We’re back to the regularly scheduled Friday edition of Understanding America, but take note that we’ll be off next week for Independence Day. First up, Oren has thoughts about the war in Iran.
The chorus of war enthusiasts never loses its enthusiasm for war. Each war is a good idea at the start and, once it turns out not to be a good idea, the answer is more war. The only way to lose is to stop fighting, and this they never suggest, which means that when we do lose, they can invariably say that we lost only because we stopped taking their advice. Convenient.
This is not so much a “forever war” as infinite war—a strategy akin to the unbeatable gambling maneuver of always doubling your bet. If you put $1 on red and the ball lands on black, put $2 on red. If that loses, go to $4. If that loses, go to $8. Then $16, then $32… Sooner or later, you will win, and when you do, you’ll have recovered all your money and then some. The strategy can fail only if you lose your nerve, or if you run out of money. What could go wrong?
Some people are confused by this notion that we lost. We dropped so many bombs! As Daily Wire editor-in-chief Brent Scher enthused in the war’s first week, retweeting Pentagon explosion-porn of an Iranian ship struck by an American torpedo, “I think a lot of the dove sentiment on the right is because it was burnt into people’s brains that the U.S. isn’t good at war anymore. Images from the Afghan withdrawal disaster made us look like a collapsing empire. This is a different team. Recalibrate your minds.” But as any sober-minded observer could have seen, and I explained, “No one doubts that the U.S. can drop large numbers of bombs on Middle Eastern countries and blow up boats in international waters. The skepticism has more to do with seeing what that has and has not accomplished, and where it tends to lead.”
Of course, Iran was going to close the Strait of Hormuz and begin firing missiles at Gulf infrastructure. We had assassinated their senior leadership and declared regime change the goal. We made the fight an existential one for them, and they behaved accordingly.
In the Land of Wars Are Fun, where we get to decide strategy for both sides and then ours always wins, this Iranian reaction was taken as justification for prompting it. “The fact is that Iran’s conduct in the war shows exactly why it must be crippled,” backflipped AEI’s Matthew Continetti in the Wall Street Journal. “True, military action carries a price. Yet in lashing out against the world, the Iranian regime has made its own best case for U.S. intervention.”
Perhaps that would make sense if time were a flat circle and Iran’s lashing out had prompted our already-in-motion campaign. In fact, time moves forward. There was a “before” we had launched the war, an era in which the Iranian regime was not firing its missiles at Gulf infrastructure, or closing the Strait, in part because it was not facing an existential threat and in part because it knew the price of such actions would be steep. And then we just went and imposed the maximal cost anyway.
I say “maximal cost” not because it was the greatest cost we could hypothetically impose, but rather because it was the greatest cost we had any interest in imposing, as was obvious to everyone, including the Iranians. Back in mid-March, I warned:
The United States should only ever go to war as a last resort, only after careful deliberation, only with a just cause and a clear rationale, and only after leaders have built support from the citizenry they are sworn to represent, and from whom the soldiers and resources must be drawn. The Trump administration did none of this, which makes the costs unjustifiable and also weakens the U.S. position, lacking the deep political support necessary to make a “fight until we win” posture credible. Deploying ground troops, as is reportedly under discussion, would compound all these problems.
The quick, limited strikes on Iran in June and Venezuela in January seem to have given the White House a false confidence that “We Can Just Do Things.” But this conflict is two-sided, and the other side currently holds a veto over how and when it ends. The regime could fall, but it appears more likely to survive, solidify control, and radicalize further—with less to lose and no fear of an American threat already carried out.
Wars are not won or lost by a tally of explosions, but by the achievement of strategic objectives and by arriving at a conclusion where one side can further impose its will and advance its interests and the other side cannot. Certainly, the United States destroyed many Iranian ships and missiles and set back the Iranian nuclear program. It may see a benefit from the world’s increased efforts to reduce dependence on Persian Gulf exports. But it did not achieve its constantly shifting goals and it was unwilling to accept the costs of pushing further. The Iranian regime survived, may even have tightened its grip on the nation, and proved that it could persevere in the face of an American onslaught, that it could close the Strait indefinitely, and that its still-intact missile capability could sufficiently menace neighbors to deter further aggression. Thus it is the United States now suing for peace and Iran that, while it sustained the brunt of the physical damage, emerges more credibly powerful and able to assert its geopolitical prerogatives.
