Finance Xpress: October 2019

11 Scary Money Mistakes to Avoid this Holiday Season

6:07 AM

Trick or treat! It’s pumpkin-everything and sweater weather time. But beware, this cozy season is dressed to deceive. Here are 11 money mistakes to avoid this holiday season.

For many of us, the holidays kick off with Halloween. Let’s be honest, the beginning of October is basically the start of holiday season in my household. It’s spooktacularly fitting since the next couple of months can be the scariest of the year when it comes to your money. So what scary money mistakes should you avoid between now and the end of the year? Run from these monster mistakes like the zombies are chasing you:

1. Not having a budget

The easiest way for your finances to get out of control is to not even have a handle on what you’re spending and saving. For this, you need a budget. It doesn’t necessarily have to involve old-fashioned spreadsheets. You can use great budgeting apps to get a grip on your finances.

Managing your day-to-day budget is the start of managing your money well through the holiday season, when spending is often higher than usual. So if you’re not doing that yet, get on it right away.

2. Not saving up for gifts ahead of time

Holiday gift spending is like the guy with a chainsaw in a Halloween horror special. You know he’s coming, but he surprises you, anyway. You can be smarter than the horror movie characters. You know extra holiday expenses, especially for gifts, are looming. So you can decide to be prepared and not surprised.

Here’s a simple way to plan ahead. Figure out what you spent on gifts last holiday season. Decide if you need to cut back or allow more room for spending. Then figure out what you need to set aside each paycheck to get to your savings goal before the shopping season starts.

Creating a monthly budget item designed to help you set aside money regularly can keep you from breaking the bank each holiday season. Open a separate high-yield savings account designed just for this purpose, earmarking the money for gifts.

3. Buying just because it’s a big deal

Black Friday is quickly approaching, and with it, all those temptingly great deals. It’s easy to spend money just because something is on sale, whether you need that thing or not. You can avoid this problem by being aware ahead of time of the things you want to shop for during holiday sales.

Those things might include new tech, home cleaning tools, furniture, clothing, toys, and more. And it’s not a bad idea to get those things when they happen to be discounted–as long as you’re already planning to purchase them. But steer clear of buying things that do not already exist on your to-buy list just because the deal looks great.

4. Neglecting to make a list

One of the best ways to avoid overspending and making impulse purchases is to make a list. This works, whether you’re doing your weekly grocery shopping or buying holiday gifts.

Sit down and think about what you need for the holiday season. Think about what you might need in terms of entertaining, as well as list out gift ideas for friends and family. This can help you get an idea of what you plan to spend, as well as help you avoid buying things you don’t need.

Plus, having a list can help you compare your planned purchases to sales and Black Friday deals. Knowing ahead of time and being able to make a plan of attack can go a long way toward saving you money in the long run and avoiding financial waste.

5. Swiping money from your important savings goals

One thing you definitely don’t want to do during the holiday season is suck the life out of your important savings accounts. If you’re pulling money from your emergency fund or, even worse, your retirement savings for holiday expenses, you’re spending too much.

These funds are available for when you truly need them. And buying additional Christmas gifts is not in that category. Luckily, if you avoid mistakes one, two, and three, you’re much less likely to feel tempted to pull from your savings goals to cover your holiday spending.

6. Forgetting about “free money” you could cash in

How often do you forget about free money you could use, especially during the holiday season? This might take the form of coupons or credits you can cash in for your holiday shopping. Or it could mean losing track of gift cards you get in the holiday rush.

This year, come up with a plan for keeping track of those benefits so you can use them instead of losing them. Even just having a particular place where you put all gift cards can help you stay organized.

Also, if you’re not already using a rewards credit card, check out our list of best cash back credit cards so you can earn money back while you shop.

Don’t forget to sign up for cash back rewards sites as well. Websites like Ebates, ibotta and Swagbucks all offer you ways to earn cash back on regular purchases. Make those purchases with a rewards credit card and you can stack the cash back, getting even more bang for each buck.

7. Being too free with your personal information

On Halloween night, you might see some tiny cat burglars running around ready to “steal” candy. They’re cute. But actual identity thieves are not. Pay attention to how your financial and personal information is being managed. Ignoring this is a huge problem that sets you up for identity theft and major credit issues.

Your best bet is to create a plan for protecting your personal information. This means being cautious about where you shop or give out information online, keeping an eye out for suspicious activity in your bank account, and checking your credit regularly.

8. Not being prepared for disasters

You know in those scary movies where the main cast of characters is just completely oblivious? Sure. We’re being chased by a known mass murderer, so let’s go hide in the garage that’s full of saws and other sharp objects. Don’t be like that with your finances.

You don’t have to spend all your time dwelling on potential disasters in the future. That wouldn’t be healthy. But you should be aware of and prepared for the worst. Money-wise, this means having a decent emergency fund and making sure your life insurance is solid.

9. Missing payments

Do your monthly payments sometimes sneak up on you? Don’t get caught by payments that you didn’t see coming. Missing payments or making them even a few days late can have disastrous financial consequences.

For one, you’re likely to get hit with a steep late fee. Then, suddenly your minimum payment is $35 more for the month. A few charges like that can wreck your budget pretty quickly! But late payments can also ding your credit score, making it harder to maintain financial health in the future.

Set up reminders that can help you pay bills on time, or set up automatic payments so that you don’t have to worry about missing payments and taking a hit to your bank account and your credit score.

10. Paying a ton of interest

Interest is a financial vampire. You can run up a $1,000 credit card bill, but before you know it, the interest leaves you bleeding dry. You could pay $1,500 or more towards that original $1,000 bill if you’re only making the minimum payments. Those interest payments–even the ones that seem like “good” interest rates–can creep up quickly and silently.

If you’re paying a lot of money in interest right now, figure out some ways to cut back immediately. This could mean paying down a debt more quickly so you pay less interest over time. Or it might mean refinancing into a lower-interest loan that you can then pay off swiftly.

11. Opening a store credit card

It can be tempting to open a store credit card for a discount or special financing. However, this can be a scary mistake, especially when you realize that you can’t use the card at other retailers. Additionally, you might not have access to a rewards program and often the APR is much higher than you’d see with more general bank credit cards and rewards cards.

With a store credit card, it can become costly to maintain, without extra perks and benefits. Plus, without the ability to use the card at other locations, it limits what you can accomplish. Think twice before committing yourself to a store card.

This season can be a tough one for budgets and overall financial health. But you don’t have to fall prey to these frightening financial mistakes. With a little bit of planning and the right tools, you can avoid these budgetary BOO!-by traps and come into the new year financially strong.

The post 11 Scary Money Mistakes to Avoid this Holiday Season appeared first on The Dough Roller.

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Finance Xpress

Speak Softly and Carry Big Data (Ep. 395)

8:02 PM

Assumptions interfere with good foreign policy, says political scientist Robert Pape. “It’s too easy to have preconceptions like it’s religion that causes people to blow themselves up. And if you get it wrong you could do really dumb things, like send an army to Iraq in 2003.” (Photo: Nelson/Getty)

Do economic sanctions work? Are big democracies any good at spreading democracy? What is the root cause of terrorism? It turns out that data analysis can help answer all these questions — and make better foreign-policy decisions. Guests include former Department of Defense officials Chuck Hagel and Michèle Flournoy and Chicago Project on Security and Threats researchers Robert Pape and Paul Poast. Recorded live in Chicago; Steve Levitt is co-host.

Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.

* * *

This week: an episode we recently recorded live in Chicago, on a topic that’s a bit unusual for us: American foreign policy. A few important things have already changed since our recording. For one: President Trump’s decision to withdraw some U.S. troops from Syria, which scrambled the calculus for the U.S., as well as for the Kurds, Syria, Turkey, Russia and who knows how many other players, eventually. And then, even more recently, U.S. Special Forces closed in on ISIS leader Abu Bakr al-Baghdadi, who reportedly then killed himself; this too happened in Syria. The Democrats’ impeachment proceedings have also accelerated, thanks to Trump’s interactions with Ukraine. So: this topic is a moving target, to say the least. In any case: we learned a lot, and hope you do too.

* * *

Stephen J. DUBNER: Thank you so much. We are recording live this week at the Harris Theater in Chicago, in partnership with the great public radio station WBEZ.

Now, Chicago is home to many great institutions, but perhaps our favorite is the University of Chicago, a true hotbed of intellectual curiosity and inquiry. Its economics department includes someone you should all be familiar with, my Freakonomics friend and co-author. He is rarely spotted in the wild, but he’s here tonight. Please welcome Steve Levitt. So Levitt, nice to have you here, you want to tell us what you’re working on these days?

Steve LEVITT: So I’ve gotten tired of academic research and decided I should try to do something useful for a while. So I started a center at the University of Chicago and we’re trying to do good things in the world. As I’ve gotten older, I’ve become more reflective. And maybe less of an economist and more of a regular person. And it felt like the right thing to do. Just to see if I could do something useful finally.

