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A series of two-page essays commenting on current events in foreign affairs using the lens of economic analysis.
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"The politics of restoring Egypt’s military aid" April 2, 2015 (The Washington Post)
In April 2015 the Obama administration granted access to over one billion dollars in US military
aid to the government of Egyptian President Abdel Fatah al-Sisi. That aid had been withheld
since Egypt's military, led by then-Defense Minister Sisi, overthrew the democratically-elected
government of President Mohammed Morsi in July 2013. A violent crackdown on Morsi's
supporters followed the coup. As of this writing, Egypt's repression of dissent is in many ways
worse than under the reign of longtime dictator Hosni Mubarak: the Muslim Brotherhood, once a
tolerated opposition group, was declared to be a terrorist organization and most of its leaders are
in jail and sentenced to death; public demonstrations are suppressed; the independent media are
threatened; and American aid workers are harassed and subject to public smear campaigns.
Why would the Obama administration restore military aid to an undemocratic regime that is
seemingly hostile to American interests? A common explanation is that withholding the aid
threatened US-Egyptian relations, which are considered critical to maintaining Israel's security
and the stability of the Middle East in general. But this and similar explanations take for granted
the view that the US and Egyptian governments are single entities that, like individuals, face
trade-offs and weigh the costs and benefits of one course of action over another. For example,
this analysis assumes that the US government balances its support for democracy with its desire
for a stable Middle East and Egypt-Israel relationship.
An alternative analysis of the US decision to restore aid to Egypt's military could instead regard
the US government as a system of individuals working to maximize their own self-interest
subject to the constraints imposed upon them by the institutions in which they operate. Rather
than asking if a particular government benefits or loses from a particular course of action, the
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analysis of individuals offers complementary explanations for governments' behaviors that are
grounded in the incentives that those individuals face.
For example, cutting off military aid to Egypt would mean eliminating a revenue stream to the
US defense industry, an extremely important constituency for elected officials. US aid to Egypt
is not a simple cash transfer; the money that is appropriated is used to buy hardware from US
defense contractors that supply their defense partners in Egypt. Between 2009 and 2011, the five
largest beneficiaries of US military aid to Egypt (in dollar terms) were: Lockheed Martin ($259
million), DRS Technologies ($65.7 million), L-3 Communication Ocean Systems ($31.3
million), Deloitte Consulting ($28.1 million), and Boeing ($22.8 million). These companies are
all also significant employers and political campaign contributors.
In the case of US military aid to Egypt, any individual policymaker must choose between
tangible or intangible benefits. Should he or she support withholding aid, the politician
experiences only the ethereal sensation of "protecting democracy" in the Middle East. While
there are no doubt some policymakers who care deeply for the plight of ordinary Egyptians, they
reap very few tangible benefits from acting on that concern. Egyptians do not vote in US
elections, nor do they fund influential lobbying groups. In contrast, policymakers benefit greatly
from protecting the interests of defense contractors and other lobbying groups, such as those
associated with Israel, whose security is enhanced by a stable Egypt (at least in the short run).
It should not be surprising that the US seemingly turned its back on democracy in favor of
maintaining close ties to Egypt's military. Given the vested interests involved and the system of
incentives that individual government officials face, it would be irrational for individuals
embedded in those institutions to do otherwise.
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"Why Islam needs a reformation" March 20, 2015 (The Wall Street Journal)
Ayaan Hirsi Ali argues that the "fundamental problem" with Islam today is its literal
interpretation of the Quran as the word of God and the infallibility of the Prophet Mohammed.
Strictly following the commands of a man and a document from 7th-century Arabia means
implementing many cultural and political ideas that made sense at the time but which today (at
least in wealthy, secular countries) are repulsive, such as the submission of women to men and
the rule of a clerical elite. This literalist reading of Islamic law is the most important source of
Islamist terrorism, Ali claims, and only by renouncing those "violent, intolerant, or
anachronistic" elements of dogma can Muslims truly claim that theirs' is a religion of peace.
