I'm back in Singapore for the first time in nearly two years, and what a difference two years can make. Back in 2009, Singapore was reeling from the after-effects of the global recession, which hit its trade-dependent economy particularly hard.
The island nation has regrouped quickly, however, and its economy reportedly grew by an astonishing 17.9 percent in the first half of 2010. The harbor is chock-full of ships again, construction is proceeding apace, and the government expects robust growth to continue.
I don't want to go all "Asian values" on you, and comparing Singapore's economy with that of the United States is risky at best. But I've been reading a few books and articles on the endemic corruption (or if you prefer, criminality), embedded within the United States political/economic system (and watching documentaries about it too). And it made me wonder how much this feature might have to do with the varying trajectories of the two countries.
Case in point: today's Herald Tribune reports that Goldman Sachs has concluded that there's nothing really wrong with how it does business. To quote the print version (not the online edition) Goldman decided "its operations need only a fine-tuning, not a complete overhaul." Hmmmm. I don't know about you, but when a major investment bank has to get bailed out by the American taxpayer, and just paid a $550 million fine to settle civil fraud charges (not the first time Goldman has had to do something like this, by the way), one might reasonably conclude that there were more fundamental problems involved. Not from the point of view of Goldman's present profits, perhaps, but from the point of view of what is good for the society as a whole. And the problem seems to be that maximizing political influence is as much a part of Goldman's business model as the pursuit of economic gain itself.
Mind you, I'm not an economist, and I'm sure there are legions of people out there who would be quick to leap to Goldman's defense. And I'm not really picking on Goldman, because the financial meltdown of 2007-2008 suggested that the rot was far more widespread. Instead what troubles a layperson like me -- and maybe ought to worry you, too -- is that we've just lived through the most significant global recession since the 1930s but don't seem to have learned much in the process. That recession was triggered by malfeasance in mortgage and financial markets, and yet not much seems to have been done to create new arrangements that would prevent something similar from happening again. And the main reason isn't conceptual or economic but political: financial interests give a ton of money to politicians, and -- surprise, surprise -- those same politicians tend not to take actions that these donors oppose, like significantly tighter financial regulations.
Singapore is far from a perfect society, and as I said at the outset, direct comparisons between its situation and that of the United States are somewhat dubious. But I can't help but wonder if maybe we could learn a few things about political economy from them. Like not letting private money play an enormous role in politics, and paying civil servants enough so that more of our best brains choose public service over Wall Street.
I am swamped with teaching, travel and some writing deadlines the next two weeks, so my blogging output will probably be sparse. Sadly, this pindown coincides with Obama's big Asian trip, and I regret not being able to comment at length. Given that I think the United States' strategic attention ought to be shifting toward Asia, the trip is long overdue and I'm mostly glad Obama is taking it.
But like Frank Rich, one does wonder about the timing of this particular journey. In his column yesterday, Rich complained that blowing town right after last week's "shellacking" in the midterms sent exactly the wrong message, especially when India is a country that Americans tend to associate with outsourcing and lost jobs. (There's even a new sitcom exploiting that idea.)
My concern is somewhat different. As the United States works to shore up existing alliances in Asia and to strengthen or forge some new ones, it will have to do a fair bit of hard bargaining. Even if there are strong geopolitical forces pushing states like India and the United States together, there are also lingering differences over specific policy issues (such as Afghanistan and Kashmir). Moreover, even close alliance partners will want to get others to do most of the heavy lifting, which usually means some tough negotiating.
My fear, therefore, is that a weakened president with a weak economy will be too eager to make deals while he's on the road. Despite our current woes, Obama should not be so desperate for symbolic foreign policy "achievements" that he ends up looking or sounding like a supplicant. Our Asian partners still need us more than we need them, and the United States hardly needs to be begging them to cooperate with us.
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If you want to see just how ill informed and morally bankrupt an "establishment" political voice can be, check out David Broder's op-ed column in this Sunday's Washington Post. Broder argues that President Obama's prospects will remain bleak if the economy doesn't improve, and that the President cannot count on the business cycle to do that for him. So after reminding his readers that World War II helped end the Great Depression, Broder offers Obama the following advice:
With strong Republican support in Congress for challenging Iran's ambition to become a nuclear power, he can spend much of 2011 and 2012 orchestrating a showdown with the mullahs. This will help him politically because the opposition party will be urging him on. And as tensions rise and we accelerate preparations for war, the economy will improve.
I am not suggesting, of course, that the president incite a war to get reelected. But the nation will rally around Obama because Iran is the greatest threat to the world in the young century. If he can confront this threat and contain Iran's nuclear ambitions, he will have made the world safer and may be regarded as one of the most successful presidents in history."
I haven't read such an ill informed and morally bankrupt piece of "analysis" in quite some time (which is saying something). For starters, on what basis does Broder believe that "Iran is the greatest threat to the world?" The United States spends over $700 billion on defense each year; Iran spends a mere $10 billion. That amount is less than Greece, the Netherlands, United Arab Emirates, or Taiwan. As I've noted previously, Iran has no meaningful power-projection capabilities, and its main "weapon" is the ability to modest amounts of money and arms to groups like Hezbollah. This behavior is clearly a problem, but Iran is not an existential threat to anyone. And if Iran were to get a few nuclear weapons at some point in the future -- which is by no means a certainty -- it could neither use them nor give them to terrorists without inviting devastating U.S. or Israeli retaliation.
