Iran's Failed Revolution

by Doug Bandow

Iran's Guardian Council has affirmed Mahmoud Ahmadinejad's election victory and demonstrations have ebbed. Repression appears to have worked. Washington is likely to face an Iranian government even less open to political reform and more committed to a nuclear program—with "a more decisive and powerful approach toward the West," in Ahmadinejad's words. America's options are limited: restrained engagement, with no illusions about the nature of the Iranian regime, is the best practical choice. Tehran poses one of the most important geopolitical challenges to Washington today.

Unfortunately, few Americans, including in the U.S. government, understand the intricacies of the ongoing political struggle in Iran. In fact, pervasive ignorance is but one consequence of having little diplomatic presence or other contact there for years. Moreover, Washington has brought many of its problems on its self. In 1953 the U.S. government terminated Iran's earlier democracy by orchestrating the overthrow of Prime Minister Mohammad Mossadegh. Mossadegh, Time's 1951 Man of the Year, died under house arrest by Mohammad Reza Shah Pahlavi.

For a quarter century Washington backed the shah's dictatorship. After years of repression, Islamic fundamentalists emerged stronger than liberal secularists, leading to the creation of the Islamic Republic in 1979. Then the United States supported Iraq's Saddam Hussein after he invaded Iran. Later, President George W. Bush termed Iran a member of the "Axis of Evil" even as his administration destroyed the Iraqi regime which had helped restrain Tehran's regional ambitions.

Senator John McCain unintentionally spoke the truth when he stated: "The president saying that we didn't want to be perceived as meddling, is, frankly, not what America's history is all about." All too true, unfortunately. Meddling has been a constant of U.S. policy towards Iran.

The worst thing Washington could do is turn the issue into a conflict between the U.S. and Iranian governments instead of one between the Iranian government and its people.

This history continues to afflict America's relationship with Iranians. Persistent threats of military strikes and cheery jingles about bombing campaigns—which undoubtedly would have killed some of the demonstrators whose cause the U.S. government now champions—also taint Washington's call for democracy. So, too, the preelection admission of such neoconservatives as Max Boot and Daniel Pipes that they would prefer the reelection of Iranian President Ahmadinejad. Not all Iranians are likely to see Washington as a disinterested advocate of the best interests of the Iranian people.

Americans should still encourage a freer society in Iran. Liberty is a principle that transcends country and culture. Former–Prime Minister Mir Hossein Moussavi uneasily wears the opposition mantle, but the recent election obviously was unfair: even the Guardian Council made the astonishing admission that more than 100 percent of the eligible voters cast ballots in fifty cities. The burden of proof was on Ahmadinejad to demonstrate that he would have won even without fraud, but the regime offered threats instead of evidence.

More important, the overall system is rigged, with tight control over who can even run for office. The most important policies are set outside of government. Many of the thugs deployed to protect the regime represent a parallel Islamic ruling structure—beyond even the theoretical control of the state. The regime has compounded its abuses by rounding up human-rights activists, journalists and other critics. Washington has nothing at stake in the particular form of political system in Tehran. But Americans should take the side of individual liberty and representative government.

However, those demanding vocal public expressions of U.S. government support for the opposition fail to explain how doing so would actually promote reform. After all, Washington's hostility to Iran's Islamic government is in its thirtieth year. The Bush administration spent eight years loudly declaring its opposition to Tehran's politicians and policies with little effect. Pious public proclamations risk turning into little more than selfish acts of moral vanity.

The Iranian regime already is pushing the line that Washington was behind the protests. Some on the Left speculated about Washington's influence over the demonstrators: if the CIA sponsored crowds in 1953, then why not now? The Obama administration's plan to fund Iranian opposition groups is likely to exacerbate such suspicions. Yet popular unrest, sometimes exploding onto the streets, has been evident for years. And the latest demonstrations were much broader than in the past: no outside manipulation could have brought out millions of people in the face of repression to demand that their vote be respected. Their courage speaks for itself.