This reasoning has a testable implication: if Ali is right, then the likelihood that a Muslim turns
violent is the inevitable result of slavish adherence to ideology. Therefore, we should expect to
observe the same amount of religiously-driven violence in every Muslim community
proportional to its size in a given country. How many Muslims are sufficiently literalist to
represent a potential terrorist threat? Ali cites an estimate of "only" 3% of Muslims globally,
though she says that she would "put the number significantly higher". For the sake of argument,
we will use the 3% estimate, though others are as low as 1-in-30,000 in wealthy nations.
Ali never explains why a literalist Muslim would not decide to turn violence, but given her focus
on ideology in driving terrorism to the exclusion of other factors then we assume that an
individual’s shift from extremism to violence is largely due to chance. For instance, if the
fictional country of Extremistan contains 10 million Muslims, and 1% of Muslims globally
adhere to a sufficiently literal interpretation of Islam, then we assume that 10,000 potentially
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violent extremists live there. But what are the chances that any one Muslim extremist will turn
violent? Here we can look to actual data on terror attacks globally.
The University of Maryland maintains a database of all known attempted and successful terrorist
attacks going back to the 1970s. To grant Ali’s argument the most favorable terms possible, we
assume that all terrorist attacks committed between 1990 and 2010 were committed by Muslim
extremists. And using Ali’s 3% estimate of the share of Muslims globally that are potentially
violent extremists we can calculate the share of extremists who actually turn violent. Figure 1
summarizes the results for a small sample of Western and Middle Eastern countries.
Figure 1Total Terror Attacks 1990-2010
Average Muslim Population 1990-2010
Number of Potential Violent Extremists
Percentage of Violent Extremists Committing Terror Attacks
US 602 2,062,000 61,860 1.0%UK 1,590 2,025,000 60,750 2.6%France 1,153 2,636,000 79,080 1.5%Afghanistan 2,586 20,799,000 623,970 0.4%Pakistan 4,289 145,200,000 4,356,000 0.1%Iraq 6,465 24,232,000 726,960 0.9%Average 1.1%Source: University of Maryland and Pew Research Center
What we find is that, on average, 1.7% of potential extremists in a sample of Western nations
turned violent in that timeframe while 0.5% did so in the sample of Muslim nations. This
simplistic analysis provides some evidence for Ali’s claim that the same proportion of extremists
turn to violence in any given Muslim community. But it also suggests that she is vastly
overstating the scale of the problem, if there is one. Even granting Ali’s model the most
favorable terms possible we find that only 1% potential extremists—Muslims already inclined to
violence—end up pulling the trigger. The argument above is admittedly reductio ad absurdum,
but it calls into question Ali’s own slavish focus on ideology as the cause of Muslim violence.
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“Egypt’s Sisi closes economic conference with call for further investment” March 15, 2015
(The Wall Street Journal)
The Egypt Economic Development Conference was held in the Red Sea resort town of Sharm al-
Sheikh in March 2015 and resulted in investment deals of more than $130 billion and additional
pledges from wealthy Gulf neighbors of tens of billions of dollars for economic stabilization.
During the conference, Egypt’s leaders unveiled plans for state-led megaprojects meant to both
upgrade the country’s dilapidated infrastructure and put her millions of unemployed citizens
back to work. But Egyptian President Abdel Fatah al-Sisi ended the conference by calling for
even more investment, up to $300 billion more, to put his country on course for sustained
economic growth following years of turmoil. Assuming that policymakers in the United States
sincerely care about the plight of Egypt’s unemployed, how confident should they be that
appropriating hundreds of billions of dollars for Egyptian aid will have that intended result?
US policymaker should first ask themselves: do Egypt’s leaders even have the ability to achieve
the desired outcomes? We can look to the history of massive infrastructure projects to help
answer this question. In his research on the efficacy of so-called megaprojects, Bent Flyvbjerg
argues that cost overruns occur in nine out of ten of these projects and overruns of up to 50% are
common (construction of the original Suez Canal in Egypt, Flyvbjerg notes, was 1900% over-
budget). Similarly, benefit shortfalls of up to 50% are also common. One explanation for this
observation is that governments are just not very good at identifying the most valuable projects
nor at managing these enormous projects efficiently. The knowledge required to guide money
and other resources to their highest-value investments is not easily gathered by a centralized
authority. As a result, benefits are overstated and resources are wasted.