DUBNER: I applaud your turn toward reflection. Now there’s another reason we’ve come to Chicago tonight. There is a set of problems in the world today, the sort of problems that are a constant feature in human history, concerning international relations. So, at the moment the United States has a relatively charged relationship with — among others — China, Russia, Iran, North Korea, and Venezuela. The stakes are high. The issues are complex. The outcomes will reverberate for decades, if not longer. Now Levitt, do you have a lot of experience as an economist in the realm of statecraft or spy craft?

LEVITT: I don’t know if you’d want to call it experience, but I did once visit the C.I.A. campus. I got invited there to work on a project. And when you get to the C.I.A. they basically take all your stuff. They take your cell phone and whatnot. And they hand you a badge and they say, “This badge is incredibly important, and it is your form of identification while on campus. And if you are traveling without it, you will be treated like an intruder and potentially you will be shot.”

So, I took my badge and I got on the bus, which drove me across campus. And I got off the bus to go to my meeting, and I reached for my neck and I realized I had left my badge on the bus, which was driving away. And I raced after, and the bus driver didn’t see me. And I thought, “Oh my God, what is going to happen next?” And there was a C.I.A. guy off in the distance and I thought to myself, “What should I do? Should I approach him? Will he shoot me?” And I thought briefly about maybe I should take my undershirt off and wave it as a form of surrender. But I thought probably I’m more likely to be shot if I’m walking around without a shirt on campus.

So I approached the guy very timidly and I said, “I’m so sorry, excuse me. I left my badge on the bus.” And he looked at me and he said, “Oh, that’s no problem. Where were you trying to get to? I’ll take you there. Don’t worry about it.” And I’ve got to say that was the highpoint of my statecraft so far.

DUBNER: All right. So I think it’s safe to say that neither Levitt nor I are experts in the field. But there are some experts also at the University of Chicago, in a group called C-POST, the Chicago Project on Security and Threats. They are a collection of scholars who conduct data-driven research on foreign policy and international security.

So tonight we will hear from some C-POST-ers, as well as a couple of high-ranking practitioners of foreign policy that we’ve flown in from Washington — including one former Secretary of Defense and one potentially future Secretary of Defense. So let’s begin by welcoming the founder of the University of Chicago’s C-POST, the political scientist Robert Pape. So Bob, you and your fellow C-POST researchers try to use empirical means, data analysis — when available — to understand foreign policy. How rare is that?

Robert PAPE: Well, actually a lot of people use data. The key question is are you going to focus on really current and new problems, or are you going to try to solve problems that are around for 50, 70 years. So a lot of the problems of the faculty at C-POST are relatively new problems or very new takes on those problems.

So my work, suicide terrorism, that is a field that didn’t exist 30 years ago, 20 years ago. Its exists now and there’s a lot of good reason to want to throw a whole lot of data at that problem, because it’s too easy to have preconceptions and think, “Oh yes, it’s religion causing people to blow themselves up.” And if you get it wrong, you could do really dumb things, like send an army to Iraq in 2003, which didn’t turn out very well.

DUBNER: Can you quickly summarize what you found there and how the data aided that discovery?

PAPE: Yeah. So after 9/11, I compiled the first complete database of all suicide attacks around the world. At that time, it showed that half of suicide attacks were not driven by Islamic fundamentalism. Many were done by purely secular groups such as the Tamil Tigers in Sri Lanka, which is a Hindu group, not even an Islamic group; a Marxist group, an anti-religious group.

What I found was that 95 percent of suicide attacks around the world since the early 1980s, were in response to a military intervention, often an army, being sent on the territory that terrorists prize.

So what I did is, I knew Paul Wolfowitz, our deputy secretary of defense. Before the work was published, I sent this work to Wolfowitz. And basically the word was, “Bob, we’re still doing Iraq, but we will move our troops out of Saudi Arabia and we’re going to start an airbase in Qatar.” So that’s where Al-Udeid Air Base started in 2004. And basically I said in my published work that that wasn’t going to be good enough, that we were going to touch off the largest suicide-terrorist campaign in modern times, which we did.

DUBNER: So let me ask a question to both of you, University of Chicago professors, Bob Pape and Steve Levitt. There is this lovely idea that academic research that’s done rigorously and challenged by peers and referees will be so robust that it can just be put into play as policy. How often does that actually happen?

LEVITT: So I would say honestly my research has had no direct impact on public policy. The only — I’m not joking — the only law change I know that occurred because of my work, there was a small town in Alaska which passed a law which made walking drunk a crime because we had written in one of our books about the dire risks of walking drunk. And I think that is the lone policy success I’ve ever had in almost 30 years.

DUBNER: It’s not nothing. So Bob?

PAPE: September 2005, we get a call from Deputy Secretary of Defense England. Wolfowitz had been replaced. Where I am asked to come to Washington immediately. So I went the next day. England began this meeting by saying, “Professor Pape, we want to see your data, because the N.S.C. tomorrow is having a meeting where they’re going to decide whether to send an army to an African country. And the N.S.C. wants to know how good is your data.” So for three hours, they tried to destroy the finding in my data. We never did send the army. They never told me what country it was, but I’m pretty sure it was Somalia. But when lives are on the line, man, are they going to try to really rip that data apart.

DUBNER: So Bob, I understand you once found yourself advising a Republican and a Democratic candidate for president in the same race. Can you talk about how that worked out?

PAPE: Yeah, so Ron Paul was a Republican and he picked my book up at Barnes & Noble. And Random House, who published my book, sent me a note saying there is some congressman from Texas giving a whole speech on the House floor about your book. And well, then he ran for president and he asked me to be an adviser and I kept saying, “No, no, no.” And the truth is he wanted me because of Iraq. And that was really what I knew. I don’t know about income tax and gold standards and so forth. You guys might, but I don’t. But then I also really believed that the guy who was going to win was Barack Obama. And he was completely on the same page I was.

DUBNER: What does that page say, when you say “on the same page” about Iraq at that point in time?

PAPE: Really understanding that by going in and invading Iraq in 2003, we broke the system in a way that was going to create the chaos and hornet’s nest of terrorism. And we really had to come to grips with that as a fundamental cause.

DUBNER: And did you have any sense that Ron Paul was perhaps on the same wavelength as well, or you didn’t know?

PAPE: Oh, perfectly on the same wavelength. The real thing that happened here is you had a Republican and you had a Democrat, who maybe didn’t agree on anything else, but they agreed on the most important foreign policy issue of that time.

DUBNER: You thought, “Hey, I’ll double date.”

PAPE: Well, I didn’t do it intentionally. This is one of those cases where as a naive academic, I’m not really understanding what it means to be advising two campaigns at the same time. Once I realized this was not going to work, I just stepped back from both of them at exactly the same time.

DUBNER: And is it important for you to maintain some kind of political middledom or independence? Do you consider yourself a political person? Are you a registered Democrat or Republican, for instance?

PAPE: So, I started life as a Republican. Basically a Reagan Republican. And then in the mid ’90s I started voting for some Democrats. So in ‘96 I voted for Clinton straight on foreign policy. 2000, I supported George W. Bush. 2004, because of what happened with Iraq, Kerry. 2008, Obama. I really don’t vote on domestic politics at all. I’m really trying to see which presidential candidate do I think has the best foreign policy or national security policy for our country.

DUBNER: And when you say “best,” can you unpack that for a moment. What’s that mean? I’d like to think it means that these are people who will listen to advisers — whether within government, civil service, academia — but that they also know how to make important decisions and they have a familiarity with history. That’s what I would think of as “best.” Maybe you have a different definition.

PAPE: Yeah, so I think “best” means that it’s going to enhance the strength and security of the United States over time. And I believe that’s best done by working with allies. I believe that’s best done by promoting regional stability. Some people may think we could get ahead in the short term by playing hardball, with this actor or that actor, and they may be right within six months or a 12-month period of time.

But I believe in enlightened self-interest in academic terms. It’s a little bit longer-term time horizon. I have a lot of respect for Ronald Reagan’s foreign policy. After all, he ended the Cold War without us firing a shot. That’s an incredible outcome that occurred after many, many years of working in that direction. Obama’s foreign policy was really — I wouldn’t say perfect — but I would say it was really quite good. Second right up there with Ronald Reagan. I’d put the two together. I believe we’re stronger when we have friends working with us than when we push our friends away. And I think we see that today.

DUBNER: So I’d like to talk about the research you’ve been doing looking at economic sanctions. So this is something we all read about all the time. I’ll be honest, as a layperson it’s really hard to know what “works.” And how it works, if it does, and what kind of timeframe we’re supposed to be looking at as a success. Some of the U.S.’s current economic sanction targets include Russia and Iran and Venezuela. So what can you tell us empirically about the efficacy of this kind of sanction?

PAPE: Yeah. It really matters whether you’re pursuing sanctions for ambitious foreign-policy goals like regime change, to pull back a military offensive like Russia going into Ukraine, or to stop a W.M.D. program. Or you’re doing more modest things, like you’re trying to cut a trade deal, you’re trying to free some hostages. It’s really important to see the division between the tough goals and the easy goals. Sanctions work really well for easy goals. The tough goals, much poorer track record.

