Hoover Digest, 2015, No. 1, Winter

8/10/2019 Hoover Digest, 2015, No. 1, Winter

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T H E H O O V E R I N S T I T U T I O N S T A N F O R D U N I V E R S I T Y


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TheHoover Institution on War, Revolution and Peacewas established at Stanford Universi-

ty in 1919 by Herbert Hoover, a member of Stanfords pioneer graduating class of 1895 and the

thirty-first president of the United States. Created as a library and repository of documents,

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By collecting knowledge and generating ideas, the Hoover Institution seeks to improve the hu-

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T H E H O O V E R I N S T I T U T I O N

S TA N F O R D U N I V E R S I T Y

HOOVER DIGESTRESEARCH + OPINION ON PUBLIC POLICY

WINTER 2015 HOOVERDIGEST.ORG


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TheHoover Digestexplores politics, economics, and history, guided by the

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center at Stanford University.

The opinions expressed in theHoover Digestare those of the authors and

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ON THE COVER

This poster is a scene of frozen action

and an admonition of its time. Cars inthe 1930s were getting faster, roads more

extensive, and national parks increasingly

popular. It was also a time of peoples

artuplifting yet practical messages

like this, paid for by the federal govern-

ment. This image was part of a torrent of

posters, sculptures, murals, and other art

produced in the Depression. America paid

thousands of artists to work but at the

same time argued over the role of public-

supported art. See story, page 178.

HOOVER DIGESTRESEARCH + OPINION ON PUBLIC POLICYWINTER 2015 HOOVERDIGEST.ORG

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HOOVER DIGEST WINTER 2015

THE ECONOMY

9 Sound Money, Sound PolicyThese are the keys to restoring the Fed . . . and our economy.

By John B. Taylor.

13 A Better Start for StartupsNew businesses drive productivityunless taxes and regula-

tion strangle them.By Lee E. Ohanian andEdward Prescott.

16 Ouija-Board Economics

Even the best economic forecasts just arent very good at pre-dicting growth, costs, or jobs.By Edward Paul Lazear.

INEQUALITY

19 The Problem with Equal PayA competitive labor market will make short work of pay gaps.

By Richard A. Epstein.

24 Not All Inequality Is EqualInequality does not equal stagnation. Even as differences in

income grow, entire nations may benefit.By Michael Spence.

Winter 2015HOOVER DIGEST


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ISLAMISM

28 The Enemy Is Not WaitingAmerica is engaged in a clash not only of arms but of ideas,

according to a man who understands both kinds of combat.By James Mattis.

36 Whitewashing the JihadistsThe US governments spin on Islamist violencethat the per-

petrators arent Muslimsis both condescending and wrong.

By Peter Berkowitz.

41 Omens from the Seventh CenturyThe early caliphate so idealized by Islamists was no golden

age, but a time of instability and violence.

By Edward N. Luttwak.

51 Reign of Terrorists

The self-proclaimed Islamic State might fail as a caliphate butsucceed in promoting international terrorism.

By Mark Moyar.

HEALTH CAR E

54 Take Care to InnovateHow ObamaCare threatens to ruin our leadership in research

and development.By Scott W. Atlas.


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REGULATION

57 Congress vs. CronyismUnelected agencies engage entirely too often in sheer

influence peddling. Congress can fix that.By Allan H. Meltzer.

CALIFORNIA

61 Expensivebut Worth It?California could be pricing itself right out of an economic

recovery.By Carson Bruno.

EDUCATION

65 Transforming Tomorrows SchoolsThe wheels of education reform grind exceedingly slow, but

they have ground out some progress. We need more.

By Chester E. Finn Jr.

69 Detention DysfunctionThe government wants to force a racial quota system onto

student punishment. This is an even worse idea than you

might suppose.By Michael J. Petrilli.

THE ENVIRONMENT

74 Climate Change RealismIf we cant stop climate change, can we adapt to it?

Lets find out.By Edward Paul Lazear.

79 The Fires Next TimeDrought, heat, bigger fires: forest management has to keep up.

By Terry L. Anderson andDaniel B. Botkin.


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FOREIGN POLICY

83 Hesitating, and LostThe Obama administration inherited a Pax Americanaa

stable and largely peaceful global orderand then threw itaway.By Richard A. Epstein.

FOREIGN AID

87 Paved with Good IntentionsWhen insurgents sabotage it, American foreign aid can actu-

ally make violence and poverty worse. Hoover fellow JosephFelter explains.By Clifton B. Parker.

WARFARE

92 From Drones to ZeppelinsConventional forces will always be relevant, while dazzling

new weaponry may quickly become obsolete.By Andrew

Roberts.

RUSSIA

98 Putin Is No PeacemakerThe United States should call out Putin for what he isand

make the world listen.By Yuri Yarim-Agaev.


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103 Fire PutinMemo to the Russian people: your great leader is actually a

great liability.By Paul R. Gregory.

CHINA

109 China RisingBut what is it rising toward, and how fast? For American

leaders, the uncertainty itself poses a challenge.

By Amy B. Zegart.

INTERVIEW

117 Endangering ProsperityWeve known for years that our schools are failing huge

numbers of students. Now, Hoover fellows Eric A. Hanushek

and Paul E. Peterson show how theyre failing the nation.

By Peter Robinson.

VALUES

126 An Officer and a PhilosopherThe late Hoover fellow Joseph McNamara was a most

remarkable thing: a visionary police chief.

By Tunku Varadarajan.

131 In Nobodys PocketPoorly paid politicians are easily corrupted. Offering them

a competitive salary could be a price worth paying.

By Thomas Sowell.

THE GREAT WAR CENTENNIAL

135 Are We Reliving 1914?There are disturbing parallelsand heartening differences.

By Niall Ferguson.


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141 The Afterlives of EmpiresWorld War I may have destroyed empires, but their internal

tensions lived on. Why todays little wars are the direct

descendants of the Great War.By Timothy Garton Ash.

145 Myths of the Great WarThe statesmen of 1914 knew how terrible the conflict would

bebut they marched all the same.By Mark Harrison.

HISTORY AND CULTURE

151 The Bill of WrongsVisitors to the National Archives, please check your reverence

at the door.By Andrew Ferguson.

156 Rocket ManMission Control played Tchaikovsky, the countdown ended,

and then the huge Soviet rocket composed its own last

movementa fireball. A Cold War weapons designer recalls a

darkly comic memory.By Vitaly Leonidovich Katayev.

163 The Quiet Sea?Calm may reign around the Mediterranean, but peace on

these historic shores is far from inevitable.

By Victor Davis Hanson.

HOOVER ARCHIVES

168 So Many Others Stood SilentJan Karski brought the Holocaust to the worlds attention and

fought to free Poland, his homeland. He also amassed histori-

cal treasure for the Hoover Archives.By Nicholas Siekierski.

178 On the Cover


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HOOVER DIGEST WINTER 2015 9

THE ECONOMY

Sound Money,Sound Policy

These are the keys to restoring

the Fed. . .and our economy.

By John B. Taylor

Sound money and free markets go hand in hand. In 1776, Adam

Smith wrote of the importance of rules for a well-regulated paper

money in The Wealth of Nations. In 1962, Milton Friedman made

the chapter Control of Money, with its rationale for monetary

rules, a centerpiece of Capitalism and Freedom. In the 1980s, British Prime

Minister Margaret Thatcher and President Ronald Reagan made sound-

money principles a key part of their market-based reform platforms.

The reason is clear: economic crises and slow economic growth, as in the

Great Depression of the 1930s and the great inflation of the 1970s, could be

traced to deviations from sound, rules-based monetary policy. That common-

sense finding still holds.