The Council on Foreign Relations is not the first place I look for outside-the-box thinking, but can be a useful weather-vane marking shifting attitudes within the establishment. And on that score, two articles in the upcoming issue of Foreign Affairs merit your attention.
The first article, entitled "American Profligacy and American Power," is by former Deputy Treasury Secretary Roger Altman and Council President Richard Haass. It is telling indictment of past policy errors that have undermined American power, and it is refreshing that Altman and Haass outline the strategic implications clearly. Some money quotations, with my emphasis added:
One way or the other, by action or reaction, there will be a profound shift in U.S. fiscal policy if the U.S. government continues to overspend. Deficits will be cut sharply through a combination of big spending cuts, tax increases, and, quite possibly, re-imposed budget rules. No category of spending or taxpayers will be spared."
But the impact of the United States' skyrocketing debt will not be limited to the behavior of markets or central bankers. Federal spending will decrease once the inevitable fiscal adjustment occurs, and defense spending will go down with it. …
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Here's something that probably won't shock you: I tend to agree with Paul Krugman more than I disagree with him. But not always. Case in point is his column last Sunday, which condemned China's hardline response to Japan's seizure of a Chinese trawler that had violated Japanese waters, and especially its decision to pressure Japan by cutting off the export of rare earth materials. He went on to criticize some other Chinese actions (including its chronically devalued currency), and said this added up to a picture of China as a "rogue economic superpower, unwilling to play by the rules."
I agree that China's overheated response to the trawler incident was foolish, if only because it will reinforce Asian concerns about China's rising power and make it more likely that other states will start taking concerted action to resist its influence. It's normal for great powers to throw their weight around -- if you don't believe me, just read a good history of U.S. relations with Latin America -- but doing so before one's power position is fully consolidated is a bad idea.
By the way, with the exception of the War of 1812, avoiding stupid quarrels with powerful countries was one of the smartest things that the United States did in its rise to superpower status. Not only did it avoid tangling with other major powers until after it had created the world's largest and most advanced economy, it also let the Eurasian powers bloody each other in ruinous wars, jumping in only when the balance of power was in jeopardy and leaving itself in a dominant position after both world wars (and especially WWII). This wasn't a perfect strategy, or even a noble one, but it was supremely self-interested approach that ensured U.S. primacy for decades.
If China's leaders are really smart, they'd act in a similar fashion today. They'd let the United States run itself to exhaustion in the Middle East, Central Asia, and elsewhere, while they stayed out of trouble, cultivated profitable relations with everyone, and made sure that their long-term development plans didn't get derailed. Picking fights with neighbors over minor issues is pointless, especially now, and on this point Krugman and I are in synch.
Where I part company is his characterization of China as a "rogue economic power," and his conclusion that "China's response to the trawler incident is… further evidence that the world's newest economic superpower isn't prepared to assume the responsibilities that go with that status."
For starters, this view assumes that China (or any other great power) has "responsibilities" to the global community. U.S. leaders like to proclaim that we have enormous "responsibilities" and "obligations" to the rest of the world, but this is usually just a phrase our leaders use to justify actions taken for our own (supposed) benefit. The leaders of any country are primarily responsible to their own citizens, which is why international cooperation is often elusive and why conflicts of interest routinely arise between sovereign states.
Moreover, the declaration that China is a rogue power that isn't "playing by the rules" neglects to mention that 1) many of these rules were devised by the United States and its allies and not by China, and 2) the United States has been all too willing to ignore the rules when it suited us. We went to war against Serbia in 1999 and against Iraq in 2003 without authorization from the U.N. Security Council, for example, even though we helped write the U.N. Charter that says such actions are illegal. Similarly, the US played the leading role in devising the Bretton Woods economic system after World War II, but it abandoned the gold standard in 1971 when this arrangement was no longer convenient for us.
The real lesson of the trawler/rare earth incident is that great powers can ignore the rules when they think they have to, and they can often get away with it. We should therefore expect China's leaders to pursue whatever policies they believe are in their interests, whether or not those policies are good for us, good for the planet as a whole, or consistent with some prior set of norms or rules.
Here's a penetrating leap into the obvious: sometimes China's interests will converge with ours; at other times, they will diverge sharply. Sometimes China's leaders will calculate their interests carefully and adopt smart policies for achieving them; at other times they will make costly blunders. Ditto their counterparts in Washington: sometimes U.S. leaders will act with insight and foresight and sometimes they will stumble headlong into disaster. Welcome to the real world. The bottom line is that it's neither illuminating nor helpful to hold China to a standard of "responsible" behavior that we fall short of ourselves. I mean, which country is currently detaining foreigners without trial in Guantanamo, and firing drone missiles into any country where it thinks al Qaeda might be lurking?