But for the U.S. government to be perceived as interfering—yet again—in Iran's affairs would retard rather than accelerate reform. Ahmadinejad has won on force but lost on legitimacy: Moussavi, fellow reform candidate Mehdi Karroubi, and former-President Mohammad Khatami continue to criticize the fraudulent result. The worst thing Washington could do is turn the issue into a conflict between the U.S. and Iranian governments instead of one between the Iranian government and its people. And if Moussavi unexpectedly triumphed, the United States would not want to be tied to him either. After all, he looks moderate only in comparison to Ahmadinejad.

While unlikely to help unseat the current regime, expansive statements of U.S. government support and generous cash grants risk giving democracy activists a false sense of security. It wouldn't be the first time: Hungarian revolutionaries confronting the Soviet Union in 1956, Shiites rising against Saddam Hussein's regime in 2001, and Georgians battling Russian forces in 2008 all appeared to treat American verbal endorsements as a precursor to armed intervention on their behalf.

Nevertheless, some American analysts who a few weeks ago were urging a bombing campaign against Iran—which Iranian dissidents say has played into the regime's hands—unsurprisingly contend the ongoing crackdown is (yet another) reason to end engagement with Tehran before it has begun. Yet standing for human rights has never meant refusing to talk, else Washington would have had no contact with the Soviet Union, Mao Zedong's China, Eastern Europe or a variety of third-world dictatorships during the cold war. (Indeed, taking that principle seriously, the U.S. government would not have dealt with many of its own allies, including the shah, who routinely violated human rights.)

However, the nuclear issue is too important to leave unaddressed. Military strikes might only delay Iran's possible development of nuclear weapons. Moreover, such an attack would increase Tehran's incentive to develop an arsenal. U.S. intelligence does not believe that Iran has an active weapons program underway, though the mullahs may hope to create "turn-key" capability; military action likely would remove any doubt in the regime's mind about the desirability of possessing an atomic deterrent.

Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to President Reagan, he is the author and editor of several books, including Foreign Follies: America's New Global Empire (Xulon Press).

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Moreover, war would destroy the democracy movement and solidify support for the regime. Worse, the violent, destabilizing consequences would ripple throughout the Muslim and Arab worlds, starting next door in Iraq, where one hundred thirty one thousand U.S. troops remain on station.

Tighter sanctions would increase pressure on the regime, but it's hard to predict their effectiveness. Certainly they are more likely to work in tandem with diplomacy, with carrots offered as well as sticks deployed. As America's UN Ambassador Susan Rice put it, "It's in the United States' national interest to make sure that we have employed all elements at our disposal, including diplomacy, to prevent Iran from achieving that nuclear capacity."

Human rights are important in their own right. But outside pressure is likely to have the least impact on changing Iran's internal political system. Moreover, even reducing repression in Tehran would not guarantee a satisfactory resolution of Iran's possible nuclear ambitions. After all, Iran first exhibited interest in acquiring nuclear weapons under the shah. Even a liberal, secular government might decide to maintain a nuclear option for geopolitical reasons.

In contrast, solve the nuclear issue, and there will be greater chance of improving human rights in Iran. Even then, ruling clerics will not want to yield power. However, reducing international threats while increasing international contacts would further weaken a regime now largely discredited by electoral cheating and brutal repression. In fact, sharp divisions have emerged among the ruling elite.

Reaching a negotiated settlement over Tehran's presumed nuclear ambitions was never going to be easy. It will be even harder now, especially in the near-term, with the regime attempting to rebuild its authority and legitimacy. But over time the effort is worth pursuing, if for no other reason that no other good options remain. Moreover, success would be the best means of improving human rights.

Moving forward in the aftermath of the post-election crackdown will be especially difficult, since Washington doesn't want to appear to accept the election results or the regime. So the administration should move slowly, probably much more slowly than it once had hoped. Washington has little choice but to eventually move ahead, however.

Those who would not talk to Iran would effectively abandon the best chance of resolving the nuclear issue and improving human rights. The United States should unabashedly promote the principles of a free society. But the Obama administration has correctly made caution the keystone of its response to Iran's fraudulent election. Carefully calibrated engagement is the best strategy for encouraging a freer, and nuclear-free, Iran.

GOP Needs Fewer Puritans, More Small-Government Conservatives

by David Boaz

South Carolina Gov. Mark Sanford was the emerging leader of the Republican party's Reaganite, fiscal-conservative wing. Can he still be a player after revealing an extra-marital affair?

