Declaring Victory

On reflection there was a central theme in President Obama’s 2015 State of the Union message. He was declaring victory. He declared victory in Afghanistan:

Tonight, for the first time since 9/11, our combat mission in Afghanistan is over. Six years ago, nearly 180,000 American troops served in Iraq and Afghanistan. Today, fewer than 15,000 remain. And we salute the courage and sacrifice of every man and woman in this 9/11 Generation who has served to keep us safe. We are humbled and grateful for your service.

This is a very narrow definition of victory and it’s one that could have been achieved seven years ago with little difference in effect other than the lives of those who’ve been killed in the interim. Even as we are drawing forces down in Afghanistan we are returning them to Iraq, without strategic objectives that can be effected by the tactics being used.

Similarly, on the domestic economy:

At this moment — with a growing economy, shrinking deficits, bustling industry, and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth. It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come.

Unfortunately, according to the National Association of Counties, only 65 of the 3,069 counties have recovered completely since the recession, most of those in Texas and North Dakota based on fossil fuel energy production. In other words, recovery has come to those counties despite the policies of the Obama Administration rather than because of them. We’re accustomed to the rooster taking credit for the sun’s rising.

This theme wasn’t lost on the editors of the Washington Post:

The emphasis on domestic issues was striking, given international developments in the past year. A year ago, Mr. Obama spoke of taking the country off its “war footing”; since then, he has sent thousands of troops to Iraq and launched airstrikes against the Islamic State.

This time Mr. Obama asked Congress for formal authority to continue the war, which he said would “take time” and “require focus.” But his ambivalence about the effort was evident in the relatively short shrift he gave to the fight against Islamic extremism. He underlined the end of the U.S. combat mission in Afghanistan, though the war rages on and the Afghan government is losing ground to the Taliban.

We’ve seen this movie before and we know how it ends. The Afghan government is completely dependent on foreign aid, mostly U. S. foreign aid. It cannot maintain its military, willing to fight or not, without it. That aid will be cut off sooner rather than later as we have done in the past without de facto permanent commitment of troops.

This post is not intended as an indictment of the Obama Administration rather my intention is that it be hortatory. There are three possibilities for these declarations of victory: the president is right, the president is wrong, or declaration of victory is premature. Put me down for the last.

We can do better. He can do better. Make economic growth a primary objective. Look to the infrastructure of the future, energy and connectivity, rather than that of the past—roads and bridges. Build the pipelines. They will bring some short term job and economic growth. Emphasize data infrastructure (including security) rather than bridges to nowhere and roads that should never have been built.

Stop thinking of the economy as zero sum, a situation which the only way that anyone wins is by making someone lose. More soft power, convincing people to want what you want, rather than hard power.

For more analysis of the State of the Union message see the roundup at memeorandum.

21 comments… add one
  • steve Link

    Of the three choices I would say he is wrong on Afghanistan. We don’t know how to remake the country. No one does. On the domestic front I am in agreement. As R&R noted in their book, it usually takes 5-8 years to recover from an international banking crisis. We are over the worst of it now. What we now need to address are the long term problems that have been covered up by the bubbles of the 90s and the aughts. Build the grid and connectivity as you suggest. The pipelines too since the extra 50 jobs a year they will give us would be a big help.


  • Modulo Myself Link

    The focus on the pipeline is truly strange. We have a drop in oil that has totally screwed Russia and which might explode the junk bond/fracking enterprise in America, and people think a solution for growth is energy.

  • ... Link

    I love how a rich guy in an extremely subsidized industry is telling me that the economy is just fucking wonderful. V st today or I’d go digging now for the number of fewer full-time jobs for people age 25-54 we have now than at the last peak. This economy remains a disaster.

  • ... Link

    Cheap energy allows a great many other than things to be done, from transportation & manufacturing to de-salinization on a large scale. (Ask a Californian if they’d like some large scale & cost efficient de-salinization options at the moment.)

    It’s bad to be solely dependent on one type of industry for a whole economy, since everything has its ups and downs, but cheap energy has to be a long-term plus.

    For that matter, cheap oil at the moment seems to be a function of the Saudis trying to cripple their enemies (including the US fracking industry) before the cheap oil cripples them, rather than some more organic glut on the market.

    I fear, however, that the Saudis are probably just sowing the wind….

  • Ellipsis already answered your question for me, MM. Energy infrastructure not just pipelines is the highest priority and coal, oil, and gas are going to be the most important sources for the foreseeable future.

  • Andy Link

    So my political choices are between an incompetent statist oligarchy and an incompetent corporate oligarchy. This is why I drink too much and hate partisanship.

  • Andy Link

    Cheap energy has downsides – for one, global transportation is cheaper which makes some foreign products more competitive and amplifies the labor cost advantages outside the US.

  • ... Link

    Andy, the people running the country are fixing the labor cost disparity by importing millions of peasants. Problem solved!

