INTERVIEWS:
Game-Theory Guru

By Michael Spence

From Nobel-winning economist Tom Schelling, thoughts about the unthinkable. By Michael Spence.

Tom, now 86 years of age, was my Ph.D. thesis adviser at Harvard, and this conversation—in which we focused on global threats—reminded me of so many others from the past, conversations that affected permanently the way I think and reason about the world. Every interaction with Tom is energizing. He is erect in his bearing (suggesting a military background) and precise with his words. And then he will think of something funny and dissolve into laughter. So much is original and surprising and often funny when he thinks out loud and talks.

The last time I saw Tom and his wife, Alice, was in Stockholm in December 2005, when, surrounded by a large contingent of children and grandchildren, he received the Nobel Prize in economics for the originality and impact of his applications of game theory to negotiation, nuclear deterrence, global warming, and the surprising effect of preferences for diversity on the composition of neighborhoods. If Tom’s work has a leitmotif, it is counterintuition.

Sipping his cabernet carefully, Tom tells me that he “was in South Korea shortly after North Korea exploded their nuclear device. When I got back, Henry Kissinger and others were suggesting that this was the beginning of the end of the Nuclear Non-Proliferation Treaty and era. There are 30 to 40 nations that have the capacity to acquire nuclear weapons, and that was true 30 years ago. Condoleezza Rice went to East Asia to organize a punitive response to the North Koreans. In my view, that should have been the second priority.

“The first mission should have been to encourage the three countries most threatened, Taiwan, South Korea, and Japan—all of whom have the capacity to develop nuclear weapons—to reaffirm their commitment to the NPT and non-nuclear status with support from the U.S. and the leading nuclear powers, signaling that they had no intention of using North Korea as an excuse to start building weapons. I view this as a significant missed opportunity on the part of the international community and the U.S. to reaffirm the deep importance of the non-proliferation regime.”

Tom Schelling, now 86, was my Ph.D. thesis adviser at Harvard, and this conversation—focusing on global threats—reminded me of so many others, conversations that deeply affected the way I think and reason about the world.

Tom Schelling expects Iran to get nuclear weapons. “Once a country becomes the owner of nuclear weapons, it is imperative that they learn to deal with them responsibly.” He pointed out that it took the United States 15 years after World War II to learn to think seriously about the security of its weapons. Before that, weapons did not have combination locks, let alone complex electronic security codes. Now, most weapons will not detonate even if given the codes unless they are at their designated targets.

He recalls that a friend who had a role in developing the weapons told him that one day in the late 1950s, he got off a plane at an air base in Germany and saw a military aircraft on the tarmac with a bomb beside it guarded by a single soldier. The man strolled over and asked the soldier what it was. The answer: “I believe it is a nuclear bomb, sir.” When asked what he would do if someone started to roll the weapon away, the soldier replied that he would call his superiors for instructions. A further enquiry established that the phone was some 300 meters away.

The issue of learning to be a responsible owner of these weapons goes beyond security and codes. “The Soviet Union,” Tom says, “always had civilian officials in charge of the weapons, and never let an aircraft carrying nuclear weapons out of Soviet airspace. China has a very separate army unit for this purpose. Who has control, are they trustworthy, are they put under control of the military, do we trust them? And if [control is] given to civilians, is that an act of mistrust of the military that may have adverse consequences? What are the safeguards against theft, sabotage or unauthorized use, and how will the weapons be protected and hence be credible with respect to retaliation and deterrence?

“These issues were addressed collectively and quietly by the nuclear powers during the Cold War. There was, for much of the Cold War, a surprising, effective, direct, and entirely unofficial conversation involving policy makers and military intellectuals from all the nuclear powers, including enemies, whose purpose was to learn and disseminate knowledge in this arena.” This took place because all the nuclear powers recognized that they had a shared interest in elevating the level of competence in the nuclear club. “India and Pakistan and China were all involved in these conversations and have deep knowledge of the issues and best practices. Iran should probably be the next member of the group, with North Korea to follow. Perhaps China, a highly competent and experienced owner of weapons, could start the process by organizing a conference that included others with experience: India, Pakistan, and then Iran and North Korea.”

Schelling shared the Nobel Prize in economics for the originality and impact of his applications of game theory to negotiation, nuclear deterrence, and even neighborhood diversity.

It is clear to me that Tom—who, as chairman of several interagency committees concerned with nuclear weapons policy in the 1960s and early ’70s, participated in much of the effort that ensured an effective taboo against the use of nuclear weapons in the Cold War—is deeply worried that in the post-Soviet period, the isolation of the newly arrived owners of weapons will lead to seriously inadequate strategic preparation, and therefore imperfect deterrence and the risk of miscalculation or misuse.

“Except for the end of World War II and the devices exploded over Hiroshima and Nagasaki, nuclear devices have not been used, and we have come to understand that they are useful for deterrence and not really for anything else. Part of the learning process is learning to be deterred.”