War enthusiasts resent all this talk of constraints and reality. They make blanket declarations like “Iran must not have a nuclear weapon” as if their desire for that outcome is somehow determinative. When the conflict does not go as they hoped, the fault lies with anyone who went off script. Iran is firing at other countries? That’s not fair play. The American people have no interest in bearing the economic costs, let alone sending in ground troops? Then the real blame lies with them. President Trump didn’t want to continue escalating, with no end in sight, as costs quickly rose out of proportion to benefits? He just lacks patience and fortitude.
An effective strategist always presumes his opponents will take the action he least wants them to. An effective statesman makes and wins a case of the war’s wisdom and necessity to the citizenry. An effective commentator notes that Trump did try threatening outlandish escalation and fortunately backed down when Iran called his bluff. The medicine men of foreign policy instead insist that the rain will still come and lecture us that we have not done their dance with enough fervor. Our bad.
So here we are now, with the war having gone exactly as badly as should have been expected, driven not by the wishes of the war enthusiasts but rather by the enormous imbalance between participants in preparation, clarity of objective, and willingness to bear costs. The citizens of the United States, for whom their government exists and conducts foreign policy, have shown no appetite for what would be necessary to win, so we cannot.
That’s not a criticism of the American people. To the contrary, they have every right to define the national interest and rule out actions that fail to advance it. Public support is as critical to a military campaign as are munition stockpiles; in the absence of either, proceeding and inevitably failing is folly, and the blame lies with whomever attempts it. Leaders play an important role in assessing the national interest, but they are still left with the obligation to articulate their view and persuade the people of its wisdom. The necessity that they do so, frustrating though they may find it, is one of the chief distinctions between a republic and an empire, and one of the most valuable powers that a republic’s citizens retain. That we could prevail if we were willing to do more is not a defense of an unpopular effort. As the saying goes, if my bubby had balls, she’d be my zayde.
This failure to comprehend the two-sided nature of conflict is reaching absurdist heights in the context of negotiations, with war enthusiasts condemning outcomes they dislike without the faintest awareness that their own preferred actions have led to the situation where their preferred outcomes are not available. “The U.S. shouldn’t be providing economic relief first and seeking security concessions later,” says former Vice President Mike Pence. “We should be securing concessions first. That’s what we used to call ‘America First.’”
Such a fascinating sentence construction, more suitable to psychiatric analysis than policy commentary. It is the language of domestic policy and assumes a level of control over outcomes. “The U.S. shouldn’t be providing tax cuts first and seeking spending cuts later” is a quite reasonable assertion, and a fair basis for criticism of policymakers who take a different approach. But whether the United States has the power to secure concessions is not a matter of choice or will, it is a function of the situation in which we find ourselves. “America First” might mean avoiding entanglement in foreign wars that will lead to unfavorable negotiating dynamics. It cannot mean throwing a tantrum when bad policy leads to unfavorable results, imagining that we have some power to achieve a better one by fiat.
The agreement that we have to reach now with Iran will be a bad one for the United States, as measured against the status quo ante. That result is already baked, a function of the forces that led us here, not of the negotiating team’s skill or the president’s social media posts. The humiliation is not the unfavorable deal but the failure of the war, yet we find our public square jammed with the very people who have been most wrong, jeering at the tow-truck driver trying to pull their car from the ditch. The people acting badly are not the ones trying to conclude a deal and bring this latest foreign misadventure to a conclusion, but the ones who would rather dig deeper than admit they supported a misadventure and left us with no better option.
This political dynamic is one of the great dangers of war, and an important reason to err against starting one. There may hypothetically be a limited downside. But once underway, if it goes poorly, the leader who acknowledges the problem and attempts to correct course is seen as weak and takes the fall, while the peanut gallery clamoring to fight on can always claim victory is just around the corner and they could get a better deal. Who can prove them wrong? Pulling out of the dive requires more strength than many leaders can muster. The sheer predictability and irrationality of the resulting tragedy has been a repeated experience for the American people over the past two generations, indeed it is the only experience younger Americans know, and the elite’s determination to repeat it at every opportunity is a leading cause of cynicism and nihilism.