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Back on Sept. 16, I gave a lecture at Cornell University's Einaudi Center for International Studies. The title was "Doomed to Fail: The Foreign Policy of Barack Obama," and in it I elaborated a number of themes that I've also addressed in several blog posts, including this one and this one. The audience was attentive, the questions were excellent, and I especially enjoyed my conversations with Cornell students afterward.
One member of the audience took issue with my central theme during the Q and A, and offered a perceptive alternative analysis. He argued that I hadn't given Obama sufficient credit for staving off an even deeper collapse of the U.S. and world economy, and he reminded me and the audience that Obama inherited an economy in free-fall. Back then, a lot of people were genuinely worried that we were headed toward a 1930s-style global depression. We seem to have avoided that fate -- knock wood-at least so far.
The questioner also pointed out (correctly) that a further melt-down would have caused great human misery and had poisonous effects on politics at home and abroad, fueling even more xenophobia, conspiracy theorizing, and nativism than we have already seen. And if that had happened, then the failures that I had focused on in my talk (Afghanistan, Israel-Palestine, Iran, China, etc.) would have seemed like minor problems by comparison.
On the whole, I thought he made a very good point. Although I had begun my talk by describing the mess the Obama inherited -- including the economic downturn -- I hadn't given him enough credit for the economic measures undertaken at the very outset of the administration. Critics may be right that he should have done more to rein in Wall Street, pushed for a bigger and less pork-driven stimulus, etc., but the fact remains that we didn't tumble totally into the abyss, and we've already forgotten how worried everyone was back then.
The problem Obama faces, alas, is that you don't get much political credit for preventing non-events. He'd be blamed if the 2008-09 depression had gotten worse, but he gets no applause for preventing any number of Very-Bad-Things-That-Might-Have-Occurred-But-Didn't. In addition to the Even-Greater Depression of 2009, other non-events include the 2009 Israeli attack on Iran, the Venezuelan-Colombian border war of 2010, and al Qaeda's successful attack on Yankee Stadium last week. I could go on but presumably you get the point: we're not very good at giving our leaders credit for the bad things that don't happen on their watch. And to be fair, that goes for Obama's predecessor too.
I've been perfectly happy to criticize Obama & Co. when I thought they were making mistakes, but my critic's question reminded me that we ought to give them credit where's it due. Hence this post.
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I had dinner a couple of weeks ago with a group of Harvard colleagues (and a visiting speaker), and we got into an interesting discussion about America's future as a world power. Nobody at the table questioned whether the United States was going to remain a very powerful and influential state for many years/decades to come. Instead, the main issues were whether it would retain its current position of primacy, whether China might one day supplant it as the dominant global power, and whether U.S. standards of living would be significantly compromised in the future.
One participant (a distinguished economist), was especially bullish. He argued that the United States enjoyed a considerable demographic advantage over Europe, Russia, and Japan, largely due a higher birth rate and greater openness to immigration. These societies will be shrinking and getting much older on average, while the United States will continue to grow for some time to come. He also argued that the United States remained far more entrepreneurial than most other societies, and a better incubator of technological innovation. Despite our current difficulties, therefore, he was optimistic about the longer-term prospects for the U.S. economy and for America's position as a global power.
But then came the crucial caveat. After reciting this long list of American advantages, my colleague remarked: "of course, our political system could screw it all up." And everyone around the table nodded in agreement.
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Secretary of Defense Robert Gates has sensibly concluded that when the United States: 1) Is facing massive federal budget deficits, combined with a looming fiscal crisis at the state and local levels, 2) Is already spending more on national security than the rest of the world combined, and 3) Faces no "peer competitors" or dangerous great powers nearby, then it makes sense to make a few modest cuts in its military spending.
Of course, patriotic Congressmen will now fight tooth-and-nail to preserve spending in their states or districts, so it's not even clear how much money will ultimately be saved. But it's a step in the right direction, and Gates deserves credit for seeing where the wind was blowing and for addressing the problem, even if only in a modest way.
Just don't lose sight of the real issue, which is not so much the amount of money we devote to national security as the purposes for which we use these capabilities. It doesn't make much sense to cut spending if you're going to continue to use the military on ill-advised missions; in fact, if you have a very ambitious foreign policy, then you ought to expect to spend a lot of blood and treasure on it. As the Times noted this morning, the White House backed Gates's plan, saying that "his plan would free money that could be better spent on war fighting." And when some key elements of your foreign policy make you very unpopular in large swathes of the world, it will probably fuel anti-American terrorism and create dangers that might not exist otherwise, or at least might not be as large or as difficult to address.
In other words, the debate that is about to occur about Pentagon cuts is mostly a disagreement about the allocation of pork and short-term priorities. Gates did not propose any change in the roles and missions of the U.S. armed forces, in our international commitments, or even our overall force levels. His proposals do not invite a debate about the fundamentals of U.S. grand strategy. And until that debate occurs, don't expect major changes in America's force posture or its underlying belief that it has the right and/or responsibility to intervene in far-flung corners of the world, even when vital interests are not at stake and when we don't really have any idea how to run these places reliably.
