"The politics of restoring Egypt’s military aid" April 2, 2015 (The Washington Post)

In April 2015 the Obama administration granted access to over one billion dollars in US military

aid to the government of Egyptian President Abdel Fatah al-Sisi. That aid had been withheld

since Egypt's military, led by then-Defense Minister Sisi, overthrew the democratically-elected

government of President Mohammed Morsi in July 2013. A violent crackdown on Morsi's

supporters followed the coup. As of this writing, Egypt's repression of dissent is in many ways

worse than under the reign of longtime dictator Hosni Mubarak: the Muslim Brotherhood, once a

tolerated opposition group, was declared to be a terrorist organization and most of its leaders are

in jail and sentenced to death; public demonstrations are suppressed; the independent media are

threatened; and American aid workers are harassed and subject to public smear campaigns.

Why would the Obama administration restore military aid to an undemocratic regime that is

seemingly hostile to American interests? A common explanation is that withholding the aid

threatened US-Egyptian relations, which are considered critical to maintaining Israel's security

and the stability of the Middle East in general. But this and similar explanations take for granted

the view that the US and Egyptian governments are single entities that, like individuals, face

trade-offs and weigh the costs and benefits of one course of action over another. For example,

this analysis assumes that the US government balances its support for democracy with its desire

for a stable Middle East and Egypt-Israel relationship.

An alternative analysis of the US decision to restore aid to Egypt's military could instead regard

the US government as a system of individuals working to maximize their own self-interest

subject to the constraints imposed upon them by the institutions in which they operate. Rather

than asking if a particular government benefits or loses from a particular course of action, the

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analysis of individuals offers complementary explanations for governments' behaviors that are

grounded in the incentives that those individuals face.

For example, cutting off military aid to Egypt would mean eliminating a revenue stream to the

US defense industry, an extremely important constituency for elected officials. US aid to Egypt

is not a simple cash transfer; the money that is appropriated is used to buy hardware from US

defense contractors that supply their defense partners in Egypt. Between 2009 and 2011, the five

largest beneficiaries of US military aid to Egypt (in dollar terms) were: Lockheed Martin ($259

million), DRS Technologies ($65.7 million), L-3 Communication Ocean Systems ($31.3

million), Deloitte Consulting ($28.1 million), and Boeing ($22.8 million). These companies are

all also significant employers and political campaign contributors.

In the case of US military aid to Egypt, any individual policymaker must choose between

tangible or intangible benefits. Should he or she support withholding aid, the politician

experiences only the ethereal sensation of "protecting democracy" in the Middle East. While

there are no doubt some policymakers who care deeply for the plight of ordinary Egyptians, they

reap very few tangible benefits from acting on that concern. Egyptians do not vote in US

elections, nor do they fund influential lobbying groups. In contrast, policymakers benefit greatly

from protecting the interests of defense contractors and other lobbying groups, such as those

associated with Israel, whose security is enhanced by a stable Egypt (at least in the short run).

It should not be surprising that the US seemingly turned its back on democracy in favor of

maintaining close ties to Egypt's military. Given the vested interests involved and the system of

incentives that individual government officials face, it would be irrational for individuals

embedded in those institutions to do otherwise.

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"Why Islam needs a reformation" March 20, 2015 (The Wall Street Journal)

Ayaan Hirsi Ali argues that the "fundamental problem" with Islam today is its literal

interpretation of the Quran as the word of God and the infallibility of the Prophet Mohammed.

Strictly following the commands of a man and a document from 7th-century Arabia means

implementing many cultural and political ideas that made sense at the time but which today (at

least in wealthy, secular countries) are repulsive, such as the submission of women to men and

the rule of a clerical elite. This literalist reading of Islamic law is the most important source of

Islamist terrorism, Ali claims, and only by renouncing those "violent, intolerant, or

anachronistic" elements of dogma can Muslims truly claim that theirs' is a religion of peace.

This reasoning has a testable implication: if Ali is right, then the likelihood that a Muslim turns

violent is the inevitable result of slavish adherence to ideology. Therefore, we should expect to

observe the same amount of religiously-driven violence in every Muslim community

proportional to its size in a given country. How many Muslims are sufficiently literalist to

represent a potential terrorist threat? Ali cites an estimate of "only" 3% of Muslims globally,

though she says that she would "put the number significantly higher". For the sake of argument,

we will use the 3% estimate, though others are as low as 1-in-30,000 in wealthy nations.

