The Washington Post reports the Obama administration has revised its Afghan war strategy to include “more energetic efforts to persuade” Afghanistan’s neighbors—including India, China, and the Central Asian republics—to “support a political resolution.” Just yesterday, the New York Times reported that the administration was also relying on Pakistan’s Inter-Services Intelligence spy agency “to help organize and kick-start reconciliation talks aimed at ending the war in Afghanistan.”

This is good news, but also déjà vu. The administration called for “pursuing greater regional diplomacy” back in 2009. It also said it would ask “all countries who have a stake in the future of this critical region to do their part.” Countries in the region do have a stake in Afghanistan’s future; America, however, has few effective instruments for submerging the differences among competing powers.

Take our relationship with Iran. It has made significant inroads with Afghanistan’s Hazara and Tajik communities and is well-positioned to be a key player in the region. But Tehran and Washington seem neither close to engaging in direct talks nor willing to make reciprocal concessions for the cause of furthering peace. The irony is that after 9/11, American and Iranian interests initially converged in Afghanistan: Tehran cooperated with Washington to overthrow the Taliban regime, and during the Bonn negotiations helped broker a compromise between President Karzai and the Northern Alliance.

America’s complicated relationship with Iran is one reason why what U.S. officials perceive to be in America’s best interests may not be synonymous with the pursuit of peace. Isolating Iran, or even Pakistan for that matter, will hurt the substance of negotiations, increase the incentive for these countries to sabotage peace, and hinder Washington’s ability to shape a coherent regional strategy. Even if Washington were to engage Tehran and Islamabad, they may very well decide to protract the bargaining process to convey that time is on their side (it is). One reason why the administration’s 2009 effort may have faltered was that Pakistan—a major player in Afghanistan’s internal affairs (to the consternation of many Afghans)—has come to feel that it can manage the terms of reconciliation. In fact, it is this belief that tempers Pakistan’s eagerness to be more accommodating toward the United States, which is why the case for American humility is key when it comes to the subject of negotiations.

Peace will not be perfect. Problems will rise when competing interests collide on certain core issues. Nevertheless, all parties must be sufficiently dedicated to reaching a consensus on what constitutes a manageable settlement. After all, some countries will seek to stymie their enemy’s provision of assistance to Kabul (i.e. Pakistan vis-à-vis India). Getting these countries to think otherwise will necessitate a shift in said country’s perceptions of others’ intentions.

As I wrote last week, U.S. officials understand the enormity of problems they confront in this vexing region. Proponents of peace are not blind to these difficulties. Unfortunately, much like the current nation-building effort, when it comes to regional engagement, U.S. officials could be making yet another ambitious commitment that is beyond their ability to carry out.

Cross-posted from The Skeptics at the National Interest.

One would like to say: whatever is going to seem right to me is right. And that only means that here we can’t talk about ‘right.’ — Ludwig Wittgenstein, Philosophical Investigations §258

Among the arguments for which the great 20th century philosopher Ludwig Wittgenstein is famous, perhaps the best known—and most controversial—is his argument for the impossibility of a truly “private language.” Since Wittgenstein’s own language was, if not quite “private,” notoriously opaque, it’s a matter of some controversy exactly what the argument is, but here’s a very crude summary of one common interpretation:

Language is, by it’s nature, a rule-governed enterprise. Under normal circumstances, for instance, I use words correctly when I say “there’s a yellow school bus outside,” just in case there is a yellow school bus outside. If, instead, there’s a blue Prius, then I may be lying, or trying to make some sort of signally unfunny joke, or confused about either the facts or about what words mean—but I am, one way or another, using the words “incorrectly.” And indeed, the only way words like “yellow” and “school bus” can have any specific meaning is if they’re correctly applied to some things, but not to others.