When monetary policy became more rules-based during the 1980s, 1990s,

and until recently, the economy improved and we got what economists call

the Great Moderation of strong economic growth with declining unemploy-

ment and inflation during those same years. When policy became more ad

hoc, interventionist, and discretionary during the past decade, the economy

John B. Taylor is the George P. Shultz Senior Fellow in Economics at the Hoover

Institution, the chair of Hoovers Working Group on Economic Policy and a mem-

ber of Hoovers Shultz-Stephenson Task Force on Energy Policy, and the Mary and

Robert Raymond Professor of Economics at Stanford University.


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deteriorated and we got a financial crisis, a Great Recession, and a not-so-

great recovery.

So as Americans begin to diagnose the poor economic performance of

recent years and look for remedies that rely more on markets, they are again

looking to monetary reform. A welcome example is the Federal Reserve

Accountability and Transparency Act, recently passed in the House and sent

to the Senate.

Its first main section, Requirements for Policy Rules for the Fed, would

require that the Federal Reserve submit to Congress and the American

people a rule or strategy for how the Feds policy instrument, such as the

federal-funds rate, would change in a systematic way in response to changes

in inflation, real GDP, or other inputs. The bill was the subject of a hearing

on Capitol Hill last summer, and Fed Chair Janet Yellen was asked about its

requirements during her testimony to the

Senate Banking Committee.

According to the legislation, the Fed, not

Congress, would choose the rule and how

to describe it. But if the Fed deviated from

its rule, then the chair of the Fed would

have to testify before the appropriatecongressional committees as to why the

[rule] is not in compliance. The rule would

have to be consistent with the setting of the actual federal-funds rate at the

time of the submission. The legislation also creates a transparent process for

accountability: the US comptroller general would be responsible for deter-

mining whether or not the Directive Policy Rule was in compliance with the

law and report its finding to Congress.

The legislation provides flexibility. It does not require that the Fed holdany instrument of policy fixed, but rather that it make adjustments in a

systematic and predictable way. It allows the Fed to serve as lender of last

resort or take appropriate actions to provide liquidity in a crisis. Moreover,

the legislation even allows for the Fed to change its rule or deviate from it if

the Fed policy makers decide that is necessary. As stated in the act: Noth-

ing in this Act shall be construed to require that the plans with respect to

the systematic quantitative adjustment of the Policy Instrument Target be

implemented if the Federal Open Market Committee determines that such

plans cannot or should not be achieved due to changing market conditions.

But upon determining that plans . . . cannot or should not be achieved, the

Economic crises and

slow growth can be

traced to deviations

from sound, rules-based

monetary policy.


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Federal Open Market Committee shall submit an explanation for that deter-

mination and an updated version of the Directive Policy Rule.

In the interests of clarity, the legislation also specifies a Reference Policy

Rule, to which the Fed must compare its policy rule. The Reference Policy

Rule, to quote from the legislation, means a calculation of the nominal Fed-

eral funds rate as equal to the sum of the following: (A) The rate of inflation

over the previous four quarters. (B) One-half of the percentage deviation of

the real GDP from an estimate of potential GDP. (C) One-half of the differ-

ence between the rate of inflation over the previous four quarters and two

[percent]. (D) Two [percent].

In monetary and financial circles this rule is known as the Taylor rule

because of a proposal I made in 1992, and researchers routinely compare any

policy rule they are considering to this rule. It is thus a straightforward task

for the Fed. Many at the Fed already

make such comparisons, including Fed

Chair Janet Yellen.

Some will object to the legislation,

including some at the Fed. But there

is nothing partisan about rules-based

monetary policy, and there is a clearprecedent for congressional oversight. The Federal Reserve Act previously

required that the Fed report the ranges for the future growth of the money

supply, but these requirements were removed from the law in 2000. The

proposed legislation fills that void.

Some will say that the legislation would destroy central-bank indepen-

dence. But since the Fed chooses its own rule, its independence is main-

tained. The purpose of the act is to prevent the damaging departures from

rules-based policy, which central-bank independence obviously has notprevented.

Based on writings, speeches, and publicly released transcripts of meet-

ings, we know that many at the Fed favor a more rules-based policy. Con-

structive comments from the Fed would undoubtedly improve the legislation,

but if it were passed into law as is, economic performance would improve

greatly.

The Federal Reserve Accountability and Transparency Act limits dis-

cretion and excessive intervention by our independent central bank, as

its name implies, in a transparent and accountable way. It thereby meets

Milton Friedmans goal of legislating rules for the conduct of monetary

Theres nothing partisan

about rules-based

monetary policy.


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Available from the Hoover Institution Press

is The Road Ahead for the Fed,

edited by John B. Taylor and John D. Ciorciari.To order, call 800.888.4741

or visit www.hooverpress.org.

policy that will have the effect of enabling the public to exercise control over

monetary policy through its political authorities, while at the same time . . .

prevent[ing] monetary policy from being subject to the day-by-day whim of

political authorities.

Reprinted by permission of the Wall Street Journal.

2014 Dow Jones & Co. All rights reserved.

H


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THE ECONOMY

A Better Startfor Startups

New businesses drive productivity

unless taxes and regulation strangle them.

By Lee E. Ohanian and Edward Prescott

In the first quarter of 2014, GDP in the United States plunged at a 2.9

percent annual rate, and productivitythe inflation-adjusted business

output per hour workeddeclined at a 3.5 percent annual rate. This

was the worst productivity statistic since 1990. And productivity since

2005 has declined by more than 8 percent relative to its long-run trend. This

means that business output is nearly $1 trillion less today than what it would

be had productivity continued to grow at its average rate of about 2.5 percent

per year.

Lagging productivity growth is an enormous problem because virtually

all the increase in Americans standard of living is made possible by rising

worker productivity. In our view, an important factor contributing to declin-

ing productivity growth is the large decline in the creation of new businesses.

The creation rate of new businesses, as well as new plants built by existing

firms, was about 30 percent lower in 2011 (the most recent year of data)

compared with the annual average rate for the 1980s. (The data are derived

Lee E. Ohanian, a senior fellow at the Hoover Institution, is a professor of eco-

nomics and director of the Robert Ettinger Family Program in MacroeconomicResearch at the University of California, Los Angeles.Edward Prescottis a pro-

fessor of economics and director of the Center for the Advanced Study in Economic

Efficiency at Arizona State University. He was awarded the Nobel Memorial Prize

in Economic Sciences in 2004.


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from the Census Bureaus Business Dynamic Statistics.) The decline affected

nearly all business sectors.

Virtually every state has suffered a drop in startups, which suggests that

this is a national, not a regional or state, problem. It may not be surprising thatstates hit hard by the recession, such as Arizona, California, and Nevada, have

a 25 percent to 35 percent lower rate of startups. But the startup rate in such

business-friendly states as Tennessee, Texas, and Utah is also down substan-

tially, and in some cases exceeds the declines in the states that suffered most

during the recession. Even North Dakota, which has benefited enormously

from oil and gas fracking, has a startup rate lower than in the 1980s.

These numbers are likely to underestimate the decline in new business

formation, because they do not count changes in the pace of new ideas and

new business activity in existing establishments. The fact that the economy

has been weak since 2007 suggests that new business activity has also

declined in existing companies.

New businesses are critical for the US economy to grow because a small

fraction of todays startups will become tomorrows economic heavyweights.

Most of todays workers are employed at older, established businesses, but the

country cannot rely on existing companies to boost the economy. Businesses

have a life cycle, in which even the largest and most successful reach a stage at

which they stop expanding.

If history is any indication, many of todays economic heavyweights will

ultimately decline as new businesses take their place. Research by the

PICK ME, PICK ME: Entrants in the LeWeb Startup Competition gatheron stage last October in Paris. Like such competitions elsewhere, LeWebpresents an opportunity for would-be entrepreneurs to vie for fundingand attention. [ Frederic de Villamil / LeWeb / Creative Commons]


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Kaufman Foundation shows that only about half of the 1995 Fortune 500

firms remained on the list in 2010.