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But can US policymakers be confident that such projects, even if they are over-budget and
under-deliver on benefits, will still create jobs and lead to economic growth? It is probably true
that many Egyptian laborers will be employed by these projects, at least temporarily. But
sustainable growth will only occur if these megaprojects create actual value for the society. If
they do not represent the most valuable use of these resources, and thus divert money away from
more productive uses, then Egyptians could end up no better off, or even poorer, than before.
Even if these megaprojects do add value to the economy, do Egypt’s officials have an incentive
to put those billions of dollars toward the highest-value investments? Corruption in Egypt is
rampant; according to Transparency International’s annual Global Corruption Perception Index,
Egypt ranks 94th of over 170 countries. Corruption is like an additional, unproductive investment
added to the total cost of a project, and probably represents a significant factor in cost overruns.
But even more pervasive is the problem of cronyism, the process by which officials guide
contracts to allies and contractors invest resources in influencing how government spends
megaproject money. As a result, resources are wasted trying to influence decision-makers and
contracts are steered to unproductive but politically-connected clients. This problem is even
more acute in developing nations where spending oversight is less effective.
The third reason that US policymakers should rethink investing in Egypt is the country’s
institutional environment, which constrains economic activity and sustains the corruption
discussed above. The IMF singled out Egypt’s regulatory structure as a primary reason for
economic stagnation and high levels of unemployment. According to the World Bank, it only
takes 8 days to start a business in Egypt, but over 179 days to acquire a building permit and over
1,000 days to enforce a contract. These barriers crush innovation and entrepreneurship and will
ensure that any material benefit that Egyptians realize from the megaprojects will be squandered.
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“Here’s what’s wrong with the USA Freedom Act” May 6, 2015 (The Nation)
In response Edward Snowden’s revelations about a secret NSA data collection program, the US
Congress passed the USA Freedom Act, meant to reign in some of the more objectionable
powers granted in the post-9/11 national security legislation. The author claims that the Act
represents “the first time since 9/11 that Congress has reined in any national security surveillance
program.” But he goes on to note that the USA Freedom Act does not abolish the NSA’s ability
to access bulk data on Americans’ phone records. Widespread, warrantless data collection
continues, and those data are still accessible, but the records are now held by the phone
companies themselves, which the NSA can only access with permission.
Defenders of bulk data collection claim it is an essential tool in the NSA’s anti-terrorism toolkit.
But basic economic reasoning makes this claim hard to believe. Governments are simply not
good at dealing with large amounts of information efficiently. This is the nature of bureaucratic
organizations in general: absent clear profit and loss accounting, bureaucrats must use other, less
precise measures of value to guide their decision-making. Given this reality, it is unclear how
such an organization can make sense of an enormous amount of information efficiently enough
to actually stop a terrorist attack. This is one explanation why no NSA apologist can point to a
concrete example of an attack that was prevented due to the bulk data collection program.
But if there is no clear evidence that the program is effective, why would politicians keep it
alive? Basic economics can also help us understand why this occurs. Politicians are highly
sensitive to public opinion and do not want to be blamed for a terrorist attack that happens while
they are in office. Among other unpleasantness, they could get blamed for not having done
enough to prevent the attack. With these incentives in mind, we can understand the passage of
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the USA Freedom Act not as protection for Americans but as protection for politicians. By
preserving bulk phone data collection, regardless of its efficacy, politicians have a tool that they
can point to in order to say: “look, we did everything we could to prevent that attack.”
Public officials’ ability to do this is enabled by the nature of the USA Freedom Act and of giant
government programs in general: politicians do not bear the costs of these programs, in that they
do not pay for it out of their own pockets, but they reap all of the benefits. Their incentive is to
create the largest possible program, with the furthest possible scope, that the American voter will
allow. The result is that the program continues with only superficial changes.
So why there have been so few successful terrorist attacks since 9/11? One explanation is that
many were foiled by the national security apparatus and then kept secret. This seems unlikely
given the incentives that groups like the NSA face. Publically foiling terrorist attacks, especially
with the help of controversial programs like bulk phone data collection, would help legitimize
these programs in the eyes of the public and probably lead to increasing budgets and authority.