Ali never explains why a literalist Muslim would not decide to turn violence, but given her focus

on ideology in driving terrorism to the exclusion of other factors then we assume that an

individual’s shift from extremism to violence is largely due to chance. For instance, if the

fictional country of Extremistan contains 10 million Muslims, and 1% of Muslims globally

adhere to a sufficiently literal interpretation of Islam, then we assume that 10,000 potentially

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violent extremists live there. But what are the chances that any one Muslim extremist will turn

violent? Here we can look to actual data on terror attacks globally.

The University of Maryland maintains a database of all known attempted and successful terrorist

attacks going back to the 1970s. To grant Ali’s argument the most favorable terms possible, we

assume that all terrorist attacks committed between 1990 and 2010 were committed by Muslim

extremists. And using Ali’s 3% estimate of the share of Muslims globally that are potentially

violent extremists we can calculate the share of extremists who actually turn violent. Figure 1

summarizes the results for a small sample of Western and Middle Eastern countries.

Figure 1Total Terror Attacks 1990-2010

Average Muslim Population 1990-2010

Number of Potential Violent Extremists

Percentage of Violent Extremists Committing Terror Attacks

US 602 2,062,000 61,860 1.0%UK 1,590 2,025,000 60,750 2.6%France 1,153 2,636,000 79,080 1.5%Afghanistan 2,586 20,799,000 623,970 0.4%Pakistan 4,289 145,200,000 4,356,000 0.1%Iraq 6,465 24,232,000 726,960 0.9%Average 1.1%Source: University of Maryland and Pew Research Center

What we find is that, on average, 1.7% of potential extremists in a sample of Western nations

turned violent in that timeframe while 0.5% did so in the sample of Muslim nations. This

simplistic analysis provides some evidence for Ali’s claim that the same proportion of extremists

turn to violence in any given Muslim community. But it also suggests that she is vastly

overstating the scale of the problem, if there is one. Even granting Ali’s model the most

favorable terms possible we find that only 1% potential extremists—Muslims already inclined to

violence—end up pulling the trigger. The argument above is admittedly reductio ad absurdum,

but it calls into question Ali’s own slavish focus on ideology as the cause of Muslim violence.

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“Egypt’s Sisi closes economic conference with call for further investment” March 15, 2015

(The Wall Street Journal)

The Egypt Economic Development Conference was held in the Red Sea resort town of Sharm al-

Sheikh in March 2015 and resulted in investment deals of more than $130 billion and additional

pledges from wealthy Gulf neighbors of tens of billions of dollars for economic stabilization.

During the conference, Egypt’s leaders unveiled plans for state-led megaprojects meant to both

upgrade the country’s dilapidated infrastructure and put her millions of unemployed citizens

back to work. But Egyptian President Abdel Fatah al-Sisi ended the conference by calling for

even more investment, up to $300 billion more, to put his country on course for sustained

economic growth following years of turmoil. Assuming that policymakers in the United States

sincerely care about the plight of Egypt’s unemployed, how confident should they be that

appropriating hundreds of billions of dollars for Egyptian aid will have that intended result?

US policymaker should first ask themselves: do Egypt’s leaders even have the ability to achieve

the desired outcomes? We can look to the history of massive infrastructure projects to help

answer this question. In his research on the efficacy of so-called megaprojects, Bent Flyvbjerg

argues that cost overruns occur in nine out of ten of these projects and overruns of up to 50% are

common (construction of the original Suez Canal in Egypt, Flyvbjerg notes, was 1900% over-

budget). Similarly, benefit shortfalls of up to 50% are also common. One explanation for this

observation is that governments are just not very good at identifying the most valuable projects

nor at managing these enormous projects efficiently. The knowledge required to guide money

and other resources to their highest-value investments is not easily gathered by a centralized

authority. As a result, benefits are overstated and resources are wasted.