On the latter point, I hope you caught the delicious irony on General Ray Odierno's statement that U.S. forces in Iraq were now there "to prevent foreign powers from meddling with Iraq's new government" (h/t Yglesias and Greenwald). It's easy to lampoon such a comment -- weren't we "meddling" just a bit when we invaded in 2003? -- but the real lesson is that this is how virtually all imperial powers tend to see their own conduct. Great Britain claimed to shoulder the "white man's burden" (i.e. to bring civilization to its benighted colonial subjects), and the French saw their colonial role as "la mission civilizatrice." The former Soviet Union thought it was helping spread the benefits of socialism to its Third World clients, and the United States has convinced itself that it is spreading freedom, democracy, liberty, the rule of law, "world order," etc.
I don't know if countries tell themselves this sort of thing in order to rally support for interventionist policies, or to convince other states that their actions are inspired by noble aims rather than the self-interested dictates of realpolitik (probably both). Whatever the motivation, I remain convinced that the United States would be better off if it devoted more attention to nation-building here at home, and somewhat less to fruitless efforts to do so abroad, especially in those places where the preconditions for Western-style liberal democracy are sorely lacking.
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I've been thinking about U.S. grand strategy again, and pondering some big questions that ought to be central to the debate on America's global role. Some of these big questions are researchable, others are by their very nature more speculative. How you answer some of them also depends on the theories you think are most powerful or applicable (i.e., realist theory suggests one set of answers, liberal approaches offer a different set, etc.), and the answers your get should have profound implications for what you think U.S. grand strategy ought to be.
So here are Five Big Questions about contemporary world politics.
1. Where is the EU project headed? The construction of the European Union was a major innovation in global politics, but new doubts have arisen about its long-term future. Pessimists such as Notre Dame's Sebastian Rosato believe the highwater mark of European unity has already been passed, while optimists like Princeton's Andrew Moravcsik think that Europe's current difficulties are likely to encourage further steps towards integration. The answer matters, because the re-emergence of genuine power politics within Europe could force the United States to devote more attention to a continent that some argue is "primed for peace" and no longer of much strategic concern.
2. If China's power continues to rise, how easy will it be to get Asian states to balance against it? Balance of power (or if you prefer, balance of threat) theory predicts that weaker states will try to limit the influence of rising powers by forming defensive alliances against them. China's rise is already provoking alarm in many of its neighbors, who look first to the United States and possibly to each other for assistance. But how strong will this tendency to balance be? If China gets really powerful, and the United States disengages entirely, some of China's neighbors might be tempted to bandwagon with Beijing, thereby facilitating the emergence of a Chinese "sphere of influence" in Asia. But if China's neighbors get support from each other and from the United States, then they'll probably prefer to balance.
But here's the question: Just how much support does the United States have to provide, given that this issue ought to matter more to the Asian states than it does to us? If you think balancing is the dominant tendency (as I do), then the United States can pass a lot of the burden to Japan, India, Vietnam, etc. It can "free-ride" to some degree on them, instead of the other way around. But if you think these states will be reluctant to balance, then the United States might have to do a lot of the heavy lifting itself.
To make matters more complicated still, both the United States and its Asian allies may be tempted to do some bluffing with each other, to try to get their allies to pay a larger share of the burden. Asian states will quietly threaten to realign or go neutral if they don't get more backing from the United States, and U.S. leaders may drop hints about disengagement if they don't get what they want from the allies they are helping protect. And this means figuring out just how large and iron-clad the U.S. commitment needs to be in order to sustain a future balancing coalition is a tricky business, and there will be lots of room for disagreement.
A quick shout-out for two studies you should look at, particularly if you're interested on how the United States could spend less money on defense without making itself dangerously insecure. The first is Debts, Deficits, and Defense: A Way Forward, and is from the Program for Defense Alternatives here in Boston. The second is a study by Patrick Cronin of the Center for New American Security, entitled "Restraint: Recalibrating American Strategy." There are points I might challenge in both studies, but each one shows smart people wrestling with the fiscal and strategic realities that are going to shape U.S. national security policy in the years and decades to come. To their credit, the authors of both studies are not wedded to inside-the-Beltway orthodoxy and they recognize that the United States will be much better off once it reduces its current level of over-commitment.
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Color me skeptical. The past few weeks have seen a spate of news suggesting that the US/NATO effort in Afghanistan isn't going well at all. For starters, the assault on Marjah last spring failed to achieve any decisive strategic goals. The much-heralded summer offensive in Kandahar has been delayed and downgraded, and U.S. officials have been steadily lowering expectations. We learnt over the weekend that U.S. intelligence is increasingly focused on uncovering corruption, which means we are getting sucked back into "nation-building" instead of focusing our assets on destroying al Qaeda (which is what President Obama said he'd do when he (foolishly) decided to increase the U.S. commitment in Afghanistan. The Taliban managed to bomb Afghan President Hamid Karzai's semi-bogus "peace jirga," and Karzai himself is said to be losing faith in our ability to prevail and hoping to cut a deal with the Taliban.