Sanford isn't the first Republican leader to stumble in his private life.

He's not even the first one this month. A week earlier, it was Sen. John Ensign (R-Nev.) revealing his own affair. And these revelations hurt Republicans more than Democrats because of the perception that Republicans set themselves up as moral arbiters. So Democrats are, in the unusually honest words of talk show host Bill Press, "gleeful tonight because another Republican hypocrite bites the dust."

David Boaz is executive vice president of the Cato Institute and author of Libertarianism: A Primer.

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If the Republicans keep making morality a public issue, and then fail to live up to those standards themselves, they're in for a long period in the wilderness.

After the revelation of the affair, The Washington Post dubbed Sanford "a Bible-quoting social conservative." Nancy Pelosi's filmmaking daughter calls him "another family values hypocrite." But let's keep this hypocrisy charge in perspective. True, Mark Sanford quotes the Bible — along with Thomas Jefferson, Martin Luther King, and Scottish historians. He's a quoter. He's anti-abortion and has opposed gay marriage and civil unions.

But until his downfall he was never regarded as a vocal social conservative. He was a tax-cutting, budget-cutting fiscal conservative who was the most vocal opponent of President Obama's massive spending increases. He'd even been accused of being a libertarian for his emphasis on economic issues and his opposition to the intrusive Real ID program.

As a small-government conservative who focused on cutting the size of government, he stood squarely in the tradition of Ronald Reagan. And maybe also the tradition of former Sen. Phil Gramm, who ran for president in 1996. When "family values" leaders challenged Gramm's emphasis on economic issues, he told them, "I ain't running for preacher."

Of course, Bill Clinton was elected and re-elected despite evidence of his imperfections as a husband — and a strong majority of voters did not think he should resign after his affair with a White House intern. But voters seem to judge Republicans, who tend to make private morality a political issue, differently.

So this looks like a huge setback for Sanford, for the small-government voters he might have led, and for the Republican Party, which is desperately in need of a leader who can restore the GOP's reputation for fiscal responsibility.

Maybe it's time to stop demanding perfection from politicians. The current combination of religious-right moralizing and the 24-hour news cycle means that elected officials are subjected to scrutiny that few of our past presidents could have survived.

In 1987, Judge Douglas Ginsburg was forced to withdraw his nomination for the Supreme Court because he was discovered to have smoked marijuana. But now our last three presidents have acknowledged youthful drug use.

In his book The Age of Abundance and in other writings, my colleague Brink Lindsey has argued that there is a "libertarian center" in American politics.

Over the past 40 years or so, we have eliminated many government restrictions on both personal and economic freedom. Abortion, birth control, interracial marriage, and homosexuality are legal. Divorce laws have been liberalized, and free speech is better protected. And at the same time top income tax rates have been reduced, and New Deal-era micromanagement in the transportation, energy, communications, and financial sectors has been rolled back.

According to a recent Pew Research Center survey, since the 2008 election the number of independents has been growing, and they tend to be fiscally conservative and socially liberal. That's a constituency Republicans must appeal to.

Even among Republican voters, exit polls in 2004 found that 28 million Bush voters supported either marriage or civil unions for same-sex couples — suggesting that lots of Republicans don't fit the popular image of the socially conservative "Republican base."

Young voters are another constituency disgusted with the current Republican Party. Barack Obama carried young voters by more than two to one in the 2008 election. Voters 18 to 29 delivered Indiana and North Carolina to Obama. Republicans can't win the future without doing better among young voters, and their image as narrow-minded moralists is a big obstacle.

Voters overlooked Bill Clinton's private sins because they liked his approach to politics and policy. Are Republican voters ready to do the same? If they insist that their leaders be Puritans both publicly and privately, they're likely doomed to a long winter of disappointment.

The Expanding Fed Role

by Richard W. Rahn

Why is it that those who specialize in individual athletic events hold almost all the records as contrasted with those who compete in the same events as part of a pentathlon? Like the athlete who tries to do everything (or at least five things), the Federal Reserve (the U.S. central bank) is becoming less competent as the number of its functions increases.