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But can US policymakers be confident that such projects, even if they are over-budget and

under-deliver on benefits, will still create jobs and lead to economic growth? It is probably true

that many Egyptian laborers will be employed by these projects, at least temporarily. But

sustainable growth will only occur if these megaprojects create actual value for the society. If

they do not represent the most valuable use of these resources, and thus divert money away from

more productive uses, then Egyptians could end up no better off, or even poorer, than before.

Even if these megaprojects do add value to the economy, do Egypt’s officials have an incentive

to put those billions of dollars toward the highest-value investments? Corruption in Egypt is

rampant; according to Transparency International’s annual Global Corruption Perception Index,

Egypt ranks 94th of over 170 countries. Corruption is like an additional, unproductive investment

added to the total cost of a project, and probably represents a significant factor in cost overruns.

But even more pervasive is the problem of cronyism, the process by which officials guide

contracts to allies and contractors invest resources in influencing how government spends

megaproject money. As a result, resources are wasted trying to influence decision-makers and

contracts are steered to unproductive but politically-connected clients. This problem is even

more acute in developing nations where spending oversight is less effective.

The third reason that US policymakers should rethink investing in Egypt is the country’s

institutional environment, which constrains economic activity and sustains the corruption

discussed above. The IMF singled out Egypt’s regulatory structure as a primary reason for

economic stagnation and high levels of unemployment. According to the World Bank, it only

takes 8 days to start a business in Egypt, but over 179 days to acquire a building permit and over

1,000 days to enforce a contract. These barriers crush innovation and entrepreneurship and will

ensure that any material benefit that Egyptians realize from the megaprojects will be squandered.

6

“Here’s what’s wrong with the USA Freedom Act” May 6, 2015 (The Nation)

In response Edward Snowden’s revelations about a secret NSA data collection program, the US

Congress passed the USA Freedom Act, meant to reign in some of the more objectionable

powers granted in the post-9/11 national security legislation. The author claims that the Act

represents “the first time since 9/11 that Congress has reined in any national security surveillance

program.” But he goes on to note that the USA Freedom Act does not abolish the NSA’s ability

to access bulk data on Americans’ phone records. Widespread, warrantless data collection

continues, and those data are still accessible, but the records are now held by the phone

companies themselves, which the NSA can only access with permission.

Defenders of bulk data collection claim it is an essential tool in the NSA’s anti-terrorism toolkit.

But basic economic reasoning makes this claim hard to believe. Governments are simply not

good at dealing with large amounts of information efficiently. This is the nature of bureaucratic

organizations in general: absent clear profit and loss accounting, bureaucrats must use other, less

precise measures of value to guide their decision-making. Given this reality, it is unclear how

such an organization can make sense of an enormous amount of information efficiently enough

to actually stop a terrorist attack. This is one explanation why no NSA apologist can point to a

concrete example of an attack that was prevented due to the bulk data collection program.

But if there is no clear evidence that the program is effective, why would politicians keep it

alive? Basic economics can also help us understand why this occurs. Politicians are highly

sensitive to public opinion and do not want to be blamed for a terrorist attack that happens while

they are in office. Among other unpleasantness, they could get blamed for not having done

enough to prevent the attack. With these incentives in mind, we can understand the passage of

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the USA Freedom Act not as protection for Americans but as protection for politicians. By

preserving bulk phone data collection, regardless of its efficacy, politicians have a tool that they

can point to in order to say: “look, we did everything we could to prevent that attack.”

Public officials’ ability to do this is enabled by the nature of the USA Freedom Act and of giant

government programs in general: politicians do not bear the costs of these programs, in that they

do not pay for it out of their own pockets, but they reap all of the benefits. Their incentive is to

create the largest possible program, with the furthest possible scope, that the American voter will

allow. The result is that the program continues with only superficial changes.

So why there have been so few successful terrorist attacks since 9/11? One explanation is that

many were foiled by the national security apparatus and then kept secret. This seems unlikely

given the incentives that groups like the NSA face. Publically foiling terrorist attacks, especially

with the help of controversial programs like bulk phone data collection, would help legitimize

these programs in the eyes of the public and probably lead to increasing budgets and authority.

A more realistic explanation is simply that there are few terrorists out to get us. We showed in a

previous journal entry how, even under the most generous assumptions possible, Islamic terror

attacks are extremely rare. The reality is that if home-grown terrorists did want to attack

domestic targets there would be little we could do to stop them. The Boston Marathon bombing

made this fact clear, but it also made clear how rare these easy-to-execute events actually are.