Insofar as President Trump is prepared to cut bait, he deserves genuine credit for doing the rare, right, and thankless thing. He could help himself by being honest about what has happened and what he is now prepared to accept, instead of trying to sell the deal as great, which obviously it is not. Someone who seems to have no idea of the score will build little trust or support. A clear-eyed, hard-headed assessment of reality and a willingness to do what is best for America, embarrassment be damned, is far more admirable. If we are going to have leaders who start foolish wars, let us hope at least for the kind who are not too foolish to end them. — Oren
GOOD READS FOR YOUR WEEKEND
In the Wall Street Journal, Treasury Secretary Scott Bessent writes that Hamilton Inspires Trump’s Economic Statecraft.
Fusionism for the 21st Century | In National Affairs, Henry Olsen writes that there’s “no going back” to the pre-Donald Trump Republican Party and that “the new conservative coalition can only thrive if it understands that compromise and policy innovation, not doctrinal purity and policy dogma, is the price of—and the path to—victory.”
My New Life With the Palantir Chore Coat | Writing for the Atlantic, Saahil Desai takes Palantir’s made-in-America chore coat for a spin through the streets of New York.
In UnHerd, Geisha-Marie Bland argues Against “Toddlercore” and the self-infantilization of Gen Z.
MANUFACTURING GAMBLERS
The New York Times reports that Mark Zuckerberg has assigned a small team to build a prediction-markets app, internally called Arena. That app would run independently of Facebook and Instagram, but Meta would steer its users toward it. Arena would likely run on a video-game-style points system first, with real-money wagering coming later, presumably if and when it clears regulatory hurdles. Insiders characterize the project as “experimental” but say it’s one of Zuckerberg’s top priorities, and part of his broader push into products built around “emerging social behavior.”
Meta’s edge over Polymarket and Kalshi is distribution. Where existing prediction-market apps have to “acquire” a gambler, Meta can manufacture one, routing its 3.56 billion daily users across Facebook, Instagram, and WhatsApp—most of whom opened the app to message a relative or read the news—into a betting product. The points system does the habituation before any money is at stake, training the muscle memory of wagering and converting it to revenue once the habits are formed. The behavior gets cultivated first, monetized later, raising the question: is Meta serving “emerging social behavior,” or manufacturing it?
Speaking of manufactured demand: a Wall Street Journal investigation finds that Polymarket, one of the competitors Meta is chasing, is manufacturing its own. The report finds the company paid “creators” to film themselves trading on near-perfect copies of its own site—dummy pages built for the purpose—and many did not disclose they were on the payroll until the Journal asked. Across more than 1,100 videos reviewed, 70% showed a creator placing a bet, every one of them on a fake site; in roughly one in ten, the creators also faked the payoff, splicing in outdated footage and fake headlines to look like they had won. Those faked wins added up to almost $900,000 on bets that would really have lost more than $166,000. Polymarket also paid thousands of low-wage workers, often teenagers in Asia, to repost the clips from sockpuppet accounts scrubbed of any ties to Polymarket, a tactic designed to give the illusion of authentic interest.
BONUS LINK: The Ethics & Public Policy Center published a new report outlining the problem of online sports gambling, its consequences, and recommendations for policymakers on how to respond.
ONE YEAR IS NOT AN EQUILIBRIUM
A new paper titled “The Effects of a Sudden Stop in Low-Skilled Immigration: Evidence from Korea’s Guest Worker Program,” from Giovanni Peri and coauthors, finds that when pandemic-era border closures froze South Korea’s low-skilled guest worker program—halting new inflows—and the participating workforce fell about 22% over 2020 to 2021; the firms most dependent on those workers were likelier to close. The harm concentrated among low-wage, low-productivity firms; their higher-wage competitors came through largely unaffected. Rather than hire Koreans to fill the gap, surviving firms shifted their existing Korean employees into the vacated lower-skilled jobs—occupational downgrading that shows up in the data as lower measured wages. The authors conclude that low-skilled immigrants cannot be easily replaced and that restricting their supply imposes real costs on firms and native workers.
There are at least two problems here. First, consider what the paper actually measures: a one-year, unanticipated shock that everyone expected to reverse. Firms did what rational firms do when a cheap input disappears for what they take to be a single bad year: they wait for it to return rather than recruit native workers or make major capital expenditures in automation and the like. That is the cost of transition, not the equilibrium that a permanent policy of restriction would eventually result in. Second, the paper treats firm exit as damage. But the firms that closed were the least productive, paying well below the sector average. Their exit is what you would expect when businesses built on a cheap, imported-labor model lose access to that labor. To call their exit a cost is to treat dependence on cheap imported labor as the equilibrium worth preserving.
