Gambling with other people’s lives

I don’t have much confidence in our foreign policy establishment. They did correctly decide to fight WWII.  But that was sort of a no-brainer, given that we were directly attacked at Pearl Harbor. Since then?

We were told it was worth inflicting a lot of short run pain on the Vietnamese people, as in the long run they would benefit.

We were told it was worth inflicting a modest amount of pain on the Cuban people, as in the long run they would benefit.

We were told it was worth bombing Libya, as in the long run the Libyan people would be better off.

We were told it was worth invading Iraq, as it would help the Iraqi people.

We were told it would benefit the Yemeni people if we helped the Saudi’s invade Yemen.

We overthrew a bunch of foreign leaders in places like Iran and Latin America, which often backfired.

I’m not dogmatic on this issue. It’s quite plausible that some of our interventions helped the situation. It’s just that I don’t have a lot of confidence in the foreign policy establishment. They talk like they know what they are doing, as if foreign relations is a hard science, but the results suggest otherwise.

Now we are being told that it’s worth inflicting a lot of pain on Chinese firms and American consumers on the theory that this will somehow help improve Chinese governance in the long run. Is it any surprise that I lack confidence in this theory?

Kyle Bass is one of the most famous China critics. Bloomberg reports that he is now advocating a policy that he hopes will kill lots of Chinese people. How many? He doesn’t say. But the logic of his proposal suggests the policy would only “work” if the death toll were in the millions.

“We should take our [medical] supplies and go back home. Let the chinese virus rampage through the ranks of the GT and the rest of the communist party,” the founder and chief investment officer of Dallas-based Hayman Capital Management wrote.

There are about 80 million people in the Chinese Communist Party, most of whom are not “communists” in any meaningful sense of the word.  Given the current location of the virus (concentrated in Hubei province) and given the isolated position of the Chinese leadership, an enormous number of ordinary Chinese people would have to die in order for the leadership to be threatened.

In 1959, Chairman Mao was willing to sacrifice many millions of Chinese people based on his “theory” of how the economy should be structured.  He felt that the very real short run pain would pay off in terms of future gains.  He was wrong.

Obviously most China hawks aren’t as idiotic as Bass, but those who advocate getting tough with the Chinese are willing to contemplate the fact of short run pain based on the theory that this will somehow lead to positive political developments.  I see very little evidence from the historical record that this is likely to work.  Not zero evidence; South Africa might (or might not) be a counterexample.  But not enough evidence for me to want to engage in game theoretic strategies that impose suffering on ordinary people in exchange for very uncertain gains.

I recommend Gene Epstein’s article on the US trade war against China.  Here’s an excerpt:

When a state wages war against another state, it generally portrays itself as having first considered all the peaceful ways of settling grievances. In this case, we are told that the US can’t use the World Trade Organization to challenge China’s practices because China doesn’t comply with that organization’s rulings. The evidence is that China’s record of compliance is better than ours. An academic study on this subject scrutinizes the 43 cases in which China has been a target of trade disputes from its entry into the World Trade Organization in December 2001 through December 2018. The author finds that, in 42 out of the 43 cases,“China has timely and satisfactorily implemented WTO tribunals.” He concludes that “China’s record of compliance suggests that the dispute settlement mechanism has been largely effective in inducing compliance.”

He also observes: “Ironically, while the US has been accusing China of not complying with WTO rules, the US’s record of compliance is evidently worse than that of China. The US refusal to change the practice of ‘zeroing’ has been a blunt denial of its World Trade Organization obligations and outright disrespect for World Trade Organization rulings. In addition, while China has never been subject to any request for retaliations as a result of failure to comply, the US has faced 15 [such] requests.”

PS.  I have no idea whether Bass is a nationalist.  But one reason I oppose nationalism is that it leads people to begin to treat “the other” as if they are less than fully human.  And don’t tell me that Bass’s proposal wouldn’t have much actual impact.  I know that.  He’s not just cruel; he’s dumb.  I am interested in what he wants to achieve.

PPS.  Do you remember what Jerry Falwell said when AIDS first appeared on the scene?

AIDS is not just God’s punishment for homosexuals; it is God’s punishment for the society that tolerates homosexuals



28 Responses to “Gambling with other people’s lives”

  1. Gravatar of Andrew Andrew
    9. February 2020 at 21:54

    I like Daniel Davies’ construction – opposition to all foreign policy interventions is the passive investing of policy – the dead-simple default strategy that consistently outperforms the recommendations of all the so-called “experts” in the space.