During the Intifadas there were multiple bombings of Israeli civilian buses per week. Why don’t

we see similar attacks on buses or Amtrak trains, where there is little-to-no security? Rather than

assuming that our intelligence communities have superhuman crime-fighting abilities, the likely

reason is that they are not happening because there is just no one around to do them.

8

“Trade Deficit Grows as Strong Dollar Hurts Exports” July 7, 2015 (The New York Times)

According to the Associated Press, the US trade deficit—a measure of the dollar value of all of

the goods the country imports versus how much it exports—widened to $41.9 billion in May of

2015. This news was troubling for the economists interviewed in this article; a growing trade

deficit means slower GDP growth, all else held constant, because American consumers are

sending more dollars abroad than foreigners are sending to the US. But this is simply an

accounting identity. Aggregate GDP growth, while generally a good indicator of economic

performance, is also highly imprecise. It does not do a good job of telling us about the value that

is being created in an economy beyond the raw dollar amounts that were exchanged.

Take the case of the US, a country that almost always exports more than it imports. This would

be worrisome if the US were only trading the same products as other countries, such as when the

US and China compete for the production of solar panels. A US trade deficit in solar panels with

China would likely indicate that China has a comparative advantage in their production and in

most cases would represent a signal to US producers that they would be better off devoting those

resources to more productive uses.

But the US does not compete with every other nation in producing one, homogeneous product.

So there is nothing necessarily bad about the US exporting less beef in dollar terms to Japan than

it imports from them in cars. Again, GDP is an accounting identity and only indirectly tells us

about the value being created in the exchange. If international competitive pressures forced

Apple to create a cheaper, more efficient smartphone for export and as a result it ended up

exporting less in dollar terms than with its previous version then that would result in a decrease

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in GDP for the US, even though the company brought the smartphone to millions of new low-

income consumers who can now afford it.

Similarly, the 2011 tsunami that hit Japan’s coast and disabled the Fukushima Daiichi nuclear

plant also temporarily disrupted Japan’s auto industry by devastating supply chains. As a result,

American cars like Ford and GM gained market share from Japanese brands, decreasing the trade

deficit. But calling this a productive or “good” outcome would be perverse since any gains in

GDP came as a result of resources being destroyed, rather than value being created.

Trade is beneficial because it expands the extent of the market (more potential people to buy

your goods) and enables a society to take advantage of a broader division of labor and deeper

specialization (more people can specialize in different parts of the production process and, as a

result, produce those parts more efficiently). But even more fundamentally, when people

exchange with one another they are almost always made better off, regardless of whether they

live in the same or different countries.

So when dealing with trade the relevant question is: are all the possible benefits from exchange

being realized? A US trade deficit may mean that the aggregate “economy”, as defined by a set

of arbitrary borders, is not growing as fast as it otherwise would, but that says nothing about the

consumers who benefit from the cheaper products that they import from abroad.

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“Free trade agreements draw majority support from most typology groups” June 25, 2014

(Pew Research Center)

In most of these cases, it seems like politicians and interest groups do not want to engage in a

public debate on these issues because voters largely don’t care. And why would they? TPP

would almost certainly benefit American consumers, but very little, perhaps a few dollars or

even a few cents per item. This reflects the logic of most government programs in general: such

programs cost most Americans very little. As such, people do not suffer the negative

consequences of bad policies, especially when these policies are nation-wide. The costs are

spread over a large number of people, while the benefits are concentrated for a very few. Much

more visibly, a certain number of people would certainly lose their jobs due to the agreement.

There is a lot of talk generally about voter ignorance; for example, most Americans don’t know

who the Vice President is, who the World War II combatants were, and so forth. But this is just

trivia. What difference does it make if someone knows these historical facts, beyond some vague

concept of “civic virtue”? Normal people care about concrete things like the price of gas, the

price of groceries, and whether or not they have a job. Their expertise is generally deep but

narrow, and focused on local issues close to home: family, neighborhood, etc. Much of their

knowledge is tacit, in that it cannot be communicated easily.

