A Crisis of Competence

By Shawn Brimley

Like many of you, I've spent the last week trying to wrap my mind around the woe on Wall Street, and how it will affect those of us on Main Street. I watched all the Sunday talk shows and read the press accounts, but I remain confused. Like a drooling idiot, I've watched my portfolio take a hit, and while I am not persuaded by my financial advisor's advice to do nothing, that's exactly what I'm doing. I fancy myself a decent national security analyst, but on this stuff I am, well, incompetent. There - I said it. I guess my dreams of being SEC Chairman are over!

But seriously, it seems to me that the dramatic erosion of investor confidence stems from a profound crisis in national competence. We all share some collective blame here: for allowing sub-prime lending practices to get out of hand, for continuing to consume far more as a nation than is responsible or reasonable, and for not demanding that our elected members of Congress ask tough questions and refuse to "go along" with the crowd. In fact, we've done the opposite. We have embraced easy money, we've elevated unsustainable consumption to the standing of a moral value, and we've sidelined politicians who've dared to stand in the way.

But the largest share of blame should go to those who fancy themselves in charge - to the Bush administration - for feigning competence, inflating expectations, for ignoring evidence to the contrary, and for blaming everyone else but themselves when things go bad.

Sound familiar? It should. The basic flawed economic assumptions that have brought our markets to their collective knees are similar, in scale and scope, to those that have plagued America's foreign policy.

Both the economic crisis and our foreign policy failures are linked to three problems:

1. The tendency to see the world as you would like it to be, rather than viewing the world as it actually is: The current economic crisis has been brewing for years, yet it seems as though the Bush administration was caught totally off guard. America has a long history of this problem. From the failure to detect the implosion of the Soviet Union, to the magnitude of the terrorism threat before Sept. 11, to the beginnings of an insurgency in Iraq, the history of America's national security decision-making is usually a cautionary tale in the temptations of hubris.

2. An inability to understand or accept the inherent complexity of human systems: More than five years removed from the decision to invade and occupy Iraq, it is breathtaking that smart, well-intentioned people in the Pentagon, the White House and in Congress, could have been so spectacularly wrong about the ability of the United States to affect political outcomes in a country half-way around the world. Similarly, it was spectacularly wrong to expect markets to behave in a rational manner, and limit deep exposure to questionable securities, in the absence of really any decent oversight or accountability mechanisms. American force alone cannot create a democracy, and unfettered free market opportunism is no way to run an economy.

3. A failure to detect threats early and adapt quickly: The history of the first three years of the war in Iraq show that the Bush administration failed to understand what was happening there, and, more importantly, when it began to understand, failed to adapt rapidly to changing circumstances. Indeed, perhaps the most important contribution Gen. David Petraeus (and others) made during 2007 was to detect the magnitude of the shift happening in Anbar and rapidly adapt U.S. strategy accordingly. The current economic crisis shows all the signs of the same mistake. Let's hope the plan being debated is sufficient and not too late to make a material difference.

If you doubt that our foreign policy problems and economic troubles are grounded in similar flaws, well, consider that the Bush administration has transformed nearly overnight from faith-based deregulators to economic interventionists, and over the last few years (thanks principally to Defense Secretary Robert Gates) has adopted a more realistic approach to several of America's foreign policy challenges (for example, we are talking to Iran and dealing with North Korea).

If my time thinking about America's national security has taught me anything, it is to understand what you know and appreciate the value in understanding what you don't. The height of foolishness in foreign policy and economic affairs is to delude yourself into thinking you are more competent than you are. If we are to arrest declining trends in our economy and foreign policy, it will be necessary for many more to humbly declare, "I am incompetent."

By Marisa Katz |  September 23, 2008; 9:14 AM ET
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Regarding this silliness:

"More than five years removed from the decision to invade and occupy Iraq, it is breathtaking that smart, well-intentioned people in the Pentagon, the White House and in Congress, could have been so spectacularly wrong about the ability of the United States to affect political outcomes in a country half-way around the world."

More than 5 years of progress that the blind media can't see is more like it. No, not steady progress and not progress in all areas simultaneously. But progress none the less. You people are such fools it just makes me mad sometimes.

Look at Iraq now and try to compare it to what we faced in 2002 and tell me it's not better. Go ahead, lie to me, I know you want to.

Posted by: ZZim | September 23, 2008 10:59 AM

Have National Security Analysts ever been right about anything?

I know, you could tell us, but then you'd have to kill us.

What a racket.

Posted by: srv | September 23, 2008 2:36 PM

More frightening is the authority requested by Paulson.

The following was in the International Herald Tribune, describing the draft legislation proposed by Paulson:


"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency," the original draft of the proposed bill says.

"The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act," the proposed bill read when it was first presented to Congress, "without regard to any other provision of law regarding public contracts."

It goes on to say, "Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure."

In those few words, this administration was suggesting that the Constitution be effectively suspended to solve a problem they could have prevented had they accepted the responsibility and exercised the authority that existing law had extended to them.


Al

Posted by: Aviator47 | September 23, 2008 4:34 PM

ZZim, I'd say it's pretty similar in a lot of ways. Pretty good chance of unnatural death? check. disaster of an economy? check. minuscule oil production compared to potential yearly output? check. Also, now and in 2002, Iraq did not threaten the U.S. or its neighbors with WMD. The difference is the dangers are more unpredictable and tens of thousands of Iraqis and Americans have died since 2003 just to scrap back to a bare approximation of 2002. Whether you think that's worth the cost or not is debatable, but it seems to me a lot of decent people could still have been alive right now had we not invaded with basically the same result. To me, that is what you call a "strategic blunder."