A more realistic explanation is simply that there are few terrorists out to get us. We showed in a
previous journal entry how, even under the most generous assumptions possible, Islamic terror
attacks are extremely rare. The reality is that if home-grown terrorists did want to attack
domestic targets there would be little we could do to stop them. The Boston Marathon bombing
made this fact clear, but it also made clear how rare these easy-to-execute events actually are.
During the Intifadas there were multiple bombings of Israeli civilian buses per week. Why don’t
we see similar attacks on buses or Amtrak trains, where there is little-to-no security? Rather than
assuming that our intelligence communities have superhuman crime-fighting abilities, the likely
reason is that they are not happening because there is just no one around to do them.
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“Trade Deficit Grows as Strong Dollar Hurts Exports” July 7, 2015 (The New York Times)
According to the Associated Press, the US trade deficit—a measure of the dollar value of all of
the goods the country imports versus how much it exports—widened to $41.9 billion in May of
2015. This news was troubling for the economists interviewed in this article; a growing trade
deficit means slower GDP growth, all else held constant, because American consumers are
sending more dollars abroad than foreigners are sending to the US. But this is simply an
accounting identity. Aggregate GDP growth, while generally a good indicator of economic
performance, is also highly imprecise. It does not do a good job of telling us about the value that
is being created in an economy beyond the raw dollar amounts that were exchanged.
Take the case of the US, a country that almost always exports more than it imports. This would
be worrisome if the US were only trading the same products as other countries, such as when the
US and China compete for the production of solar panels. A US trade deficit in solar panels with
China would likely indicate that China has a comparative advantage in their production and in
most cases would represent a signal to US producers that they would be better off devoting those
resources to more productive uses.
But the US does not compete with every other nation in producing one, homogeneous product.
So there is nothing necessarily bad about the US exporting less beef in dollar terms to Japan than
it imports from them in cars. Again, GDP is an accounting identity and only indirectly tells us
about the value being created in the exchange. If international competitive pressures forced
Apple to create a cheaper, more efficient smartphone for export and as a result it ended up
exporting less in dollar terms than with its previous version then that would result in a decrease
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in GDP for the US, even though the company brought the smartphone to millions of new low-
income consumers who can now afford it.
Similarly, the 2011 tsunami that hit Japan’s coast and disabled the Fukushima Daiichi nuclear
plant also temporarily disrupted Japan’s auto industry by devastating supply chains. As a result,
American cars like Ford and GM gained market share from Japanese brands, decreasing the trade
deficit. But calling this a productive or “good” outcome would be perverse since any gains in
GDP came as a result of resources being destroyed, rather than value being created.
Trade is beneficial because it expands the extent of the market (more potential people to buy
your goods) and enables a society to take advantage of a broader division of labor and deeper
specialization (more people can specialize in different parts of the production process and, as a
result, produce those parts more efficiently). But even more fundamentally, when people
exchange with one another they are almost always made better off, regardless of whether they
live in the same or different countries.
So when dealing with trade the relevant question is: are all the possible benefits from exchange
being realized? A US trade deficit may mean that the aggregate “economy”, as defined by a set
of arbitrary borders, is not growing as fast as it otherwise would, but that says nothing about the
consumers who benefit from the cheaper products that they import from abroad.
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“Free trade agreements draw majority support from most typology groups” June 25, 2014
(Pew Research Center)
In most of these cases, it seems like politicians and interest groups do not want to engage in a
public debate on these issues because voters largely don’t care. And why would they? TPP
would almost certainly benefit American consumers, but very little, perhaps a few dollars or
even a few cents per item. This reflects the logic of most government programs in general: such
programs cost most Americans very little. As such, people do not suffer the negative
consequences of bad policies, especially when these policies are nation-wide. The costs are
spread over a large number of people, while the benefits are concentrated for a very few. Much
more visibly, a certain number of people would certainly lose their jobs due to the agreement.
There is a lot of talk generally about voter ignorance; for example, most Americans don’t know
who the Vice President is, who the World War II combatants were, and so forth. But this is just
trivia. What difference does it make if someone knows these historical facts, beyond some vague
concept of “civic virtue”? Normal people care about concrete things like the price of gas, the
price of groceries, and whether or not they have a job. Their expertise is generally deep but
narrow, and focused on local issues close to home: family, neighborhood, etc. Much of their
knowledge is tacit, in that it cannot be communicated easily.