This is as it should be. I don’t know anything about the local economy of Akron, Ohio, and it

would be unproductive for me to. National policy is deliberately broad-based, because it

decreases the benefit that people get from paying attention and understanding it, and increases

the amount that interest groups can influence how income is distributed.

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“How Russia’s labor migration policy is fueling the Islamic State” July 11, 2015 (The

Washington Post)

In 2015, Russia began requiring that foreign workers pass a series of tests and pay for permits in

order to migrate to the country and gain access to its labor market. For workers from Tajikistan,

a poor Central Asian country neighboring Russia, the changes have the potential to be

devastating. Russian President Vladimir Putin began allowing Tajikistani workers greater access

to Russian jobs as part of his effort to gain influence over his Central Asian neighbors. About

47% of Tajikistan’s GDP came from workers’ remittances by 2013, according to the World

Bank, a larger share of the economy than in any other country. But the World Bank expects

remittances to drop by almost 25% due to Russia’s new restrictions.

The Russian government’s barriers to labor mobility illustrate the danger of unintended

consequences. It is clear why Tajiki workers flock to Russia: the man interviewed in the

Washington Post makes about 29,000 rubles a month, or about $900 USD. According to the state

statistical agency in Tajikistan, the average monthly wage is about 900 Tajikistani Somonis,

equal to about 8000 rubles or $140 USD a month. Basic economic reasoning predicts that raising

the costs of an activity, in this case obtaining the paperwork needed to secure a work permit, will

result in pushing some Tajiki workers to pursue alternative money-making activities.

One alternative is fighting for the Islamic State (IS). According to reports from former IS

fighters, the militant group provides stipends, housing, and food to foreign recruits and their

families. IS makes strong demands of its fighters, including adhering to an austere Muslim

lifestyle with the potential for committing acts of extreme violence against enemies. But while

the group attracted thousands of foreign fighters with the promise of life under an authentic

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Islamic Caliphate, there are no doubt some who came because the subsidized lifestyle was

preferable to any alternative available at home.

Luckily, the more foreigners coming to Syria and Iraq to fight due to a lack of alternatives, the

larger the opportunity there is to tempt those workers with better opportunities elsewhere. But

this will require that other, hopefully more enlightened nations liberalize their own migration

laws and allow foreign workers access to their labor markets. Jobs in the EU or in the US, even

low-paying jobs, may coax Tajikistanis and other desperate Muslim workers away from

unproductive and even deadly activities like fighting for the Islamic State. And it will benefit the

home nations as well. These migrants do not just move to richer nations to live off of the welfare

state; they provide low-skilled labor to business owners, increase the demand for goods and

services, and may start businesses of their own. So liberalizing labor migration is not just good

anti-terrorism policy, it is also good domestic and humanitarian economic policy.

Critics of a more open labor migration will point to countries like France, which has a large

Muslim migrant population that has largely failed to integrate with the rest of French society,

resulting in extremism and violence. But while France’s government has been generous in

accepting migrants, especially refugees fleeing conflicts in France’s former colonies, the

country’s labor laws and hostility toward immigrants in general make it difficult to find a job. A

high minimum wage makes it too costly for many employers to hire low-skilled migrants, while

laws that make it hard to fire workers make employers hesitant to hire unproven foreigners. As a

result, many low-skilled Muslim migrants live in poverty and are ripe targets for recruitment

among extremist groups. Maximizing the gains from labor migration requires these countries to

make it easier to start businesses, get hired, lay off workers, and pay them a wage corresponding

to their productivity and the value they generate for a business.

13

“Iran deal raises prospect of fresh oil glut” July 14, 2015 (The Wall Street Journal)

Iran reached a deal Tuesday with the five permanent members of the security council and

Germany (the P5+1) to rein in the Islamic Republic’s nuclear program and relieve economic

sanctions. The US and the EU, operating through the United Nations, imposed harsh economic

sanctions on Iran beginning in 2011 that prevent the country from exporting oil and other

petroleum products to most of the industrialized world. For a country in which the value of

exported petroleum products made up over 20% of GDP in 2011, the result was devastating.

According to the Energy Information Administration, oil and natural gas export revenue dropped

47%, from $118 billion in FY 2011/12 to just $63 billion. This contributed to the nation’s GDP

shrinking over 6% in 2012, according to IMF data.

