Showing Your Work: Who really got Iraq or the market crash right?

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One thing I remember from high school math is to always show your work. The teacher wanted to make sure you knew what you were doing and not merely guessing (or cheating). For example, if the problem was-

3x+2=14

You couldn’t merely write

x=4

You had to show-

3x+2-2=14-2

3x=12

3x/3=12/3

x=4

You get the idea.

As we approach the 10 year anniversary of the Iraq War, I’m quite afraid we’re going to get a lot of people showing us the answer they wrote at the time and claiming they have been vindicated. However, what they won’t show is how they got their answer.

As I look back on the war, I remember the problem a lot of anti-war folks ran into. They began to focus on the tactical mistakes of the war. The problems were-

  • the mission wasn’t international (no UN Flag, not even the backing of NATO)
  • we didn’t have enough troops
  • we made horrible political decisions like firing all Baath Party and firing the army and them replacing them with political hacks from the Republican Party

James Fallows wrote yesterday about how his arguments before the war, while critical, accepted the war was going to happen. Many pundits and policy makers can point to statements they made showing skepticism of how things would play out.

However, all this obsession with tactics underwrote what was the key problem-was invading Iraq necessary? Was Iraq a threat? Is preventative war a good policy? These are much more pressing concerns than troop levels or the members of the occupational authority. As Stephen Walt wrote last year, even with better planning, we probably would have still lost the war. However, now, as back then, no one is really discussing these things.

This reminded me of an article by the normally good Hamilton Nolan about Stanley Druckenmiller and his call for cuts to the social safety net. He cites as Druckenmiller’s authority-

Stanley Druckenmiller predicted the last financial crash (the collapse of the housing bubble) years before it happened

I have seen this many times over the last couple of years. Often I hear some pundit saying or being introduced with “I predicted the housing bubble burst.” Rick Santelli was the worst last week when he claimed Alan Greenspan predicted the burst. However, to quote Jeff Madrick’s Age Of Greed

The bursting of the housing bubble…did not alone nearly bring the nation to the cusp of full-fledged depression. The decline in housing prices would have resulted in reduced consumer spending and a substantial recession in the United States, as many economists had warned, but not the economic catastrophe of late 2007 and 2008. It was the house of cards built on Wall Street greed, unchecked by Washington regulators, that created the nation’s credit crisis…and caused the most severe recession in the United States since the Great Depression. (p.371)

In the case of Druckenmiller, he doesn’t blame regulation, he blames interest rates being too low for the crash and calls on workers to suffer for the sins of Wall Street.

We keep seeing this with people who got the public policy so wrong the last decade-blame some smaller tactical error everyone can agree was wrong (not enough troops to occupy Iraq, giving money to homeowners who couldn’t pay it back), ignore the larger problems with their world view, and keep on giving advice as if nothing happened.

This lack of accountability has led to the people who got things completely wrong to still hold positions of key influence. Kevin Hassett wrote a book before the Dot-Com bubble crash predicting the Dow Jones would reach 36,000 and he was a senior adviser to the Romney campaign. Dan Senor failed miserably in Iraq yet that didn’t prevent him from coming up with foreign policy for Romney. To be bi-partisan, both of Obama’s Secretaries of State and Defense voting for the Iraq War (though they later admitted to their mistakes) and, while Obama’s Treasury Secretary Jack Lew believes we need to deal with unemployment, one cannot blame people for being skeptical about his priorities given he worked for Citibank in the lead up to the crisis.

People make mistakes. Even the most brilliant minds get things wrong. However, it’s important we know your though process going into a decision. Showing us your model or your hypothesis is important. This means if you’re correct, we can and try to apply your methods to dealing with other problems. If you’re wrong, we can look over where you went wrong, and try to get it right. However, pundits and policy makers don’t seem to be interested in showing their work. To them, it’s about covering their own behinds and making sure they keep raking in the money or winning elections.

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