Cheap at the Price: A Libertarian Theory of Regime Change

A story from the Washington Post by DeYoung and Abramowitz (9/27/07), contains this tidbit that caught my eye:

Less than a month before the U.S. invasion of Iraq, Saddam Hussein signaled that he was willing to go into exile as long as he could take with him $1 billion and information on weapons of mass destruction, according to a report of a Feb. 22, 2003, meeting between President Bush  and his Spanish counterpart published by a Spanish newspaper yesterday.

The meeting at Bush’s Texas ranch was a planning session for a final diplomatic push at the United Nations. The White House was preparing to introduce a tough new Security Council resolution to pressure Hussein, but most council members saw it as a ploy to gain their authorization for war.

Spain’s prime minister at the time, Jose Maria Aznar, expressed hope that war might be avoided — or at least supported by a U.N. majority — and Bush said that outcome would be “the best solution for us” and “would also save us $50 billion,” referring to the initial U.S. estimate of what the Iraq war would cost. But Bush made it clear in the meeting that he expected to “be in Baghdad at the end of March.”

I want to make an argument about how we should have gone about regime change in Iraq. I argue that we should have credibly offered Saddam Hussein to accept cash and exile in return for regime change (the rest of the story seems to indicate President Bush was never serious about the offer). Even a relatively expensive bribe ($1 billion-$10 billion) would have enabled a transfer of power far less bloody and expensive in human and fiscal terms than the war that President Bush initiated.  Using cost-benefit analysis, that conclusion seems obvious to me; even a pure fiscal comparison between the current costs of the Iraq conflict (a little over $702 billion at present according to would have indicated the relative merits of an exile deal.

This subject is an underexplored subject in the literature as far as I know. An SSRN search came up with two working papers that I thought were immediately relevant, both taking a stance on the option of offering exile to Saddam for regime change. The first paper, by Michael Scharf at Case Western in 2006, notes particularly that:

Admittedly, thousands of lives could have been spared if Hussein had accepted the deal. But at the risk of being accused of blindly embracing Kant’s prescription that “justice must be done even should the heavens fall,” this Article argues that it was inappropriate for the Bush Administration even to make the offer, and that if implemented the exile-for-peace deal would have seriously undermined the Geneva Conventions and the Genocide Convention, which require prosecution of alleged offenders without exception.

The second article, by Leila Sadat of Washington University in 2006, agrees, noting:

Second, this Article challenges the conventional wisdom that “swapping justice for peace” is morally and practically acceptable. Instead, I argue that international negotiators offering exile are neither morally nor legally justified in doing so. Indeed, although it is beguiling to imagine that offering exile to Saddam Hussein would save thousands of lives, or that the Lord’s Resistance Army of Uganda would have laid down its weapons in return for automatic immunity, the evidence suggests the contrary: that warlords and political leaders capable of committing human rights atrocities are not deterred by the amnesties obtained, but emboldened. As will be discussed below, the cases of Sierra Leone, the Former Yugoslavia, and Haiti suggest that amnesties for top-level perpetrators imposed from above or negotiated at gunpoint do not lead to the establishment of peace – but at best create a temporary lull in the fighting. Indeed, amnesty deals typically foster a culture of impunity in which violence becomes the norm, rather than the exception.

I find both statements rather, well, wrong. I think it’s true Scharf and Sadat woefully underestimate the real costs of war; Scharf says “thousands of lives could have been spared” with Saddam in exile and Sadat says those who offered exile are neither “morally or legally justified in doing so”. I don’t think that either scholar evaluated the true impact of not exiling Saddam; Scharf notes the value of robustly enforcing international legal conventions like the Geneva conventions, ignoring the possibility that a pre-emptive war against Iraq would almost certainly involve greater circumventions of the Geneva conventions than exiling Saddam. Indeed, this turned out to be the case, as many well-documented cases of extra-legal rendition, torture, and violations of civil liberties turned out to be the modus operandi of the organization (President  Bush’s administration) prosecuting the war. Sadat’s article talks about the morality of exiling criminals, but portrays this debate in a vacuum that does not include the costs of war and forced regime change.

I do have the sense that offering amnesty or exile to those in nations where institutions are extremely unstable ( particularly those in Africa) may not be a good idea for practical reasons and also that there is a very real difference between offering amnesty and offering exile. In any case I think there are clear differences between the offering of amnesty or exile to African warlords than to Middle Eastern dictators and that both Scharf and Sadat never really articulate clear reasons why clearly different scenarios are functionally the same (I understand that this is not a completely clear statement and that I haven’t come close to establishing the basis under which I think it is true but that’ll come soon as I progress in this direction).

But I digress. Let’s start from another angle. The difference between the cost of exiling Saddam and the nominal fiscal current cost of the war is staggering, about $701 billion. Even if you are very generous about estimating the cost of getting Saddam’s organization into exile and assume a tenfold increase ($10 billion) the answer is still obvious. Even with an absurdly expensive transition involving substantial amounts of US troops providing security while Iraqis were able to organize elections and start the process of governmental change, we can presume that war still looks like an unattractive option. If we expand our notion of the fiscal cost of war to account for the casualties of the war and the internal conflict that followed (roughly 5,000 coalition members and roughly 100,000 civilian casualties), the comparison is bleakly compelling.

