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Airstrip One
by Emmanuel Goldstein

December 18, 2000

Beyond the Dreams of Avarice
Intervention does not bring economic rewards


I always think of Britain being behind America by at least one war. While the Gulf War was on the American right had a vibrant minority opposing it, in Britain being to the right and opposing the Gulf War was lonely. I found out later that there were a couple of other right wing types who opposed it, but that was it. There was no John Randolph Club, no Centre for Libertarian Studies and no Buchanan Brigades. I fell in with a load of provincial lefties, who regarded my attachment to free markets and (horrors) cynicism about the motives and reliability of Saddam Hussein – to be treachery. In Britain, the Kosovo war did bring out some opposition from the right, although still a minority. On the other side of the pond the only Conservative minority was the Conservative Establishment, the isolationists had captured the grass roots.


The point of this reminiscing was to point out that the right in Britain supported the Gulf War almost to a man. Now there where many reasons for this. The war was being carried out by right wing governing parties, there was the natural desire to get behind your country, there was a feeling that Saddam had upset the natural order. And there were other reasons. However the one I heard most, was the question of oil. What if, we were asked, Saddam controlled the oil supply? Oil prices would sky rocket, the strategic reserve would be tapped, expensive car journeys, not being able to wear your T-Shirt indoors during winter, oh yes and industry will wither on the vine. It will be like 1973 all over again. Now this was from the self-styled hard nosed realists, which affected me quite deeply, as I happen to think of myself as a hard nosed realist. But vindication was to come eight years later.


Oil prices have sky rocketed, the strategic reserve has been tapped, expensive car journeys, etc, etc. It's like 1973 all over again. Why? Well instead of Saddam Hussein controlling all the oil stocks in Arabia, he just can't get his oil to market thanks to the UN sanctions (and a on going bombing campaign against Iraq's infrastructure). So the oil supply is constricted, and OPEC has the whip hand. And this was after the war to give us cheap oil. It seems that the hard nose realists were wrong, their war increased the oil price.


The fact is that the self styled realists were dead wrong, not because they were being too cynical but because they in reality had their own idealistic ordering of the world. Firstly why would expensive oil be a bad thing for the UK? We're a net oil exporter, and an expensive oil producer at that (off shore drilling isn't cheap). High oil prices would benefit our marginal fields more than almost any one. The American and European economies may take a dive but is that really any of our concern any way, us hard nosed realists should care as much for the French as we do for the Iraqis.


If high oil prices were really that bad, why is government so intent on taxing petrol? Those of us who drive are being taxed at around 75% for the luxury of getting to work or shopping. And this inexorable increase was started in the aftermath of the Gulf War. If high oil prices are so bad, then surely petrol taxes are where the cutting should start. Any governmental volunteers?


Anyway would a high oil price really permanently cripple the Western economies? Well not really. Oil is only another source of energy after all (you can't really talk about its use for plastics if you want to burn the stuff). What would the economies do? They are after all market economies, they would do what a market does best, adapt to new circumstances. If the market is a discovery mechanism it can, well, discover. New sources of oil can be found, like in the North Sea. Other energy sources can be tapped, Britain has enough coal for a thousand years, or so we are told. Nuclear energy could also be used. We could also get used to using less energy, and buy the slightly more expensive fuel efficient cars. There are myriad ways in which the market can react. And if you can't really trust the market, what is the point of being right wing, or a hard nosed realist?


The free market case against, say, subsidising dying industries, boosting aggregate demand or state directed research; is as valid against foreign intervention as it is against domestic folly. Expensive oil would have meant some short term pain to our trading partners and to some of us elements of British industry, but why do we doubt that the market would not have coped? The fact is that free market thinking doesn't just mean privatising the drains or making marriage registries competitive, it means looking at a wider angle. Thinking that is wishful at home – "if only we could control the price of oil" – is equally as misplaced abroard – "if only we could force the Arabs to pump oil cheaply." It seems that most free marketeers leave their principles at the airline check in. The economic case for intervention is simply a nonstarter, and all the talk of military equipment or high powered diplomacy must not bind us from the essential truth, intervention is economic moonshine.


In a little noticed (OK, I didn't notice) but highly revealing piece in the left wing Guardian, Hugo Young, the mouthpiece of the Blair regime, shilled for more small African wars. The logic, he made out, was inescapable, not only would we be doing good, but we were going to benefit as well:

Wanting to export, we need growing markets in the developing world. Without political stability, these markets have little chance of creating the prosperity British business could help to feed.

Our goods? Why should a country buy our goods when American goods are cheaper, Japanese goods are better made and French goods are more stylish? The fact is that in any economy imports are going to be a small part of economic activity. This is more so in primitive economies with a large subsistence sector, although growing food for your own use is never allowed near GNP statistics. Now of those imports, assuming free trade, why should those imports be yours? Gratitude? Even if a large proportion of imports were bought from the liberating country, don't assume that the majority would be, unless you wished to stunt the economy and breed resentment through selective tariff barriers. And the cost of stabilisation is both large and uncertain. You don't just have the troops, but you also have roads to build, children to educate, hospitals to restock. And for how long do you do this before the country is stable? The pay off is comparatively tiny for a large and uncertain investment.


There is one other thing that this Keynesianism with bombs seems to miss – the people benefiting from this are by definition limited – road companies, exporters of luxury cars to African dictators, munitions suppliers. If you figure in their workforces and the church pension funds that always seem to own shares in the dodgiest companies, these people will never be more than a minority. The people who pay tax, or are in line to receive reduced or delayed benefits comprise just about everyone. Even an action that showed a "profit" (and they don't) would in effect be redistributing wealth from the many to the few, and the wealthy few at that. While this is yet another reason for showing that it is economically bad, it means that this course of action is politically viable. The groups that benefit will find it profitable to lobby for these things, the groups that are at a disadvantage find it such a small disadvantage that they won't. Well that's more public choice theory (or something like that). Of course the interventions almost always make a net loss, but they still benefit a small, lucky few.


So the two rules of foreign intervention – they pay as poorly as domestic intervention and they will only benefit the few – can be applied to all the fatuous "economic" arguments. Britain could somehow muscle in on the diamond trade in Sierra Leone? Do you know how hard we'd have to fight for that and how expensive it is to garrison troops there – and how few British people are connected with the diamond trade. Britain will benefit from Kosovo's rebuilding contracts? How many site managers and skilled craftsmen will go to Kosovo? Are the contracts really paying more than we spent bombing these places in the first place? And where is the money for these schemes going to come from any way. And a oil pipeline across Central Asia? Will the money paid for the various security forces and bribes to local strong men really be paid for by cheap oil? If they would be why can't the private oil companies pay for them out of their increased profit margins.


Intervention is economically wrong headed. Whenever you hear someone saying that it is in the national interest, ask yourself are the real costs really higher than the returns, and who pays the costs and who reaps the returns. Remember that there are plenty of non-economic reasons for avoiding stupid foreign adventures, like strategic overstretch or the corruption of public life, but it does help to shoot down a few of their idiotic arguments as well.

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