So today -- surprise, surprise -- comes news that Afghanistan isn't a poor country whose primary strategic asset is its ability to grow opium poppies. Nope, turns out Afghanistan is just brimming with iron ore, lithium, cobalt, copper, and other strategic minerals. This report -- which comes from "a small team of Pentagon officials and American geologists" may well be completely correct, but isn't the timing of the release a mite suspicious? This looks to me like an attempt to provide a convincing strategic rationale for an effort that isn't going well.
As Jack Snyder noted in his book Myths of Empire, the "El Dorado" myth is a common justification for imperial expansion. Great powers often convince themselves they have to control some far-flung area because it is supposedly rich with gold, diamonds, oil, etc., and that physical control is essentially to preserving access to them. In most cases, however, the cost of trying to control these areas isn't worth the resources they contain, and it usually isn't necessary anyway. Gulf Oil used to pump oil from Marxist Angola, and those pesky Iranians would be happy to sell us oil and gas and give us fat development contracts for their petroleum industry if only we were willing to do business with them.
We don't need to control Afghanistan in order to gain access to whatever minerals do exist, because whoever is in charge is going to have to sell them to someone and won't be able to prevent them from being sold to us (even if indirectly) if we want to buy (that's how markets work). And if we want to make sure that U.S. companies have the opportunity to compete for the opportunity to mine these resources some day, it might be a good idea if we didn't spend the next decade blundering around and angering the local population.
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The last thing I want to do is write anything that might spook the markets, but I don’t think anybody will take my views on finance or economics so seriously as to spark a run on Wall Street.
I say this because I just got back from Athens and I spent much of my travel time reading Liaquat Ahamed's terrific book Lords of Finance: The Bankers Who Broke the World. Taken together, the trip and the book have reinforced my pessimism about Greece's prospects of reversing its economic slide, and my concern that this situation will have significant negative repercussions elsewhere. The problem, as others know far better than I do, is that it will be very difficult for Greece to rescue its position despite the recent EU/IMF rescue package.
In order to stave off default, Greece needs to trim its budget drastically (which means throwing people out of work or at reducng their incomes), while at the same time stimulating economic growth. The problem is that it’s hard to do both at the same time, because cutting the budget (or collecting taxes more efficiently) reduces domestic demand and thus chokes off economic growth. And because Greece is part of the Eurozone, it can’t stimulate export-led growth by the normal expedient of devaluing its currency. (The sinking Euro helps globally, but not within the Eurozone itself.) Greece’s prospects for economic growth are further handicapped by conditions elsewhere in Europe: It will be hard for Greece to grow if the rest of Europe is stagnant. And if the government’s efforts at restructuring lead to widespread political unrest, then chances of robust growth are even slimmer.
And once the financial markets begin to realize all this, bond spreads will increase again and we will be back in the same soup we were in a few weeks ago. All of which leads me to conclude that Europe as a whole is going to be in difficult shape for quite some time, unless EU officials figure out a way to do a lot more than they have done so far. And a double-dip European recession could trigger a double-dip recession here in the United States, which would have profound economic and political consequences (e.g., goodbye to Barack’s second term?).
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For the past 500 years or so, world politics has mostly been driven by the actions and priorities of the transatlantic powers (aka "the West"). This era began with the development of European colonial empires, which eventually carved up most of the globe, spread ideas like Christianity, nationalism and democracy, and created many of the state boundaries that still exist today. (They also screwed a lot of things up in the process). Although other actors (e.g., Japan) played significant roles too, especially after 1945, the transatlantic community (broadly defined) had been the most important set of players for centuries.
Europe's decline after World War II was immediately followed the era of American liberal internationalism. With NATO and Japan as junior partners, the United States underwrote a variety of global institutions (mostly of its own making), maintained a vast array of military bases, waged and won a Cold War, and sought-with varying degrees of enthusiasm and success-to spread core "Western" values and institutions to different parts of the world.
I don't want to go all Spenglerian on you (or even Kennedy-esque) -- but I'm beginning to think this era is essentially over, and that we are on the cusp of a major shift in the landscape of world power. Asia's share of world GDP already exceeds that of the United States or Europe, and a recent IMF study suggests it will be greater than the United States and Europe combined by 2030. Europe has already become a rather hollow military power, and the current economic crisis is going to force European states-and especially the United Kingdom -- to cut those capabilities even more. Needless to say, hopes that the euro might one day supplant the dollar look rather hollow today. Politics within many European countries is likely to get nasty as austerity kicks in, and there will inevitably be less money and less support for Europe's various philanthropic projects in Africa, Central Asia, or the Middle East. Such activities won't disappear entirely, but it's hard to see how they can continue at anywhere near their current levels.
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I'm beginning to think that what’s happening in Europe these days is really critical, in the sense that it will have large and lasting ramifications no matter how it turns out. Europeans were feeling their oats a few years back, and starting to talk in lofty terms about the strength of their common currency, their unique ideas about "civilian power," and their plans for defense integration and a common foreign and security policy. The EU was expanding, major neighbors like Turkey were knocking on the door, and the United States was shooting itself in the foot in Iraq and elsewhere.