This is as it should be. I don’t know anything about the local economy of Akron, Ohio, and it
would be unproductive for me to. National policy is deliberately broad-based, because it
decreases the benefit that people get from paying attention and understanding it, and increases
the amount that interest groups can influence how income is distributed.
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“How Russia’s labor migration policy is fueling the Islamic State” July 11, 2015 (The
Washington Post)
In 2015, Russia began requiring that foreign workers pass a series of tests and pay for permits in
order to migrate to the country and gain access to its labor market. For workers from Tajikistan,
a poor Central Asian country neighboring Russia, the changes have the potential to be
devastating. Russian President Vladimir Putin began allowing Tajikistani workers greater access
to Russian jobs as part of his effort to gain influence over his Central Asian neighbors. About
47% of Tajikistan’s GDP came from workers’ remittances by 2013, according to the World
Bank, a larger share of the economy than in any other country. But the World Bank expects
remittances to drop by almost 25% due to Russia’s new restrictions.
The Russian government’s barriers to labor mobility illustrate the danger of unintended
consequences. It is clear why Tajiki workers flock to Russia: the man interviewed in the
Washington Post makes about 29,000 rubles a month, or about $900 USD. According to the state
statistical agency in Tajikistan, the average monthly wage is about 900 Tajikistani Somonis,
equal to about 8000 rubles or $140 USD a month. Basic economic reasoning predicts that raising
the costs of an activity, in this case obtaining the paperwork needed to secure a work permit, will
result in pushing some Tajiki workers to pursue alternative money-making activities.
One alternative is fighting for the Islamic State (IS). According to reports from former IS
fighters, the militant group provides stipends, housing, and food to foreign recruits and their
families. IS makes strong demands of its fighters, including adhering to an austere Muslim
lifestyle with the potential for committing acts of extreme violence against enemies. But while
the group attracted thousands of foreign fighters with the promise of life under an authentic
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Islamic Caliphate, there are no doubt some who came because the subsidized lifestyle was
preferable to any alternative available at home.
Luckily, the more foreigners coming to Syria and Iraq to fight due to a lack of alternatives, the
larger the opportunity there is to tempt those workers with better opportunities elsewhere. But
this will require that other, hopefully more enlightened nations liberalize their own migration
laws and allow foreign workers access to their labor markets. Jobs in the EU or in the US, even
low-paying jobs, may coax Tajikistanis and other desperate Muslim workers away from
unproductive and even deadly activities like fighting for the Islamic State. And it will benefit the
home nations as well. These migrants do not just move to richer nations to live off of the welfare
state; they provide low-skilled labor to business owners, increase the demand for goods and
services, and may start businesses of their own. So liberalizing labor migration is not just good
anti-terrorism policy, it is also good domestic and humanitarian economic policy.
Critics of a more open labor migration will point to countries like France, which has a large
Muslim migrant population that has largely failed to integrate with the rest of French society,
resulting in extremism and violence. But while France’s government has been generous in
accepting migrants, especially refugees fleeing conflicts in France’s former colonies, the
country’s labor laws and hostility toward immigrants in general make it difficult to find a job. A
high minimum wage makes it too costly for many employers to hire low-skilled migrants, while
laws that make it hard to fire workers make employers hesitant to hire unproven foreigners. As a
result, many low-skilled Muslim migrants live in poverty and are ripe targets for recruitment
among extremist groups. Maximizing the gains from labor migration requires these countries to
make it easier to start businesses, get hired, lay off workers, and pay them a wage corresponding
to their productivity and the value they generate for a business.
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“Iran deal raises prospect of fresh oil glut” July 14, 2015 (The Wall Street Journal)
Iran reached a deal Tuesday with the five permanent members of the security council and
Germany (the P5+1) to rein in the Islamic Republic’s nuclear program and relieve economic
sanctions. The US and the EU, operating through the United Nations, imposed harsh economic
sanctions on Iran beginning in 2011 that prevent the country from exporting oil and other
petroleum products to most of the industrialized world. For a country in which the value of
exported petroleum products made up over 20% of GDP in 2011, the result was devastating.
According to the Energy Information Administration, oil and natural gas export revenue dropped
47%, from $118 billion in FY 2011/12 to just $63 billion. This contributed to the nation’s GDP
shrinking over 6% in 2012, according to IMF data.