Startups also have declined in high technology. John Haltiwanger of the

University of Maryland reports that there are fewer startups in high technol-

ogy and information-processing since 2000, as well as fewer high-growth

startupsannual employment growth of more than 25 percentacross all

sectors. Even more troubling is that the smaller number of high-growth

startups is not growing as quickly as in the past.

Surveys of small-business owners clearly indicate that changes in econom-

ic policy are required to reverse this trend. Chamber of Commerce surveys

show that roughly 80 percent of small-business owners believe that the US

economy is on the wrong track and that Washington is a major problem. Sur-

veys by John Dearie and Courtney Geduldig, authors of Where the Jobs Are:

Entrepreneurship and the Soul of the American Economy, show that entrepre-

neurs report being hamstrung by difficulties in finding skilled workers, by a

complex tax code that penalizes small business, by regulations that raise the

costs of doing business, and by difficulties in obtaining financing that have

worsened since 2008.

There are clear solutions to these problems. Immigration reform that

increases the pool of skilled workers and potential new entrepreneurs. Taxreform that reduces and equalizes marginal tax rates on capital income, includ-

ing reducing the corporate income tax, which currently exceeds 40 percent in

some states. Reforming Dodd-Frank to make it easier and cheaper for small

business to obtain loans. Reducing the regulatory burden on all businesses.

In the absence of these reforms, there is little reason to believe that the

depressed rate of new business creation will reverse itself. And if the trend

is not reversed, then the current shortfall of $1 trillion per year in lost output

due to lost productivity will continue.

Reprinted by permission of the Wall Street Journal.

2014 Dow Jones & Co. All rights reserved.

Available from the Hoover Institution Press is

Government Policies and the Delayed Economic

Recovery, edited by Lee E. Ohanian, John B. Taylor, andIan J. Wright. To order, call 800.888.4741 or visit www.

hooverpress.org.

H


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THE ECONOMY

Ouija-BoardEconomics

Even the best economic forecasts

just arent very good at

predicting growth, costs, or jobs.

By Edward Paul Lazear

Government economic forecasts receive a great deal of attention

and are used to make a case for or against legislation or public

policies. How good are the forecasts? The answer: not very. Fore-

casting is an inexact science at best, and the trust that Congress

and the public invest in these estimates is not warranted.

The Congressional Budget Office and a group simply known as Troika

the administrations Council of Economic Advisers, Office of Management

and Budget, and Treasury Departmentput out annual economic forecasts.

As chairman of the Council of Economic Advisers from 20069, I headed

Troika. The agencies are staffed by capable and cautious career economists

who do not claim that their forecasts are accurate, only that they are unbi-

ased. Unfortunately, these caveats often fall on deaf ears.

The CBO and administration (through Troika) put out annual forecasts

on economic variables including the gross domestic product, unemploy-

ment rates, inflation, and interest rates. Real GDP growth is perhaps most

Edward Paul Lazearis the Morris Arnold and Nona Jean Cox Senior Fellow at

the Hoover Institution, co-chair of Hoovers Conte Initiative on Immigration Re-

form, and the Jack Steele Parker Professor of Human Resources Management and

Economics at Stanford Universitys Graduate School of Business.


19/178


important for a variety of reasons, not the least of which is estimating how

economic growth will affect government revenues and program costs. Yet the

forecasting error by the CBO and the administration is very large.

My analysis of 19992013 reveals that the CBOs real GDP growth fore-

casts for the next year were off, on average, by 1.7 percentage points, either

too high or low. Administration forecasts were similarly off by a slightly

larger 1.8 percentage points on average, also too high or too low. Given that

the average growth rate during this period was only 2.1 percent, errors of this

magnitude are substantial.

Perhaps most damning: history is a better predictor of annual growth

than government forecasts. Simply assuming that GDP growth will be 3.1

percent in each yearthe average annual

rate for the thirty years that precede the

study periodresults in an average fore-

cast error of 1.5 percentage points.

Troika is associated with a presidential

administration, while the CBO is gener-

ally regarded as a nonpartisan agency

that serves Congress. The CBO estimates

might be the least political, and althoughthe CBO and Troika do not differ much in

their average forecast error, administra-

tion forecasts over the entire period studied tend to be higher by 0.7 percent-

age points than those of the CBO.

The CBO is also charged with estimating the costs of proposed legislation.

As with GDP, and despite its professionalism, the task is daunting and the

numbers should be read with caution. Large transfer programs and tax-

change legislation provide important examples.The food stamp program, which dates to 1939, became the Supplemental

Nutrition Assistance Program (SNAP) in 2008. In 2007, the CBO estimated

that in 2013 SNAP would cost under $40 billion. The actual cost was more

than $83 billion. The CBO failed to anticipate the effect of the severe reces-

sion. Yet even in 2009, during the recession, the CBO underestimated 2013

costs by more than 20 percent.

Sometimes the CBO overestimates cost. In 2003, the CBO estimated that

the new Medicare Part D program would cost around $100 billion by 2013;

actual spending was $50 billion. The CBO significantly overestimated how

many seniors would enroll and the market-based plans cost less than esti-

mated because of the competition that Part D enabled.

In 2007, the CBO

estimated that in

2013 the food stamp

program would cost

under $40 billion.

The actual cost?

More than $83 billion.


20/178


21/178


INEQUALITY

The Problemwith Equal PayA competitive labor market

will make short work of pay gaps.

By Richard A. Epstein

An event dubbed Equal Pay Day is meant to draw attention to how

a woman who works full time earns 77 cents for every dollar a

man earns, as President Obama has put it. Though a detailed

analysis (The Disappearing Gender Wage Gap, by the National

Center for Policy Analysis, June 2012) reveals that the claim of a systematic

pay gap is spurious, the president wants to enact reforms to decrease the so-

called inequality in the labor markets.

His political advisers clearly are calculating that his brand of economic

populism might help achieve two ends. First, it might divert attention from

the still-unpopular rollout of the Affordable Care Act. Second, it might rally

female voters around the Democrats by putting Republicans in the uncom-

fortable position of waging a war against women.

But a dubious economic agenda drives our populist president, whose plans

to further regulate the economy will harm the economic prospects of women

and men alike.

Richard A. Epsteinis the Peter and Kirsten Bedford Senior Fellow at the HooverInstitution and a member of the steering committee for Hoovers Working Group

on Intellectual Property, Innovation, and Prosperity. He is also the Laurence A.

Tisch Professor of Law at New York University Law School and a senior lecturer

at the University of Chicago.


22/178


MYRIAD VARIABLES

The initial mistake, of course, comes with the presidents perception of

economic inequality in labor markets. Obama states that a woman earns less

than a man even when shes in the same profession and has the same educa-

tion. In so doing, he pays no respect to the principles of supply and demand,

which bring the two sides of the market into balance. Those forces make it

highly unlikely that a system with so many informed parties would be as seri-

ously out of balance as he claims it is.

Nor does the empirical evidence support the presidents claim that women

make less, once efforts are made to control for other variables that influence

the outcome. His double use of the word same ignores the wide variations

within any given job category, and equally wide variations in the education

that men and women bring to their work, both within and across the two

sexes. For instance, a definition of the

medical profession that lumps together

pediatricians and neurosurgeons misses

huge differences in training and skills. The

marketplace accurately reflects the higher

returns to certain kinds of work relative to

others, and thus gives strong and accu-rate signals on how both men and women

should invest in their educations.

Without exception, more-sophisticated

studies that seek to control for some of these differences narrow the per-

ceived 77 percent gap. But they do not eliminate it entirely. One common

inference is that the persistence of that measurement gap is indicative of

some lurking discrimination between the sexes throughout labor markets.

