The Summit, Berlin and Unknown Knowns

by Sydney Williams Among the more famous quotes in Rumsfeld’s […]

Russian president Vladimir Putin attends G8 meeting in Northern Ireland

by Sydney Williams

Among the more famous quotes in Rumsfeld’s Rules , Donald Rumsfeld’s recent book, is the one that states that there are known knowns , things we know we know, known unknowns , things we know we don’t know, and unknown unknowns , things we don’t know we don’t know. There is, however, another, related phrase, unknown knowns .

While some include in that phrase things we knew, but have forgotten, Fintan O’Toole, the acerbic Irish commentator, defines the term differently. He sees the phrase as referring to things that are inevitable and easily knowable, but things that people choose not to know.

What brings these thoughts to mind was the two-day Summit in Northern Ireland for the G-8. While the group is supposed to represent the largest economies in the world, it ignores China (2), Brazil (6) and India. The latter is, admittedly, the ninth largest economy, but it is bigger than both Russia and Canada, both members of the G-8. Russia and Canada should perhaps stay on, but, in a world that is fragile yet filled with opportunity, it seems foolish to ignore the other three.

Summits are useful, in that they provide a forum for world leaders to meet, talk and get a sense of one another. But they also are seized upon as photo-ops to promote personal agendas back home. British Prime Minister David Cameron, the leader of this week’s Summit, had asked participants not to bring their wives. Most chose not to, but Mr. Obama not only brought his wife, but also his two daughters. That is his prerogative of course, but why does he continue to campaign when he has run his last race? Nevertheless, if world leaders, in gathering together, can help promote economic growth and avert armed conflict, it is money well-spent.

The Summit was expected to focus on the three ‘T’s – trade, taxes, transparency – and Syria. Free trade among the members has been on the agenda since the original six nations first met thirty-nine years ago; so we might be pardoned for exhaling with disappointment when only baby steps were taken in that regard. David Cameron, this year’s host, insisted on some sort of an international agreement that prohibits companies from transferring profits to low-tax havens. As a British friend wrote me from Switzerland, reducing taxes at home makes more sense than some sort of an international accord that would require more bureaucrats. Keep in mind, competition has done more to improve people’s lives than all government programs combined. Countries, just like companies, should be free to compete; otherwise there is a tendency to drift toward the lowest common denominator. The consequence of different tax strategies has been demonstrated over decades. Look no further than California and Texas, or Eastern Europe and Western Europe. The deliberate ignoring of such knowledge falls under the category of an unknown known .

In terms of transparency, Mr. Cameron wants to expose those who “aren’t paying their fair share.” (I wonder where he came up with those words?) Mr. Cameron would like to see a central registry detailing the beneficial ownership of all companies; “so businesses could not hide behind shell companies and trusts.” In demanding an increasing role for government, Mr. Cameron is betraying his conservative roots. But Mr. Cameron and the others are not interested in two-way transparency. They are, in fact, looking for one-way mirrors, where they can see us, but all we see are our reflections. Jackie Calmes and Stephen Castle, in the New York Times , wrote Wednesday that on the issue of global economic policy, “the leaders were equally vague and even self-congratulatory despite continued high unemployment…” Curiously, but not surprising, the final communiqué was a typical example of opaque, self-evident grandiloquence: “Promoting growth and jobs is our top priority.” And we, the taxpayers of these eight countries, had to spend $80 million to have our leaders travel to Enniskillen to get those pearls of wisdom?

The civil war in Syria, however, was the foremost issue at the Summit, with the United States trying to determine the exact location and color of the “red” line that President Assad and his forces were not supposed to cross, and Mr. Putin insisting that Assad is in fact the legitimate leader of Syria. Given the differences regarding Syria, the tension between Mr. Obama and Mr. Putin was palpable, but unsurprising. (That tension only increased over the silly squabble as to who would get exclusive use of the resort’s one gym. Mr. Obama won.) Mr. Putin supports Mr. Assad, while Mr. Obama and the rest would like to see him gone. There was agreement that a peace conference should be convened in Geneva over Syria, even though that conference would be delayed until “late August or early September.” That was sufficient, though, for the White House to release a statement that applauded “the international consensus that was reached on Syria.” While such inane comments are as common from politicians around the world as rocks are in New Hampshire, I am always astounded to note how gullible they must believe us to be.