DUBNER: Can you give us some numbers? And I’m also curious to know about your dataset. How far back did you look? How good is the data on this topic, etc.?

PAPE: It’s really quite good going back to World War I. So since World War I, well over 115 cases of economic sanctions. And we could really divide up and cut up the data in this way.

DUBNER: And this is not just the U.S., correct?

PAPE: Oh no, this is global. So the problem isn’t whether you have a dataset at all. It’s: are you dividing the data in the right way? Are you mixing apples and oranges, or are you comparing the tough cases to tough cases, so to speak. And when you do, you see that sanctions for tough cases work less than 5 percent of the time.

DUBNER: Oh my goodness.

PAPE: And they not only work less than 5 percent of the time, but about 5 percent of the time they have catastrophic failure.

DUBNER: Give us a specific, please.

PAPE: July 1941. We want Japan to stop using all the military force on its adventures in Asia. So we slap maximum-pressure oil sanctions on the Japanese. We think what we’re doing is that we’re going to tilt the balance and we’re going to weaken hawks and empower the doves. We did exactly the opposite. What we did is we weakened the doves and we empowered the hawks. The guy who led the Pearl Harbor attack was Admiral Yamamoto. We know this because we got all the documents, and what Yamamoto did was he flipped his position on Pearl Harbor as a result of the sanctions. Before July ‘41, he was opposed to the Pearl Harbor attack. July ’41 sanctions were what caused him to do the Pearl Harbor attack, because it was a brushback pitch. The more we threatened the survival of Japan, the more he wanted to take a risk to push us back. And that, I’m afraid, is what we’re seeing with Iran today.

LEVITT: So you said that the sanctions work on the tough problems about 5 percent of the time. What percent of the time do whatever other approaches we use on tough problems work? I mean, they’re tough problems. So maybe there aren’t a lot of other good options.

PAPE: So they’re usually compared to, Steve, military force. So what you see is that when you apply economic sanctions on a target, especially for a tough goal, a lot of times what’s happening is they fail and then you end up using military force. Pearl Harbor, again, is a perfect example of that. Another example is when we put economic sanctions on South Vietnam in 1963. We wanted to change the government of 1963. We tried with economic sanctions. That wasn’t good enough. It didn’t do it. So we ended up pursuing a foreign-sponsored military coup and that, of course, then led to our military intervention in Vietnam.

LEVITT: I’m curious if you do economic sanctions, whether you actually can measure effects on prices and quantities?

PAPE: Let me give you a good case. Iraq, after 1991. So we slapped economic sanctions on the country of Iraq, an oil-producing country, cutting off virtually all of its oil, starting in 1990. And we kept that off. We cut its economy in half. It dropped 50 percent plus. We have really good data on that. And we thought that would ultimately bring about regime change. A Republican president thought that. A Democratic president thought that. And another Republican president thought that. And the truth is, politically, that didn’t work. We had to invade Iraq.

But if you look at the consequences of cutting that economy, we had tens of thousands of miscarriages and other harm due to malnutrition as a result of the sanctions, which are all blamed on us. The costs here weren’t just on the regime, and we can measure it. And it’s not because we didn’t damage them enough.

DUBNER: In 2014, Russia made a military move on Ukraine and they annexed the Crimean Peninsula. So in response the U.S., under President Obama, joined other countries in imposing economic sanctions on Russia. Tell us about the consequences of those economic sanctions on Russia, as far-ranging as you can.

PAPE: I believe that the sanctions have had no effect on Putin. They have weakened the economy but they’ve also fed nationalism. So one of the reasons why sanctions don’t work is because, rather than in terms of just raw cost-benefit calculation, you produce nationalism, which shifts things in favor of the hawks, even though they’re losing wealth.

DUBNER: And what have been some of the consequences of Russian nationalism in the form of blowback to the United States?

PAPE: Well, one of the things we worry a lot about is that a lot of those sanctions are some of the reasons why Putin has us so much in his gunsights. It’s not simply personal animus against Hillary Clinton.

DUBNER: Do you or others have evidence that one of the blowbacks was Russia attempting or actually meddling in the 2016 U.S. presidential election?

PAPE: Nope. Can’t go that far. No, I can’t personally go that far. So it’s not because there’s not a correlation there. It’s because the kind of work I do — so when I’m looking at the cases of economic sanctions — I’m getting inside to the extent possible the decision-making on the target country. You can’t do that in every single case. So I’d have to pull back and say there is a correlation there but no, I can’t say for sure that’s the trigger.

DUBNER: So here’s the problem as I see it. As Levitt said, the reason that solutions to difficult problems don’t often work is because the problems are difficult. And you’re describing now that sanctions are typically ineffectual. And the other choice is typically a military invasion, which is costly on many dimensions. And furthermore, as you’ve said, military invasions and/or occupation have a downstream cost of suicide terrorism, among many other things. Right? So can you give us anything remotely resembling good news or good ideas?

PAPE: Rather than have pushed for the sanctions, what we should have done is played up the politics of embarrassment. So we had just had a case in Syria when the Syrian government used gas. You remember that? And what the Obama administration did — and Secretary Kerry, Secretary of State, did was embarrass the heck out of Putin for supporting this, and got the Russians to not veto in the U.N. the most serious anti-chemical campaign that we really have ever had. And that politics of embarrassment was our best lever in Syria.

And what I believe is that we could have been better off by trying that approach in Ukraine. What we underweight is how much the politics of embarrassment can separate a leader from his own nationalist base. Because it’s one thing for the public to be nationalist. It’s another thing to want to really embrace a war criminal that’s committed murder and killed hundreds of civilians outright. That is a very different thing to own and I think it has a possibility of separating the leader from the public — whereas sanctions, I believe, just bring them right together.

* * *

One of the things Robert Pape has done at his Chicago Project on Security and Threats is assemble a cadre of younger political scientists who, like him, are trying to look at international affairs through an empirical lens. We brought up one of these political scientists, Paul Poast, for a brief conversation about his research — which has to do with the spreading of democracy, or the lack thereof.

Paul POAST: So a good way to think about this is to go back a little bit. Everybody’s excited about the 1990s, because it’s the end of the Cold War and it’s viewed as this moment that now liberal democracy, that represented the West, is going to spread. And the reality is, it didn’t just happen.

And that, Poast says, is because the big countries that have historically prided themselves on being the big spreaders of democracy — the U.S. in particular — are in fact not very good at spreading democracy. Or maybe they’re just too distracted with other pressing matters. In any case, imagine you’re the leader of a smallish country that’s heading toward a new democratic setup.

POAST: And these leaders, a lot of times, they’re looking for resources. They’re like, “I need help. I need technical expertise. Everything here is geared towards giving out bribes. I need help building roads. How do I do this?”

The common perception, Poast told us, is that the U.S. is always willing to step in and provide this help.

POAST: What my research showed is that that wasn’t fully what happened. Instead what I have found is that countries that are what we call democratizing — meaning they’re basically in the first 5 to 10 years of being a new democracy — they are dramatically more likely, say on the order of 30 percent more likely, to form new international organizations compared to say an established democracy, autocracy, or any other kind of just regular country.

In other words, these new democracies can’t get what they need from big countries like the U.S., or big organizations like NATO. Instead, they rely on what Poast calls “middle democracies.”

POAST: One of my favorite examples of this is something called BALTBAT, the Baltic Battalion. The Baltic Battalion was an organization formed by the Baltic states after the end of the Cold War. And who steps in is the Nordic countries, in particular Denmark, who’s a NATO member. They come in and actually helped them to form this new organization, to where it was referred to as a preparatory school for NATO. And that organization then started to allow them to get the resources that they needed to help to start to consolidate.

DUBNER: So, two of the most avid advocates of democracy-spreading in the past — the U.S. and the U.K. — they both seem much less interested in that function at the moment. So do you — and I don’t mean this to sound as bad as it’s about to sound — but do you feel, in your research, that you’re chasing a piece of history that’s already evaporating?

POAST: Ah, Yes. That is the common narrative you hear right now. I actually, despite being very cynical, I actually have a much more optimistic view of it. Even if you go back to the early 1990s, it wasn’t the U.S. that was leading the way. It was the smaller, middle democracies who lead the way. Or if you go back to the 1940s, with the creation of NATO, it was Canada that came along and said, “Hey, U.S., there’s this thing you might want to get involved with that would really help out Europe.”

DUBNER: You sound shocked that Canada could come up with a good idea.

LEVITT: So when you talk about spreading democracy you’ve focused on countries that already have a nascent democratic process in place. But when I think about the U.S. approach to spreading democracy, I think about us assassinating leaders, bombing places, doing very un-democratic things to trigger the process. Is there any data on the success rate of big democratic powers doing very undemocratic things to try to induce future democracies?

POAST: We call this foreign-imposed regime change. But the key to that is it’s not necessarily democratic change. Because all those things that you mentioned the U.S. did, they also did it the reverse. They’ve also engaged in operations that undermined a democratic regime largely because they felt well, this particular regime is going to be more pro-capitalism, pro-U.S., than say the democratic regime that is there. So there has been a lot of work that’s done on this. Usually what it’s found, though, is that if you’re using a military option, it’s typically because it’s a very bad situation. It’s comparable to what Bob was saying about sanctions, where it’s typically not very successful and of course we observe that with Iraq.