Posted by: Spencer | September 23, 2008 4:46 PM

As someone with a fairly low opinion of the Bush administration's competence in key areas, I suppose I ought to be the one to point out that addressing this deficiency will not suffice to solve our economic problems.

The national political environment, with its devotion to the permanent campaign, has made out recession to be the worst thing that can happen, even worse than war. But in fact recessions are as normal as fires on the prairie; if you go out of your way to keep fires from happening one year, the fuel load for next year will be that much bigger, and the case with the economy is the same.

The United States should have had a recession when the tech bubble burst in 2000, and again after 9/11. We staved off recession on those occasions by taking on more debt -- which was what President Bush's famous post-9/11 advice to Americans to "go shopping" was all about. During recessions, Americans are more likely to vote against the party in power, which makes incumbent politicians deeply reluctant to risk a recession under any circumstances. Bush's advice is widely mocked now, but at the time he had few vocal critics among American politicians.

So, we just get some competent people into Washington to replace the ones we have now and things will be set right. Right? Not exactly. It never hurts to have public officials who don't screw things up. With respect to the economy, though, we need to note two things. First, personnel in the executive branch will turn over, one way or another, after the election, but the great majority of Congressmen and Senators will still be there in January.

And second, the contribution the nation most needs from its political leadership isn't managerial competence, intellectual curiosity or cultural sophistication. It's the honestly to tell the country things that most Americans plainly do not want to hear, to wit:

* Americans are carrying too much debt; to reduce their debt loads, they need to not buy as much stuff.

* The American government is carrying too much debt. It cannot take on the additional debt Sen. McCain's tax cuts would require, and it can't afford the revenue loss Sen. Obama's tax cut plans would impose, either.

* Energy prices are higher than they were, and they are going to stay that way; in fact, if we are ever to do anything effective to reduce the economy's vulnerability to foreign petroleum suppliers, let along to address climate change, energy prices will have to go higher still.

* Health care is not just a problem because some Americans don't have adequate access to it; it is also a problem because we spend way more on it than any other country does, and way more than we should.

* A "phased, measured, responsible, etc" withdrawal of combat forces from Iraq does not serve American's major interest with respect to that country, which is shedding the financial burden of our commitment there. This commitment must be liquidated, sooner rather than later and regardless of what Iraqis subsequently choose to do to one another.

Americans are often stubborn or resentful when presented with unpalatable truths by high government officials, but they are not indefinitely so. What concerns me is that the Bush administration is so typical of American politicians in its unwillingness to lay such truths before the public. Both Presidential candidates, for example, are using the occasion of the crisis in financial markets as an excuse to address the American people as victims. Sen. Obama likes to talk about mortgage fraud and predatory lending; Sen. McCain laments a "culture of greed" -- on Wall Street, naturally, not among people that most American voters would recognize. Neither man is laying a foundation on which to govern a country that will need its people, not just a few government departments in Washington, to accept many changes in the way they live and do business in the coming years.

Posted by: Zathras | September 23, 2008 5:02 PM

Zzim: It is much worse. Remember, we created 5 MILLION refugees. That is a time bomb. It will explode. Their anger will be, justifiably, directed at us for making them refugees.

Zzim: Remember the million or so who were killed as a result of our invasion. They left behind children and siblings. Towards whom do you think their anger is directed?

Posted by: AMviennaVA | September 23, 2008 7:41 PM

Regarding point number one: I remember Robert Byrd on C-SPAN, long before the Berlin Wall came down, advising that Russia's biggest problem was going to be how to feed its people and that our challenge would be to make the collapse of the Soviet Union as "soft" as possible. Richard Clarke and the rest of Clinton's national security team certainly appreciated the dangers presented by terrorism. And anyone with half a brain and an ounce of empathy could have predicted, with absolute certainty, the rise of insurgency in Iraq. It wasn't "America" which failed. It was the NeoCon cadre which somehow overwhelmed all sensible opinion.

Posted by: Terry Nelson | September 23, 2008 8:06 PM

Competence should be the only thing anyone talks about from now until the election. Enough with lipstick and religion and "elitism" and empty outrage. But this, I know, is wishful thinking on my part. "Competence" is not sexy or interesting to the American public. This is why George W. Bush was elected twice.

Posted by: Mike C | September 23, 2008 10:33 PM

I mis-wrote, above. It was Daniel Moynihan, not Robert Byrd. My apologies.

Posted by: Terry Nelson | September 24, 2008 9:22 PM

For me, as a Norwegian who have been following quite closely the US debates and political positions as mirrored on the nets, I can only subscribe 100% to this analysis. The Bush approach to politics can best be described as "holistic", wich means that it seems founded on some New Age crap about how Right makes Might and if you just have the Will there will be a Way, etc. Competence and self-critiscism has been sorely lacking, its interesting to see that there is still a marked reluctance to talk about the Rumsfeld years and analyze how bad they really were.

Iraq was supposed to take max a year and cost 500 billion. That was the cost estimate, and even that was marked as the max limit for the project. To call it a success is just... weird. Its been saved from total disaster, through, but as a project it has blown both its time and cost (in lives as in money) by over 500%. In industry, that is catastrophic.

Posted by: fnord | September 25, 2008 4:20 AM

It's so common that professional thinkers call other people incompetent.

Posted by: quangxpham | September 26, 2008 9:07 AM

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