Why Throw Good Money at Bad Policy?

When I went to Yogyakarta, Indonesia, I stayed in a homestay (a private home that boarded tourists). One evening, the

When I went to Yogyakarta, Indonesia, I stayed in a homestay (a private home that boarded tourists). One evening, the lady of the house and I talked about the local palace, which had an outbuilding where an unhappy queen had once been made to live. She said the same thing had happened to her own mother, who was the first of her father’s nine wives. At some point down the string of ever-younger lovelies, she expressed some displeasure and was banished. “Had she gotten angry?” I asked, wondering what the tripwire for domestic exile was on the island of Java. “Oh, no,” my hostess replied. “Perhaps once she was not polite enough.”

The Javanese make the Japanese look like Puerto Ricans. It is the world capital of self-restraint–a place where, if you can’t say it with silence, you are shouting at the top of your lungs.

What happens when the restraint cracks? I also met a diplomat who had been in the country so long that he had accompanied Vice President Hubert Humphrey on a visit to Bali in the late 60’s. The Balinese put on a good show–one of the upsides of a culture where no one is ever left alone–and the Vice President was enjoying the racket of his welcome. “Look at all these wonderful people!” he bubbled, making his own characteristic racket. “Mr. Vice President,” his guide interjected, “eight months ago, these wonderful people killed”–however many thousands of people were killed on Bali during the last change of regime, in 1965-66. The death toll for Indonesia as a whole may have reached 750,000.

America encouraged that political changeover. The dictator who lost was Sukarno, who had been leaning toward the Communists and what used to be called Red China. The dictator who replaced him was Suharto, who yanked the country back into the non-Communist column. Considering Indonesia’s size and its natural resources (it belongs to OPEC), who will say the Communists were net gainers in Southeast Asia, even though they won the Vietnam War? Suharto’s coup was at least partly an American export. But the carnage was homegrown.

When the lid comes off in that part of the world, a lot boils over. Suharto and his omnivorous family may be swept away by student rioting. Or they may hang on, as Deng Xiaoping hung on when students took over Tiananmen Square, by killing several thousand of them. Either result will probably be accompanied by a bloody nationwide carnival. Victims of opportunity in Indonesia will be the country’s ethnic Chinese who, like the Koreans of South Central Los Angeles, own too many stores for their own good.

This is the legitimate reason for America’s prop-up-the-status-quo policy. Giving advice to foreigners has had a bad track record since Aristotle tutored Alexander the Great. We have enough problems with our own system (just ask Senator Bulworth, or better yet, look at the White House) that we should not be interfering in the systems of other people, especially when the materials are so volatile.

But there are right and wrong ways to prop up a status quo. World Bank loans are usually a wrong way. Flowing as they do from the psychology that the country receiving the loan is “too big to fail,” they tend to evolve, as the World Bank’s loans to Indonesia have, into gifts with fewer and fewer strings attached. If the beggar knows that the Samaritan thinks the beggar must live, why should he change his ways? Emergency bailouts teach no lesson to other countries, or to their future creditors. The only way to discipline Asian crony bankers and in-law industrialists is to make the Western banking community realize that whatever it loans them will be lost if they fool it away. No money upfront, less folly abroad. Every time the World Bank rides to the rescue, it guarantees a later and bigger rescue of the next bankruptcy.

Conspiracy theorists know why we are helping Suharto: It is the last payoff for all the campaign money that James Riady raised during the last election cycle. It is amazing how quickly even a liberal and basically nonpolitical Clinton-hater, like my wife, reached for the word Riady when talk of a World Bank loan to Indonesia graced the front pages. My wife doesn’t even know Dick Bossie. I found myself in the role of Al Hunt, gaseously explaining that there were sufficient institutional and geopolitical reasons to account for the Administration’s stance. These are the discussions that arise when an administration has been playing footsie with foreign contributors. Alexander Hamilton said that foreign influence was the Trojan horse of republics. It is also the Trojan horse that destroys republican trust between leaders and the led. If President Bill Clinton was grubbing for millions to buy Dick Morris’ TV commercials and to buy off Webb Hubbell, who will trust him when he wants to shovel billions at tottering kleptocrats?

The Clinton-Gore campaign’s Asian connection also ran to China, where we see yet another example of bad judgment. Loral Space & Communications Ltd. and the Hughes Corporation got a green light from the Clinton Administration to sell advanced missile technology to the Chinese. Now Representative Robert Barr, Republican of Georgia, has charged that fear of newly sophisticated Chinese missiles was as much behind India’s recent nuclear tests as national pride, or rivalry with Pakistan. Whether the Indians feared them or not, the Pakistanis will now, of course, be driven to make a test of their own. Like a triple bank shot, the Chinese missile sale touched three countries. It’s not every day that a few businessmen and a lazy White House affect 2 billion people.

Here again, it is unreasonable to look for a flat quid pro quo. American Presidents were doing Beijing unwise favors long before Bill Clinton inaugurated the Chinese primary. It is a question of seemliness and tone. Somewhere along the line, Bill Clinton should have learned to be less polite.

Why Throw Good Money at Bad Policy?