The War On Rogues

When an organization goes rogue it takes up a new mission, of its own choosing…often in cahoots with the enemy it was supposed to be fighting.

You can see this phenomenon in many different places in many different activities. Poor African nations were supposed to be fighting poverty and hunger. But leaders found that losing the battle was more rewarding than winning it. Famine brought aid. And top-end Mercedes sales went up in the capital cities shortly after new aid programs were announced.

Likewise, US cities such as Baltimore and Detroit largely destroyed their own middle class tax bases. So, they came to depend on federal aid programs with perverse incentives. The outside world saw city governments as corrupt and dysfunctional, but they were really responding, rationally, to the choices before them. The worse off you are the more money you get. They went rogue…because that’s where the money was.

The clearest example of this phenomenon is the War on Drugs. The anti-drug warriors went rogue many years ago. They found common cause with drug dealers, both of them now work against the public’s interest. The drug fighters gain power and money by putting resources to work against the drug dealers. The drug dealers gain power and money thanks to the drug fighters who, like regulators, create high barriers to entry, keep out competition, push up prices, and protect the dealers’ profit margins.

The drug dealers should thank the drug fighters. And here, one did:

“I couldn’t have gotten so stinking rich without George Bush, George Bush Jr., Ronald Reagan, even El Presidente Obama, none of them have the cojones to stand up to all the big money that wants to keep this stuff illegal. From the bottom of my heart, I want to say, Gracias amigos, I owe my whole empire to you.”

– Joaqin “El Chapo” Guzman, head of Mexico’s Sinaloa Cartel, as reported by a close confidant (via The Huffington Post)

Colleague Justice Litle explains:

The war on drugs – a war that America has lost – is an excellent example of why the world is so hard to change. Bad laws, bad ideas and bad arrangements persist by the will of stakeholders behind the scenes.

It’s a “tragedy of the commons”: Costs are shouldered by the oblivious many, while profit concentrates in the hands of the few.

There is no way the cartels could have prospered so mightily, for so long, without a symbiotic relationship between criminals, politicians, and the lobbying agents who love them both. If not for the long arm of the law – and the helping hand attached to it – El Chapo and his ilk would have been rubbed out by Fortune 500 corporations (via free competition in a regulated market) quite some time ago.

“Whoever came up with this whole War on Drugs,” one of El Chapo’s lieutenants reports he said, “I would like to kiss him on the lips and shake his hand and buy him dinner with caviar and champagne. The War on Drugs is the greatest thing that ever happened to me, and the day they decide to end that war, will be a sad one for me and all of my closest friends. And if you don’t believe me, ask those guys whose heads showed up in the ice chests.”

But the biggest rogue of all is the only one that still retains the faith and respect of the people – the US military. That alone is remarkable, considering that the Pentagon has a record of failure that stretches back over the last 60 years. In Korea, it accepted a draw. In Vietnam, it withdrew, shamefully. In Iraq, we replaced one corrupt government with another, probably just as corrupt and incompetent too. In Afghanistan, it is ready to get out…leaving the country in the hands of its enemies.

Still, instead of sending military personnel to the back of the bus, the airlines board them along with the first class passengers and even move them up to business class if there are seats available. Mother Teresa can stay in economy!

Additional “investments” in security have been arguably the least productive use of capital in American history. From an outsider’s perspective, it looks like the US military was suckered into spectacularly bad outlays in Iraq and Afghanistan. The New York Times reported as follows:

Al Qaeda spent roughly half a million dollars to destroy the World Trade Center and cripple the Pentagon. What has been the cost to the US? In a survey of estimates by the New York Times, the answer [is] $3.3 trillion or about $7 million for every dollar Al Qaeda spent planning and executing the attacks.

The insiders knew better. The Pentagon has gone rogue. It no longer protects the US from war; it causes wars. It no longer seeks to win wars; it wants them to go on forever. It no longer avoids wasting US resources; it sucks up all it can get.

Like drug fighters and poverty fighters, the fighters in the military were happy to have an enemy…especially one that couldn’t do them any real harm.

Where does this lead? How does it progress? Stay tuned…


Bill Bonner
for Markets and Money

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Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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Since the USA went all paranoid about terrorism, and think only they are the victims of terrorists, with the TSA patting down babies, old people and students I have absolutely no interest whatsoever in visiting the place. As far as I am concerned the country is effectively a ‘failed state’. Add to this banks that are the financial terrorists of the modern age. Why would anyone want to visit the place? Unless they are, of course, anthropologists doing a comparison between the fall of ancient Rome and the modern USA.

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