Today, however, Europe's prospects don't look quite so bright. European officials have finally gotten around to assembling a rescue package for Greece (remember when a trillion dollars was a lot of money?) and this belated action seems to have quieted markets for awhile. But it remains to be seen if Europe’s problem children (Greece, Portugal, Spain, Ireland) will be able to raise taxes and cut budgets enough to make themselves solvent again. If not, then the rescue package will just have kicked the problem down the road, and we will face a renewed crisis a year or two from now. And if that happens, don’t expect another bailout.
In the past, Euro-optimists like Princeton’s Andrew Moravcsik have argued that crises like this just make Europe stronger, by forcing it to get its house in order and strengthen the relevant supra-national institutions. Maybe, but I’d be more convinced if my friend Andy hadn't described Europe as being "stronger than ever" last August (i.e., well before this latest crisis hit). Meanwhile, voters in Germany just delivered a sharp rebuke to Chancellor Angela Merkel and the Christian Democrats, sending a clear message that their support for costly bailout packages is not infinite.
The larger problem is longer-term. Europe’s population is declining and aging, which means that a smaller number of workers will have to pay for welfare benefits for an ever-growing number of retirees. Cutting benefits will be politically difficult, raising taxes is always hard, and immigration won’t bring in many of the skilled and highly productive workers that Europe needs. The latter step also creates cultural frictions. Maybe the well-off countries can jettison Greece et al from the Eurozone (thoug not the EU), but to do this would be to enshrine inequality within the EU itself and would be a major step backward. No doubt Europe will find a way to muddle through, but austerity will be the watchword for some time to come.
In any case, whether Europe grows closer together or begins to spin apart, it’s going to carry a lot less weight in world affairs in the next few decades. Its population is shrinking and aging, its military power is increasingly hollow, and it’s going to be short on money for years to come. If U.S. officials think they are going to get a lot more help from NATO in the decades ahead, they are living in a dream world.
So here’s my question: will NATO's new “Strategic Concept,” currently being formulated for presentation at the NATO summit next fall, reflect this emerging reality? Will it openly acknowledge that Europe is not going to commit more resources, and identify a set of (fairly modest) common goals that the alliance actually has some chance of achieving? Or will it contain the usual pious declarations of transatlantic solidarity, along with various empty pledges that everyone knows are no more than polite fictions?
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I'm in Athens at the moment, attending an Economist conference on "What is Shaping the Global Agenda?" My task, in case you're curious, was to offer an American perspective on the global foreign policy agenda, in fifteen minutes or less. I focused on four issues: climate change, the changing balance of power, Israel-Palestine, and global nuclear security. I may not have offered many bold new insights, but at least I didn't exceed the time limit. And if you want to know the basic line I took, read this.
Not surprisingly, the big topic in most of the conversations (and many of the sessions) is the Greek financial crisis and its broader implications. There's been a pretty clear consensus from the people here that I've talked with (most of them from the business community): 1) yes, there will be a bailout, 2) it will probably work; 3) Greece's situation is mostly of its own doing (poor investment choices, ineffective tax system, padded public budgets, fatal combination of persistent deficits and falling competitiveness, etc.) and 4) the whole mess raises big questions about the EU.
I am hardly an expert on financial markets (though like a lot of other Americans, I've gotten more interested in them since 2008!) so I have no great wisdom to impart on the origins of Greece's troubles or the specific nature of the rescue package that is now being assembled. But it seems to me that this crisis is a serious body blow to the European Union itself. The EU can point to plenty of successes over the years, but the combination of continued expansion and the creation of a common currency back in 1995 now looks like an exercise in hubris.
The central problem, as plenty of people pointed out, is that EU didn't create the right institutional machinery when it created a unified currency. Once states give up their own currencies, they can't deal with financial or fiscal crises by devaluation. With that flexibility lost, the EU needed far more centralized economic authority (e.g., a true European central bank and a centralized European tax system) to make things work properly. As one banker told me here, it would be no problem if Europe were really one country and Greece was just a poorer province. But Europe's member states refuse to give up those powers, and so the stability of the euro rested on the naive assumption that all the member states would follow the rules and stay within certain fiscal targets. This was like assuming that it would never rain, or that at least everyone would always be carrying their own umbrella. Or as one European academic recently put it: European monetary union was "not ready for bad weather."
Indeed, as Steven Erlanger points out here, it's been a pretty tough couple of years for the EU. It didn't cover itself with glory in response to the 2008 recession, and the EU had no mechanism for dealing the volcanic eruption in Iceland that snarled air traffic all over Europe. Instead, what we got was a confused array of poorly-coordinated national policies. And then Greece had to turn to the IMF rather than its European partners to arrange a proper restructuring program.
Among other things, these events cast further doubt on the possibility that Europe will ever speak with one voice on foreign policy. By creating a president of the European Council and a High Representative for the Union of Foreign Affairs and Security Policy, the Lisbon Treaty of 2007 was supposed to be a step in that direction. In reality, however, foreign policy (including economic policy) remains primarily the prerogative of national leaders, with all the potential for division and delay that this implies.
There are in theory two ways that the EU could go in response to these events. One possibility is that these recent failures will eventually prompt a further expansion of all-European institutions. This view is the modern version of old-style functionalism: if Europe needs certain institutions to work properly, it will eventually create them.
