[I suppose everyone who wants to by now already reads Krugman, but (a) this is particularly good, and (b) someone -- Jeet? -- a month or so ago asked whether there was a conventional concept that described a situation of self-reinforcing feedback that seperates an executive from reality. Krugman says there is a relatively common term for it in military circles: "incestuous amplification." And he gives a Jane's reference work you can cite.]
New York Times March 28, 2003
Delusions of Power
By PAUL KRUGMAN
T hey considered themselves tough-minded realists, and regarded
doubters as fuzzy-minded whiners. They silenced those who questioned
their premises, even though the skeptics included many of the
government's own analysts. They were supremely confident and yet with
shocking speed everything they had said was proved awesomely wrong.
No, I'm not talking about the war; I'm talking about the energy task
force that Dick Cheney led back in 2001. Yet there are some disturbing
parallels. Right now, pundits are wondering how Mr. Cheney who
confidently predicted that our soldiers would be "greeted as
liberators" could have been so mistaken. But a devastating new report
on the California energy crisis reminds us that Mr. Cheney has been
equally confident, and equally wrong, about other issues.
In spring 2001 the lights were going out all over California. There
were blackouts and brownouts, and the price of electricity was
soaring. The Cheney task force was convened in the midst of that
crisis. It concluded, in brief, that the energy crisis was a long-term
problem caused by meddling bureaucrats and pesky environmentalists,
who weren't letting big companies do what needed to be done. The
solution? Scrap environmental rules, and give the energy industry
multibillion-dollar subsidies.
Along the way, Mr. Cheney sneeringly dismissed energy conservation as
a mere "sign of personal virtue" and scorned California officials who
called for price controls and said the crisis was being exacerbated by
market manipulation. To be fair, Mr. Cheney's mocking attitude on that
last point was shared by almost everyone in politics and the media and
yes, I am patting myself on the back for getting it right.
For we now know that everything Mr. Cheney said was wrong.
In fact, the California energy crisis had nothing to do with
environmental restrictions, and a lot to do with market manipulation.
In 2001 the evidence for manipulation was basically circumstantial.
But now we have a new report from the Federal Energy Regulatory
Commission, which until now has discounted claims of market
manipulation. No more: the new report concludes that market
manipulation was pervasive, and offers a mountain of direct evidence,
including phone conversations, e-mail and memos. There's no longer any
doubt: California's power shortages were largely artificial, created
by energy companies to drive up prices and profits.
Oh, and what ended the crisis? Key factors included energy
conservation and price controls. Meanwhile, what happened to that
long-term shortage of capacity, which required scrapping environmental
rules and providing lots of corporate welfare? Within months after the
Cheney report's release, stock analysts were downgrading energy
companies because of a looming long-term-capacity glut.
In short, Mr. Cheney and his tough-minded realists were blowing smoke:
their report described a fantasy world that bore no relation to
reality. How did they get it so wrong?
One answer is that Mr. Cheney made sure that his task force included
only like-minded men: as far as we can tell, he didn't consult with
anyone except energy executives. So the task force was subject to what
military types call "incestuous amplification," defined by Jane's
Defense Weekly as "a condition in warfare where one only listens to
those who are already in lock-step agreement, reinforcing set beliefs
and creating a situation ripe for miscalculation."
Another answer is that Mr. Cheney basically drew his advice about how
to end the energy crisis from the very companies creating the crisis,
for fun and profit. But was he in on the joke?
We may never know what really went on in the energy task force since
the Bush administration has gone to extraordinary lengths to keep us
from finding out. At first the nonpartisan General Accounting Office,
which is supposed to act as an internal watchdog, seemed determined to
pursue the matter. But after the midterm election, according to the
newsletter The Hill, Congressional Republicans approached the agency's
head and threatened to slash his budget unless he backed off.
And therein lies the broader moral. In the last two years Mr. Cheney
and other top officials have gotten it wrong again and again on
energy, on the economy, on the budget. But political muscle has
insulated them from any adverse consequences. So they, and the
country, don't learn from their mistakes and the mistakes keep getting
bigger.
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