Not likely. A far better explanation is that these statistical studies cannotincorporate into their regressions each relevant variable that matters to a

skilled manager or recruiter, even after controlling for hours worked or, most

critically, years out of the workforce. Such issues as a willingness to travel,

working overtime in dangerous neighborhoods, making cold calls to prospec-

tive customers, handling risk, or responding to hostility in interpersonal

relations are likely to be relevant in how much an employee is paid.

The effect of any one of these variables could be small, but in aggregate,

they really matter. Yet they are too numerous and too difficult to quantify, to

be incorporated into the statistical models that predict unequal pay. So it is

just wrong to assume that any unmeasured variation should be attributed to

some undocumented form of discrimination.

In single-earner families,

husbands and wives

have jointly decided

that specialization

will advance the

familys well-being.


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There is also the key role of marriage. Married woman often cut back on

their labor-market participation to become the primary family caregiver.

It is easy to praise, as Frank Bruni did in a recentNew York Timesop-ed,

the heroic efforts of individual women to balance the demands of home

and workplace. But it is much more important to understand the economic

dynamics.

These decisions are not made in isolation. They are made jointly by hus-

bands and wives who think that this form of specialization will advance the

familys well-being of which income is only one part.

Defenders of equal pay often draw the wrong inference from this indis-

putable labor-market asymmetry by claiming that womens contribution in

the home goes unrecognized. Not so, especially when the market value of

these services is added back to market wages to get a more comprehensive

measure of womens productiv-

ity where it will systematically

reduce the perceived wage gap.

At that point, the total economic

contribution of married women

with children will creep up, and

could well approach the incomeof single women, who make about

96 percent of the income of men.

The claim that women are

playing against a stacked deck is wrong for still other reasons. Labor mar-

kets are intensely competitive, so the claim about systematic pay gaps has to

assume both that female managers are hostile to womens economic welfare

and that competitive markets are massively inefficient in matching people

with positions. Competition for labor tends to lead to efficient outcomes.Indeed, by the standard account, price discrimination cannot survive in

competitive markets, which means that the differentials in wages track dif-

ferences in performance. Put simply, one danger of the Equal Pay Act is that

it could mandate equal wages for unequal work, that is, for two workers with

different productivity.

The claim of systematic discrimination in labor markets also ignores the

large number of self-employed women who run their own businesses. Once

again, specialization reigns. Women are more likely to work in areas of family

and interpersonal relations than in construction or hedge-fund management.

It is dangerous to disregard this persistent pattern of revealed preferences

in the belief that the president, or indeed any outsider, knows whats best for

Labor markets are intensely

competitive, yet the claim

about systematic pay gaps

assumes that competitive

markets are somehow

massively inefficient.


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individual men and women. Specialization by occupation and within occupa-

tions is a good thing and increases gains from trade.

Finally, note two important measures of the overall success of women.

They now constitute close to 60 percent of college enrollees and represent

an ever-growing fraction of students with advanced degrees. Women also

weathered the past recession better than men, whether measured by profes-

sion, age, or level of education. There are also many affirmative-action and

diversity programs that give women a leg up in the workplace. No major

structural flaws exist that government regulation can fix. And there are

always powerful social forces that target perceived areas of injustice.

UNINTENDED CONSEQUENCES

Our false preoccupation with pay equity is not costless, for it leads to bad

labor-market regulations that hurt all workers. Employment relationships

will form and endure only when the gains from the deal exceed the costs of

putting it together. Every time a government regulation imposes some new

restriction on the contracting parties, it increases the costs of the deal and

reduces the benefits it generates, thereby killing jobs for men and women

alike.

Of course, the long-term prospects in labor markets are grim for todaysyoung adults, the millennial generation. But indignant editorials in theNew

York Times urging more government action wont help. These major losses

are not just random events: they are driven by unfortunate regulatory choic-

es. The Age Discrimination in Employment Act protects employed workers

older than forty. How can that not hurt the generation behind them? The

community-rating requirements under the Affordable Care Act force young

people to subsidize their elders. Large transfer payments via Social Security

and Medicare do the same. No wonder the economic prospects of millennialsare worse than those of their parents.

The nonstop effort to turn todays minimum wage into a living wage has

the same effect, especially when the president justifies this initiative in the

name of gender equity. His executive order requiring federal contractors to

pay all workers a minimum of $10.10 is, on average, supposed to raise the pay

of women in the bottom quartile by 93 cents an hour, and that of men by only

60 cents. But that ignores the obvious risk that a higher fraction of these

vulnerable women are more likely to lose their jobs, given the greater labor-

market distortions.


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MEN, WOMEN, AND FAMILIES

One common theme the president raises is that his proposals are good not

only for women but also for American families and the economy as a whole.

Of course, he is right to say that when women succeed, America succeeds.

Any overall improvement in labor productivity reverberates across the

economy. But the president is blind to the difference between the rising tide

that raises all ships, and the dam that makes water flow into one channel

and not the other. Market transactions raise all ships by improving levels of

productivity. The presidents regulations shrink the pie in the effort to give

women a larger share of what remains. But that strategy never works.

Increased pay for women is always a blessingall other things being

equal. But that improvement takes on a different hue when it comes at the

expense of an overall decline in the income and economic prospects for men.

Right now, the president can act only by executive order. But he is actively

agitating for the now-stymied Paycheck Fairness Act, which would introduce

pay equity on a grand scale for all private firms. It is a prescription for the

destruction of labor markets. We have revved up enforcement of labor-mar-

ket regulation in the past generation just as the prospects of millennials have

tanked. Why double down on failure?

Reprinted from Defining Ideas (www.hoover.org/publications/defining-

ideas), a Hoover Institution journal. 2014 by the Board of Trustees of

the Leland Stanford Junior University. All rights reserved.


The Case against the Employee Free Choice Act,

by Richard A. Epstein. To order, call 800.888.4741


H


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INEQUALITY

Not All InequalityIs Equal

Inequality does not equal stagnation.

Even as differences in income grow,

entire nations may benefit.

By Michael Spence

Rising income and wealth inequality in many countries around the

world has been a long-term trend for three decades or more. But

the attention devoted to this trend has increased substantially

since the 2008 financial crisis: with slow growth, rising inequality

bites harder.

The old theory about inequality was that redistribution via the tax

system weakened incentives and undermined economic growth. But the

relationship between inequality and growth is far more complex and multidi-

mensional than this simple trade-off suggests. Multiple channels of influence

and feedback mechanisms make definitive conclusions difficult.

For example, the United States and China are the fastest-growing major

economies today. Both have similarly high and rising levels of income inequal-

ity. Though one should not conclude from this that growth and inequality

are either unrelated or positively correlated, the unqualified statement that

inequality is bad for growth does not really accord with the facts.

Michael Spence is a senior fellow at the Hoover Institution, a professor of econom-

ics at New York Universitys Stern School of Business, and the Philip H. Knight

Professor Emeritus of Management in the Graduate School of Business at Stanford

University. He was awarded the Nobel Memorial Prize in Economic Sciences in 2001.


27/178


Moreover, in global terms, inequality has been falling as developing coun-

tries prospereven though it is increasing within many developed and

developing countries. This may seem counterintuitive, but it makes sense. The

dominant trend in the global economy is the convergence process that began

after World War II. A substantial share of the 85 percent of the worlds popula-

tion living in developing countries experienced sustained rapid real growth for

the first time. This global trend overwhelms that of rising domestic inequality.

Nonetheless, experience in a wide range of countries suggests that

high and rising levels of inequality, especially inequality of opportunity,

can indeed be detrimental to growth. One reason is that inequality under-

cuts the political and social consensus around growth-oriented strategies

and policies. It can lead to gridlock, conflict, or poor policy choices. The

evidence supports the view that the systematic exclusion of subgroups on

any arbitrary basis (for example, ethnicity, race, or religion) is particularly

damaging in this respect.

Intergenerational mobility is a key indicator of equality of opportunity.

