by Gary M. Shiffman, PhD. This article was originally published in The Hill. Click here for the full article.
“America is back” means that President Biden faces a slew of foreign policy challenges as he modifies the course of U.S. national security. From confronting Russian President Vladimir Putin on cyber-based attacks against the American public to competing with China’s ambitions under Xi Jinping to searching for a path toward honest diplomacy with Iran’s Supreme Leader Khamenei and President Rohani, moments like these can lead to big and important changes.
With years of experience working in national security (from war zones to the U.S. Senate to federal law enforcement), I have learned that the simplest and most effective way to make sense of the complexity of these moving moments is to treat these issues as firms and entrepreneurs acting in competitive markets.
To change the behavior of a criminal, terrorist or tyrant, offer something in exchange. Offer a “good” – money, political support, market access, etc. – or a “bad” – kinetic force from military or law enforcement, trade sanctions, denial of access to currency or banking, etc. The key idea is to think of Putin, Xi, and Rohani and their critical supporters as humans, and not just countries.
People want the best for themselves and their people, defined decreasingly as family, communities and nation. People tend to base their involvement in an activity on the expectation that the involvement will somehow bring about what they want. Entrepreneurs can lead commercial or political organizations and make resource allocation decisions for that organization. The organization can be called a firm: a state, an insurgent organization, a mafia. Whether a president, a criminal, a terrorist, or a tyrant – or a president engaging in crime – the first rule to keep in focus is this: Each human seeks to optimize these personal goals.
- Resource constraints
Resources like wealth can constrain a person’s chosen behaviors for a given set of goals. A tyrant’s power may be limited by the wealth he can pay to his internal police forces, for example. Increasing or decreasing the wealth available to a leader/entrepreneur often effects human behavior. Sanctions from the Treasury Department, trade promotion from the Commerce Department and the United States Trade Representative (USTR), and development assistance from USAID have proven powerful tools in the past and must be considered in the context of incentives to change the behaviors of entrepreneurs such as Xi and Putin.
- Institutional constraints
Institutions are the human-devised set of rules and associated enforcement of those rules which further constrain or enable human behavior. Laws and norms of behavior promoted by institutions such as the Financial Action Task Force, World Customs Organization or World Bank can define standards of behavior and exercise or moral suasion like “name-and-shame” policies of the Treasury that identify individuals providing financial support to terrorists.
- Information asymmetries
Information feeds a person’s expectations, and leaders, like all other people, make decisions based on expected outcomes. But leaders make decisions with imperfect information, so their decisions can be wrong.
In the coming year, the Biden administration should communicate clearly with both our friends and adversaries around the world to avoid information asymmetries. What consequences could the Iranian leadership expect to suffer if they violate weapons agreements? If President Biden cannot provide information convincing his Iranian counterparts of real negative consequences, then the agreement will have no good impact.
Time horizons act as an enabler or constraint on a leader’s decision making. This time horizon may be different based on age, health or expected political term. An elected official may expect a four-year term, but a dictator may expect a lifetime term and the ability to pass on power to her heirs.
All those who would threaten the public safety and security of the American people are people, so this framework from economics can inform our national security protections and countermeasures. Seeing global threats as firms led by entrepreneurs acting in competitive markets makes clear that national security isn’t just a job for the military and law enforcement. All levers of U.S. power (kinetic, financial, trade-based, cultural, diplomatic, etc.) comprise the tools of national and homeland security. Crafting U.S. foreign policy in market terms provides the framework to regain balance following a shift in priorities.
Gary M. Shiffman, Ph.D., a former chief of staff of U.S. Customs and Border Protection, is an adjunct professor at Georgetown University. He is the founder of Giant Oak and Consilient and the author of “The Economics of Violence: How Behavioral Science Can Transform our View of Crime, Insurgency, and Terrorism.”