The prospect of lifting sanctions means that oil can start flowing once again, but the timeline is
still unclear. The agreement signed with Iran and the P5+1 states that the initial set of sanctions
would not be lifted until the International Atomic Energy Agency (IAEA) verifies that Iran
complied with the initial set of conditions to limit its nuclear program. Secretary of State John
Kerry estimated that would take about six months. Iran could then immediately sell some 20
million barrels already on hand and the Ministry of Petroleum claimed that it could ramp up
production by one million barrels a day within a few months by re-activating idle wells, though
industry experts predict that the number is probably between 100,000 and 400,000. Production
could increase further, by between 400,000 and 600,000 barrels a day, by the end of 2016.
Getting any more production out of Iran will likely require investment and expertise that can
only be gained from global oil companies. But while some companies with a presence in Iran
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before sanctions are eager to re-enter once they are lifted, it is likely that others will be more
hesitant given that significant uncertainty remains regarding the nuclear deal and the end of
sanctions. One challenge is that the deal still has yet to be officially adopted by the US; Congress
has 60 days to review and vote on the resolution, the result of which the President can then sign
or veto. But given the harsh penalties levied against firms that were accused of violating the
sanctions--private companies, especially banks, face millions of dollars in fines and years in
jail--investors will not risk a firm commitment until the deal is officially adopted.
Another challenge is the nature of the energy industry itself: Iran’s constitution prohibits foreign
ownership of natural resources, so the National Iranian Oil Company and two other state-owned
enterprises manage Iran’s energy sector, including all oil and natural gas production projects.
Foreign companies are allowed to participate in the exploration and development phases, but
only by entering into contracts with Iran subsidiaries. The key question for foreign investors is
whether Iran will establish a new framework for petroleum contracts that allow international oil
companies to participate in all stages of a production project. Iran’s Ministry of Petroleum said
that the details of those contracts would be revealed in September.
The nuclear issue aside, critics of the deal warn that lifting sanctions risks revitalizing Iran’s
economy and empowering them to pursue mischief in the Middle East. But this reasoning
confuses intentions with outcomes. Sanctions do hurt the country being sanctioned, but they also
hurt the countries applying sanctions. Access to Iranian oil will lead to cheaper gas and other
energy prices, making everyone richer. Lifting sanctions gives private companies access to a
huge, relatively wealthy market hungry for US goods and enriches Americans in the process.
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“Air force will offer bonuses to lure drone pilots” July 14, 2015 (The Wall Street Journal)
The US Air Force is offering its officers thousands of dollars in bonuses if they commit to
becoming drone pilots for five years or more, with officers already in the program receiving a
$15,000 retention bonus for every year they stay on. These steps are in response to a shortage of
trained drone pilots, coupled with an ever-increasing demand for the intelligence and offensive
capabilities they provide. As a result, the average drone pilot flies about 900 hours per year,
while a traditional pilot spends less than a third of that time flying, leading to high levels of burn-
out among active drone pilots—the article states that about 230 pilots leave the program each
year, while the Air Force trains only 180 new pilots.
Basic economic reasoning can help explain why drones, and thus drone pilots, are in such high
demand. Drones greatly decrease the costs of intelligence-gathering and warfare, at least for the
side commanding the drones, compared with traditional methods. Flying a remote-controlled
aircraft from the safety of the US is less costly in terms of lives risked and valuable equipment
lost. Drones can be flown over dangerous or inaccessible places to gather information and
conduct strikes. And in many cases those strikes do not require a soldier or other operative on the
ground to guide munitions from a high-flying aircraft to a designated target. Drone pilots can
simply point and shoot. This helps explain the proliferation of drone use across the world, both
by the US and other nations.
But economic reasoning also predicts that if you decrease the cost of an activity, all else held
constant, people will do more of it. Drones make waging war cheaper, and as a result we
increasingly see the United States and its allies engaged in a state of near-perpetual war against
traditionally faraway enemies: the Taliban in Afghanistan, ISIS in Iraq, al-Shabab in Somalia,
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and al-Qaeda in Yemen. And their ability to lower the cost of surveillance makes drones
appealing in other, non-military contexts, such as patrolling the US-Mexico border and policing
airports in the UK. But there should be no doubt that the offensive capabilities that make drones
so effective in a martial context will also tempt governments to use them in non-military settings,
such as in law enforcement and domestic surveillance.