The prospect of lifting sanctions means that oil can start flowing once again, but the timeline is

still unclear. The agreement signed with Iran and the P5+1 states that the initial set of sanctions

would not be lifted until the International Atomic Energy Agency (IAEA) verifies that Iran

complied with the initial set of conditions to limit its nuclear program. Secretary of State John

Kerry estimated that would take about six months. Iran could then immediately sell some 20

million barrels already on hand and the Ministry of Petroleum claimed that it could ramp up

production by one million barrels a day within a few months by re-activating idle wells, though

industry experts predict that the number is probably between 100,000 and 400,000. Production

could increase further, by between 400,000 and 600,000 barrels a day, by the end of 2016.

Getting any more production out of Iran will likely require investment and expertise that can

only be gained from global oil companies. But while some companies with a presence in Iran

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before sanctions are eager to re-enter once they are lifted, it is likely that others will be more

hesitant given that significant uncertainty remains regarding the nuclear deal and the end of

sanctions. One challenge is that the deal still has yet to be officially adopted by the US; Congress

has 60 days to review and vote on the resolution, the result of which the President can then sign

or veto. But given the harsh penalties levied against firms that were accused of violating the

sanctions--private companies, especially banks, face millions of dollars in fines and years in

jail--investors will not risk a firm commitment until the deal is officially adopted.

Another challenge is the nature of the energy industry itself: Iran’s constitution prohibits foreign

ownership of natural resources, so the National Iranian Oil Company and two other state-owned

enterprises manage Iran’s energy sector, including all oil and natural gas production projects.

Foreign companies are allowed to participate in the exploration and development phases, but

only by entering into contracts with Iran subsidiaries. The key question for foreign investors is

whether Iran will establish a new framework for petroleum contracts that allow international oil

companies to participate in all stages of a production project.  Iran’s Ministry of Petroleum said

that the details of those contracts would be revealed in September.

The nuclear issue aside, critics of the deal warn that lifting sanctions risks revitalizing Iran’s

economy and empowering them to pursue mischief in the Middle East. But this reasoning

confuses intentions with outcomes. Sanctions do hurt the country being sanctioned, but they also

hurt the countries applying sanctions. Access to Iranian oil will lead to cheaper gas and other

energy prices, making everyone richer. Lifting sanctions gives private companies access to a

huge, relatively wealthy market hungry for US goods and enriches Americans in the process.

15

“Air force will offer bonuses to lure drone pilots” July 14, 2015 (The Wall Street Journal)

The US Air Force is offering its officers thousands of dollars in bonuses if they commit to

becoming drone pilots for five years or more, with officers already in the program receiving a

$15,000 retention bonus for every year they stay on. These steps are in response to a shortage of

trained drone pilots, coupled with an ever-increasing demand for the intelligence and offensive

capabilities they provide. As a result, the average drone pilot flies about 900 hours per year,

while a traditional pilot spends less than a third of that time flying, leading to high levels of burn-

out among active drone pilots—the article states that about 230 pilots leave the program each

year, while the Air Force trains only 180 new pilots.

Basic economic reasoning can help explain why drones, and thus drone pilots, are in such high

demand. Drones greatly decrease the costs of intelligence-gathering and warfare, at least for the

side commanding the drones, compared with traditional methods. Flying a remote-controlled

aircraft from the safety of the US is less costly in terms of lives risked and valuable equipment

lost. Drones can be flown over dangerous or inaccessible places to gather information and

conduct strikes. And in many cases those strikes do not require a soldier or other operative on the

ground to guide munitions from a high-flying aircraft to a designated target. Drone pilots can

simply point and shoot. This helps explain the proliferation of drone use across the world, both

by the US and other nations.

But economic reasoning also predicts that if you decrease the cost of an activity, all else held

constant, people will do more of it. Drones make waging war cheaper, and as a result we

increasingly see the United States and its allies engaged in a state of near-perpetual war against

traditionally faraway enemies: the Taliban in Afghanistan, ISIS in Iraq, al-Shabab in Somalia,

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and al-Qaeda in Yemen. And their ability to lower the cost of surveillance makes drones

appealing in other, non-military contexts, such as patrolling the US-Mexico border and policing

airports in the UK. But there should be no doubt that the offensive capabilities that make drones

so effective in a martial context will also tempt governments to use them in non-military settings,

such as in law enforcement and domestic surveillance.