Rising inequality of outcomes need

not lead to reduced intergenera-

tional mobility. Whether it does

depends heavily on whether impor-tant instruments that support

equality of opportunity, principally

education and health care, are

universally accessible. For example,

if public education systems start to

fail, they are often replaced at the upper end of the income distribution by a

private system, with adverse consequences for intergenerational mobility.

There are other links between inequality and growth. High levels ofincome and wealth inequality (as in much of South America and parts of

Africa) often lead to and reinforce unequal political influence. Rather than

seeking to generate inclusive patterns of growth, policy makers seek to

protect the wealth and rent-capturing advantage of the rich. Generally, this

has meant less openness to trade and investment flows, because they lead to

unwanted external competition.

This suggests that not all inequality (of outcomes) should be viewed in the

same way. Inequality based on successful rent seeking and privileged access

to resources and market opportunities is highly toxic with respect to social

cohesion and stabilityand hence growth-oriented policies. In a generally

meritocratic environment, outcomes based on creativity, innovation, or

In a meritocratic environment,

outcomes based oncreativity, innovation,

or extraordinary talent are

usually viewed benignly.


28/178


extraordinary talent are usually viewed benignly and believed to have far less

damaging effects.

That is partly why Chinas current anti-corruption campaign, for exam-

ple, is so important. It is not so much Chinas relatively high income inequal-

ity but the social tension created by insiders privileged access to marketsand transactions that threatens the Chinese Communist Partys legitimacy

and the effectiveness of its governance.

In the United States, how much of the increase in income inequality over

the past three decades reflects technological change and globalization (both

favoring those with higher levels of education and skills) and how much

reflects privileged access to the policy-making process is a complex and

unsettled question. But it is important to ask, for two reasons.

First, the policy responses are different; second, the effects on social cohe-

sion and the social contracts credibility are also different.

Rapid growth helps. In a high-growth environment, with rising incomes

for almost everyone, people will accept rising inequality up to a point, par-

BOOMING: Maggie Cheng, secretary general of the China EntrepreneurClub, speaks at a meeting last spring with British trade and investmentofficials in London. China and the United States are the fastest-growingmajor economies today, and both have similarly high and rising levels ofincome inequality. [China Entrepreneur Club / Creative Commons]


29/178



The New Deal and Modern American Conservatism:

A Defining Rivalry, by Gordon Lloyd and

David Davenport. To order, call 800.888.4741or visit www.hooverpress.org.

ticularly if it occurs in a context that is substantially meritocratic. But in a

low-growth (or, worse, negative growth) environment, rapidly rising inequal-

ity means that many people are experiencing no income growth or are losing

ground in absolute as well as relative terms.

The consequences of rising income inequality can tempt policy makers

down a dangerous path: the use of debt, sometimes combined with an asset

bubble, to sustain consumption. This arguably occurred in the 1920s, before

the Great Depression; it certainly occurred in the United States (and Spain

and the United Kingdom) in the decade before the 2008 crisis.

A variant, seen in Europe, is the use of government borrowing to fill a

demand and employment gap created by deficient private domestic and

external demand. To the extent that the latter is associated with productiv-

ity and competitiveness problems and exacerbated by the common currency,

this is an inappropriate policy response.

Similar concerns have been raised about the rapid increase in debt ratios

in China. Perhaps debt seems like the path of least resistance in dealing with

the effects of inequality or slow growth. But there are better and worse ways

to deal with rising inequality. Leverage is one of the worst.

So where does that leave us? For me, the high-priority items are fairly

clear. In the short run, the top priority is income support for the poor andthe unemployed, who are the immediate victims of crises and the underly-

ing imbalances and structural problems, which take time to remove. Second,

especially with rising income inequality, universal access to high-quality

public services, particularly education, is crucial.

Inclusion sustains social and political cohesionand hence the very growth

needed to help mitigate the effects of rising inequality. There are many ways

for economies to fall short of their growth potential, but underinvestment,

especially within the public sector, is one of the most potent and common.

Reprinted by permission of Project Syndicate (www.project-syndicate.org).

2014 Project Syndicate Inc. All rights reserved.

H


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ISLAMISM

General James Mattis (USMC, Retired) is an Annenberg Distinguished Visiting

Fellow at the Hoover Institution and a member of Hoovers Working Group on the

Role of Military History in Contemporary Conflict. His final assignment was com-

manding general of the US Central Command.

The EnemyIs Not Waiting

America is engaged in a clash not only of arms

but of ideas, according to a man who understands

both kinds of combat.

By James Mattis

In the following testimony before the House Intelligence Committee, Marine Gen-

eral James Mattis (Ret.), a Hoover visiting fellow, outlined the threat posed by the

organization that calls itself the Islamic State and recalled

the long gestation of Islamist terrorism.

Chairman Rogers, ranking member

Ruppersberger, members of the committee:

Thank you for inviting me to testify on the nature

of the threat posed by Islamic State terrorists. Please

allow me to once again express my appreciation for

this committees integrity and my respect for your

leadership in safeguarding our country. From my time

on active duty to today, I have only the highest regard

for this committees role.

The current maturation of the Islamic State, or ISIS (known in earlier

forms as AQI or ISIL or IS), and its demonstrated penchant for barbarity are

Key points

ISIS is a more

powerful threat

than Al-Qaeda.

The right US

strategy demands

a clear objective.

Nothing should

be off the table.


31/178


well known to this committee and need no elaboration here. A review of their

origins is helpful to place the current threat in context as we look at what

must be done about this clear and present danger.

We all recognize that the Mideast is dissolving into crises, and we know

terrorism did not start with 9/11. Two fundamental strains of violent Islamic

jihadists pre-existed 9/11 and provide the backdrop for what is manifesting

now. Both are dressed in false religious garb.

First are the violent Shia-inspired movements supported by Iran. We

know them as Irans Lebanese Hezbollah militia and associated groups. In

the early 1980s they commenced war on us when they attacked our Beirut

embassy, killing 63 people, and also attacked the French paratrooper and US

Marine peacekeeper barracks then in the city. They continue their murder-

ous and destabilizing legacy: fighting to keep Bashar Assad in power in Syria;

murdering Israeli tourists in Bulgaria;

trying to murder the Saudi ambassador to

Washington a few short miles from where

we sit today. They continue to spread

mayhem.

The other strain of terrorism declared

war on us in the mid-1990s, and is wellknown to this committee as Al-Qaeda

(AQ) and its associated violent Sunni movements. Having attacked our east

African embassies and the USS Colein a neutral port, the dramatic events

of 9/11 earned them a strong US response. We have shredded much of their

senior leadership in the Afghanistan-Pakistan border region, yet the move-

ment has franchised: Al-Qaeda in the Arabian Peninsula (AQAP) in Yemen;

Al-Shabaab in Somalia; Al-Nusra in Syria; and Boko Haram in the Maghreb,

to name several.Out of this franchising effect has arisen ISIS in Syria and Iraq. In 2010

Iraq was in a post-combat, pre-reconciliation phase, with then-AQI [Al-Qae-

da in Iraq] unable to sustain their intended level of violence that they hoped

would spawn a Sunni-Shia civil war. Prime Minister Nouri al-Maliki, released

from American restraint, acted on his worst instincts, creating enormous

distrust in Iraqs Kurdish population and deeply embittering Sunnis in west-

ern Iraqs Al-Anbar, who lost any confidence in a Baghdad government they

saw as adversarial. The reformed but still nascent Iraqi army was purged by

Maliki of its effective leadership as he jury-rigged the command structure,

undercutting what had been the growing effectiveness of that force. In Al-

Anbar, Al-Qaeda began its growth into todays ISIS.

Nothing can replace

American leadership in

bringing the interested

parties together.