  2. Gravatar of ssumner ssumner
    9. February 2020 at 22:22

    Good analogy.

  3. Gravatar of Benjamin Cole Benjamin Cole
    9. February 2020 at 22:35

    Kyle Bass’ remarks are small-minded, detestable, loathsome and immoral. The US should extend all the aid it can to any population anywhere suffering from a plague. Such maladies go beyond nations or ideologies. The US spends $1.2 trillion a year on global security—surely a portion of that can be split off for humanitarian purposes.

    Scott Sumner forgot to mention Afghanistan among the US’s fantastically expensive yet counterproductive military boondoggles, which recede back in time in a long procession. Maybe we can give a thumb’s up on Korea, but that was 70 years ago.

    Interesting historical note: FDR worried he would not be able to enter the European theater, even after Pearl Harbor. The American public was against US entry into WWII, led by GOP stalwarts from the Midwest, such as Senator Taft. But then Germany declared war on the US a few days after Pearl Harbor, and the US was in. As late as Bob Dole’s presidential run, the GOP referred to “Democrat wars”, in part meaning WWII.

    From the non-interventionist non-militarist mindset of pre-WWII—-in which standing armies were viewed as repulsive—-the US has gravitated to constant global intervention, and constant glorification of a constantly mobilized US military. There are some ugly sides to the DC globalist-community, and this is certainly one.

    One might reasonably wager the expensive US military hyper-mobilization is not to protect US shores, but to serve as a global guard service for multi-nationals.

    I disagree with Sumner on China trade policy. Even the IMF has advised the US move back towards balanced current-account trade.

    Globalization is marching forward arm-in-arm with increasing income stratification, political repression and race/ethnic/class tensions. Sometimes resulting in populism, and socialism (see pending US elections).

    Obviously, a big topic. The globalists are glib.

    But remember this: 1,100 US credentialed economists signed a public letter in May 2019 that Trump’s trade tariffs could cause a global Great Depression. Just like Smoot-Hawley! By yearend 2019, the S&P 500 was up nearly 30% and the Shanghai Composite up about 25% from Jan. 1

    Why are US economists so fixated on 1) wrinkles in US trade tariffs, and 2) inflation?

  4. Gravatar of mbka mbka
    10. February 2020 at 01:19


    This Bass quote is so vile in its smug disregard for human life, it is only surpassed by Michael Leeden’s re: US foreign policy

    “every now and again the United States has to pick up a crappy little country and throw it against a wall just to prove we are serious.”

    for context.

  5. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2020 at 02:15

    Americans Joining Workforce at Record Rate-WSJ

    “Nearly three of four Americans who became newly employed in recent months came from outside the labor force”

  6. Gravatar of rayward rayward
    10. February 2020 at 06:26

    Lots of American companies have supply chains in China that will be cut due to the coronavirus. When popular goods sold in America are in short supply and prices rise as a result, what will be the reaction of American consumers? Further, many American manufacturers rely on intermediate goods imported from China. When those goods are unavailable due to the coronavirus and American manufacturers start laying off employees, how will Americans react? I know how Trump will react it manufacturing output drops this quarter: he will blame his usual suspects.

  7. Gravatar of Brian Donohue Brian Donohue
    10. February 2020 at 07:08

    Yes, the foreign policy establishment has been wrong about almost everything for decades, but they no price. It’s almost like Ike was on to something.

    Are they just dumb? Maybe not. Check it the whole 2018 Syrian chemical weapon hoax for a recent installment.

    The war in Afghanistan is now in its smash 19th season.

  8. Gravatar of Michael Rulle Michael Rulle
    10. February 2020 at 07:18

    Bass sounds like a nut job. I assume no one is listening to him. I have read we (CDC) and WHO have offered assistance—-don’t know where China stands on this.

    You left out the biggest and most obvious foreign policy success. The collapse of the Soviet Union. It did not turn out like “end of history” people thought it would—-and Russia is what it is. But Russian people are more free than they were before—they can at the very least leave the country if they chose to. My one Russian friend who immigrated here as a small business person says her friends in Russia are happier than her. They work less, but work, have less material well being —-but in her view they are “happier” than her—-she visits there once a year. I am NOT playing up Russia—-just saying it was a foreign policy success—-and she would not move back to Russia—-but she seems to prefer Europe, she likes Trump too. Shows that not all of us fit in well defined categories.

