A DISCOURAGING NOTE ABOUT THE DECISION TO LAUNCH A WAR IN IRAQ

Earlier, I explained the concept of marginal analysis. Although marginal analysis is an economic concept, it can be applied to many situations-war included.

The question I want to answer is this: are we getting our money’s and lives’ worth in the ongoing war in Iraq? In other words, after $350 billion (although estimates vary widely) and the lives of 4,500 troops, what has America really accomplished? Has America received the benefits it expected? What, in fact, are those benefits?

On March 9, 2008, MSNBC.com reported that a Nobel Prize-winning economist (J. Stiglitz) reported that the US government is burning through $12 billion a month to fight that war.

I recently concluded that this was a totally unnecessary war. And before I proceed, note that this entry discusses contemporary US politics. And politics, as my second favorite uncle said, is one of those topics where the discussion never ends. (The other is religion.)

VOICES OF DISSENT

Shortly after the US invaded Iraq, various politicians—most of whom come from the Democratic party—described the Iraq War as a “war of choice” or phrases to that effect. (President Bush belongs to the opposing party-the Republican party.) Various political commentators echoed the same observation.

USA Today reported on August 26, 2004 that:

“Iraq was a war of choice, and the United States is bearing virtually all of the cost,” according to John Podesta. Mr. Podesta was the chief of staff of former President Clinton. He now heads the Center for American Progress, a liberal think tank. He is, unquestionably, a liberal Democrat.

Boston Globe reported on September 9, 2004 that:

CINCINNATI —— Senator John F. Kerry, campaigning at the same site where President Bush laid out his case against Saddam Hussein two years ago, yesterday called the Iraq war a “catastrophic choice” that has cost $200 billion while inspiring terrorist groups and yielding “the most incalculable loss of all”—more than 1,000 US military deaths.

“George W. Bush’s wrong choices have led America in the wrong direction in Iraq, and they have left America without the resources we need so desperately here at home,” Kerry said, in a bluntly worded attempt to contrast his views on Iraq with the incumbent’s war policy. “I call this course a catastrophic choice that has cost us $200 billion because we went it alone, and we’ve paid an even more unbearable price in young American lives and the risks our soldiers are taking. We need a new direction.”

TIME WILL TELL

For my part, I withheld judgment about the wisdom of waging war in Iraq until I read Scott McClellan’s book. Scott’s book explains his belief that the Bush administration fabricated evidence to justify the assault on Iraq.

Who is McClellan? He’s the former Press Secretary of President Bush. Mr. McClellan was a loyal worker for the president since 2000. He became the Press Secretary-the official mouthpiece of the White House-on July 2003 until he resigned on April 2006. In June 2008, his book, "What Happened: Inside the Bush White House and Washington's Culture of Deception," was published.

I found the book credible. I don’t think Mr. McClellan had an axe to grind. Instead, I think his conscience was weighed down by his knowledge and he wrote it to both clear his conscience and to inform the American people of his belief that the president deceived the American people. It was this book that clinched the case and convinced me that America did not have to invade Iraq.

According to the Washington Post (October 10, 2004), the rationale behind the invasion was...

In announcing 19 months ago that the United States was poised to invade Iraq, President Bush told the nation:

• Intelligence gathered by this and other governments leaves no doubt that the Iraq regime continues to possess and conceal some of the most lethal weapons ever devised...
• The people of the United States and our friends and allies will not live at the mercy of an outlaw regime that threatens the peace with weapons of mass murder.

But the argument that the United States faced a moment of maximum peril in early 2003 from Iraq has been greatly weakened by the release last week of the comprehensive report of chief U.S. weapons inspector Charles A. Duelfer. Click on any of these links: Link-1, Link-2, or Link-3.

The report found that the 1991 Persian Gulf War and subsequent U.N. inspections destroyed Iraq's illicit weapons capability, leaving it without any chemical, biological or nuclear weapons.

Saddam Hussein hoped to someday resume his weapons efforts, the report said, but for the most part there had been no serious effort to rebuild the programs.