  • Guarneri Link


    The actual materials handling capabilities of the equipment are more important than energy characteristics. Rail dominates trucking for energy, but not other characteristics.

    Commenters citing “50 jobs” about the pipeline does not inspire confidence. No discussion about the pipeline is complete without considering the feedstocks various sources carry. I tried over at OTB but that fell flat because it didn’t fit the tastes great/less filling norm.

    I am of course less charitable about the prospects for the economy than “incomplete” because I see no evidence of needs being addressed or policies helpful. It is curious that we are told income inequality is the scourge of our times, yet the administration is cold stone quiet about QE, and further, the stock market is often cited as evidence of economic success along with dismal wage performance but more bartender jobs. It can only be described as “Gruberesque.”

    Lastly, I wonder if I made comments wildly praising Obama over there if I’d get thumbs down simply out of Pavlovian effect.

  • Yes. They’ve rejected the Enlightenment values of rationality and logic so that all that’s important is authenticity. Who you are is more important than what you say.

    That’s the reason for the automatic rejection of sources they don’t like. In the world of the Enlightenment that called the “genetic fallacy”. In logic the individual making the claim is irrelevant to the truth or falsehood of the claim. But not in the post-modern world.

  • Modulo Myself Link

    Well, American energy production has gone up. What are the results? Boom towns in North Dakota and finance jobs in Houston, but what else?

    More importantly, if energy and energy independence is such an obvious good, why didn’t the Bush administration act? Was it their environmentalism, their lack of connections with oil companies, and their indifference to red state voters?

    It seems to me that a bunch of people can wargame out scenarios in which everything clicks as America approaches energy independence, but reality is far more difficult.

  • I don’t care about energy independence. I think it’s a phantasm. There’s a global market for energy. And I don’t care what the Bush Administration did or not do.

    What else has happened as a result of the low cost of energy? Manufacturing including manufacturing jobs is up. It’s estimated that the lower price of gasoline will put an additional $800 in the pocket of every household. A lot of that has gone or will go to increased retail sales. Those are just a few of the things that lower energy cost has done.

    However, I agree with one of your points: recovery has got to be expanded beyond the 65 counties that have recovered and I’ve proposed a number of ways of doing that. I wish the Obama Administration would get behind some growth proposals rather than being so intent on divvying up the economic pie.

  • Modulo Myself Link

    I’ll ask naively: will increased energy production in America lead automatically to cheap energy? Are the gas prices never going to rise dramatically again?

  • Not automatically. If you stamp out the cheaper sources (coal, oil, and gas) and replace them with expensive ones (alternative is still expensive–don’t let the subsidies fool you), it won’t.

    As to gas prices rising again, I think they will (despite the Saudi oil minister’s remarks about never seeing $100 a barrel oil again). That’s why I think we should stop subsidizing road construction which serves as a stimulus to oil consumption.

  • TastyBits Link

    @Modulo Myself

    Oil is only one component of gasoline prices. Gasoline is only one product from a barrel of oil. Depending upon how you “crack” it, you can get more or less automobile usable gasoline, and this depends upon the demand for the other products you are producing at your refinery.

    Heating oil, diesel, jet fuel, etc. all have different prices and returns depending upon the market. In addition, there are long term contracts that must be fulfilled first. The prices you see quoted are usually the spot market price. This is what it would cost to buy a barrel today, but most oil is sold as a future commodity.

    If there were a lot of speculators purchasing futures contracts, prices would drop quickly. They would start dumping what they had as fast as they could, and the market would stabilize as the actual users bought up all these contracts. The market would then have a future supply, and demand would be down even though usage would remain steady.

    There used to be web sites that tracked oil futures. It was similar to mortgage rate sites. Mortgage rates are based upon MBS “sales”, and if you know how they are “selling”, you can tell what the rates are doing. This can also give you a general feel for other things also, and oil futures are the same. None of this is secret. I track mortgage rates, but I stopped tracking oil years ago.

    Anyway, the nonsense that you hear about gasoline prices and oil supply is basically nonsense. When oil prices drop this much, it will affect the price of all products obtained from oil, but in general, the refined products have their own supply-demand pricing dynamic. Oil companies hire economists to determine the best way to maximize their profits.

    An example: Oil prices could drop 10%, but jet fuel demand has increased by 20% and gasoline demand by 5%. It could more profitable to increase jet fuel production and decrease gasoline production. The price of jet fuel would decrease (increased supply), but the increased sales would increase profits. The price of gasoline would increase (decreased supply), and the increased would increase profits.

    This is drastically oversimplified, but it is to illustrate the dynamic. If it were this simple, they would not employ economists, and these are not the Nobel award winning kind. These are the kind who know their asses from a hole in the ground, and they can maximize profits.

    None of this is evil or nefarious. It is simply markets at work. The problem is that people who do not know their ass from a hole in the ground spout a lot of nonsense that they have heard some political operative spout, who heard some other political operative spout, and so on, and so on, and …

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