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May 01, 2008

Cheney's Motivations

I'm not much of a student of history, but I've picked up on a few things. I know that during the Cold War, we were all freaked out about nuclear war. Not just the possibility of the Soviet Union having an itchy trigger finger, but the United States being a bit unstable about it as well.

Years later I read about how that was a deliberate foreign policy strategy - brinksmanship and saber-rattling - to convince our enemies that we might just be crazy enough to do it. To get them to back down. And over time, it worked - helped along by an unexpectedly enthusiastic Reagan suggesting arms reductions beyond what was planned for. (His advisors hated him for that.)

Dick Cheney had his hand in that policy. A brinksmanship policy that freaked the hell out of everyone while it was happening, but that proved to yield positive results in hindsight (sort of).

What looked crazy at the time was actually rational in hindsight.

This is what gives me pause about this whole Iraq thing sometimes. All current explanations of Cheney rest on the assumptions of him being a power-mad and crazy recluse. It's as if no one can explain Dick Cheney without believing he's crazy.

What if Dick Cheney isn't crazy?

That question is enough to drive many progressives crazy, but they (we) do themselves no favors by refusing to consider the question.

Just as a thought exercise I think it's interesting to consider the last few years from the perspective of a leader that is rational.

The world's economy is driven in large part by America's economy, and America's economy is largely dependent on energy, which currently means oil.

Oil demand is measurable and well-known throughout the nation and the world. Oil prices are not driven by true oil supply - they're driven by perceptions of supply. Oil supply is not measurable, kept secret, and open to a high degree of speculation. On top of that, there are cartels that can control the amount of supply open to us based off of things that have little to do with pure economic interests, such as Middle East nationalism and fundamentalism.

Everyone, including Dick Cheney, knows that America would be better off if we had less reliance on foreign oil, and were less under their thumb.

Government officials and oil executives have economic models about energy. Large spreadsheets, but a million times more complicated. Of course they do, it would be impossible for them not to. They've factored in variables such as:

  • the price of oil
  • the efficiency of oil
  • the efficiency of alternative energy sources
  • the cost of scaling up alternative energy sources
  • the cost involved to develop alternative energy sources
  • the time required to ramp up alternative energy source
  • the amount of oil that can be produced given current capacity
  • the projects of increased demand in oil

Etc. Using models, it is possible to ascertain the magic point where alternative energy becomes economical "enough" to reduce our dependence on foreign oil "enough". That sentence has a lot of wiggle room, but it'll become clearer with a graph:


For the green oil line, we're plotting price against demand. You can see that as demand increases, price increases. But the slope gets very, very steep, for two reasons. We have fairly inelastic demand for oil in this country. There's a point at which we need to fill our gas tanks, no matter what the price. And supply is limited. So this means that when we're up against the (perceived) supply limits of oil, a small increase in demand can increase prices a lot. We're on the steep part of the curve right now, because our demand is running right up against the (perceived) supply limits of oil.

For the blue alternative energy line, we're plotting the theoretical cost of a unit of alternative energy against time. There are a lot of things that go into this calculation. For one thing, say it costs $50 for oil to give us a set amount of power, and $25 for a solar panel to give us that same amount of power. That doesn't matter if we can't scale up the production of that solar panel to make the dent in the demand for oil. The cost for ramping up has to be factored in, and then we might see the cost for that unit of solar go up to $150. So this line is the cost of alternative energy that has the capability of actually affecting demand for oil.

Obviously, we are not at the point where alternative energy is notably relaxing our demand for oil. We will in the future. As time passes, the cost for this unit will go down. And as our demand for oil increases (constrained by the perceived supply), the comparative cost for alternative energy will become competitive on a national scale.

There are some very interesting and economically dangerous side effects to this graph. For instance, say we reach that point where the lines cross and things become competitive. What happens at that point? More businesses will be encouraged to jump in and create more alternative energy. And, demand for oil will start to decrease.

And this is the trick of these Macroeconomic graphs - the lines can move. If demand decreases, it's like the entire green line jogs to the right a few notches. And all of a sudden the lines aren't crossing anymore, and the Alt Unit is more expensive again.