DUBNER: All right. So far we have learned, among other things, that big democracies are really bad at spreading democracy further. We’ve learned that economic sanctions rarely work. And that the root cause of suicide terrorism is more likely to be political than religious. And this will conclude the egghead portion of our program.

* * *

DUBNER: It is time now for our next guest. He was a two-term U.S. senator from Nebraska. And from 2013 to 2015 he served as the United States Secretary of Defense. A very interesting fit, considering that he’s a Republican and the president he served under was Barack Obama. Would you please welcome Secretary Chuck Hagel.

Chuck HAGEL: Thank you.

DUBNER: I’d like you to tell us, in all honesty, how the Defense Department considers the sort of academic research and analysis we’ve been hearing about tonight. Do you take it seriously or do you dismiss it as the work of a bunch of pencil-necked geeks who don’t know how the real world works?

HAGEL: We have to take it seriously. The mistakes that we’ve made, and Bob Pape talked about some of them — Vietnam, Iraq — I don’t think we had a very clear understanding of information. Culture, religion, history of these areas. And Afghanistan is a good example here. Eighteen years in Afghanistan. That country has never been ruled by a central government. Great powers of different eras have tried and all failed because they’ve lost the people. And research and analysis helps guide you — not guarantee — but guide you into smarter, wiser decision making.

DUBNER: So Bob Pape told us that he was on the same page, foreign-policy-wise, as Barack Obama, as well as Ron Paul for what it’s worth, at the same time. What about you and Barack Obama? What persuaded you that the Obama Doctrine was something that you as a Republican could help enact as Secretary of Defense?

HAGEL: Well, first I got to know Barack Obama when he first came to the Senate. We served on the Senate Foreign Relations Committee for four years. And I admired his thinking. I liked his style. And Iraq was really at that time — because he got there in 2004 — the centerpiece of our foreign policy. And as he moved into a presidential campaign and what he said about Iraq, I agreed with. John McCain was a very close friend of mine. In fact, I was co-chairman of John McCain’s presidential election in 2000. But John was very aggressive on Iraq and actually wanted to do more in the Middle East. And I told John I couldn’t support him and why I thought his foreign policy was dangerous and I thought if he was elected president it would get worse.

LEVITT: So I know nothing about foreign policy, but—

HAGEL: What did you want to talk about?

LEVITT: One thing that struck me about Iraq is after a military victory, it seemed like we had the opportunity to win the hearts and minds of the people of Iraq by providing basic economic infrastructure. Electricity, keeping garbage off the streets, giving people something to eat. And it seemed like we as a country failed miserably in that activity. Any reactions to that, and how that might have triggered a lot of the problems we’ve had in the last many years?

HAGEL: Well, first we should acknowledge the sacrifices made by the men and women who lost their lives in Iraq and who were severely wounded and their families. It wasn’t because they failed, but our leadership failed. To your point about economic structure. Always there is an element of the uncontrollable. And again, it wasn’t the military’s fault. The military should only be used for a clear, diplomatic, strategic objective. If you don’t have that, the military will do its best, but the military can only do so much. The military can’t fix all those problems. Those economic problems, corruption problems, and government and so on. So yes, I think that was part of what you said, why we failed.

DUBNER: The current Secretary of Defense, Mark Esper, was your legislative director and senior policy adviser when you were a U.S. Senator. So I’m really curious to know whether you’re returning him the favor and whispering in his ear now, and whether you’ll tell us or not — if you were whispering in his ear. There are a lot of hot spots around the world right now. North Korea, Iran, Russia, China, Venezuela. Take your pick. I’m just really curious to know your thinking on these. And tell us what we should be thinking about that’s important. What may be slightly hidden from view that we’re not thinking about.

HAGEL: Well, first I would say to Mark, why in the hell did you take the job? But— and Mark did a good job for me and I’ve stayed in touch with him over the years and we’ve talked. As to your question, the hot spots around the world. We start with the Middle East. As dangerous, as volatile as anytime ever in the history of the Middle East. Governments there don’t exist in countries. In some countries you’ve got kind of government, revolutions, instability. Obviously with Iran being the centerpiece of that. The unpredictability of Kim Jong-Un in North Korea presents a real issue with the Japanese-South Korean split. You mentioned Venezuela.

I would mention another one: the destabilizing of Western democracies. Start with the obvious, Brexit. But every one of those Western democracies is not very stable. France. Germany. Italy. They’re all in a state of flux and uncertainty. And you look at our country. We are as divided politically, in many ways polarized. I don’t think like anytime since the Civil War. Watergate, I was a young chief of staff to a Republican congressman during Watergate, and that was a bad time. But it was not near as bad as what we’ve got today.

And when we’re off-balance, the United States is off balance, the world’s off balance. The world has keyed off of us. We made plenty of mistakes, but the world has always been secure in knowing there is a centerpiece to global leadership. And if we walk away from that, a vacuum will surely occur. Something will fill that vacuum. It’ll either be China trying to fill the vacuum, or we’ll go back again to a decentralized world.

DUBNER: Let me ask you about your argument about the weakening of Western democracies. Tonight we’ve heard about the costs of economic sanctions and how they tend to backfire, and not work very well. Military intervention is costly in many, many ways. And there are unintended consequences there. But let’s talk for a minute about potentially some of the costs of non-intervention.

So I’d particularly like to get into Syria, which I know you were involved in intimately. So let me describe a potential daisy chain. I may be totally off, but here’s one way of looking at it. We essentially decided to not do as much about Syria as many people thought, or wished. And one could argue that one consequence of that was adding to the instability in Western Europe by producing a refugee crisis, by destabilizing the Middle East further, and so on. So how do you weigh the cost of non-intervention? And let me ask you to start the conversation by asking you simply this: had Iraq not happened, how different might the treatment of Syria have been?

HAGEL: Well, in my opinion, our invasion in Iraq in 2003 set off a conflagration in the Middle East that we’re still living with today. I took on my own party and my own president on this, and I was vilified, and I was called a traitor and a RINO. Which I thought was a compliment. But I’m from Nebraska. So a rhino is an impressive animal. But the point being, Iraq was really the beginning of the destabilization of the entire Middle East. We set something in motion that we couldn’t control. There’s no question that President Obama, Vice President Biden, Secretary Kerry, Secretary Hagel, all four of us members of the Senate Foreign Relations Committee who saw all this happen. We were all conditioned by what happened in Iraq. No question about it.

And Obama ran in 2008 saying, “I’m not going to get us into any more of those and we’re going to get out of Iraq.” So he was very concerned — we all were, about getting back into another war. And that was in all of the National Security Council meetings we had, that was very much on the minds of everybody. Then when the chemical weapons attack occurred and—

DUBNER: And we should say that the attack occurred after the President had said if such an attack were to occur, that would change the calculus.

HAGEL: Yeah, I mean, the president was just very straightforward. That’s a red line. That’s that’s what he said.

DUBNER: What was your expectation at the point when the red line was crossed?

HAGEL: So we had a National Security Council meeting, after National Security Council meeting. “What are our options?” “What should we do?” And we went to the United Nations, asked for their help investigating it. Was it Assad who actually used chemical weapons?

DUBNER: How long did that take to confirm, if you recall?

HAGEL: I’d say maybe two months to confirm it. Something like that. And then it was a matter of the President asking for military options. Everything from actually an invasion to different possibilities that would not put our troops on the ground. Which at the time, President Obama said, “I do not want troops on the ground in Syria.”

DUBNER: And did you consider that a sort of red line itself or maybe not a red line but an option that once you rule it out, you lose leverage?

HAGEL: Well, that wasn’t public. That was within the National Security Council.

DUBNER: And what did you think, then? As a former military man and Secretary of Defense.

HAGEL: I supported that. But I also supported, as Kerry did, and others on the National Security Council, that we had to have some response.

DUBNER: What was on your menu?

HAGEL: Well, we probably gave the President eight or nine options. I mean, a rocket attack. Bomb certain headquarters of his command-and-control systems. We looked at hitting it at three o’clock in the morning, when the least number of people would be there. Those were the things that we all talked about. He decided, the President, that he was going to pick one of those options. And he went around the table. And said, “What do you think? Yes? No? Where are we?” I don’t think there was one dissenting vote on it. We all agreed. This was the option. I was—

DUBNER: Are you going to tell us the option?

HAGEL: Well, I— it was not ground troops. Let me just put it that way. I was in Europe for a NATO defense ministers’ meeting, and I was coming back on the day that, and they brought me in through closed-circuit television. And we had one more vote on it. Everything was ready to go. It was on a Friday. And we pushed the button. Marty Dempsey, Chairman of the Joint Chiefs of Staff, was in the National Security Council room. I was on the plane. When I landed at Andrews at 6:00 on that Friday night, I went home, took a shower, changed clothes, and my wife and I went to dinner.