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HOOVER DIGEST WINTER 201530[Taylor JonesFor theHoover Digest]


33/178


Meanwhile, in neighboring Syria, Assad created a civil war against his

own people, heavily targeting the Sunnis. Abetted by Russias regrettable

veto in the United Nations and sustained by Irans full support, Assads war

created a cycle of violence that led to the expanded rise of ISIS, ideologi-

cally similar but operationally distant from Al-Qaeda. The growth of ISIS

illustrated the usual adaptations of terror groups. By winnowing its ranks,

sharpening its ideology, and adapting its methods, ISIS morphed into a much

more robust threat. Combining Al-Qaedas significant fighting capabilities

with a stronger focus on the administrative capabilities that might permit it

to hold ground, ISIS copied the latter from Hezbollahs model. Basically ISIS

is a combined Al-Qaeda and Lebanese Hezbollah on steroidsdestabilizing

the region, dissolving borders and changing the political geography in the

Mideast, and hardening political positions that make Mideast peace-building

more remote by the day.

Gaining strength as they draw to their banner the most hardened and

disaffected violent Sunni radicals, todays ISIS holds ground in a continua-

tion and significant maturation of the modern violent jihadist terror war that

began against us in 1983. In 1984 thenSecretary of State George Shultz not-

ed that the violence was no longer random, and he rejected any moral confu-

sion when it came to Americas special responsibility to firm resistanceagainst terrorism. Today ISIS represents a threat to governance across the

Middle East and a threat that extends far beyond that tumultuous region.

Having dealt with the mutating threat of terrorism since 1979, I believe that,

left unfettered, its only a matter of time before ISIS launches transnational

operations. We should approach their threat in this manner and determine

how to take away their initiative.

FRIENDS MATTERThe enemy is not waiting. I understand and appreciate the desire to pull us

out of the poorly explained Mideast fights weve engaged in. But as we say

in the military, the enemy gets a vote. We must now change what weve been

doing, challenging or validating our assumptions about this threat, determin-

ing our political objectives, and building a fully resourced strategy in con-

cert with allies. Potential allies exist in the region and around the globe, but

nothing can replace American leadership in bringing the interested parties

together.

Friends matter in todays globalized worldjust as they have always

mattered. Alliances and coalitions are high priorities when we confront

todays challenge: we need to embrace those who reject terrorism, working


34/178


with allies even when they are not perfect because our friends stood by us

when we fell short of perfection. When the United Arab Emirates stands tall

condemning ISIS and its atrocities [and how it] aims to kill, terrorize, and

displace civilians, we hear our own thoughts in their blunt words.

So long as we demonstrate firm reliability, there are many allies hoping

for our leadership, both in the region and around the world. Secretary of

State John Kerrys efforts to build international support for this campaign

are on target, for we are in an era of frequent skirmishing. By era I mean

that this will be a long-term effort involving fighting alongside our partners;

it will not be solved with humanitarian airdrops to the surviving victims of

ISIS barbarism. Additionally, forecasting the amount of time we will com-

mit to this effort is unwise, giving hope to our foes that they can outlast us.

Saying that these maniacs are on the wrong side of history also will not stop

them, for history is written by good people and bad. If history teaches us any-

PREPARED: Thenlieutenant general James Mattis talks with main-tenance crews of the Marine All-Weather Fighter Attack Squadron 121at Al-Asad, Iraq, in 2007. Last fall, Mattis told members of Congress,I understand and appreciate the desire to pull us out of the poorlyexplained Mideast fights weve engaged in. But as we say in themilitary, the enemy gets a vote. [Department of Defense]


35/178


thing and we want to leave a better world for the next generation, we learn

that we must stand with those who share our security interests. Throughout

history it has been nations with allies that defeated those without.

Today in ISIS we see again those who thinklike those on 9/11that they

can scare us by hurting us. While we didnt ask for this fight, we must again

show that we dont scare and we wont abandon our friends. By their very

barbarity ISIS has created a strong motivation for a wide range of countries

to move against themif America will lead. The barbarism of ISIS is a vul-

nerability worth exploiting to the maximum degree possible.

The strategy we choose must no longer deal with each emerging Mideast

threat as a one-offthere is no single vexing threat to be dealt with as an

immediate, stand-alone problem. Nowhere is the impression of American

withdrawal more pronounced than in the Mideast. To counter that impres-

sion and take necessary steps before our enemies grow stronger, we need

an integrated regional strategy that avoids unintended consequences that

come from dealing with individual problems without regard for their regional

context. In league with our allies (those who find their purpose in moderate

policies and being responsive to the needs of their people), we must build a

politically unambiguous, guiding vision. That starts with a policy that pro-

vides clarity: objectively and persuasively laying out to the American peopleand the global audience what we stand for, but also what we will not tolerate

toward innocent people, either our own or others. Recognizing that in the

Mideast today vacuums are not filled by tolerant elements, we must stand

with those opposed to terrorism.

While we recognize that we may have previously confused and even

dismayed our friends, or unintentionally emboldened enemies sworn to our

destruction, we must now accept that the international order promoting

peace and prosperity is not self-sustaining. We must choose sidesstandingwith those willing to fight what President Obama rightly called a cancer,

and outlining our approach using clear strategic objectives.

A ROBUST AND COHERENT STRATEGY

ISIS, born of regional warfare and violent religious extremism, has grown

into a strategic threat. Occupying an area as large as Great Britain with mil-

lions of inhabitants, its hold is not yet firm. Even as ISIS tries to strike ever

more deeply into Iraq, Syria, and Lebanon, their intent is clearly to set up a

safe haven in the Mideastlike the Federally Administered Tribal Areas on

the Pakistan-Afghanistan borderfor direct destabilization of the region and

for use as a launching pad for transnational attacks. We must not patronize


36/178


them or dismiss the threat their words and actions clearly proclaim, even if

they cannot yet carry out their more grandiose pronouncements.

A robust and coherent strategy to shatter the enemys designs must

start with our comprehending their irreconcilable worldview. In confront-

ing that reality and rigorously defining our political objectives, we will enlist

allies and avoid mission creep, recognizing the limits of what outsiders can

do while strengthening our friends who live in that area. As Doctor Nadia

Schadlow has advocated, we must use all means to carry out our strategy,

one that does not rely solely on military activities to fight what is at heart

a violent political argument against the values that for us grew out of the

Enlightenment.

With regard to the immediate threat of ISIS, the critical first step to

restarting the Iraqi political process was supporting the removal of Maliki

as prime minister. Using American airpower to buy time is also necessary as

the Iraqis get their political and military act together and we align interna-

tional support.

The strategy that follows must define with

carefully chosen words where we intend to go

in this campaign: degrading or defeating or

destroying ISIS, for example, portend differ-ent endgames that demand different levels of

effortand thus different strategies.

Whichever strategy we choose, we should be

reticent in telling our adversaries in advance

any timeline that governs us, or which of our

capabilities we will not employ. Specifically, if this threat to our nation is

as significant as I believe it is, we may not wish to reassure our enemies in

advance that they will not see American boots on the ground. If a bri-

gade of our paratroopers or a battalion landing team of our Marines could

strengthen our allies at a key juncture and create havoc or humiliation for

our adversaries, then we should do what is necessary with forces that exist

for that very purpose. The US military is not war-weary; our military draws

strength from confronting our enemies when clear policy objectives are set

and we are fully resourced for the fight.

Properly used, a mix of our troops can help set the conditions for the

regional forces that can carry the bulk of the fighting on the ground. Half-

hearted or tentative efforts, or air strikes alone, can backfire on us and actu-

ally strengthen our foes credibility, reinforcing his recruiting efforts, which

are already strong. I do not necessarily advocate American ground forces at

We may not wish to

reassure our enemiesin advance that they

will not see American

boots on the ground.