What is the cost of a human life? If that question sounds like evidence that economics is a bleak, amoral science, rephrase the question. What is the value of preventing a human fatality? The US Department of Transportation uses the estimate $5.8 million as the basis for its cost analyses, and also runs the analyses for the higher estimate of $8.4 million. Using $5.8 million as the value for preventing the average human fatality, a rough estimate of the cost of the Iraq war is now

Fiscal Cost ($702 billion) + human cost ($5.8 million x 105,000=$609 billion) = $1.311 trillion

Using the higher value, $8.4 million, the cost of the Iraq war is $1.584 trillion.

Note, furthermore, that the cost estimates here don’t even begin to incorporate other large scale costs associated with the war, like foregone GDP growth, or the implicit costs of the damage done to the US’s status. At this point I really am beating a dead horse with a rather large club, so I’ll move on and save my energy for the seals.

What is the opportunity cost of the Iraq war? What alternative policy options could we come up with for equal to or less than $1.3-1.5 trillion dollars that would leave us better off? The sheer magnitude of the difference between the explicit initial costs of exile vs. the explicit initial costs of invasion would seem to be worth it; even if Iraq devolved rapidly post-Saddam and we still committed the same fiscal resources post-Saddam to the country we still save on the cost of the invasion and are likely to have far fewer civilian casualties.

There is the argument to morality that says we should punish the evil. What this analysis is designed to give is the sense that sometimes the costs of punishing the evil are too high. It is easy to see the evil that Saddam Hussein perpetrated throughout his career (some of it with US backing), but what is less easy to see are the thousands and millions of evils that perpetrate in the aftermath of a war. From the circumvention of international legal conventions on war and human rights, to the blatant corruption and crime that followed as the US gave contracts to private contractors operating as if they were their own law, to the warlords that sought to tear Iraq apart using their own militias, to the million small crimes against children and women and the weak that happen in the absence of law and order, the aggregate evils that flourish in the aftermath of war far outweigh the  singular qualms that we have in sending an accomplished elderly dictator into comfortable exile.

Of course, exile for such a person would never truly be comfortable. Even on the most remote island, Saddam in exile would fear for his life; one does not rule a nation with an iron fist for decades and not make the kind of implacable enemies that would seek extra-legal justice at any cost.

Some make the argument that we don’t want to incentivize dictatorship by paying off current dictators. In a world where the steady-state path seems to be towards liberal democratic governments and we only buy off the dictators in nations where the institutional facilities exist to make a successful transition of power viable, nations transition ineluctably towards democracy and dictators become an endangered species. If we relax these constraints and try to buy off dictators in countries at the margin of institutional continuity and anarchy, this strategy still works if we are able to facilitate the rapid creation of those institutions by stimulating economic growth and increasing the education level of the population.

Note that though I describe the heft of this argument as libertarian (the outcome I describe is achievable solely through voluntary trade and all parties are better off) liberals and conservatives should find much to like about this argument. First, I think liberals would like the argument that wars of these kinds (superpowers vs. marginal third world countries) are outmoded and needlessly wasteful and allow precisely those kinds of government encroachment into rights and liberties that democracies are designed to ameliorate. I think conservatives would like the idea that America can buy peace and profit from it. I think those among us with common sense would like the idea that we can pursue an aggressive foreign policy that doesn’t treat Islam as an enemy and spreads the notions of economic liberty and freedom. The Western victory happens when we get people of different beliefs to understand the idea that differences in religion and belief don’t matter as much as the freedoms and liberties that allow us to pursue wealth and prosperity.

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2 thoughts on “Cheap at the Price: A Libertarian Theory of Regime Change

  1. Social comments and analytics for this post…

    This post was mentioned on Twitter by eapenthampy: New Blog Post: Cheap at the Price: A Libertarian Theory of Regime Change, #Iraq #libertarianism #war…

  2. hhandy says:

    This is a very exemplary and reasoned approach to the way politicians could make the world a better place, instead of jumping at an opportunity to show off that we are the “superpower” we pretend to be. The Iraq invasion was unconscionable. It is a moot point whether human nature will ever change so that a dominant power will not seize a perceived opportunity, even though it may be foolhardy. Are we empire builders like the Romans?

    Politics aside, I am flattered that a reference was made to a posting of my own blog at it may be relevant to the very reasoned approach I find in this posting. The reference was to my posting, New Handy Market Theory” Superior to “Candlestick Theory.” The stock market is a game, just like war is a game. The difference may be that Corporations can issue stock in a legitimate free enterprise way of benefitting society.

    Briefly, the stock market game must bear some of the responsibilty for the ensuing economic crisis, the results of which we are still grappling. Rampant speculation, credit default swaps, collateral mortgage corrupt deals, you name it, got us into the mess we are in now. My innovative stock market theory seeks to level the playing field so that order can be brought to a chaotic market.

    When you think of it, game theory may be the “name of the game.” My philosophy and purpose is to show that through mathematics we may achieve a scientific accuracy to enable the ordinary man, or even nations, to recoup much of money lost through not following the fair rules that we have a right to expect. “What’s done,” so now we have to begin to compensate for mistakes made. (from war and finance).

    Respectfully, Herb Handy, author of “The Handy Market Theory”

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