And about 9:00, my security guys came into the restaurant and said, “Mr. Secretary, the President needs to talk to you, it’s urgent.” My first concern was something’s gone wrong. That we’ve lost a plane or something, and this was all top-secret. Nobody was supposed to know — well, maybe the press have gotten a hold of it. And I went out to the car and the security people left me alone in the car. The President came on and said, “Chuck, I’m pulling down the attack. And I want you to know we’re going to have a meeting tomorrow morning. I’ll explain everything. I’m going to call Marty next.”

DUBNER: What are you feeling?

HAGEL: I’m surprised, obviously.

DUBNER: Were you pissed?

HAGEL: Well I wasn’t— I wasn’t pissed, I was just— I couldn’t understand what had happened. What’s happened here? So I called Marty right away. And Marty, I think, was on his third scotch and, I said, “Marty, you’re going to be going for a fourth soon here. I just got off the phone with the president and he wants to pull the option down and you’re going to get a call from him in a minute.” When I was on the phone with Dempsey, the president called him. So I went back inside.

DUBNER: You weren’t offended that he dropped your call to take the President’s call?

HAGEL: I said, “Just don’t let it happen again.” So I went back in the restaurant and, I think I ordered a scotch. And my security people came back in and said, “Secretary Kerry is on the line.” Okay, so went out to the car.

DUBNER: What’s your wife eating at this point, she’s—

HAGEL: Well, she’s probably wondering about is anybody in charge of anything? And, Kerry, I think he said something like, “Chuck, what the hell’s going on?” And so John and I talked on the phone. And then we went the next morning and he explained why he’d done it. Obama was very uncomfortable about going into Syria and doing anything without congressional concurrence. And the Republicans just wouldn’t give it to him.

DUBNER: But did Obama use that as a dodge to cover for not wanting to go into Syria?

HAGEL: Well, he— I don’t think it was a dodge, I think he really wanted that. He was very uncomfortable about using the military to go back and start something new. In the wars, the skirmishes, the conflicts that we’ve gotten into since World War II, the Congress has obviously reasserted itself. As a former member of Congress, I agree with that. I believe that’s right. Especially with this president. And I think that the responsibility to declare war is the Congress’s.

DUBNER: So in retrospect, the Syrian civil war is still in some form of—

HAGEL: And we have troops there.

DUBNER: And we have troops there, a lot of lives lost. A lot of people hurt. A lot of people fled the country. A lot of those people who fled the country then went to other countries where they were mostly not very welcome. That produced political instability in those countries, so this chain of events was massive. I’m really curious to know as someone who favored some form of military intervention, how you think back to that decision. I’m not asking you to say, “I was right. We should have done it. XYZ would have happened.” But I’m really curious to hear you talk about the overall costs of non-intervention in that case.

HAGEL: Well, I don’t think any of us were wise enough, smart enough to be able to think that through and anticipate all that’s happened as a result of Syria. One example: the Russians were not in Syria. The Russians had a little naval base in the Mediterranean at Tartus, and there was just nothing there. One of the consequences here was this allowed the Russians to get in because the U.S. wouldn’t do anything. So Putin saw that as an opening to help Assad.

But you mentioned the refugees. A lot of the populism, nationalism in Western democracies is very much a result of those refugees flooding into those countries and overpowering the systems in those countries. I don’t think anybody was clairvoyant enough, wise enough to think that far down the road this was going to be a consequence. I think our intelligence people were telling us, and allies, that Assad probably wasn’t going to last long. There were a lot of people, pretty smart people, giving us advice in thinking that — a lot of our State Department, Defense, the C.I.A. — that he just won’t last. We don’t know what’s coming next, but most likely is not going to be Assad.

DUBNER: I’m guessing you have a few thoughts about the Trump administration and foreign policy within?

HAGEL: Well, I don’t know what the foreign policy is but — foreign policy cannot be “America first.” If that is his policy, then this country is going to be in a lot of trouble. Every nation responds in its own self-interest. Nothing wrong with that. That’s consistent. But we do more than that. We pay more for NATO and all of these other organizations. We get so much more out of it. As a secretary of defense, if we didn’t have those alliances, if we didn’t have NATO, we couldn’t project power around the world, because we couldn’t station troops around the world. We couldn’t have air bases around the world, naval bases around the world, and the world would be a hell of a lot more dangerous than it is today.

DUBNER: Before we let you go, I’m curious to know what’s next for you, Secretary Hagel. Are you—do you want to be president yourself? Do you want to open a rhinoceros farm back in Nebraska perhaps?

HAGEL: Saddle up.

DUBNER: Secretary Chuck Hagel, thank you so much for joining us tonight. And would you please welcome our final guest tonight. She served in the Department of Defense under presidents Bill Clinton and Barack Obama. From 2009 through 2012, she was Under Secretary of Defense for Policy. Would you please welcome Michèle Flournoy. I understand you were considered a front runner for Secretary of Defense had Hillary Clinton become president in the 2016 election. Is that true?

Michèle FLOURNOY: I can neither confirm nor deny.

DUBNER: Perfect. So that’s a yes. I’m also told you’re still considered a front runner if a Democrat were to win the White House in 2020. So tell us a little bit about what you’re doing right now. And I really want to know how you stay prepared for the possibility of taking on that job were it to happen.

FLOURNOY: Well, Henry Kissinger wrote several memoirs and one of the things he said in one of his memoirs is when you’re out of government, it’s your time to repack your intellectual suitcase. Because when you’re in government, you’re dealing with the tyranny of the in-box. The crises of the day. And all you’re doing is unpacking and using whatever intellectual capital you came in with. This is a period — when you’re out of government, it’s a chance to learn and grow and reload. And obviously there’s nothing certain in politics and in elections, but I do have a passion for public service, and I hope public service isn’t done with me.

DUBNER: Let’s talk about Syria. In May 2016, you co-authored a report that called for a more muscular U.S. campaign to support the Syrian rebels. More training, more arms, a no-bombing zone, and limited military strikes perhaps to help turn the tide toward regime change. So what was your position during the action that we were hearing about earlier with Secretary Hagel, when President Obama seemed poised to consider a pretty strong response to Assad after the chemical weapons use?

FLOURNOY: So just to clarify, I was out of government at the time, so I was observing this from the outside. But I thought that early on, when we had the massive protests against Assad, when opposition groups were forming, I thought there was a moment where some assistance to them might have really constrained Assad’s options and cut short or stopped or slowed what eventually became a civil war. So I do think we’ll never know.

At the same time, as we chose not to do that, there were concerns about providing weapons to the opposition and having them fall into the hands of Al-Qaeda and other terrorist groups. Those are very legitimate concerns. So it was a difficult set of decisions. But as we watch things start to worsen, I think we could anticipate. And we did somewhat, but we didn’t act appropriately. We could see the level of the refugee crisis that was coming and the degree to which that could destabilize the countries around the periphery of Syria.

DUBNER: And by the time you saw the scale of that problem, was it essentially too late in your view to carry out the plan you’d conceived?

FLOURNOY: I don’t think so. I think we could have leaned forward more and worked with the borderline states in terms of preparing the humanitarian response, in terms of getting Europe more involved, to try to maybe consider some no-fly zone areas where we were not putting troops on the ground, but trying to create an umbrella that would protect civilians in coordination with opposition forces on the ground. And those sorts of options just sort of slipped away because we did not take more aggressive action.

And then by the time the chemical weapons were used, my concern about President Obama’s ultimate choice — and, again, incredibly difficult decision — when he chose not to make good on the red line and not to authorize the strike, at that point having already gone out to the American people and told them, “We’re going to do this.” And gone out to the world and told them, “We’re going to do this.” I think at that point, it was a real blow to U.S. credibility. And we are witnessing that every single day now, where you have a president with a huge say-do gap, and it hurts U.S. credibility enormously.

DUBNER: That’s quite a phrase. I’ve never heard it before, but it makes a lot of sense, a say-do gap. Yeah.

FLOURNOY: Your kids will remind about your say-do gap all the time.

DUBNER: So President Trump recently declared that the U.S. was preparing a cyberattack on Iran. And I would like to know — a) in your view, how does a cyberattack measure up against traditional military responses, and also b) how common, or wise, is the preemptive declaration of the intention to launch a cyberattack?

FLOURNOY: I thought that was kind of interesting as well. Normally, cyberattacks are used when you don’t want attribution. You don’t want it to be known exactly what you’re doing, but the use of cyber as an instrument by states has really evolved. Countries have tried to figure out who’s doing what by getting inside each other’s systems. Then we saw a period where countries started stealing information. So it’s estimated that China has stolen hundreds of billions of dollars of intellectual property from U.S. companies and that’s part of what’s fueled their economic rise. Now in 2016, we saw Russia’s use of cyber and manipulation of social media as a covert influence tool to try to—

DUBNER: For the election.

FLOURNOY: For the elections.

DUBNER: And do you know of any evidence — we asked Bob Pape, he did not — but do you know of any evidence connecting the interference with the U.S. election to a retribution for economic sanctions against Russia?