37/178


this point, but we should never reassure our enemy that our commander-in-

chief would not commit them at the time and place of his choosing. When we

act, it should be unequivocal, designed to end the fight as swiftly as possible.

No one is more reluctant to see us again in combat than those of us who have

signed letters to the next of kin of our fallen. But if something is worth fight-

ing for, we must bring full strength to bear.

When one side resorts to barbarity against our fellow Americans and

tears up the rulebook about protection of the innocent, then the moral choice

is obvious. The only questions lie in our wise choice of a coalition strategy

and full resourcing by America if we want the same commitment by our

allies. As British Prime Minister David Cameron has said, true security will

only be achieved if we use all our resources.

Without firm action this poison will spread. The geography of the glo-

balized world does not permit us to look away as if this is not our problem.

Geopolitical realities must be confronted, and the enemy of our enemy may

still remain our enemy, so the construction of an integrated Mideast strategy

to include confronting ISIS will not be simple. But that is now our duty to

ourselves and to the world that our children will inherit.

Without exaggerating the ISIS threat, we must bring objective purpose

and strong heart to this fight to determine which values will govern ourfuture. With both the power to inspire as well as to intimidate, America

should now bring both to bear with firm leadership and robust resources.

Vacillation or tentative American moves absent an integrated regional

strategy will not work to sustain the civilized international order in the face

of barbarians. Delay can only cost us as the enemy grows stronger. Failure to

act multi-dimensionally, decisively, and in concert with allies can only leave

us vulnerable to future enemy attacks.

These remarks were delivered September 18, 2014,

before the House Intelligence Committee.

New from the Hoover Institution Press is

Iraq after America: Strongmen, Sectarians,

Resistance,by Joel Rayburn. To order, call

800.888.4741 or visit www.hooverpress.org.

H


38/178


ISLAMISM

Whitewashingthe Jihadists

The US governments spin on Islamist violence

that the perpetrators arent Muslims

is both condescending and wrong.

By Peter Berkowitz

Speecheseven or especially when they are intended to obscure

the truthreveal something of the convictions of the speech giver

and clarify his opinions about the character of his audience. So it

was with President Obamas special address to the nation from the

White House on September 10, announcing military operations to degrade

and ultimately destroy the savage jihadists seeking to reestablish a caliph-

ate in Iraq and Syria.

At the very moment he was summoning the nations support for the most

recent battle in the long war Islamism has waged against the United States

and her allies, the president insulted the peoples intelligence and demon-

strated disdain for our capacity for self-government.

Presuming to understand Islam better than those who are undertaking

jihad in its name, Obama declared ISIL is not Islamic. The reason he gave

for this remarkable assertion is that No religion condones the killing of inno-

cents, and the vast majority of ISILs victims have been Muslim.

Peter Berkowitz is the Tad and Dianne Taube Senior Fellow

at the Hoover Institution, chair of Hoovers Jean Perkins Task Force

on National Security and Law, and a member of Hoovers working groups

on military history and foreign policy.


39/178


The presidents reasoning is either tautological or false. It is tautological

if the president meant that no religion condones the killing of individuals

whether of the same or another religionit regards as innocent. It is false if

the president meant that no religion condones killing individuals whom our

moralitythe morality that underlies liberal democracyregards as inno-

cent.

Liberal democracies draw a sharp distinction, for example, between

combatantsmen and women who serve in the armed forcesand non-

combatants. Many jihadists, however, regard all citizens of Western liberal

democracies, whether or not they wear military uniforms and take up arms,

as enemies of Islam and therefore fair game for maiming and killing. For sup-

port the jihadists can cite an impressive array of fatwas, or legal rulings of

Islamic jurists.

Moreover, contrary to President Obamas assertion, the fact that the vast

majority of ISILs victims have been Muslims proves nothing about ISILs

Muslim credentials, just as the slay-

ing of Protestants by Catholics and

Catholics by Protestants during the

seventeenth-century European wars of

religion did not alter that the combat-ants who bathed the continent in blood

were Christians. Indeed, if the killing

of Muslims established that one did not

really practice Islam, it would follow

that the large swaths of Sunnis and

Shias who have waged religious war against each other for more than a mil-

lennium and a half do not qualify as Muslims.

What then caused the president to speak so foolishly?One possibility is that Obama doesnt take religion seriously. We know,

however, that cant be right because of the acclaimed speech on the com-

plexities of race and religion that he gave in March 2008 as he battled Hillary

Clinton for their partys presidential nomination.

After it had been revealed that the Reverend Jeremiah Wright, the spiri-

tual leader of Trinity United Church of Christ in Chicago (which Obama reg-

ularly attended for two decades), had repeatedly voiced vehement contempt

for America and its promise of freedom and equality, then-Senator Obama

faced the delicate task of condemning Wrights most egregious opinions while

showing sympathy for the circumstances that generated them and admira-

tion for the man who uttered them.

Many jihadists regard all

citizens of Western liberal

democracies, in uniformor not, as enemies of

Islam and therefore fair

game.


40/178


Obama rose to the occasion. In a speech at the National Constitution

Center in Philadelphia, he spoke eloquently of the ambiguities of the black

experience in America; of predominantly black churches ministry to the

full range of black Americans material and spiritual needs; and of his own

Christian faith being nurtured by Wright. Trinity United, Obama acknowl-

edged, had many faces. It encompassed in full the kindness and cruelty, the

fierce intelligence and the shocking ignorance, the struggles and successes,

the love and, yes, the bitterness and bias that make up the black experience

in America.

In simultaneously vindicating and distancing himself from Trinity United,

Obama made a point of explicitly rejecting Wrights vulgar contention that

the conflicts in the Middle East are rooted primarily in the actions of stal-

wart allies like Israel. Rather, argued Obama, much of the violence engulfing

the Middle East arose from the per-

verse and hateful ideologies of radical

Islam.

His 2008 speech indicates that Obama

takes seriously the capacity of religion

to uplift human beings, the complexities

of actual religious life, and the dangersposed by radical Islam. A second expla-

nation of his surreal assertion that ISIL

is not Islamic is therefore necessary.

Perhaps he doesnt really take Islam seriously.

We know that cant be so because only fifteen months after his Philadel-

phia speech and less than half a year after his inauguration, Obama delivered

a much-ballyhooed speech in Cairo. The speech was not addressed to Egyp-

tians or even to Arab nations but to the Muslim world as a whole. Althoughit does not contain even a single mention of jihad, Islamists, or radical

Islam, Obamas Cairo speech does recognize, up to a point, Islams internal

struggles and certain gaps between Western ways and the ways of many who

practice Islam.

In reaching out in a spirit of conciliation to the Muslim world, Obama

understandably highlighted the contributions Islam has made to civilization.

Less understandably, he primarily blamed the tensions between the United

States and the Muslim world on the West: colonialism, the Cold War, mod-

ernization, and globalization.

These tensions, Obama observed, have been exploited by a small number

of extremists. While America would pursue those who engage in violence

A president determined

to lead the people rather

than coddle them would

not hide the warrior

teachings inscribed inIslam.


41/178


against civilians, it would never, the president emphatically stated, make

war on Islam.

But in making the valid distinction five years ago between Islam and

Muslim extremists, the president committed the same error that he made in

September at the White House. America stands with true Muslims against

false Muslims, the president averred in Cairo, because we reject the same

thing that people of all faiths reject: the killing of innocent men, women, and

children. As if the jihadists believe that those whom they decry as heretics,

infidels, and apostates are innocent.

In Cairo, the president also recognized that reality is more complicated.

He rightly called for greater democracy, tolerance, and protection of womens

rights in the Muslim world. His gently phrased admonitions both suggested

that Islam harbors tendencies that conflict with the principles of liberal

democracy and affirmed that the Islamic tradition has moral resources that

can be brought to bear to condemn the violence perpetrated by Islamists and

to embrace the principles of liberal democracy.