The second possibility-which I'd deem more likely -- is that we have in fact seen the high-water mark of the EU project. Nationalism is still alive and well in Europe, the Cold War is over and there is thus less need for unity against an external threat, Germany is gradually shedding its post-World War II reticence, and the consequences of over-expansion and excessive ambition have been fully exposed. I'm not saying the Union is headed for the dust-heap of history or anything like that (no bureaucracy goes out of business that quickly, especially when there are thousands of pages of laws involved), but a significant consolidation of power in the near future seems most unlikely.
Given that the EU Union has been one of the more interesting political experiments in recent decades, this is going to be fascinating to watch. Time for IR theorists to place their bets?
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Consider the ability of the U.S. to enact multilateral economic sanctions. The Bush administration, at the depths of its unpopularity, was still able to get the U.N. Security Council to pass three rounds of sanctions against Iran, as well as measures against North Korea. The Obama administration, despite a serious effort to open a dialogue with Iran, is encountering resistance from China, Brazil, and Turkey in its efforts to craft another round of sanctions."
Dan knows more than I do about the intricacies of economic sanctions, but I can think of two obvious explanations for this apparent paradox. First, as I noted a few days ago, countries like China have little interest in sanctioning Iran, no interest in war, and some interest in prolonging the U.S.-Iranian imbroglio. So they'll drag their feet no matter how popular or unpopular the United States is. Second, we've been down the sanctions road for some time now, and (as one would expect), it's not having any appreciable effect on Iranian behavior. Maybe other states are figuring this out: Why take some costly and inconvenient action when it won't do much good? Obama and the United States may be more popular, but that doesn't make sanctions more effective and therefore international enthusiasm for more of them isn't forthcoming.
NOTE: I will be on the road for the rest of the week, giving a guest lecture at Wesleyan University and attending a conference at Notre Dame, so posting will be dependent on the vagaries of travel and internet access.
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The New York Times and other news agencies are now reporting that China is preparing to get behind the U.S.-led effort to toughen economic sanctions on Iran. The Times's headline (in the print version) reads "China Supports Iran Sanctions," but the actual story tells a rather different tale. It says that President Hu Jintao agreed yesterday to "join negotiations" for a new sanctions package, but reminds readers that China has a well-established pattern of using negotiations to delay and deflect stiffer measures. In particular, the article reports that former President George W. Bush tried three times to "corral Chinese support " for tougher penalties on Iran, only to have China use its participation to "water down" the resulting resolutions.
This pattern should not surprise us, because China has every reason to drag its feet on meaningful economic sanctions. To begin with, China wants to safeguard its access to Iranian oil and gas and protect its ability to invest in Iran. Iran is now China's second largest source of oil and gas (providing about 15 percen of its consumption), and China is Iran's second largest customer. China has also become a substantial investor in Iran's economy. With demand for oil likely to grow in the future, this is not a relationship Beijing is likely to jeopardize.
Second, China is sanguine about the prospects of an Iranian bomb because it has a more realistic view of what that development would mean. China's leaders know that they didn't gain a lot of geopolitical clout when they tested their own nuclear weapon in 1964, and being a nuclear power didn't enable them to dictate or blackmail Taiwan, Vietnam, the Koreas, or anyone else. China's rise to great power status was driven by its economic development, not its modest nuclear arsenal, and Bejing knows that same would be true for a nuclear Iran. While China would probably prefer that Iran not develop nuclear weapons, it hasn't succumbed to worst-case paranoia and isn't willing to pay a large price to prevent that from happening.
Furthermore, keeping the U.S.-Iranian pot simmering (but not boiling) is in Bejing's long-term interest. America's ham-handed involvement in the Persian Gulf and Central Asia has been a tremendous strategic boon for Beijing, and they undoubtedly feel a profound schadenfreude as they watch the Uncle Sam expend trillions of dollars in Iraq and Afghanistan while simultaneously maintaining an icy confrontation with Iran. After all, the more time, money, attention and political capital we devote to Iran, the less we can focus on China's long-term efforts to build influence in Asia and eventually supplant the U.S. role there. Plus, bad relations between Washington and Teheran creates diplomatic and investment opportunities for China. The last thing Bejing wants is a prompt resolution of the Iranian nuclear issue, because it might pave the way for a more substantial détente between Washington and Teheran, thereby diminishing Beijing's value and allowing U.S. strategists to shift their attention elsewhere.
At the same time, China doesn't want a war to break out in the Gulf, which could send oil prices soaring (at least temporarily), put the world economy back in recession, and lead to other unpredictable consequences. So it would like the United States and its allies to keep confronting Iran via economic sanctions, but slowly, so that the dispute with Iran never goes away and the use of force stays off the table.
For China, therefore, the optimal strategy is to drag its heels and play for time. This approach means never quite refusing to go along with stiffer sanctions but never saying "yes" either. They'll probably agree to some additional penalties eventually (maybe after a desperate United States agrees to guarantee China's oil supplies against an Iranian cutoff!), but they won't back anything severe enough to convince Iran to forego nuclear enrichment altogether. The dispute will continue, U.S. leaders will devote lots of time and attention to it, and China's long-term interests will be advanced.
