Deepish Thought

Atlantic blogger Megan McCardle doesn’t think much of the the ongoing discussion about whether or not the next President should meet with controversial foreign leaders.

To date, the current administration has been pretty resolute in its policy of not talking to people it doesn’t like.  This could reasonably be described as the angry two-year-old approach to foreign policy.

Unsurprisingly, the lack of invitations to the White House has not had a huge impact on the policies of Iran, Venezuela or North Korea.

To be fair, the President’s lack of involvement has little to do with the administration’s difficulties in dealing with the country’s various foreign antagonists.  The fact is, getting unfriendly regimes to do what you want is largely a question of leverage.  For various reasons, the US doesn’t have any.

Going further, the administration’s no talking policy isn’t quite as pigheadedly stupid as it sounds.  A meeting with the President can be a significant carrot.  It’s the kind of thing that you might reasonably want to hold back until the final stages of negotiation.

More importantly high level talks with dictatorships can be dangerous for the President.  In any high profile meeting the administration tends to be under enormous pressure to show results.  Dictators, who don’t have answer to voters or the press, have no such concern.   The playing field is thus not level, which can easily result in the good guys making concessions that they probably shouldn’t.

However, this is a concern that can easily be addressed.  We have tended to get very hung up on whether or not the President should speak to problematic foreign leaders.  What really matters is what the President would say. Obama could largely eliminate concerns about his engagement policy by addressing the issue along the following lines:

“Would I speak with President Ahmadinejad?  Certainly.  Communicating with foreign leaders is part of the President’s job.  Would President Ahmadinejad enjoy the conversation?  Probably not.  I would tell him in no uncertain terms that his country is on a dangerous path that could lead to conflict with the United States.

We should have no illusions that my words alone will change the policies of the Iranian government.  However high level engagement is one of the tools we have at our disposal.  I will not neglect any opportunity to communicate our views and apply pressure to the Iranian regime.  This is one of those times we need a full court press.”

Harvard economist Greg Mankiw supports the “plague on both your houses” view of Congress’ role in the Freddie & Fannie fiasco.

Events are moving so quickly that this post is already two massive bailouts behind the times. However, the quasi-nationalization of Freddie and Fannie is such a significant event in the history of finance and government that it bares belated comment.

One of the (many) great tragedies of the Bush administration is that its reputation for untrustworthiness, incompetence, and blatant political hackery became so overpowering that people stopped listening. So on the rare occasions when the administration displayed the foresight so conspicuously lacking in Iraq and New Orleans, nobody listened.

The Bush administration repeatedly warned that Freddie Mac and Fannie May were dangers to the stability of the financial system. Congress, determined to show that the administration doesn’t have a monopoly on self righteous, arrogant bungling, and always mindful of the flow of campaign contributions, chose not to listen. The result is that taxpayers are on the hook for Freddie and Fannie’s losses.

Congress has (shamefully) shown itself to be not so very different from the administration. When it came to Freddie and Fannie, Congress chose to believe what was personally and politically convenient, regardless of the evidence. Faced with a crisis, Congress reached for the quick fix solution of having Freddie and Fannie expand their operations, without considering the risk. Ignoring outside advice they took their cue from lobbyists who wanted to use the housing crisis to help Freddie and Fannie escape the restrictions imposed as a result of their respective accounting scandals.

Finally, Congress appears to be dead set on learning nothing from the experience. The political groundwork is already being laid for the resurrection of Fannie and Freddie. No doubt bigger, more political and even less transparent than before.

Perhaps the most depressing aspect of this whole sad saga is that it really deosn’t seem to matter much who controls Congress.  Between 2002 and 2006 the Bush administration and the Republican Congress put on a master class in bad government. Sadly, it appears from their recent performance that congressional Democrats were taking notes.