But does the president believe his own admonitions? Why, five years after

the Cairo speechwith the Middle East from Libya to Iran rocked by a surg-

ing Islamism, and with an Islamist threat mounting in Europe, the United

States, and Australia (in September, Australian counterterrorism forcesdetained 15 suspects in connection to an alleged ISIL plot to commit public

beheadings in Sydney and Brisbane)does he insist on sugarcoating mat-

ters?

A third possibility to explain the presidents bizarre insistence that

Muslim extremists are not Muslim is that while he takes religion and Islam

seriously, he doesnt take seriously his responsibility to treat the American

people like adults and inform us about the true nature of the threats we face.

A president who was determined to lead the people rather than coddlethem would, for example, not hide the warrior teachings that are inscribed

in Islam. He would not whitewash the Islamic teaching that divides the world

into the house of peace (Dar al-Islam), which is under the rule of Islam, and

the house of war (Dar al-Harb), which comprises the rest of the world. He

would not obscure the comprehensive character of Islamic religious law, or

Sharia, which seeks to regulate all aspects of life and demands to be realized

in politics. He would not conceal the Islamic principle that where Islam once

ruled it must always rulea principle that, among other things, converts

Israel into an irreparably illegitimate country and renders all Israelis, includ-

ing noncombatant women and children, legitimate targets. And, accordingly,

he would not declare that ISIL is not Islamic.


42/178


To be sure, Islam puts forward qualifications to, and alternative interpre-

tations of, all of these dangerous doctrines. But the president, apparently,

prefers we believe that the one and only true Islam preaches peace exactly as

we in the West understand it.

That is a multicultural fairy tale.

The president has been right in his speeches to stress that America

respects the achievements of Islam, seeks to live in peace with peace-loving

Muslims, and is devoted to protecting the rights of Muslim Americans no

less vigorously than the rights of all other Americans.

But the president should also show respect for the American people and

their capacity for self-government by accurately explaining the Islamist

threat. Perhaps the exigencies of realpolitik make it difficult for a US presi-

dent to state clearly that jihadists take their cue from Islamic authorities and

that radical Islam is a radicalization of Islam. Certainly, President Obamas

predecessor didnt do this, either. By failing to find the wherewithal to

address Americans like grown-ups about the war the Islamists are waging

against us and our allies, the leader of the free world hinders our capacity to

prevail.

Reprinted by permission of Real Clear Politics. 2014 RealClearPolitics.

All rights reserved.

New from the Hoover Institution Press is

In this Arab Time: The Pursuit of Deliverance,

by Fouad Ajami. To order, call 800.888.4741


H


43/178


ISLAMISM

Omens from theSeventh Century

The early caliphate so idealized

by Islamists was no golden age, but

a time of instability and violence.

By Edward N. Luttwak

When modern Muslims invoke theKhilafathe caliphate

as their ideal of governance for the Ummah, the planetary

community of all Muslims, and indeed for all humans

once converted or killed if stubbornly pagan, they do not

refer to the famous caliphates of history: the splendiferous Umayyad, the

longer-lasting Abbasid extinguished by the Mongols in 1258, the Egypt-

based and tolerant Fatimid in between, or the Ottoman that lingered till

1924, let alone the extant Ahmadiyya caliphate that most condemn as

heretical.

Instead they wax lyrical about the rule of Muhammads first four rightly

guided successors,Al-Khulafa ur-Rashidunwho followed one another after

his death in 632. Unable to assume Muhammads prophetic role, his best-

placed followers Abu Bakr as-Siddiq, Umar (or Omar) ibn al-Khattab, and

Uthman ibn Affan, took control of his movement in that sequence as his suc-

cessors,Khulafaa, whence their governance became known as the succes-

sion orKhilafa, our caliphate.

Edward N. Luttwakis a member of the Hoover Institution's Working Group on

the Role of Military History in Contemporary Conflict and a senior associate

at the Center for Strategic and International Studies.


44/178


Muhammad had left no son to claim the leadership by inheritance, female

succession was undreamed of, and son-in-law Ali ibn Abi Talib, married to

daughter Fatimah, was subordinated by the first three to become only the

fourth caliphnot good enough for the dynastic-minded loyalists of the

prophets household. That started a deadly quarrel that the party of Ali,

Shiatu Ali, abbreviated as the familiar Shia, still pursues very vigorously

evoking accusations of heresy by the more severe of their Sunni opponents,

the followers of the Sunnahor traditional path of the Muslim majority in all

countries but Iran and Iraq.

In greatly celebrating the Rashidun, as modern Muslims afflicted by

the contemporary travails of the Muslim world are wont to do, the violent

instability of the institution is disregarded, no doubt because what is cel-

ebrated are mostly its colossal victories over the infidels who torment them

still.

OUT OF ARABIA

Within a year of Muhammads death in

632, his erstwhile companions and self-

appointed successors led their Muslim

followers on plunder raids into ByzantineSyria and Sassanian Mesopotamia that

were so successful that they were directly

followed by conquering and missionary

expeditions. Muhammads religion had

promised victory and loot above all, and

the advancing Muslim riding out of Arabia

saw those promises triumphantly validated by the seemingly miraculous

defeat of the vast, ancient, and till then all-powerful Roman and Sassanianempires, which between them had long dominated all the lands of the Middle

East fertile enough to be worth ruling.

The two empires had just finished the longest and most destruc-

tive of all their warsalmost thirty years of wide-ranging reciprocal

raids and outright invasions. It started in 602 and ruined many of their

cities, destroyed commerce, emptied their treasuries, exhausted their

manpower, and wrecked frontier defenses and field armies alike, while

bitterly antagonizing their provincial populations, left undefended to

be despoiled by enemy looters yet harshly taxed before and after. A few

years of tranquillity might have restored the strength of both empires

beyond any challenge by Arab raiders no matter how enthusiastic,

Muhammads religion

promised victory and

loot above all, and the

advancing Muslim riding

out of Arabia saw those

promises triumphantly

validated.


45/178


but instead both were invaded and each suffered a catastrophic battle

defeat.

In August 636, just four years after Muhammads death, the army of the

emperor and erstwhile great conqueror Herakleios was utterly defeated at

the River Yarmuk. The Roman empire that had possessed Syria, Egypt, and

all the lands between them for six centuries would lose every part of them

within a decade.

In that same year (636), the annus mirabilisof Islamic conquest, the Sas-

sanian empire of Persia, whose power had till very recently stretched from

the Mediterranean to the Indus Valley, was also decisively defeated, at Al-

Qadisiyyah in Mesopotamia, immediately losing its treasury and capital city,

Ctesiphon. After a last attempt to defend the Persian hinterland at the battle

of Nihawand in 642, commanded by the king of kings Yazdegerd III himself,

resistance and the Sassanian empire

with it waned, ending by 651.

One can readily see how the most

hardened cynics among the Arabians

would have been won over to intense

faith by these utterly unexpected,

indeed wildly improbable victories,which were soon followed by further

waves of conquest that brought the

raiders and missionaries of Islam right

across northern Africa all the way

to the Atlantic, and as far east as the

eastern edges of Central Asia adjacent to Tang China, and into the Indus Val-

ley. Indeed the immense victories of those earliest years are still the main-

spring of Islams triumphalism, contrasting so sharply with the turn-the-other-cheek spirit of most other faiths and generating the most acute inner

tensions given the military inferiority of Muslims in almost all wars of recent

centuriesat the hands of Christians, Jews, and unprotected infidels whom

Islam condemns to perpetual martial inferiority. That glaring contradiction

inevitably raises terrible inner doubts that in turn foment the most violent

emotions, amplified in the case of the Jews because of their (post-Quranic)

denigration as weaklings.

UNDER THE BLACK FLAG

The Umayyad, Abbasid, Fatimid, and

Hoover Digest, 2015, No. 1, Winter

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