The rise of drones has other negative, unintended consequences. The Bureau of Investigative
Journalism estimates that between 2004 and 2015 the US inadvertently killed at least 500
civilians, and possibly many more, in over 550 confirmed drone attacks carried out in Pakistan,
Yemen, Somalia, and Afghanistan. One attack on a suspected al-Qaeda compound accidentally
killed two Western hostages held there. And it isn’t just friendly governments using drones
anymore. The US Army issued a report that Iran is developing drones laden with explosives to
disable ships in the Strait of Hormuz. And the Pakistani government recently claimed that it shot
down an Indian spy drone, raising tensions along the world’s most dangerous border.
There is also a institutional explanation for why the Air Force is having trouble finding pilots.
Flying drones lacks the prestige associated with flying jets or helicopters. Drone pilots sit at a
desk and are more in danger of developing carpal tunnel than being shot down. So in addition to
increasing their pay and decreasing their workload, the military can also expect to attract and
retain more drone pilots by changing the cultural norms associated with that profession. Another
option is to lower the barriers to entry. Currently, only officers can become Air Force pilots,
including drone pilots, drastically shrinking the pool of potential recruits. Allowing enlisted
personnel to enter their ranks would increase the number of potential drone pilots, but may
further degrade the prestige of the position and could have other unintended consequences.
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“U.S. suddenly goes quiet on effort to bolster Afghan forces” January 29, 2915 (The New York Times)
Beginning in 2015, the US military stopped sharing information about the Afghanistan
occupation that for the previous six years had been made publically-available through the Special
Inspector General for Afghanistan Reconstruction (SIGAR). The newly-classified information
includes such details on Afghanistan’s military strength as troop levels, desertion figures, and
casualties among soldiers and police. But it also includes data on taxpayer money spent in
Afghanistan. SIGAR’s quarterly reports now only contain top-line spending figures, while the
bulk of the details are confined to an appendix that is classified as top secret. While the US
military claims that the information was restricted to protect the lives of American soldiers and
their Afghan allies, the move is part of a broader phenomenon of over-classification throughout
the government’s national security bureaucracy.
One reason we see a trend toward over-classification is that the incentives facing national
security bureaucrats push them toward greater secrecy. Bureaucrats incur very little cost from
making more and more information top secret, which they can justify as in the interests of
national security. But they do bear the costs of under-classifying information, in that if it is
discovered that enemies used publically-available information to their advantage, or if unpleasant
details of a government program are made public, those bureaucrats could bear the blame.
Similarly, there are benefits for bureaucrats to over-classify information: it makes it more
difficult for that information to be subject to public debate. If an issue arises that may be
inconvenient or embarrassing for the government to deal with, an easy remedy is to put up legal
barriers to its discussion.
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Another reason that we see over-classification is that there is little genuine oversight of the
national security bureaucracy. The article above makes this clear. SIGAR is charged with
overseeing how money is spent and communicating that information to the public. But when
large amounts of information related to spending on the Afghan occupation suddenly became
unavailable, SIGAR could only criticize the decision and call for greater transparency. Members
of Congress from both parties also criticized the move but apparently took no further steps to
reverse it. This is because those in Congress face many of the same incentives as the national
security bureaucrats: they bear only a small cost for over-classifying information in the form of
public resentment but benefit from limiting access and debate on potentially embarrassing
information about an unpopular war.
One implication of the over-classification trend is the danger of a vicious cycle developing: as
more information becomes classified, oversight of the national security apparatus under the
current institutional arrangement becomes more difficult. As a result, the risk to individual
bureaucrats of extending their power and getting punished decline, further incentivizing the
abuse of power in the name of national security. How do we stop this cycle from forming? One
option is to change the incentives for individual bureaucrats within the system to report abuses of
power when they happen. While the government nominally protects watchdogs, in reality those
who leak classified information to the press or elsewhere face harsh penalties. But if a program
were put in place that encouraged leaks, perhaps for a large sum of money and immunity from
prosecution, we would see more Edward Snowden-type revelations about massive abuses of
national security power.
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