FLOURNOY: No. I don’t. I don’t know of any specific evidence of that.

DUBNER: Do you think such evidence could be found if it existed?

FLOURNOY: But I think there’s a deep sense of grievance in Russia at not only — Vladimir Putin isn’t happy right now — but in terms of the society writ large and particularly at the elite level.

LEVITT: One of the things I’ve been told about cyber is that offense is much easier than defense. Right now the attackers are way, way better at attacking than defenders are at defending. Do you have any thoughts on that?

FLOURNOY: I would say that I think the offense tends to have the initiative and certain advantages, but I also think that drawing too clean a line between offense and defense doesn’t really work in cyber. And I’ll give you an example. It has to do with what happened just before the midterm elections, where our cyber command got indications that the Russians were preparing to try to meddle in the 2018 midterm elections. And so as a defensive measure to prevent that, they went on the offense, which was basically doing denial-of-service attacks on the Russian entity. And so it was an offensive move, but in the context of an imminent threat. So it was part of a defense. So these terms they get blurry a little bit in the cyber world.

DUBNER: The Iran deal, allowing economic activity in return for suspending a nuclear-weapons program, was said to be “settled” under the Obama administration. The Trump administration has sort of unsettled it. I’m curious to know what you think about one administration undoing another administration’s work in such case.

FLOURNOY: Well, I think it will go down in history as a terrible mistake to walk away from the Iran nuclear deal. Let me just say, across multiple administrations, Democratic and Republican, we’ve had the same consistent goals vis-a-vis Iran. We’ve wanted to prevent them from becoming a nuclear-weapons power. We’ve wanted to prevent them from developing more and more capable ballistic missiles. And we wanted to prevent and stop their support for terrorism and proxies around the region. Those aims are shared across a wide swath of the political spectrum.

When President Trump came in, he sort of had a “well, not-invented-here” perspective: if President Obama concluded this, it must be the wrong approach. “I’m the dealmaker. I’m going to make a better deal.” So instead of building on that as the foundation, he ripped it up. And in ripping it up and going back to maximum-pressure approach, first thing he did is he isolated the United States from that coalition. He made us the bad guy. And then, Iran as it started suffering from sanctions again, which have been quite crippling, started looking for ways to find leverage. And they found that through provocation.

So first they started attacking tankers, then they shot down a drone. Now they did a really audacious attack against the Saudi oil facilities, and who knows what’s next. And so we have lost deterrence with Iran and now the president, he’s really in a bind now. Because if he doesn’t respond, it’s a horrible blow to U.S. credibility, given all the tough talk, and it might embolden Iran. If he does respond, he risks further escalation, and that could not only involve more attacks on Saudi oil — which could also hurt us or hurt global economic stability. But they could decide to start taking potshots at Americans in Iraq or embassies in the region. So this is a really dire situation that he’s gotten himself into.

DUBNER: I understand that you were offered a position in the Trump administration but didn’t take it, saying that it would violate your sense of values. Is that true so far?

FLOURNOY: I am, as you can tell, not aligned with this administration and I could not imagine myself serving this president, and there have been many points that that has been reinforced.

DUBNER: So I understand that and respect it, but I also just want to ask you — and you’re a Democrat — but Chuck Hagel is a Republican who served under a Democratic President Barack Obama.

FLOURNOY: It wasn’t a partisan issue.

DUBNER: Right, but I am curious to hear you speak so knowledgeably across the portfolio of issues here, whether you think, maybe even just in retrospect, that, well, better to be fighting for what you think is the right fight from the inside than being on the sideline and seeing so many moves that you think are really ill-advised and will have long-term ramifications.

FLOURNOY: Look, the only reason I considered the offer in the first place was because it was from James Mattis, who I have the utmost respect for. Someone who served out of a sense of duty. But when you are a political appointee you can’t be wondering every day: Do I stay? Do I go? Is today the day I have to resign on principle? I mean, that’s like being Hamlet on the Potomac. I just wasn’t ready to sign up for that.

LEVITT: Technology has been an enormous friend of the U.S. in defense over the last 50, 100 years. We’ve been a leader in innovations, they’ve dramatically changed warfare, and in our favor. I wonder if you could riff on the future of war, because it seems like, with the drone attacks, it is just the tip of the iceberg. That things like miniaturization and decreasing costs have democratized the ability of individuals or rogue nations to create harm on powerful countries.

FLOURNOY: You are absolutely right in that a lot of the most critical technologies for the future of warfare are proliferating. They’re going to be in the hands of many, not just ours. So for example, if you read Chinese military doctrine, they talk about their opening salvos being cyberattacks against critical infrastructure in the United States to keep our military from leaving their home bases and attacks in space to blind us, to keep us from communicating, from navigating, from seeing, from processing. And they hope that that will stop us in our tracks or buy them enough time to create a fait accompli in Taiwan or the South China Sea or where have you. So they don’t want to actually confront the United States Navy, for goodness sake. They want us never to be able to fully get our forces there, and so they’re thinking about very different means.

And the most important thing that we need to be doing is investing here at home. Science and technology, research and development, 21st century infrastructure. 5G, quantum computing, all of that tech talent, STEM talent, access to higher education, the things that economists talk about all the time. That’s how we compete. That is how we set ourselves up to continue to lead in the future. And my biggest worry is that our domestic distraction is keeping us from attending to those critical priorities.

DUBNER: So the moral of the story is people should pay more attention to economists.

FLOURNOY: Absolutely. Stop worrying about all this foreign-policy stuff.

DUBNER: I do have to say though, what we’ve been talking about tonight is, thoroughly depressing to me. Because we basically learned that economic sanctions don’t work and often backfire. We’ve learned that invasions have huge costs. We’ve learned that non-intervention can have huge costs. Why did you choose this line of work? No, I’m not joking. I really— what brought you to want to wrestle with problems that, by the time they get to your desk, are almost inherently unsolvable?

FLOURNOY: I came into the field at the height of the nuclear saber-rattling, the very end of the Cold War with Reagan and Gorbachev before they ended up at Reykjavik. The nuclear-arms race in my time was the sort of climate-change kind of existential threat of the day. That if we didn’t solve this problem and get into the business of arms control, we weren’t going to be around to solve anything else. So that’s what drew me in. And I’ve been suffering ever since.

DUBNER: So, would you say you’re an existentialist then?

FLOURNOY: I’m actually an optimist. I really am an optimist because even though we go through these very difficult periods, the United States — we are Phoenix-like as a country. We’re good at leaving it until the last minute, but we usually do rise from the ashes and make good choices and figure out how to get on the right path. So I have tremendous faith in the American people when we are our best selves, and that’s when I have to — that’s what keeps me going.

DUBNER: So, I have to say, I approached tonight’s show with a bit of trepidation. Foreign policy and nation-building are not the sort of topics we usually cover on this program. But I feel we’re leaving tonight with a little bit better understanding of and a greater appreciation for the people who do this hard work every day. So to that end I’d like to thank all our guests: Michèle Flournoy and Chuck Hagel, Robert Pape and Paul Poast, thanks to Steve Levitt and WBEZ here in Chicago. And most of all thanks to you for listening this week and every week to Freakonomics Radio. Goodnight.

* * *

Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was created in partnership with WBEZ and was produced by Zack Lapinski, with lots of help from Alison Craiglow, Greg Rippin, Harry Huggins, and Corinne Wallace. Our staff also includes Matt Hickey and Daphne Chen. Our intern is Ben Shaiman. Our theme song, “Mr. Fortune,” was originally recorded by the Hitchhikers; the live version you heard in this episode was performed by Luis Guerra and the Freakonomics Radio Orchestra. All the other music was composed by Luis. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

Steve Levitt, Freakonomics co-author and economist and the University of Chicago.
Michèle Flournoy, former Under Secretary of Defense for Policy.
Chuck Hagel, former Secretary of Defense and Senator from Nebraska.
Robert Pape, professor of political science at the University of Chicago and founder and director of the the Chicago Project on Security and Threats.
Paul Poast, professor of political science at the University of Chicago and assistant director of the the Chicago Project on Security and Threats.

RESOURCES

“These Surprising Countries Could Emerge as the Heroes of NATO — and the Liberal World Order,” by Paul Poast, The Washington Post (July 10, 2018).

EXTRAS

Dying to Win: The Strategic Logic of Suicide Terrorism, by Robert Pape.
Chicago Project on Security and Threats

The post Speak Softly and Carry Big Data (Ep. 395) appeared first on Freakonomics.

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How Sarah Earns $5,000,000 A Year With Shopify

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Today, I have a fun interview to share with you that will show you how to start an online store. I recently had the chance to interview Sarah Titus of Million Dollar Shop and SarahTitus.com, who explains exactly how to start an online store and make extra income. If you want to learn how to make passive income, this is a great option!

Here's her easy-to-understand definition of what she does:

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Check out the interview below for more information. She answers questions such as:

How much money she currently earns
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What exactly an online store is
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How she finds customers

And much, much more!

Read below to learn more.