ON CAPITOL HILL
This week in Congress, the House of Representatives passed the 21st Century ROAD to Housing Act by a vote of 358 to 32, a day after the Senate passed it 85 to 5. Most of the legislation focuses on supply-side reforms—streamlining environmental reviews, making it easier to build manufactured homes, and conditioning dollars from federal programs on whether localities actually build more housing. But, as we’ve written here in Understanding America, what makes the legislation remarkable is that it addresses both sides of the affordability problem—supply and demand—and affirms a principle the housing debate usually ignores: not all demand is created equal. The version that cleared both chambers retained the provision barring large institutional investors—those controlling 350 or more single-family homes—from buying any more, the demand President Trump put to Congress at January’s State of the Union when he said “homes are for people, not corporations.” A decade ago the provision would have died in committee; the free-market veto that once disciplined the Republican conference would have ruled a purchase ban on private capital out of bounds. Now that same Republican conference has told a class of investors that a category of homes is off-limits to their money.
But if the free-market veto is gone, a presidential one remains—and President Trump may use it. Hours before he was scheduled to sign the bill into law, he cancelled the signing ceremony, saying he would not sign it unless Congress passed the SAVE America Act, legislation that, among other election reforms, mandates voter identification to cast a ballot in federal elections. Despite unified Republican support for the legislation in Congress, the path to passage is narrow, if nonexistent, in the face of Democratic opposition, and Senate Republicans’ reluctance to nuke the legislative filibuster. President Trump routinely uses hardball tactics to extract concessions. But in this case, he has no leverage. Holding the housing bill hostage in a fight he cannot win would mean killing the one provision he demanded, in a package that’s directly responsive to the affordability concerns at the top of voters’ minds. President Trump should sign the bill, and take the win.
Elsewhere in Congress, Sens. Bernie Moreno (R-OH) and Elizabeth Warren (D-MA) published an op-ed in the New York Times, proposing to eliminate the cap on the Social Security payroll tax—the $184,500 ceiling above which wages go untaxed. The proposed change, they estimate, would add some $3 trillion to the program over the next decade, and “extend the solvency of Social Security for another generation.” Moreno, a populist Republican, deserves credit for grabbing the third rail of entitlement reform and pushing conservatives past the Paul Ryan era, when “entitlement reform” was a euphemism for benefit cuts, toward an approach that puts revenue on the table. But revenue alone is not sufficient. Any comprehensive reform must also restrain costs, and reduce spending on high-income households especially, if the nation is to find a fiscally sustainable future.
And some REINDUSTRIALIZATION news to end your week:
U.S. Bets Billions of Dollars in Low-Cost Loans Can Revive Nuclear Power (Wall Street Journal): “The Trump administration is so eager to see a nuclear power renaissance that it is starting to fund billions of dollars for reactor orders…low-interest loans amounting to $17.5 billion from the Energy Department…The loans are intended to speed up construction of 10 reactors in the United States.”
DOD Commits $1.2B in Conditional Loans to Phoenix Tailings, Energy Fuels (Manufacturing Dive): “The funds, provided through the agency’s Office of Strategic Capital, are expected to support the two companies’ scale-up of their domestic rare-earth mineral processing in the United States.”
Army Will Lease Land on Bases for Critical Mineral Production (Wall Street Journal): “The U.S. Army is leasing land on bases across the country to companies that will build and operate critical mineral processing plants…In lieu of cash payments from the companies, the Army will get some percentage of the processed mineral output, officials said. Collectively, the companies are expected to invest about $2 billion on the projects…”
Enjoy the weekend!
Way too long, Oren. You are late to the party, and there is really nothing new in anything you say. Even if I agree, don't make me wade through long, wordy essays. In general, if there were one tip I could give Commonplace, it would be tighten up the editing and deliver shorter, much more crisply focused pieces, especially given the frequency of your emails.
How entertaining to watch the America First (Alone) wing of the party split with the MAGA wing. It's just beginning, so I'm stockin up on popcorn:). Imagine the dance as JD and his flock seek to separate themselves from Don. Why don't these guys learn, in the end Don humiliates and betrays all his followers, no matter their level of obsequiousness. Paging Mike Pence as but one example...
Sadly, America has also been humiliated, and Iran strengthened, from Don's latest incoherent flailing. Not exactly a shocking outcome.
Good luck America.