The Fed is supposed to provide the United States with stable currency yet it now takes $21.60 to equal the purchasing power of $1 in 1913, the year the Fed was established. (In the 124 years prior to the founding of the Fed, there was almost no permanent change in the purchasing power of the dollar. There was some inflation during the Civil War, which was offset by a slow deflation in the 40 years after the war.)

The Fed is supposed to regulate the banking system to provide financial stability, yet far more banks have failed since the Fed was created, and events of the past year illustrate how the Fed has failed at providing financial stability. The Fed has become like a large fire department that has a fixed percentage of its employees who are arsonists, so as it gets bigger, there are always more fires. Yet the politicians call for an even bigger fire department (or Fed) rather than a smaller one that has rid itself of the arsonists. (The same can be said of most of government.)

The Fed has become like a large fire department that has a fixed percentage of its employees who are arsonists, so as it gets bigger, there are always more fires.

The Fed suffers from conflicting responsibilities both within the organization and with other government agencies and actions. It is charged with maintaining full employment, but the long-run level of employment depends far more on government fiscal policy (tax rates, government spending and regulatory burdens) than on monetary policy.

The government tries to protect bank depositors through deposit insurance (administered by the Federal Deposit Insurance Corp.), but this adds systemic risks to the banking system by making bank customers less concerned about the financial health of banks they deal with than they otherwise would be. It also causes a breakdown of market discipline, which adds to the Fed's burden.

The accompanying chart shows the growth in the money supply, as measured by M1 (currency and checking accounts) over the past 35 years. During the great inflation of the late 1970s, M1 grew by almost a record 40 percent in four years, and yet in the past year alone M1, has grown by almost 20 percent.

The reason inflation is stable despite the rapid monetary growth is that velocity -- the number of times a dollar is spent in a year -- has been falling. People have been hoarding cash rather than buying new homes or autos.

Once excess inventories are worked off and global commodity prices begin to rise again, inflation fears will come back quickly and people will rush to get rid of their dollars by buying "stuff." Unless the Fed can quickly extinguish all of the new money it has created, inflation will come roaring back.

Unfortunately, the Fed has become all too politicized -- despite its declared independence -- and thus is unlikely to react quickly and completely enough to extinguish the inflationary fires it has started. Federal Reserve Chairman Ben S. Bernanke appears to have abused his power by forcing Bank of America to buy Merrill Lynch even though the top executives concluded that the purchase was not in the interest of Bank of America's shareholders. This was done to make the Treasury and the political actors in Washington happy.

The Fed needs to be split up. As long as the government insists on maintaining a monopoly on the production of money, it needs to have a board that has the sole responsibility of maintaining price stability (within a relatively specified narrow range, such as plus or minus 2 percent). If the Fed governors fail to do so, they should be dismissed.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

More by Richard W. Rahn

The Fed's bank regulatory functions need to be put into a separate agency. If the federal government wishes to bail out companies and serve as a lender of last resort, it needs to put the liabilities on its own balance sheet.

The new central bank should not be required to buy government debt. That would force the politicians (the Congress and the president) to reduce spending or raise taxes to pay for all of the interest on the bonds. (At the current level of federal government spending, raising taxes will not work. Tax rates are already above the long-run maximizing level. Increasing tax rates will only result in even slower economic growth, not more tax revenue.)

The smarter folks in Washington understand that the trillions of dollars of new spending will be "paid for" largely by the "inflation tax," which will fall hardest on those without assets -- i.e. the poor about whom the president and many in Congress claim to care so much.

Given the behavior of the Fed board during this financial crisis, there is no basis to think its members will suddenly have the courage to stand up to their political masters in the White House and Congress and just say "no."

Do not expect an America without pervasive inflation until the money-supply function is separated from the financial-regulatory function at the Fed and governors are appointed who have not only the technical competence but the individual courage and character to do what is necessary.

Classical Liberalism and the Fight for Equal Rights

Remembering the forgotten libertarian legacy of American anti-racism

Damon W. Root

In a 1992 speech at Colorado's Metro State College, Columbia University historian Manning Marable praised the black minister and activist Malcolm X for pushing an "uncompromising program which was both antiracist and anticapitalist." As Marable favorably quoted from the former Nation of Islam leader: "You can't have racism without capitalism. If you find antiracists, usually they're socialists or their political philosophy is that of socialism."