Now suppose I decide to invent my own private language, meant to describe my own internal sensations and mental states, maybe for the purpose of recording them in a personal diary. On the first day, I experience a particular sensation I decide to call “S,” and record in my diary: “Today I felt S.” As time passes, on some days I write S to describe my private sensations, and on other days maybe I come up with different labels—maybe T, U, and V. This certainly looks like a private language, but there’s a problem: each time I write down “S,” the idea is suppose to be that I’m recording that I had the same sensation I had the first day—S—and not T, U, or V. But what’s the criteria for “the same”? What makes it true that my sensation on day 27 really is “more like” the sensation S that I had on day 1, and not V, which I first had on day 16? How do I know that this new sensation is really an S and not a V? (Say S was an itch in my hand; will I be correct to use S to refer to an itch in my shoulder? Or a pain in my hand? Or for that matter a pain in my shoulder?) The only criterion is that it seems or feels that way to me. But in that case, I’m not really engaged in a rule-governed language system at all, because in effect S applies to whatever I decide it does. Since I can never really be wrong, it doesn’t really make sense to say I’m ever right in my use either. Since the terms are truly private, there’s no difference between “correctly applying S” and “specifying in greater detail what S means.” What looked like a “private language” was actually just a kind of pantomime of a true, rule-governed language.

I found myself thinking of Wittgenstein and his private language argument, oddly enough, when thinking about the various forms of “secret law” and “secret legal interpretations” that increasingly govern our endless War on Terror. Consider, for instance, the secret legal memorandum justifying the assassination of Anwar al-Awlaki, discussed in an October 8 New York Times piece:

The legal analysis, in essence, concluded that Mr. Awlaki could be legally killed, if it was not feasible to capture him, because intelligence agencies said he was taking part in the war between the United States and Al Qaeda and posed a significant threat to Americans, as well as because Yemeni authorities were unable or unwilling to stop him.

Whether or not one agrees with the substantive principle articulated here, this at least sounds like a real rule limiting the discretion of the executive. Except…who decides when a capture is “not feasible” (as opposed to merely risky, costly, or inconvenient)? The same executive who is meant to apply and be bound by the rule. Who determines when the threat posed by a citizen is “significant” enough to permit targeting? Again, the executive.

This is not, one might object, a wholly “private” interpretive problem, because the Office of Legal Counsel provides some kind of quasi-independent check: it will occasionally tell even a president that what he wants to do isn’t legal. But in that case, the president can simply do what Barack Obama did in the case of his intervention in Libya: keep asking different legal advisers until one of them gives you the answer you want, then decide that the more favorable opinion overrides whatever OLC had concluded.

Similar considerations apply to the “secret law” of surveillance. The FBI may issue National Security Letters for certain specific types of records—including “toll billing records”—without judicial approval, but these secret demands must at least be “relevant to an authorized investigation.” A weak limit, we might think, but at least a limit. Yet, again, the apparent limitation is illusory: it is the Justice Department itself that determines what may count as an “authorized investigation.” When Congress initially passed the Patriot Act a decade ago, an “authorized investigation” meant a “full investigation” predicated on some kind of real evidence of wrongdoing. Just a few years later, though, the attorney general’s guidelines were changed to permit their use in much more speculative “preliminary investigations,” and soon enough, the majority of NSLs were being used in such preliminary investigations. Needless to say, “relevance” too is very much in the eye of the beholder.

In most of these cases, the prospects for external limitation are slim. First, of course, anyone who disagreed with the executive’s secret interpretation would have to find out about it—which may happen only years after the fact in whatever unknowable percentage of cases it ever happens at all. Then they’d have to overcome the extraordinary deference of our court system to assertions of the State Secrets Privilege just to be able to have a court consider whether the government had acted illegally. In practice, then, the executive is defining the terms of, and interpreting, the same rules that supposedly bind it.

The usual thing to say about this scenario is that it shows the importance of checks and balances in preventing the law from being perverted or abused. If we think there is at least a rough analogy between these cases and Wittgenstein’s diarist writing in a “private language,” though, we’ll see that this doesn’t go quite far enough. What we should say, rather, is that these are cases where “secret law,” like “private language” is not merely practically dangerous but conceptually incoherent. They are not genuine cases of “legal interpretation” at all, but only a kind of pantomime. Perhaps what we should say in these cases is not that the president or the executive branch may have violated the law—as though there were still, in general, some background binding principles—but that in these institutional contexts one simply cannot speak of actions as “in accordance with” or “contrary to” the law at all. Where the possibility of external correction is foreclosed, the objectionable and unobjectionable decisions alike are, inherently, lawless.

