PALO ALTO, CALIF.
A year ago, a group of terrorists from Saudi Arabia and Egypt attacked the United States using box cutters as their weapons and citing extremist versions of Islamic fundamentalism as their cause.

Today, the Bush administration and Congress are focused almost solely on Iraqi leader Saddam Hussein and his weapons of mass destruction, with almost no reference whatsoever to his ideology.

This narrow focus has only a loose relationship to the grander vision of "securing freedom's triumph" that President Bush has outlined as the mission of American foreign policy in the new millennium.

As currently framed, the debate about Iraq has produced three dangerous distortions. First, the discussion has confused the means-ends relationship between weapons of mass destruction and regime change. Suddenly, both hawkish Republicans and antiwar Democrats now have asserted that the destruction of Iraq's weapons of mass destruction is the new paramount objective in the war on terrorism.

For the hawks, regime change is the means to achieving this objective. Those less eager to go to war assert that this same goal can be achieved by other means, such as sending in the weapons inspectors or even by a surgical strike against weapons facilities.

Both sides of this debate are focused on the wrong objective. Regime change – democratic regime change – must be the objective. If over the next years and decades, a democratic regime consolidates in Iraq, then it will not matter to the United States if Iraq has weapons of mass destruction or not.

Does anyone in the United States know how many weapons of mass destruction the British or French have? Does anyone even lose much sleep over the fact that Russia still has thousands of nuclear weapons and launch vehicles capable of reaching the US in a matter of minutes?

Specialists are rightly worried about the safety and security of Russian weapons, but most Americans no longer make plans for what to do in the event of a Soviet nuclear attack. It was not a robust nonproliferation regime, coercive weapons inspections, or a preemptive war against the Soviet Union that produced this shift in our attitudes about Russia's weapons of mass destruction. Rather, it was regime change in the Soviet Union and then Russia.

Someday, the same will be true in Iraq. Israel already destroyed Iraq's nuclear weapons program once in 1981, delaying but not eliminating the threat. The real objective of any strategy toward Iraq, therefore, must be the creation of a democratic, market-oriented, pro-Western regime.

The singular focus on Iraq's weapons of mass destruction – not unlike the misplaced focus on arms control during the cold war – prevents the US from pursuing a grander strategy that could secure the more important objective of democratic regime change. Moreover, many of the means for achieving this objective are nonmilitary by nature, an aspect forgotten in the discussion.

A second distorting consequence of the current debate is that we have become obsessed with one leader, one country, and one category of weapons, none of which were involved directly in the Sept. 11 attacks.

The Iraqi dictatorship (and not simply President Hussein) is certainly part of the problem, but Iraq cannot be the only front of the war on terrorism. In fact, victories on other fronts could create momentum for the Iraqi regime's demise. Ronald Reagan's strategy for defeating communism did not begin with a military invasion of the Soviet Union, but rather aimed first to roll back communism in peripheral places like Poland, Afghanistan, and Nicaragua. Imagine how isolated Hussein would be if democratic regimes took hold in Iran, Palestine, and Afghanistan.

A third distortion of the debate is the near silence about the kind of regime the Bush administration plans to help build in Iraq after the war. The Bush administration is busy making the case against Hussein, but has devoted much less attention to outlining the plan for a new regime in Iraq. Will it be one state or three, a federal or unitary state, governed by the US or the United Nations? How many decades will occupation last?

We need to have the same "frenzied" debate about Iraq's reconstruction that is now being devoted to Iraq's deconstruction. A serious discussion of the postwar regime in Iraq will help inspire support in Congress, the international community, and within Iraq. Now is the time to be concrete about future blueprints.

To be credible, the message of change must also be directed at other dictators in the region. The probabilities of fanatics coming to power in Pakistan and using weapons against American allies are greater than the probabilities of Hussein doing the same.

Without reform, revolution in Saudi Arabia is just as likely as an Iranian attack on American allies. Failure to define a grand strategy of transformation in the region will condemn American soldiers to fighting new dictators like Hussein over and over again.

Foreign banks have long faced difficulties in attempting to enter certain Japanese financial markets. This is due partly to regulatory practices and partly to specific Japanese socioeconomic conditions, for instance the system of relationship banking. While retail banking is still a sector in which almost no foreigners have been able to succeed, some foreign financial institutions have been able to gain market share in investment and wholesale banking.

Today, Japanese financial markets offer a bizarre playing ground for foreign competitors.On the one hand, overdue reforms, deteriorating stock markets, and shockingly bad ratings should scare many foreigners away from making commitments to Japan's markets. On the other hand, it is just these problems and the dissatisfaction with the Japanese banking sector, as well as an increasing division of the Japanese economy into large global players and small domestic companies, that might help a few strong foreign banks with superior global capabilities overcome their liability of foreignness. Indeed, we assume that improved market opportunities for foreign banks in Japan are related to a fundamental lack of global capabilities on the part of Japanese financial institutions, despite their pronounced advantages as local players. In contemplating the future of foreign financial institutions in Japan, we propose three scenarios. Japan is often compared with Great Britain, where the term "Wimbledon effect" was coined after deregulation of Britain's financial markets--the "Big Bang"--resulted in the acquisition of many British banks by foreign companies. (The analogy refers to the fact that although Britain provides the world's foremost arena for tennis at Wimbledon, the winners of the Wimbledon tournament tend to be foreign players.) The Wimbledon effect would predict that market deregulation will strengthen the financial center but lead to asituation in which markets are dominated by foreign banks. Focusing on investment banking, our paper examines whether Japan faces the same developments as did Great Britain, whether the Wimbledon effect is a plausible scenario for Japan, and whether the analogy between the two financial centers is suitable.

The two other scenarios are strong positions of foreign-Japanese joint ventures ("mixed double") and the continuing dominance of Japanese financial-service providers ("home run").While domination by foreign financial institutions has come to pass in Britain, its BigB ang has at the same time boosted London's position as a financial center. However, in this paper we will explain why Japan's case is different from the situation in the British financialmarkets. Not only is market domination by foreigners in Japan an effect that cannot be expected in the medium run, but Tokyo's domestic orientation distinguishes it from so-called global centers such as London and New York and makes it highly vulnerable in the current situation. Japan's long-lasting economic problems, Tokyo's historical lack of a greater region it has served as a financial center, and an increasing need for globally competitive financial services by large international Japanese corporations cast doubt on the future status of Tokyo as a leading financial center.

The ethical case for the social insurance model will be strengthened as people realize that most health problems have at least in part a genetic basis. The efficiency case will benefit from recognition that employment-based insurance has high administrative costs but provides no advantages to society as a whole. The desire to exert more direct control over rising expenditures will provide an additional reason to introduce some form of national health insurance.

The timing of such a change, however, will depend largely on factors external to health care. Major changes in health policy are political acts undertaken for political purposes. This was true when Bismarck introduced national health insurance to the new German state in the 19th century. It was true when England adopted national health insurance after World War II; and it will be true in the United States as well. National health insurance will probably come to the United States after a major change in the political climate, the kind of change that often accompanies a war, a depression, or large scale civil unrest. Until then, the major effect of the new plans will be to make young and healthy workers better off at the expense of their older, sicker colleagues.