    I thought it was obvious that China, as a emerging economy, received “better” terms on trade than Europe and US in the WTO original set up when China entered. Maybe they should have. But it is not crazy to think they should no longer have them.

    I think the recent “trade wars” are largely political and symbolic and just shift the benefits around. As far as economic sanctions are concerned——they are supposed to force countries to do what most of the world wants them to do. For example, Iran. What is right policy? Treat them like any other country? Let the have Nukes? Maybe. But I don’t think that would make sense.

    Vietnam was a mess—-for so,many reasons—-it could have been South Korea—-but we lost our way ——and when we did —-we got Pol Pot for our efforts. If we never went there it might have been better off——certainly how we implemented it could not have been worse.

    Cuba is not a good example on bad foreign policy. Castro was a stubborn mule. Don’t know what happens when Raul goes—-but this new guy (don’t even know his name—-because we never see him discussed) will soon be able to show his colors. It is so clear it is in Cuba’s interest to let itself be in our economic orbit. I know if they want to be, we will want it to.

    Re: nationalism. I sometimes think we get caught up in word tricks or games. As an example (you can assume Trump is a liar, but it still makes a point) when he gives his “America first speech” he usually brings up other countries should also be England First or Russia First. But he also adds that we can and should always do it peacefully and with agreements. It’s like one would think of Intel versus Microsoft, e.g. Forget, please, you think Trump is nuts—-the point is nationalism need not be what you say it is. In fact, America First still wants legal immigrants—-or should and can—-need not be “otherist”.

    Although I see your point.

  9. Gravatar of ssumner ssumner
    10. February 2020 at 09:13

    Ben, You said:

    “I disagree with Sumner on China trade policy. Even the IMF has advised the US move back towards balanced current-account trade.”

    You do realize that Trump’s policies are moving us further away from balanced trade? If not, you might want to check the data.

    mbka, Good example.

  10. Gravatar of Chris Chris
    10. February 2020 at 09:34

    For the record, I don’t really think that most of the mentioned conflicts were led by foreign policy experts. I think most experts prefer softer methods than military conflict.

    It seems like our military ventures are usually due to presidents consulting with military leaders and campaign staff. If it makes the president look good and there’s a credible threat (or one can be manufactured) then we go for the military route. Even if it’s not purely for the president’s gain, it tends to be in the name of our country appearing strong. This is why our conflicts in the last 50 years haven’t been based on winnable goals, because the actual goal was unrelated to the battle itself.

    Also, as someone already mentioned, America was dragged into WWII, which we avoided entering as long as was politically possible. I don’t think you can count that as a win in any way.

    Lastly, it’s interesting to see how much damage Trump and similar nationalists are, or are proposing, to cause, without even blowing things up. The Israel Palestine plan, abandonment of the Kurds, support for Saudia Arabia while turning a blind eye to its human rights abuses (even the murder of American journalists), tearing up the Iran Nuclear deal, and the China trade war are all incredibly dangerous moves, each of which directly endanger lives with little foreign policy rationale.

  11. Gravatar of Scott H. Scott H.
    10. February 2020 at 10:05

    So in order to make a point about our current odd China trade policy you need to throw the entire historical US foreign policy vector under the bus? At least list the more well known counterfactuals — the USSR, Communist China, Cambodia, North Korea, Cuba, the Shining Path, FARC, and now Venezuela.

  12. Gravatar of Bob Bob
    10. February 2020 at 10:38

    “The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent. Even when weapons of war are not actually destroyed, their manufacture is still a convenient way of expending labour power without producing anything that can be consumed. A Floating Fortress, for example, has locked up in it the labour that would build several hundred cargo-ships. Ultimately it is scrapped as obsolete, never having brought any material benefit to anybody, and with further enormous labours another Floating Fortress is built. In principle the war effort is always so planned as to eat up any surplus that might exist after meeting the bare needs of the population.” George Orwell, 1984

    And today we have another Federal budget that would cut healthcare and food support for the poor, while hiking the military budget.

  13. Gravatar of Charles Fox Charles Fox
    10. February 2020 at 15:18

    Two potential counter-arguments:

    1) When you pick the wrong line in the grocery store, you spend more time in it and are more likely to remember it than the times you picked the right line. Maybe sanctions last longer when they don’t work.

    2) There may be a deterrence effect on outside observers.