An amendment to a Senate appropriations bill introduced by Sen. Tom Coburn (R‑OK) that would have reduced funding for rural development subsidies at the Department of Agriculture by $1 billion was easily voted down today. Only 13 Republicans voted to cut the program. Thirty-two Republicans joined all Democrats in voting to spare it, including minority leader Mitch McConnell (R‑KY), ranking budget committee member Jeff Sessions (R‑AL), and tea party favorite Marco Rubio (R‑FL).

This was a business-as-usual vote that will receive virtually no media attention. However, it is a vote that symbolizes just how unserious most policymakers are when it comes to making specific spending cuts. That’s to be expected with the Democrats. On the other hand, Republicans generally talk a good game about the need to cut spending and they rarely miss an opportunity to criticize the Obama administration for its reckless profligacy. Republicans instead fall back on their support of a Balanced Budget Amendment and other reforms like biennial budgeting.

I think most Republicans are in favor of a BBA because they believe it gets them off the hook of having to name exactly what they’d cut. There are several reasons why Republican policymakers won’t get specific: 1) they really don’t want to cut spending; 2) they’re afraid of cheesing off special interests and constituents who benefit from government programs; 3) they’re more concerned with being in power and getting reelected; 4) they’re just plain ignorant of, or disinterested in, the particulars of government programs.

As for biennial budgeting, Republicans would have us believe that appropriating money every other year will give policymakers more time to conduct oversight of government programs. I think it’s another cop-out. Coburn’s office put out plenty of information on the problems associated with USDA rural development subsidies (see here). A Cato essay on rural development subsidies provides more information, including findings from the Government Accountability Office that are readily available to policymakers.

(Note: I worked for both Jeff Sessions and Tom Coburn.)

Bill Niskanen did most of his thinking and analysis on paper, in his many books and articles. He didn’t seek out television appearances, though he certainly made a few during his years with Cato. But one television appearance stands out in my mind, when he debated Rep. Richard Gephardt on PBS’s NewsHour about Gephardt’s bill that would have required economic retaliation against countries that have huge trade surpluses with the United States. Alas, I can’t find the exact date for this pre-Internet appearance — possibly 1988, when Gephardt ran for president and made protectionism a big part of his campaign — and I have only a clip of one of Bill’s answers. But it confirms the “Blunt Libertarian Economist” headline that the New York Times used on its obituary:

I first met Bill when I went to the Council of Economic Advisers in mid-1982. Bill had come to the CEA in the spring of 1981 as one of the early appointees of the incoming Reagan administration. He had known the president and worked with him when he was governor of California.

Bill and I quickly became good friends. Whenever we were both in Washington, we would usually start the day with 20 minutes of chewing over what was going on in the economy and in public policy. Part of the bond that developed between us was a consequence of the unrelenting infighting within the administration. The infighting sometimes involved the CEA but Bill and I, most of the time, were able to stand clear and remain in neutral territory.

Of course, Bill understood how bureaucracies work, or failed to work, from both his research and his experience at Rand, Ford, OMB and, yes, at UCLA and Berkeley. His insights were a staple of our conversations both at the CEA and later. Very few scholars have such first-hand experience in these various sectors of the economy. That fact often shows in the work of academics who have policy ideas that are simply untenable in the context of how organizations and the political system actually work.

A wonderful sense of humor lubricated Bill’s interactions with others. Well, most of the time anyway. During the administration’s work that culminated in the Tax Reform Act of 1986, Bill cracked along the way that the Treasury proposal was one that Walter Mondale would be proud of. I had left the CEA and returned to Brown University by that time, but Bill’s crack so angered Treasury Secretary Don Regan (who was not renowned for a sense of humor) that Regan vetoed Bill’s path to become chairman of the CEA. He served as acting chairman for a short time and then joined Cato.

Bill was the most widely read person I have known. That, plus the breadth of his personal experience, made him a delightful conversationalist on almost any topic in almost any group.

Although it was a big loss to the Reagan administration for Bill to depart, it was a huge gain for Cato and for the nation for him to join Cato. His leadership there, working closely with Ed Crane, built Cato to what it is today—the premier libertarian think tank in the world. Bill’s scholarly work will influence future generations; so also, in equal or greater measure, will the Cato Institute that he helped to build.