Iran and North Korea probably think they need nuclear weapons to prevent being attacked by us or others hostile to them. They need to learn that success in this limited objective consists of never using them. “Lyndon Johnson in 1964 was awed by the fact that nuclear weapons had not been used for 19 peril-filled years. He stated that the use of these weapons, particularly against civilian targets by any state, would result in denial of diplomatic recognition and sovereignty, personal and economic boycotts, and a level of isolation that has never been seen before.”

But this view was not always the prevailing one. Before the Johnson administration, the use of nuclear weapons was not seen as a taboo. Under Eisenhower, John Foster Dulles is quoted in then–national security adviser McGeorge Bundy’s book as having said that we must get rid of this taboo against nuclear weapons, and Eisenhower himself, faced with the threat from the Soviets in Western Europe when NATO troops were weak, probably felt it necessary to take the same position.

How did he come to be interested in things like nuclear war? “I thought that the most important strategic bargaining issues in the world related to nuclear weapons.”

Our conversation turns to present times, in which potential acquirers of nuclear weapons and WMD include terrorist organizations as well as nation states. Terrorists, Tom insists, “also need to understand that nuclear devices are really only useful for deterrence. They would be unlikely to have the capacity to deliver them on planes or missiles, and would be more likely to smuggle them into a hostile country and hide them in cities, and then threaten to detonate them if attacked—or unless their aims and conditions are met. The object should be not to blow up a city but to deter attacks on their country, region, or organization.” One is struck, once again, by the counterintuitive nature of the strategic issues related to these weapons: one has, to a large extent, a powerful strategic interest in the sophistication of one’s enemies.

We speak, also, about bioweapons. “Three years ago,” Tom explains, “there was a lot of interest in, and concern about, the use of smallpox as a weapon. I was involved in a meeting that included a number of bioweapons experts, and after considerable discussion, I asked how long it would take for a smallpox epidemic deliberately started in the U.S. to spread around the world. The answer was, ‘Not long.’ Then how practical are infectious diseases as bioweapons? Is it really likely that terrorists in the Middle East would use smallpox against a neighbor? Because of these considerations the interest in infectious diseases as weapons (as opposed to anthrax, for example, which does not spread infectiously from person to person) has declined. But I was struck by the fact that experts in bioweapons are not strategists, and by the thought that if our experts hadn’t thought of this, could we be sure that others, including terrorist organizations, had?” Smallpox, in a nutshell, cannot rationally be used as a weapon because it would spread too quickly, a kind of self-inflicted wound and mutually assured destruction.

How did Tom Schelling, an economist, come to be interested in all these issues? “I was about to become a junior fellow in the Society of Fellows at Harvard, when Sidney Alexander asked me to come to work with him in the implementation of the Marshall Plan.” Tom’s gentle wife, Alice—born in Poland—is now ministering to us in the dining room, ladling brimming bowls of soup. In between spoonfuls, he continues: “I ended up in Copenhagen and then the central office in Paris under Averell Harriman and became fascinated with international negotiations. I followed Harriman to Washington when he became Truman’s national security adviser and joined the Office of the Director of Mutual Security, which was essentially the budget office for all the aid programs in the period of rebuilding in Japan and Europe after the war.

Schelling has added global warming to his portfolio—continuing to teach us to think strategically about the unthinkable.

“Then I left to go to Yale as a faculty member and decided to make bargaining and negotiation my work. And there I thought that the most important strategic bargaining issues in the world related to nuclear weapons!”

China worries Tom; but typically, it is our approach to China, and not Chinese policy, that is the source of his discomfiture. “I believe that we do not pay enough attention to China. China has a small, well-managed nuclear arsenal, which they have never brandished or threatened to use. China does not react well when we treat it as if it were irresponsible. Recently, China conducted a test and shot down a satellite, and was criticized for contributing to the militarization of space. What appears not well known in the U.S. is that China has been trying to negotiate treaties on outer space, antisatellite weapons, and limiting the production of fissile material for a number of years, and has not been able to get the U.S. to participate. Since we are clearly developing antisatellite capabilities, accusations against China for escalation are viewed by them and others as hypocritical.”

Here, on display, were perhaps his most striking characteristics—intellectual courage and an unwillingness to pander to public opinion. He is aware of what is popular or conventional but acts on what is rigorous and true. In the later stages of the Vietnam War, and at considerable personal cost, he led a group of 12 scholars to Washington to object to the invasion of Cambodia. He thought the invasion was a costly mistake, neither strategically nor morally justified. For a time, he lost his place at the official table in the formulation of military policy and strategy. But his interest and his influence continued. Having added tipping phenomena and global warming to his portfolio, he continues to teach us to think strategically about the unthinkable.

Available from the Hoover Press is Capitalism and Its Discontents: The Adam Smith Address, by Michael J. Boskin, part of the Essays in Public Policy series. To order, call 800.935.2882 or visit www.hooverpress.org.

Michael Spence is a senior fellow at the Hoover Institution and the Philip H. Knight Professor Emeritus of Management in the Graduate School of Business at Stanford University. He is the chairman of the independent Commission on Growth and Development, focusing on growth in developing countries.