I looked for corroborating evidence and found it in the official press release by the White House on October 7, 2002:

1. Tonight I want to take a few minutes to discuss a grave threat to peace, and America’s determination to lead the world in confronting that threat.
2. The threat comes from Iraq. It arises directly from the Iraqi regime’s own actions-its history of aggression, and its drive toward an arsenal of terror.
3. Eleven years ago, as a condition for ending the Persian Gulf War, the Iraqi regime was required to destroy its weapons of mass destruction, to cease all development of such weapons, and to stop all support for terrorist groups.
4. The Iraqi regime has violated all of those obligations. It possesses and produces chemical and biological weapons. It is seeking nuclear weapons. It has given shelter and support to terrorism, and practices terror against its own people. The entire world has witnessed Iraq’s eleven-year history of defiance, deception and bad faith.
5. We also must never forget the most vivid events of recent history. On September the 11th, 2001, America felt its vulnerability—even to threats that gather on the other side of the earth. We resolved then, and we are resolved today, to confront every threat, from any source, that could bring sudden terror and suffering to America.
6. Members of the Congress of both political parties, and members of the United Nations Security Council, agree that Saddam Hussein is a threat to peace and must disarm. We agree that the Iraqi dictator must not be permitted to threaten America and the world with horrible poisons and diseases and gases and atomic weapons. Since we all agree on this goal, the issues is: how can we best achieve it?

We know now that the answer was war.

ONE OF THE UNIQUE THINGS ABOUT AMERICAN DEMOCRACY

America is unique in the sense that its leaders must convince its people that its military action is justified. America’s military power is such that it can win practically any war. Its military’s weakness-if that’s what it should be called-is the American people’s attitude towards any military action. The American people must support it since public attitude will ultimately support or undermine the might of the military.

I thought the president did a fine job during his first term but he really screwed up his second. Most of that screw-up revolves around the war in Iraq.

I also think that he capitalized on the trust that he had built after he led the post-9/11 America. I believe that the evidence supports the deception. And I am discouraged to acknowledge that the president did what many others have done before him—betray the public trust.

Next, let’s see if marginal analysis can determine the benefit of waging the war in Iraq. It can. And the conclusion is terrible. I would like to submit a suggestion. It’s an illegal suggestion unless Congress can be convinced to change the law. It’s a pragmatic suggestion that makes a lot of economic sense. By that, I mean that the cost-to-benefit ratio will be low and that's a good thing. We want the most bang for the buck. It should cost considerably less than a hundred million dollars. Compared to the war effort, this is a simple operation. The beauty of it lies in the likelihood that it will deliver most or all of the benefits that were originally expected.

What are those benefits anyway? Answering that question will require answering two more. Who should own these expectations—the American people or the government? And what benefits does an aggressor typically derive from a victorious war?

To be continued in a few days...

REMEMBER SCHWINN BICYCLES?

How bad management destroyed an American icon.

Our personal accountant was (and, may be, still) married to one of the manufacturing executives of Schwinn Bicycle Co. She was our accountant from 1989 until they moved to Colorado in 1994. She was our accountant for both our business (printing) and personal affairs. We had several good discussions about Schwinn’s decision to outsource practically all of its manufacturing to China.

It began with the decision of two generations of Schwinn family descendant. The first descendant inherited a bureaucratic and complacent company. He decided to stay the course and that must have contributed to Schwinn’s failure to recognize the BMX craze that began in the 70s. This was followed by hybrids (road and off-road models). Schwinn missed that too. Then, the market started looking for more exotic metals (like titanium and much later, carbon fiber) to use for bicycle frames. Schwinn also missed that.

Schwinn lost market share and, worse, visibility among the younger generation. Management decided to look overseas for a solution. They decided to downsize and outsource manufacturing. (Of course, terms like “downsize” and “outsource” did not exist at that time but they accurately describe their activities.) Along the way, they antagonized their suppliers and dealers. Their suppliers entered the U.S. market themselves. Their dealers defected. Good grief, what a mess!

Their moves were all band-aid solutions. Schwinn’s decline continued. At about this time, the second (and final, as it turns out) generation took over.

(FYI: New tabs or windows will open for each hyperlink.)

As this Wikipedia article states, this descendant was a great believer in MBAs. (This degree was in its ascendancy at that point. I recall reading an article questioning whether the management of business could really be taught in schools.)

At any rate, the vicious cycle continued. In addition to quality and supplier problems, engineering and marketing were slow to catch up with trends. I suspect that the centralized decision-making had a lot to do with their lack of nimbleness.

As the Wikipedia article states, the firm declared bankruptcy in 1992 and Zell (the Chicago billionaire who now owns The Tribune Co.) bought it. Zell moved corporate to Colorado and that’s when our accountant relocated with her husband to Colorado.

In 2004, another Schwinn descendant, was featured in an article by the Washington Post.

This last one is a beauty. It features a timeline. Read the entries from 1975 on.

This story has many business management-related lessons. Most of them, in my opinion, stem from fossilized management.

Just in case, those links no longer work, I saved archive copies:

1. The Washington Post article
2. The Wikipedia entry