Related articles on how to start a Shopify store:

1. Please give us a little background on yourself, how you started your online store, and how it’s going for you right now.

I was walking by my husband’s phone and he got a text. For some reason, it caught my attention and I looked at it. It was from a girl. She was saying she loved him.

My whole world, tears, came crashing down in an instant. He ended up taking my debit cards, then physically abusing me. I had ¼ tank of gas and had to get away. I called a local Pastor who helped me get out safely and ended up living in a homeless shelter with my two babies.

Fourteen years of marriage, down the drain in a millisecond.

After I got out of the homeless shelter, I got my first apartment. I was bent on not working outside the home. My kids ALREADY lost their dad. I wasn’t going to let them lose ME TOO!

I did what I knew. I sold on eBay. I’d go to yard sales, pick up stuff to resell. I’d get things, whatever I could, to survive and be home with my little ones.

I started doing pretty well. Making enough to pay all my bills. Then, I started niching down on eBay to selling Littlest Pet Shop toys. I was the highest paid Littlest Pet Shop toy seller in a market with over 40,000 ads on any given day.

My store on eBay was thriving. I was doing really good, and I learned how to sell something better than my competitors. I would dress them up like Barbies. Ship in pretty organza bags so they felt like they were getting a GIFT. I gave them coupons for future purchases ($10 off $50). I created a free website for Littlest Pet Shop coloring sheets, wallpaper, games, everything. I created a Pinterest account to drive traffic to my eBay store for Littlest Pets.

I was making good money ($18,000 a year at the time). Things were great.

But I wasn’t satisfied in my SOUL, you know what I mean? I was feeling like, selling a toy doesn’t change the world. It doesn’t help people.

I wanted to do more with my life. Be more.

So, I started blogging. Friends were asking me a ton of questions about how I was making income from home and living so well on so little.

They told me they were making $60,000 a year, yet here I was, making $18,000 a year and I had way more than them. WHY? HOW? They asked. Each question they asked, I turned into a post and that’s how I started blogging.

A few years into blogging, I was making really good money. Six-figures/year at that point, but I wanted to not have to work so much. Yeah, I was making six-figures, but I was working 80-120 hours a WEEK (yes, a WEEK!) for three YEARS straight.

I thought to myself, if I ever DO get married, I’m sunk. I can’t even date someone. I’ll never get married because I’m too busy always working my guts away. I wanted a different life. A life that could be more autopilot. I had this dream that, if I ever got married again, I’d make enough, passively, that we could travel or do whatever. We wouldn’t be tied to the computer working so much. And he could be home with me, as a family.

So, I took six months to start closing loose ends and systematizing everything. Once I got a handle on things, I wanted to sell my first product, a Blogging Binder. I put it on Podia but it didn’t sell but a couple copies.

I sat there in the middle of the night contemplating, what will I do? Give up? Is it the binder? No one likes it? I decided to make one last ditch effort, put it one more place. Through a google search, I found Shopify and tried that. It sold 52 copies! Just the platform alone did that!

My Blogging Binder released on May 9, 2017 and by June 17, 2018, it had sold 13,667 copies. Just that ONE product. No shipping, no envelopes, no lost in the mail, no post office fees. I’ve been able to keep a lot more profits than when I sold physical items. Plus, it’s not like eBay, where they nickel and dime you for everything. With Shopify, it’s one small low-monthly cost and a tiny transaction fee (for the debit card processing part). Easy peasy!

2. How much do you currently earn through this?

Within my first month on Shopify, I made $52,060!

I knew pretty quickly into it, I hit on something pretty major. All those 21 years on eBay paid off in Shopify. I knew how to market, how to sell, how to give discounts, how to treat customers, and most importantly, how to set up a store in a way that GETS people to give you their debit card number and BUY!

Since opening my store in the middle of the night on June 1, 2017, I’ve made $6,479,594.60 to date (July 12, 2019). I make $5 million a year currently in Shopify.

What started out as a bad situation, turned into something much better than I ever thought imaginable. It sucks about my ex-husband. I’ve been blessed more than I ever thought possible.

Opening a Shopify store for me, has been one of the best things I’ve ever done in my entire life! Not just because of the money, but because now I don’t have to work a bunch of crazy hours. I’m truly FREE!

3. How much time do you dedicate towards it?

Between me and my team members, we work a combined 16-20 hours at the moment (this number includes everything I do: my blog, the store, courses, etc.)

I work around 9-10 hours a week myself. I do work on printables sometimes online as a hobby, but it’s just goofing off or stuff I wanna do. I WORK 10 hours a week.

Mostly, I only have to MAINTAIN the store now. In the beginning, I had to put more time into it because I was creating products to sell. Now, I just create one new binder every month. It takes me 2-3 days to create a new binder usually. If it’s a really hard one or super lengthy, a week, but on average, it’s just a few days to create.

Binders for me, are what I use to GET people to the store as well as to stay on my list. I give the binder free for the first three weeks, then charge for them.

Outside of that, it’s just email support, which is VERY low because I have most all of that automated. This helps keep the customer service requests down so I can spend my time creating more products.

The last thing I do for my store is email my newsletter list. Most of the time, it’s just about getting them to the store with the free binder and they do the rest. They see other things they like and buy them or there’s a deal in the header bar at the top of the site that gets sales. So, I just focus on that and it’s not salesy or pushy in any way. They build up my reviews and then because of the reviews, others come along and buy.

My audience also sometimes pays for things that are free. They are seriously sweet. They say they receive so much free stuff from me, they wanna pay. It’s the sweetest thing ever.

I don’t do any paid promoting at this time. I would like to get into Facebook ads soon, but right now, how I get all my sales is simply giving out free stuff and coupons to drive traffic to my store.

4. What exactly is an online store? Can you explain this more for those who have no idea? Do you have to be a blogger?

An online store is the same thing as your local grocery store, except that it’s online. So you go to your grocery store, you see a bunch of products and you buy them. Same thing here. It’s a digital store. So instead of buying celery, you’re buying printables that help you organize your entire life, that create calm in the chaos for you.

You can sell absolutely anything you want to (within reason, not illegal stuff, etc. obviously) in your store and best of all, you own it. It’s stable because it can’t be taken away from you!

You don’t have to be a blogger to sell on Shopify. But if you want to start a blog, you can have a separate blog, or you can even have your blog on Shopify, which is great as well.

The only upside there to having a separate blog while selling on Shopify is that Google tends to send more traffic to a great SEO’d website over a shop, but one of my friends gets just as much traffic as me to JUST her Shopify blog/store, as I do to my separate blog and store.

So if you’re just starting to set up a store, I wouldn’t recommend setting up a blog at the same time. It would be too complex. Just focus on one at a time and then add another as time goes on if you want them separate.

Either way, you do not have to be a blogger, as long as you promote your store. You have to have a way to drive traffic to it. That could be on social media, YouTube videos, talking to friends about it, handing out business cards, handing out fliers. I mean, there’s a bazillion ways to get traffic to your store, ESPECIALLY if you offer something FREE!!!

5. Is Shopify easy to use?

Shopify is THE most easiest thing I’ve ever learned to do online. No kidding. I literally remember setting up my shop in around 5 minutes and was like…am I done?

I was actually done. Then, it was just about making things pretty and professional and using my knowledge of how to get sales and get those conversions.

That’s the part that no one seems to know. And using my 21 years’ experience on eBay, I know EXACTLY what to put and where to make people feel comfortable enough to buy my stuff. Your store is like a map. You need them to come and buy, not come and leave and it’s all about HOW YOU SET IT UP that matters.

It’s easy to set up. But so many people set up a Shopify store and never make more than fifty bucks.

There is a lot more than goes into it. People are giving you more than their email address. They are giving you their home address, phone number, and debit card number.

Do you just give that stuff out to anybody?

No, right?

Neither will your customers. You have to set up your store in a way that makes them feel SAFE. Like they TRUST your site and YOU. So you have to set it up very specifically or sadly, it won’t convert. All of that is taught in my Million Dollar Shop® course.

How to get reviews, how to set up reviews so you get them and why it’s so important, how to set up your store so they buy, what free apps to use that’ll make your life so much easier, what bylines and legal verbiage you need to use to protect yourself, how to systematize your store to keep customer service requests low, how to set up products and what to say to get people to buy, and so much more is included in that course! I go through it all. Absolutely everything you need to know to run and have a successful Shopify store.

Click here to check out Shopify.

6. What can a person sell? Where do you find products when starting an online store?

You can sell literally anything you want (within reason). There’s a list here of things a person CAN’T sell on Shopify here under the B.5 section. Things like drugs, copyrighted stuff, gambling, pornography, get rich schemes, etc. These are all outside to scope of what any of us would want to sell.

But for example, if I wanted to sell Littlest Pet Shop toys again today, I’d have my OWN store on Shopify rather than go through eBay, where there’s SO much competition. Having my OWN store, makes the sales come easier (if it’s set up properly) because I’m not fighting anyone else for that sale. The buyer is just seeing MY stuff at the time. I have their full attention.