I have sometimes wondered whether it is accurate to say that Republicans are the “Stupid Party.”

We’ll soon know the answer to that question. As part of the debt limit agreement, the politicians agreed to set up a “Supercommittee” comprised of six Republicans and six Democrats that was responsible for producing at least $1.2 trillion of supposed deficit reduction.

But the Democrats appointed a group of hardcore leftists to the Supercommittee, which means that it is virtually impossible to get the necessary seven votes for a good agreement. Indeed, the more relevant question is whether one or more of the Republicans surrenders to a big tax hike.

Fortunately, there is an alternative. The law says that there will be automatic spending reductions if the Supercommittee does not reach an agreement. The political establishment in Washington thinks that this outcome—known as sequestration—would be horrible.

They tell as that a sequester would mean “savage” and “draconian” budget cuts. The only “responsible” approach, we are told, is to go along with a tax increase.

This is hogwash. The automatic spending cuts are only “cuts” using Washington’s dishonest budget math. Here’s a chart showing how much spending will grow over the next 10 years, and the relatively tiny reduction in budgetary growth that will be caused if there is a sequester.

We’ve actually been down this path before. There was a small sequester back in the mid-1980s, shortly after the Gramm-Rudman-Hollings law was enacted. There was much wailing and gnashing of teeth, but the sequestration helped restrain the growth of spending and helped bring about a record amount of deficit reduction in 1987.

There was a similar (unsuccessful) fight in 1989. Here’s what then-Senator Bob Packwood of Oregon wrote in 1989.

…the sequester has become the focus of partisan debate . Each side accuses the other of being responsible for “deep and arbitrary” budget cuts . Some legislators say we should do whatever it takes to cancel the sequester, even if it means higher taxes. While a sequester is certainly not the ideal way to resolve this year’s budget dispute, there are reasons to believe that the fiscal discipline of a sequester is the medicine we need to cure the budget process. For all its drawbacks, a sequester is real deficit reduction . Instead of budget gimmicks, accounting tricks, phony cuts, and “revenue enhancements,” a sequester would reduce spending levels by a fixed percentage in eligible spending programs . In other words, unlike most deficit reduction packages, sequestration would actually reduce the deficit.

The only argument against a sequester, at least among conservatives, is that a sequester would impose too much of a burden on the defense budget. But I’ve already explained in this post that the defense budget will climb by about $100 billion under sequestration.

I don’t know whether Republicans are the stupid party, but I know they will be very stupid if they don’t take the sequester and declare victory.

There’s an interesting new NBER working paper out this week on the impacts of Fannie Mae and Freddie Mac on the mortgage market and the overall economy. I have to admit I’m still working through some of it (my matrix algebra is a little rusty).

To summarize the paper’s findings:

First, comparing stationary equilibria with and without the policy, a tax-financed interest rate subsidy of 40 basis points leads to a significant increase in mortgage origination, but has little effect on investment in housing assets or in the equilibrium construction of real estate. The mortgage subsidy does not significantly change the share of households with positive holdings of real estate, because on one hand the subsidy makes real estate ownership more attractive, but on the other hand the higher required taxes lower net of tax income and thus discourage homeownership for low-income and low-asset households. However, the subsidy does significantly affect the distribution of leverage in the economy by increasing both the fraction of households that have positive mortgage debt and the level of leverage. This suggests that the GSE’s may have led to over-investment in mortgages and excess household leverage, which may have exacerbated the response to the recent drop in house prices.

Using a steady state utilitarian social welfare functional we find that the aggregate welfare implications of the subsidy are negative, in the order of 0f 0.8% of consumption equivalent variation. However, since households are heterogeneous, there is disagreement over the desirability of the subsidy. Low-wealth households prefer to live in a world without the subsidy, whereas high wealth households prefer to live in a world with the subsidy. This can be explained by the fact that low-wealth households hold little or no housing, and thus do not benefit from the subsidy, as compared to high wealth households that have large homes and mortgages.

Of course you can always read the paper and decide for yourself. I didn’t need to work out all the equations to prove that Fannie and Freddie have been a massive regressive theft from all of us to a narrow segment of higher-income homeowners (and bankers).