  14. Gravatar of Alex Mazur Alex Mazur
    10. February 2020 at 15:20

    Japan is a similar example in my opinion. Americn occupation probably lead to a lot of gains to the Japanese people and the wider world.

  15. Gravatar of Ray Lopez Ray Lopez
    10. February 2020 at 16:09

    Sigh. Here we go again, time for me to educate the professor (that just feels wrong, but that’s that).
    First, Sumner mixes analogies with “free trade” and “a just war”. Second, Sumner ignores that the USA is largely a monopsonist, and China will dance to the USA’s tune when it comes to tradeable goods. Finally, Sumner ignores that in free trade, ‘bilateral’ free trade (aka “fair trade”) is better (for both China and the USA) than ‘unilateral’ free trade (aka the USA importing everybody else’s goods but not exporting, and running a persistent trade deficit). How to reach “fair trade”? Textbook game theory (graduate level) says you must threaten a trade war, and hope the other side (here, China) does not retaliate. Since the USA is a monopsonist, that’s easy to do. If the USA and China were equals, trying to get fair trade via threats of a trade war could be stupid and backfire. But China is not the USA’s equal, so the Trump/Lighthizer hardball strategy is working, as expected, and as I predicted to a famous economist (not Sumner) by email when it all started in 2018.

  16. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2020 at 16:35

    Scott Sumner—

    I do not know why you think that the US trade deficit is still growing.


    Economy & Politics
    Economic Report

    U.S. trade deficit falls in 2019 for first time in six years as China tariffs reduce imports

    By Jeffry Bartash

    Published: Feb 5, 2020 9:52 a.m. ET

    The U.S. trade deficit surged in the final month of 2019 after the U.S. and China struck an interim deal to ease trade tensions.

    The numbers: The trade deficit fell slightly in 2019 to mark the first decline in six years, mostly reflecting U.S. tariffs on Chinese goods that reduced the flow of imports from the Asian giant.

    The U.S. deficit slipped 1.7% to $617 billion last year from almost $628 billion in 2018. Last year’s trade gap was the highest in a decade.”


    The US dollar has appreciated against the global market basket of currencies by about 20% to 25% since 2008. So anyone wishing to balance the US current account trade deficit is fighting a headwind.

    We will see if mainland China actually buys more US goods and product in the next two years.

    My own view is that there is so much state capitalism, or subsidized industry, in the Far East and Europe that the US is justified in permanent tariffs of about 20% to 25% on imports from those regions.

    David Ricardo explicitly stated that capital mobility between nations would undermine his theory of comparative advantage. Ricardo, of course, also never anticipated state capitalism or state subsidies of industry. In the modern world, there is no such thing as “free,” “fair,” or “foul” trade. There is only international trade, too complicated and mixed to be defined.

    Each nation must determine how to participate in international trade on terms most beneficial to its population.

    I am concerned about the effects of globalization on increased income stratification, inside and outside of the United States.

    Perhaps we can posit that multinationals are far more interested in regime stability than democracy, and have fiduciary obligations to shareholders that properly trump all other concerns.

  17. Gravatar of Christian List Christian List
    10. February 2020 at 17:09


    How do you define intervention? Own soldiers on the ground? Cruise missiles? Sending simple supplies? What is an intervention and what is not? Your defintion in mind seems rather arbitrary, most likely because it is just that: completely arbitrary.

    For example, U.S. intervention in World War II began long before Pearl Harbor.

    This is the old debate between interventionists and non-interventionists. One side will enumerate their wars, the other side will say: World War II. And so it goes round and round, always in a circle with no visible result.

    The really interesting questions are: Why did it work in World War II? Why did it work in Korea? But why didn’t it work in other wars? Now THOSE are the really interesting questions, but you aren’t even asking the interesting questions.

    On a side note:
    Ray Lopez is back, and so far I’m already lovin’ it. He is so sassy and smug, but in a friendly and entertaining way.

  18. Gravatar of Christian List Christian List
    10. February 2020 at 17:28

    @Charles Fox

    When you pick the wrong line in the grocery store, you spend more time in it and are more likely to remember it than the times you picked the right line.

    You’re on to something here. The Yugoslav Wars are also completely “forgotten”. It doesn’t fit into the narrative of the non-interventionists, so they don’t really talk about it.

    They usually remember WW2, if one is really lucky. And then it usally goes like this: “Korea? Did something happen in Korea? Yugoslavia? I’m sorry, I can’t really remember.”

