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The same old mistakes

Summary:
War, wrote Carl von Clausewitz, “is merely the continuation of politics with other means.” Which implies that the mistakes made in thinking about war will be similar to those made when thinking about domestic policy. This is especially true of those, such as Dan Hodges, calling for a no-fly zone in Ukraine. Of course, Mr Hodges is a squit who is best ignored. What’s significant is that his call reflects two widespread errors. Error one is that you must base policy not upon what you hope will happen, nor even upon what you expect to happen, but upon the range of possible outcomes. For example, in the IC, I tell my readers to hold a decent proportion of cash to protect against the possibility not just of losses on equities, but of falls in equity and bond prices at the same time.

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War, wrote Carl von Clausewitz, “is merely the continuation of politics with other means.” Which implies that the mistakes made in thinking about war will be similar to those made when thinking about domestic policy. This is especially true of those, such as Dan Hodges, calling for a no-fly zone in Ukraine.

Of course, Mr Hodges is a squit who is best ignored. What’s significant is that his call reflects two widespread errors.

Error one is that you must base policy not upon what you hope will happen, nor even upon what you expect to happen, but upon the range of possible outcomes. For example, in the IC, I tell my readers to hold a decent proportion of cash to protect against the possibility not just of losses on equities, but of falls in equity and bond prices at the same time. Imposing a no-fly zone in Ukraine would require shooting down Russian planes which would risk triggering all-out war with Russia. There’s no point dismissing this risk: you don’t know enough about Putin’s mind to do so. What matters is avoiding it. And to their credit, Boris Johnson and Ben Wallace seem to be doing so. Clausewitz

You might think this principle is an obvious one. It’s not. Brexit was based in part upon wishful thinking to the neglect of the downside risk that the EU would prove a tough negotiator. A post-Brexit trade deal would be "one of the easiest in human history" said Liam Fox. “The day after we vote to leave, we hold all the cards and we can choose the path we want” said Michael Gove. Subsequent events have not necessarily vindicated such optimism.

Ditto fiscal austerity after 2010. There might have been a case for this if the world economy were strong and the UK sector sufficiently dynamic to take up the slack created by weak government demand. But they weren’t. Sensible fiscal policy would have heeded the risk of this. When in 2012 Vince Cable tried to excuse the UK’s weak growth by pointing to the euro crisis, he was actually drawing attention to how bad policy was, because it was not founded upon the distribution of probabilities.

Ditto Iraq. The lack of post-occupation planning was due in part to wishful thinking rather than to a consideration of probabilities, one of which was that the country would sink into chaos.

It’s not just government policy that can go terribly wrong by failing to consider probability distributions. So too can corporate policy. RBS’s takeover of ABN Amro – which contributed greatly to the financial crisis – owed much to Fred Goodwin thinking he could reap synergies to the neglect of evidence that takeovers have a high probability of poor returns for the bidder.

There is, though, a second error in calls for a no-fly zone which has a counterpart in domestic policy. It’s what I’ve called the pawn mistake – of regarding the objects of your policy as pawns who will do your bidding, rather than strategic actors with their own agency and objectives.

The first question to ask of a no-fly zone is: how would Putin react? The answer to which is: possibly not as we would wish him to.

Again, you might think this is obvious. But again, it’s not been obvious to our rulers. In 2019 Digby Jones tweeted:

Hey Mr Tusk. Those who pushed for Brexit did have a plan but it required your lot not to bully the UK, for Remoaners & the Establishment not to sabotage the wish of the majority & for Jezza’s mob not to play tribal party politics with a major National issue.

His discombobulation reflects the assumption of (some) Brexiteers that the EU would do the UK’s bidding, that they would defer to a posh English accent. But the EU wasn’t a mere pawn.

Brexiteers aren’t the only culprits here, though. One reason why target culture has not improved productivity (in the private as well as public sectors) as much as its advocates hoped is that workers are not mere pawns but strategic actors. So they meet targets not by doing more or better work but by teaching to the test; distorting clinical priorities; producing unreplicable academic research; or cooking the books.   

I suspect one reason why the Labour right has discovered an appetite for party unity – which it oddly didn’t have in 2015-19 – is an anger that the little people aren’t merely passive fund-raisers and door-knockers but have the temerity to have thoughts of their own. They don’t see, and still less appreciate, that people are agents not pawns.

Again, though, it’s not just in politics that we see this error. We see it too in stock markets. One of the best-attested anomalies is that of IPO underperformance: newly-floated stocks on average do badly in their first three years on the market. A big reason for this lies in investors’ failure to think strategically. They don’t ask: if this is such a great company why are its owners, who know more about it than anyone else, so keen to sell?

Calls for a no-fly zone are therefore indeed the continuation of politics in that they are the continuation of widespread errors.

But here’s the thing. These errors should be widely known by now: if a twat in Rutland knows them, so should anybody with political influence. The fact that they seem not to be tells us something significant – that a good portion of politics has become divorced from serious thinking about policy and unable to learn from past mistakes.

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