Incentive structures and the evil empire.

EVEN AS Ronald Reagan reaffirmed his intention to proceed with a Star Wars defense, even if the Soviets agree to cut back or eliminate offensive weapons, the rationale for such a defense system received a persuasive exposition in the March issue of The American Spectator. Like so many important articles these days, it was written by Gregory Fossedal of the Wall Street Journal, who must be the first journalist ever to have simultaneous cover stories in NATIONAL REVIEW and The New Republic.

Fossedal observes that the Soviets, by taking Star Wars seriously, have ironically forced American liberals to stop mocking it. ("Star Wars" was a derisive nickname bestowed by Edward Kennedy.) Critics still argue that such a system could never be 100 per cent effective. Maybe not. But Fossedal points out that an effectiveness of, say, 80 per cent would have a strong disincentive impact on Soviet use and production of nuclear weapons. It would constitute an 80 per cent "tax" on the Soviet arsenal. Thus "the Soviet might add one thousand new warheads to their offensive force, but they would gain only two hundred deliverable warheads for their effort." The arms race would then become prohibitively expensive for the Soviets, especially since any increase in their missiles would be far more costly than a corresponding increase in our relatively cheap interceptors.

Liberals have failed to grasp this for the same reason they are slow to grasp the importance of marginal tax rates. Just as they assume that people will go on producing even when those rates reach 80 per cent of marginal income, they assume that the Soviets will keep building missiles no matter how unprofitable and even self-defeating further construction gets.

But the American Left, including many liberals, reacts tropistically against Star Wars--warning that it will not work, at the same time fearing that it will. The landscape trembles as Jonathan Schell, author of The Fate of the Earth, disarmament's bible, comes out for Star Wars. And, as Fossedal shrewdly points out, stripped of its offensive nuclear capability, the Soviet Union would sink to second-rate status. A world freed of the nuclear threat would be one in which the power of free societies would prevail. That frightens the Left.

But as the President said in his State of the Union address: "Let's get started."