    If you are particularly good at this (and if you are Austrian), then you can even get the Nobel Prize in Literature.

  19. Gravatar of ssumner ssumner
    10. February 2020 at 19:02

    Everyone, I suggest reading the post before commenting. I mentioned WWII, and even explained why.

    Christian, Yes, I’ll sure you’ll like Ray. Check out his brilliant comments on the previous post.

    Ben, You said:

    “I do not know why you think that the US trade deficit is still growing.”

    Maybe because I actually know what is going on. You might try looking beyond the newspapers.

  20. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2020 at 20:02

    “Ben, You said:

    “I do not know why you think that the US trade deficit is still growing.”

    Maybe because I actually know what is going on. You might try looking beyond the newspapers.”–Scott Sumner

    Okay, I am all ears (well, eyes).

    Point me in the right direction. Give me a link and I will read it.

    BTW, the federal budget deficit is animal far beyond Trump, a creature of regional, state, interest-group and party politics and the Congress, much more so than a document of the White House.

    Side note: John Cochrane is posting increasingly complex blogs on how fiscal deficits determine inflation.

  21. Gravatar of P Burgos P Burgos
    11. February 2020 at 04:38

    Perhaps this isn’t true, but maybe this talk is a return to the “Bombs over Baghdad” approach to foreign policy of the 90’s? That song’s reference really aged quickly. Yes, there were devastating sanctions, but in part that seems to be because Sadam wanted people to think he had a chemical and/or nuclear weapons program even when his regime didn’t.

  22. Gravatar of P Burgos P Burgos
    11. February 2020 at 04:47

    Also, in most (all?) of those examples, the justifications were not nationalists ones, but internationalist ones. The justification wasn’t to help Americans, but to help foreigners. I suspect that few people think that they will personally benefit from their nation waging a war, which is probably why few people try justifying wars on those grounds.

  23. Gravatar of Packard Day Packard Day
    11. February 2020 at 07:08

    Re: The value of international expert forecasting (i.e. CIA, DIA, US State Department, FBI, NSA, former Republican Neocons, & Washington DC Think Tanks).

    Given their seventy year history of consistently wrong international forecasting, I would sooner trust the judgment of a drunken orangutan flipping a dishonest coin than I would the likes of any US intelligence agency or so called international experts. Yes friends, they are that unreliable.

    On their best days, they are all only slightly better than useless in their predictions. Worse still, when they are actively working to thwart a duly elected POTUS (e.g. JFK and his CIA Director, Allen Dulles or Donald Trump and his FBI Director, Jim Comey), the seditious mischief they can cause is beyond estimation.

    Winston Churchill was right when he wrote that “experts should always be on tap, but never on top.” God save us all from so many of these overpaid, Ivy League educated idiots.

    [See also: Bay of Pigs fiasco, Gulf on Tonkin incident, complete inability to anticipate the 1988 fall of the Berlin Wall, wildly optimistic economic predictions for the USSR as late as 1988, utter blindness for Islamic terrorism, Weapons of Mass Distruction in Iraq, Libya, abysmal Afghanistani intelligence, Ukraine, Chinese expansion, Pakistani double dealing, Venezuela, etc.]

  24. Gravatar of Brent Buckner Brent Buckner
    11. February 2020 at 07:40

    @Benjamin Cole, @Scott Sumner

    I suppose whether or not one considers the US trade deficit to be growing or shrinking depends upon one’s starting date:

  25. Gravatar of Brian Donohue Brian Donohue
    11. February 2020 at 12:02

    Fed Chair Powell today:

    “This low interest rate environment may limit the ability of central banks to reduce policy interest rates enough to support the economy during a downturn,” he said.


  26. Gravatar of ssumner ssumner
    11. February 2020 at 12:26

    Brent, The deficit was $503 billion in 2016 and $628 billion in 2018 and $617 billion in 2019. I’d say that’s getting worse. If Trump wants to claim improvement, that’s his right.

    Brian, Did he also point out that there are other methods beside “reducing interest rates.”

  27. Gravatar of Brian Donohue Brian Donohue
    11. February 2020 at 12:43

    No, but he did muse about negative interest rates, which is like a mechanic wondering aloud about what might happen if he forgot to tighten the lug nuts.

  28. Gravatar of Misha Misha
    16. February 2020 at 21:19

    Korean War probably a Vietnam counterbalance….seems worth it given where South Korea is today vs NK….

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