Delusions of Grandeur

Chris Coyne

That is the title of a new working paper.  Here is he abstract:

This paper analyzes the political economy of the creeping militarization of U.S. foreign policy. The core argument is that in integrating the “3Ds”—defense, development, and diplomacy—policymakers have assigned responsibilities to military personnel which go well beyond their comparative advantage, requiring them to become social engineers tasked with constructing entire societies. Evidence from The U.S. Army Stability Operations Field Manual is presented to illustrate these excessive ambitions, and the tools of political economy are used to analyze some of the implications.

I will be presenting the paper on a panel on foreign policy at this year's APEE conference.  David Henderson and Bob Higgs will be co-panelists.

Comments

[Jerry O'Driscoll]

Just a quick read, but once again I admire how Chris integrates foreign policy and defense analysis with Austrian economics. In my 4 years at Heritage, I was lodged in the Foreign Policy department. I understand how difficult his task is.

A question to Chris: Is not the moral hazard and adverse-selection problems you identify one-and-the same principal/agent problem? It struck me as such.

[Peter G. Klein]

Chris, you might find Joel Baum and Anita McGahan's work on private military companies useful, e.g.:

http://ssrn.com/abstract=1496498

[Chris Coyne]

Jerry,
Thanks for the kind words.

Regarding the adverse selection and moral hazard problems – I view the former as being an ex ante problem and the latter being an ex post problem. In the context I am writing, the adverse selection problem is that proponents of foreign interventions will tend to (ex ante) overstate the net benefits of the interventions. Principals know this and therefore will dedicate less than the optimal amount of resources necessary to accomplish the task. After resources have been committed (ex post) those that control the resources will have an incentive to shirk due to imperfect monitoring.

Upon rereading the paper, I need to go back and make this clear. Thanks for raising this point.

Peter,
Thank you for bringing the Baum and McGahan paper to my attention. It looks very relevant.

Chris

[Kyle]

I too like the way Chris marries foreign policy analysis to Austrian econ.

Better than all that pirate crap.