On top of that, since we're basing this off of perceived supply rather than actual supply (thanks to OPEC), surprises can happen. This is exactly what happened in the seventies during the Carter Administration. Alternative Energy companies started up. The Saudis responded by opening the spigots and flooding the market with oil. Supply increased, oil prices dropped like a stone. The Alt Unit costs that were economically competitive were all of a sudden grossly expensive. In relatively short order, we went from here:


To here:


Oil was king once again. Companies went out of business, and Carter got blamed for it. Alternative energy became something to scoff at, all because we got conned by the Saudis. R&D was devastated. It set us back decades.

This uncertainty has been priced into the Alt Unit cost since then. We're not going to really start ramping up on alternative energy until we're really damn sure, and until a sudden drop in oil prices is either not possible, or won't devastate the alternative energy sector if it happens.

The energy companies know this. Dick Cheney knows this. And the oil executives are part of large companies that are perfectly capable of entering the alternative energy markets when it becomes economical for them to do so.

There is another line to add into this graph. I'm going to call it the America line. This is the line that symbolizes our collective standard of living, of survival. It's our ability to handle economic hardship - not on an independent level, but on the collective level. It's the point at which American society reaches a tipping point - where if we can't sustain the level, then American society degrades to a level similar to if a plague were to hit us. You can imagine whatever scenarios you wish, but it's basically the tipping point at which we cannot sustain our familiar levels of societal peace and safety, at which the violence and danger starts to feed on itself and becomes virtually irreversible.

This point is obviously dependent on energy costs. If we reach a point where we simply cannot meet "enough" of our energy costs, society will degrade in a way that does not compare to current or past American history.


When energy gets expensive enough that it crosses the red line, that's... the point to avoid. Is it too hard to imagine that our administrations, with all the brainpower of America behind them - thousands of lifelong government workers doing nonpartisan studies - have not analyzed and modeled American sociological behavior and tolerances?

And so. A decision for war might have come down to one very simple point in time, a decision between two scenarios.

Say that we originally had the assumption that our energy outlook looked like this:


But then, due to new information - whether it was new oil field data showing less supply, or China's greater than expected demand reducing our perceived supply, or perhaps 9/11 raising the likelihood of inflamed anti-American sentiment and less oil supply being available to us - our energy outlook changed to this:


The first graph shows us avoiding the energy costs crossing the red line, thanks to alternative energies. The second graph shows society panicking before we get to that point.

We cannot control the placement of the blue line - we can't make time move faster than it is. The blue line would factor in all scenarios, including Manhattan projects to speed up alternative energy development and deployment.

All we can do is try and affect the position of the green line.

What would a rational, if diabolical, government leader do in this case? Well, the models would tell him:

  • Without perceived supply increasing, American society will degrade unacceptably before alternative energies can reduce our demand for oil.
  • The only way to force an increase in perceived supply is to control the flow of more of the oil.
  • Whoever controls Iraq and Iran controls the flow of oil.
  • America needs to increase the perceived supply of oil available to them, even if only to give them more time to reduce the Alt Unit Cost.
  • A safe and content American society has the luxury of being moral and objecting to such a policy, while an American society on the other side of the green line would collectively be in favor of it.
  • It might actually be possible to come out of it with a stronger Democratic presence in the Middle East, thereby depressing Middle East nationalism and leading to fairer oil markets for the world. Which would mean that American society would eventually be in favor of the policy in hindsight.

And so, the war in Iraq was launched, with all the creativity the administration could muster to make the war palatable "enough" to the American people.

Of course, the war effort failed in many ways, because while this administration was partially dominated by a diabolical strategist, it was also dominated by incompetence (Katrina, Iraq's initial occupation strategy) and testosterone-laden cowboy bravado (Rumsfeld's too few troops, the attitudes leading to Guantanamo and Abu Ghraib). The result so far has been to cause enough devastation and death in another society that the choice between that path and the path leading to American society degrading is an interesting moral debate. But even with that, there are murmurings in the foreign press among foreign policy experts, unthinkable two years ago, but voiced publicly now - that things in Iraq might - might - actually improve to a point to where things will be better than they were when Saddam was in power. If so, then in a matter of years, the initial choices for war, while seen as unconscionable now, might eventually be seen as rational in hindsight.

The above is a thought experiment. When we judge our opponents as being merely evil and crazy, we do ourselves a disservice since it gives us permission not to understand. And that's what they want. The attempt to understand leads to us being better able to oppose. Again to quote the great Keyser Soze: "The greatest trick the devil ever pulled was convincing the world he did not exist."

Posted by tunesmith at May 1, 2008 03:02 PM

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