Spend time on most college campuses and you're likely to hear something very similar. Progressives and leftists, the conventional narrative goes, fought the good fight while conservatives and libertarians either sat it out or sided with the bad guys. But there's a problem with this simplistic view: It completely ignores the fact that classical liberalism—which centers on individual rights, economic liberty, and limited government—played an indispensable role in the fight for equal rights.

Indeed, from the great abolitionist Frederick Douglass, who championed the natural rights philosophy of the Declaration of Independence and declared "give the negro fair play and let him alone," to the conservative newspaper magnate R.C. Hoiles (publisher of what is now the Orange County Register), who denounced liberal President Franklin Delano Roosevelt's wartime internment of Japanese Americans while most New Dealers (and liberal Supreme Court justices) remained silent, classical liberals have long opposed racism and collectivism in all of its vile forms.

This important yet sadly-neglected history is the subject of Race & Liberty in America (University Press of Kentucky), a superb new anthology edited by Southern Illinois University historian Jonathan Bean, which features carefully selected articles, speeches, book excerpts, newspaper accounts, legal decisions, interviews, and other materials revealing, in Bean's words, that "classical liberals are the invisible men and women of the long civil rights movement." (Full Disclosure: Bean includes one of my articles in a list of recommended readings.)

There's Lysander Spooner, the radical libertarian, legal theorist, and abolitionist who argued that slavery was illegal under both natural law and the U.S. Constitution; Louis Marshall, the "ultraconservative" NAACP attorney and lifelong Republican who won the Supreme Court case Nixon v. Herndon (1927), striking down the "white primaries" favored by racist Southern Democrats; and Zora Neale Hurston, the acclaimed Harlem Renaissance novelist and folklorist who denounced New Deal relief programs as "the biggest weapon ever placed in the hands of those who sought power and votes" and endorsed libertarian Sen. Robert A. Taft (R-Ohio) for president in 1952.

As Bean demonstrates, when it comes to the history of civil rights and racial equality, most of us have only heard one part of the story. Take the NAACP, which was arguably the leading civil rights organization of the 20th century. Why, Bean writes, "do we know so much about W.E.B. DuBois [an NAACP activist and editor] but little about super-lawyer Moorfield Storey"? A founder of both the NAACP and the Anti-Imperialist League, Storey championed free trade, liberty of contract, and the gold standard alongside racial equality and non-interventionism. In 1917 he argued and won the NAACP's first major victory before the Supreme Court, Buchanan v. Warley, relying on property rights to strike down a residential segregation law. As George Mason University law professor David Bernstein argues, "Buchanan almost certainly prevented governments from passing far harsher segregation laws [and] prevented residential segregation laws from being the leading edge of broader anti-negro measures." DuBois credited the decision with "the breaking of the backbone of segregation."

Now contrast that with the racial record of a celebrated leftist such as labor leader and Socialist presidential candidate Eugene V. Debs. While typically lionized as a champion of the poor and downtrodden, Debs also served as head of the American Railway Union, a discriminatory outfit that banned blacks from its ranks. And while he was apparently personally sympathetic to African Americans, during his 1912 presidential campaign Debs simply declared, "We have nothing special to offer the Negro." Yet this was during the era of lynchings, Jim Crow, and other acts of state criminality that specifically targeted the rights of blacks, a situation classical liberals like Storey clearly understood and effectively challenged.

Along similar lines, Race & Liberty in America includes a fascinating 1924 article from Howard University president Kelly Miller arguing that in the battle between labor and capital, blacks should side with the bosses. "The capitalist stands for an open shop which gives to every man the unhindered right to work according to his ability and skill," Miller wrote. "In this proposition the capitalist and the Negro are as one." Try finding that quote in most standard labor histories!

Taken together, the documents collected in this volume present overwhelming evidence that classical liberalism deserves serious attention in any account of the American struggle for civil rights and a colorblind society. Rather than serving as the villains caricatured by Malcolm X, Manning Marable, and others on the left, classical liberals provided essential intellectual, political, moral, and financial firepower in the battles against slavery, Jim Crow, imperialism, and racial classifications. With Race & Liberty in America, these largely unsung heroes are finally getting some of their due.