Syria ’s descent into civil war owes its fate, at least in part, to our procrastination. (As New England Patriot’s former owner Victor Kiam once said, “Procrastination is opportunity’s assassin.”) Assad is a known known , a bad guy. If we were going to arm the rebels (and I am not saying we should), the time to have done so was when they first took to the streets two years ago. The vacuum created by the absence of international support over the past two years has been filled with al Qaeda and other Islamic extremists – an example of an unknown known . In what seems to be an unnecessarily provocative concession, the G-8 decided to permit Iran’s newly elected President Hassan Rohaniwas to attend the Geneva peace talks. Hassan Rouhani may seem moderate in comparison to his predecessor Mr. Ahmadinejad. But this is a man who in 1999 “mercilessly and monumentally” suppressed and killed more than a dozen student protestors, according to Sohrab Ahmari writing in Monday’s Wall Street Journal . Intervening in any civil war carries risk, as the examples of Libya and Egypt have made clear. It hurts me to say so, but Mr. Putin may be right on the issue of Syria. 100,000 men, women and children have been killed over the past two years. Do we really want to risk an unknown unknown ?

From Northern Ireland, the President headed to Berlin to give an address on a new phase of nuclear arm cuts. He will be doing what he does best – speaking, this time before the Brandenburg Gate, a place of much significance in U.S. Presidential orations. We recall President Kennedy, who in June, 1963 stood on the west side of the gate and said, “Ich bin ein Berliner,” and President Reagan who, on another June day twenty-four years later, declared: “Mr. Gorbachev; tear down this wall!” Now, this June, fifty years after Kennedy’s immortal words, Mr. Obama hoped to achieve a similar place in history. As a great speaker, he is well suited for such a performance; though the crowd he drew was only a small fraction of the 250,000 people that heard him in 2008. I read his speech, but did not hear it. It seemed more inspirational than policy driven. It was also designed to stave off the ripening scandals in Washington. He spoke of “peace with justice,” a nuclear free world, but also mentioned gay rights, global warming, AIDS, balancing the need for security with the protection of privacy, and the need to close Guantanamo. And, yes, he did mention that “Osama bin Laden is no more.” But instead of repeating that al Qaeda is in decline, he said that efforts against them are “evolving.” I did not note any line that might be remembered fifty years hence.

When the history of the late 20 th Century is written, it will be the absence of the use of nuclear weapons that will stand out. Throughout history, increasingly deadly weapons have been developed, all of which have been used to kill or maim with ever greater effici
ency. Nuclear weapons represent a noticeable exception. Other than the tragic, but necessary in my opinion, use of two nuclear bombs dropped on Japan in 1945, the world has lived with these horrific weapons without using them. They have, however, served as a deterrent. The concept of Mutual Assured Destruction (MAD) worked well for forty-five years as the East and the West faced one another. The East led by Russia was totalitarian but not stupid. They had skin in the game of international diplomacy and were able to control their satellites. The U.S. played the same role in the West. But the collapse of the Soviet Union has seen the rise of terrorists’ states; so nuclear weapons are now in the hands of unstable nations like North Korea and Pakistan. And Iran is perilously close to having one.

For the U.S. and Russia to reduce stockpiles may make sense, though not including China and India seems odd. Regardless, Mr. Reagan’s admonition of “trust, but verify” should still apply. In a world with terrorist and unstable nations in possession of nuclear weapons, far more sensible would be a concomitant proliferation of missile defense. It is, in my opinion, an example of an unknown known . Instead of bowing to Mr. Putin’s pressure to remove interceptor missiles in Poland, Mr. Obama should offer the technology to the Russians. It is defense not offense that we and all people, including the Russians should be playing when it comes to nuclear weapons. We cannot, though, overlook their role as a deterrent. President Reagan’s concept of a Strategic Defense Initiative seems increasingly prescient and sensible. Missile defense will do much more to make us safer than the U.S. and Russia reducing their nuclear stockpiles from 1500 pieces to 1000.

There are things we know and things we don’t, just as there are things we cannot know. But, ignoring what is known or not thinking clearly, or letting ideology override reason, is a recipe for disaster.

This memorandum has been prepared as a matter of general information. The accuracy of the material submitted, though obtained from sources believed reliable, is not guaranteed by us and may not be complete. The opinions and estimates expressed in this memorandum accurately reflect the personal view(s) of the analyst(s) covering the subject securities on the original date the memorandum was issued, but are subject to change without notice. Analyst compensation at our firm is not directly related to any specific recommendation or views contained in this research. The analyst, officers and employees of this firm may at times have a position in the securities mentioned herein.

“The thought of the day” by Sydney Williams


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

Do you like the article?

We are glad you do! Please consider donating if you want to read more articles like this one.


Share this article!
Join our community and stay updated!