However, after selling physical products for SO long, I highly encourage you to sell digital products instead. There are far lower overhead costs with digital products. You don’t have to worry about shipping, people not getting orders, things breaking in the mail, a wrong order being sent out, cost of the product, shipping costs, gas to pick up or find items to sell, etc.

Some people try to drop ship as well. I find most of those stores fail. Most drop shipping (99.9%) is just a scam. The other, legit 0.01% is not worth it because of the things mentioned above. I’ve seen a lot in my years of making money online and wouldn’t touch drop shipping if my life depended on it. It’ll just ruin your credibility and it’s not something YOU own. You can’t control it when they ship the wrong order and you lose a customer because the customer gets mad. I’d stay away from drop shipping. You just don’t want a business that relies so heavily on someone else like that. If they go out of business, your whole empire you built is gone in an instant.

For me, I sell printables. If you don’t know how to make printables, I have a full course where you get to sit side by side with me and watch as I create them from start to finish! I show you the entire process. It’s one of my favorite courses, because it’s so much FUN. Creating printables is addicting for me. It’s the most funnest thing ever and I get really into it.

One of my other courses, Top 13 Things To Sell in Shopify (That Makes the Most Money), is a great course if you’re trying to determine which path is right for you to sell. It covers the top 13 most profitable things to sell on Shopify and then gives a bird’s eye view of good, working strategies of HOW to go about selling that particular thing successfully.

7. How does an online store owner find customers?

This is the fun part! You can find customers in any way you want!

There are a bazillion and one ways to find people who will fall in love with your stuff and pay you to have it. You’re only capped by your imagination really, but the first thing you’ll want to do is establish how YOU want to go about getting traffic to your store.

The easiest way is to work off what you already have going for you. So, if you have a blog already, add a store and drive traffic that way. If you have social media pages or groups, drive traffic that way.

Another way to drive traffic is by paying for advertising. This is something that I haven’t ever done yet (I hope to in the future, but haven’t yet). Things like Facebook ads or Instagram ads would work great.

Likewise, having an Instagram account for your store is a great thing to do. One of my friends, makes $5k/month in her Shopify store consistently and she drives traffic from her blog, her newsletter, and she created a cool Instagram account specifically for Instagram. She says she gets most of her sales from Instagram (she does a mix of posts and little videos showing how to use her products).

Social media is great! You can create YouTube videos (unboxing videos, product videos, etc.) For me, I have videos that show the printables like a book with the pages turning. I show how to create those specific videos in the Million Dollar Shop® course under the products section.

Another way to drive traffic is by installing an affiliate app. You can get affiliates to help spread the word. I don’t currently have affiliates on my store as I just sell way too much to keep up with what I have now, but I know there are some affiliate apps out there worth giving a shot to.

After a while, you become known and people remember you. For my site, direct traffic is the #1 way I gain traffic. People remember, know me, and come back, and they’ll do the same with you.

The best overall way that I’ve personally found to drive traffic to my shop, is to give away something highly valuable to other people. For me, that’s a 100+ page binder. They like it, sign up for my newsletter, and instead of giving them some download straight from my blog, I make them order it free, using a discount code, in the store.

This gets them used to the process of ordering in my store, they already have an account, etc. so the next time they want to order, they are already in the system and feel comfortable using the platform and have no reservation purchasing.

My returning customer rate is really high. In the past 30 days, it’s at 70.2% and I’ve gotten 8,775 traffic sessions (this is sessions, not pageviews).

You definitely want to strive to get repeat customers because it’s MUCH easier to sell something to the same person then selling something to a completely new person. However, you do want new customers too, so a good balance is what you want to shoot for.

I personally shoot for no more than 75% repeat customers. This means I’m getting at least 25% of people in the store that are new and I’m growing, gaining traction, and getting new word of mouth sales. You can determine your own goals and what works best for you. When I first started, it was near 50/50 and that’s a great balance too.

Both the Top 13 Things to Sell in Shopify and Million Dollar Shop® courses go over how to get traffic in a much deeper way.

8. How much does it cost to start this type of business and how much on a monthly basis to maintain it?

It doesn’t cost as much as you’d think. A Shopify store is only $29/month and that includes a blog if you want it. Then they have super tiny transaction fees by PayPal when you make a sale. If you want additional apps, those can vary in price. I use several apps, which I go over in Million Dollar Shop® and only pay $15/month in apps.

Then, when you start making $1k/month+, you’ll want to move to the $79/month Shopify plan because that includes better analytics. You can see how much sales you’re making for each product and that helps you determine what KIND of products to create MORE of.

All in all, it’s very inexpensive. They don’t nickel and dime you like some other platforms do and if you ever get stuck, they have 24/7 chat support, which is a really great feature that most other companies do not offer.

Another great thing is that they give you the theme free. They have many themes to choose from and I’ve BETA tested a few of them and share all my findings in the Million Dollar Shop® course. A free theme on Shopify is great, so that’s another thing you don’t have to worry about paying for.

If you want to save even more money, you can talk to chat and they can give you deals if you purchase by the year or 2 years, etc. Since my store is extremely stable and makes me a lot of money, I bought the 2-year plan and it saved me some significant money.

When you’re just starting out though, you’re only looking at $44/month + tiny transaction fees based on the price you sell your item at. Shopify gives you a generous 14-day free trial period to take it for a spin too and get things set up before you have to start paying, which makes it super nice.

9. Are there any other tips that you have for someone who wants to learn how to start an online store?

I think the main thing is really deciding if starting a store is right for you and if it is, going for it full throttle. Not saying, “Well, if it works, it works, if it doesn’t, it won’t”. That kind of wishy-washy attitude won’t get anyone anywhere. You have to be bold and just jump in!

Having your own online store is such a fantastic way to earn money. In my 20+ years of making money online, I’ve quite literally seen everything, and this is by far, THE BEST way to earn money the fastest and easiest, that I’ve ever seen.

Think about it. After 20 years of my selling on eBay, I was making $3k/month. After 2 years blogging, I was making $23k/month. After 2 years on Shopify, I’m making $5 million/year.

The other ways of earning money are fantastic and nothing to sneeze at, for sure (!!), there’s just a lot more POWER and profitability when earning money in a store. It’s also the fastest way to go. If you start a store today, you can be earning money by this afternoon. With other options, it takes more time to set up, to establish yourself, etc.

They are all great ways to earn money, but I believe that Shopify has a lot more power to make money quicker. If you wanna make money online, that’s the way to go, for many people.

10.Why should a person take a course on this subject? Is it hard? What will they learn with your course?

The truth is that a lot of people set up Shopify stores and they think they can go it alone. But they can’t. They crash and burn and never get any sales and wonder why.

The problem is because they haven’t laid the proper foundation. Even if they try to mimic or copy me, they don’t know WHY they’re doing what they are doing. Not having that knowledge of WHY do this or that or how to make their own decisions of how to determine what works best for them, isn’t going to make someone succeed.

Another problem is that, some people try to start a store on their blog and use plug in stores like WooCommerce, etc. Those plug in stores, out of all the people I’ve coached, I’ve only seen it work for ONE person and that’s because her husband is an engineer!

100% of the people I’ve coached, who’ve started out on a store plug in on their blog, move to Shopify and they INSTANTLY start making more sales. This is because customers TRUST Shopify and PREFER THEIR checkout over other solutions. My last customer I worked with, made 400% more just by switching platforms (WooCommerce to Shopify). Like my own fail with Podia, it really IS all about the platform and how you set it up.

After you set up your store on the right platform and in the right way, you need to begin your strategy of how to get people to your shop and how to get sales. Million Dollar Shop® teaches all that, from start to finish. It guides you through the entire set up process, then teaches you how to get sales, in a hand-holding friend style.

Then, if you want to sell printables and don’t currently create them in professional software (that’s key to your sucess) or don’t know how to make them, How to Create Printables, is the perfect course for you.

Million Dollar Shop® trainings (the whole platform) has sold over 40,000 products to date. These courses aren’t just something put up by someone, somewhere online. They are taught by someone who’s been in e-commerce for 21 YEARS and have been tested by tens of thousands of students to work! You just can’t get this information anywhere else. It’s a complete system that I created myself and have perfected over the years.

P.S. You can get 15% off by using the code MAKINGSENSE15.

Are you interested in starting an online store?

The post How Sarah Earns $5,000,000 A Year With Shopify appeared first on Making Sense Of Cents.

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6. Forgetting about “free money” you could cash in

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How Sarah Earns $5,000,000 A Year With Shopify

1. Please give us a little background on yourself, how you started your online store, and how it’s going for you right now.

2. How much do you currently earn through this?

3. How much time do you dedicate towards it?

4. What exactly is an online store? Can you explain this more for those who have no idea? Do you have to be a blogger?

5. Is Shopify easy to use?

6. What can a person sell? Where do you find products when starting an online store?

7. How does an online store owner find customers?

8. How much does it cost to start this type of business and how much on a monthly basis to maintain it?

9. Are there any other tips that you have for someone who wants to learn how to start an online store?

10.Why should a person take a course on this subject? Is it hard? What will they learn with your course?

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