The rise of drones has other negative, unintended consequences. The Bureau of Investigative

Journalism estimates that between 2004 and 2015 the US inadvertently killed at least 500

civilians, and possibly many more, in over 550 confirmed drone attacks carried out in Pakistan,

Yemen, Somalia, and Afghanistan. One attack on a suspected al-Qaeda compound accidentally

killed two Western hostages held there. And it isn’t just friendly governments using drones

anymore. The US Army issued a report that Iran is developing drones laden with explosives to

disable ships in the Strait of Hormuz. And the Pakistani government recently claimed that it shot

down an Indian spy drone, raising tensions along the world’s most dangerous border.

There is also a institutional explanation for why the Air Force is having trouble finding pilots.

Flying drones lacks the prestige associated with flying jets or helicopters. Drone pilots sit at a

desk and are more in danger of developing carpal tunnel than being shot down. So in addition to

increasing their pay and decreasing their workload, the military can also expect to attract and

retain more drone pilots by changing the cultural norms associated with that profession. Another

option is to lower the barriers to entry. Currently, only officers can become Air Force pilots,

including drone pilots, drastically shrinking the pool of potential recruits. Allowing enlisted

personnel to enter their ranks would increase the number of potential drone pilots, but may

further degrade the prestige of the position and could have other unintended consequences.

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“U.S. suddenly goes quiet on effort to bolster Afghan forces” January 29, 2915 (The New York Times)

Beginning in 2015, the US military stopped sharing information about the Afghanistan

occupation that for the previous six years had been made publically-available through the Special

Inspector General for Afghanistan Reconstruction (SIGAR). The newly-classified information

includes such details on Afghanistan’s military strength as troop levels, desertion figures, and

casualties among soldiers and police. But it also includes data on taxpayer money spent in

Afghanistan. SIGAR’s quarterly reports now only contain top-line spending figures, while the

bulk of the details are confined to an appendix that is classified as top secret. While the US

military claims that the information was restricted to protect the lives of American soldiers and

their Afghan allies, the move is part of a broader phenomenon of over-classification throughout

the government’s national security bureaucracy.

One reason we see a trend toward over-classification is that the incentives facing national

security bureaucrats push them toward greater secrecy. Bureaucrats incur very little cost from

making more and more information top secret, which they can justify as in the interests of

national security. But they do bear the costs of under-classifying information, in that if it is

discovered that enemies used publically-available information to their advantage, or if unpleasant

details of a government program are made public, those bureaucrats could bear the blame.

Similarly, there are benefits for bureaucrats to over-classify information: it makes it more

difficult for that information to be subject to public debate. If an issue arises that may be

inconvenient or embarrassing for the government to deal with, an easy remedy is to put up legal

barriers to its discussion.

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Another reason that we see over-classification is that there is little genuine oversight of the

national security bureaucracy. The article above makes this clear. SIGAR is charged with

overseeing how money is spent and communicating that information to the public. But when

large amounts of information related to spending on the Afghan occupation suddenly became

unavailable, SIGAR could only criticize the decision and call for greater transparency. Members

of Congress from both parties also criticized the move but apparently took no further steps to

reverse it. This is because those in Congress face many of the same incentives as the national

security bureaucrats: they bear only a small cost for over-classifying information in the form of

public resentment but benefit from limiting access and debate on potentially embarrassing

information about an unpopular war.

One implication of the over-classification trend is the danger of a vicious cycle developing: as

more information becomes classified, oversight of the national security apparatus under the

current institutional arrangement becomes more difficult. As a result, the risk to individual

bureaucrats of extending their power and getting punished decline, further incentivizing the

abuse of power in the name of national security. How do we stop this cycle from forming? One

option is to change the incentives for individual bureaucrats within the system to report abuses of

power when they happen. While the government nominally protects watchdogs, in reality those

who leak classified information to the press or elsewhere face harsh penalties. But if a program

were put in place that encouraged leaks, perhaps for a large sum of money and immunity from

prosecution, we would see more Edward Snowden-type revelations about massive abuses of

national security power.

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