That, ladies and gentlemen, is Realism 101. Too bad that Washington seems to have forgotten how to play it.
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The always-interesting Matt Yglesias has a nice post on the political feasibility of defense spending cuts, which pivots off an Economist/YouGov poll and some data presentation and commentary by Annie Lowrey at the Washington Indepedendent and Ezra Klein at WaPo. I have no disagreement with what any of them said, but I did want to register one comment.
There are really only two sensible ways to think about reducing defense spending. One is to hold one’s military obligations (aka “roles and missions”) constant and to devise cheaper ways of meeting these commitments. In this approach, you have to identify genuine waste, fraud and abuse in the Pentagon, and devise a convincing way to defend various interests while spending less money. People who believe that the United States could have a robust nuclear deterrent with a much smaller nuclear arsenal are making this sort of argument, and so did the so-called "military reform" movement back in the 1980s.
The second way to cut defense spending is to reduce one’s military commitments; i.e., to decide that there are some missions or obligations that the United States does not need to perform, either because they are not essential, because they are counterproductive, or because other states can and will do them better than we will. Some of us might put the Afghan War under this heading.
The point, however, is that it doesn’t get us very far to talk about reducing U.S. defense spending unless you’re prepared to identify how to do the same missions at less cost, or unless you think there are some things we don’t need to do at all.
P.S. Isn’t the point of having lots of allies around the world to get them to do lots of things that will make us safer (and save us money), instead of simply multiplying the number of countries we think we are obligated to protect?
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Yesterday our distinguished and highly principled House of Representatives passed HR 2194, the Iran Refined Petroleum Sanctions Act (IRPSA). The new measure is the brainchild of Rep. Howard Berman (D-CA), and best one can say for it is that it is a foolish bit of political posturing. As Lara Friedman of Americans for Peace Now and Matt Duss at the Center for American Progress make clear, this act will do virtually nothing to change the Iranian government’s behavior or weaken the political grip of the clerics and Revolutionary Guards. (See also Gal Luft and Alireza Nader's 's FP pieces here and here.) Instead, it will undoubtedly cause a lot of suffering among ordinary Iranians and reinforce the widespread perception that Uncle Sam is indifferent to the sufferings of others. It will also complicate U.S. efforts to get stronger multilateral sanctions on Iran, and is therefore counterproductive to any broader effort to address Iran’s nuclear ambitions. And you may rest assured that when this new set of sanctions fails, hardliners will argue that "we've tried everything," and that we must therefore rely on other options (i.e., preventive war).
It's not like Congress was unaware of some of these counter-arguments -- for example, all four witnesses at a Tuesday hearing before the House National Security and Foreign Affairs subcommittee said they would vote against the legislation if given the option--but these expressions of sanity could not stop the stampede to folly. AIPAC endorsed the legislation (duh!), but so did J Street, the self-advertised "pro-peace, pro-Israel" lobby that appears to be trimming its sails more and more with each passing month. Needless to say, the act passed overwhelmingly (412-12, with four others voting "present"). No wonder Mark Twain once complained that Congress contains "the smallest minds and the selfishest souls and the cowardliest hearts that God makes." With maybe sixteen exceptions.
I've been a big fan of Jared Diamond's work ever since Guns, Germs, and Steel, and I enjoyed his op-ed yesterday describing how companies like Wal-Mart, Coca-Cola, and Chevron are "going green." But I thought the real lesson of the article got buried in his glowing depiction of these supposedly enlightened companies. If you read his account carefully, it's clear that these big businesses didn't suddenly acquire an altruistic concern for the good of the planet; they are simply responding to clear market incentives, reinforced in some cases by intelligent regulation. Walmart is working to reduce its energy expenditures because energy (e.g., fuel for delivery trucks) is expensive; Coca-Cola is worried about water supplies because Coke is mostly made of water and its costs will increase as water becomes scarcer; and Chevron now does more to prevent environmental damage because governments now require it to pay clean-up costs and that's more expensive than preventing oil spills and other environmental mishaps in the first place.
The moral is that we aren't going to get a greener planet if we don't make the cost of environment-damaging activities (like burning fossil fuels or wasting water) substantially more expensive, and if we don't make it harder for those who do the most damage to off-load the costs on someone else. Everyone watching the climate change talks in Copenhagen should keep this lesson firmly in mind: A truly effective solution isn't going to be cost-free, especially in the short-term.
Donald Bowers/Getty Images for The Coca Cola Company
I was struck by Louis Uchitelle's article in the Sunday NY Times on the dearth of big public works projects here in the United States. "For the first time in memory, the nation has no outsize public works project under way," he says, and then reports that:
Some economists argue that the continual construction of new megaprojects adds a quarter of a percentage point or more, on average, to the gross domestic product over the long term. Again, cause and effect aren't clear, but the strongest periods of economic growth in America have generally coincided with big outlays for new public works and the transformations they bring once completed."
One might add that we aren't spending enough to maintain our existing public infrastructure, and state and local governments across the country are facing deep budget deficits (and in some cases, a very real risk of bankruptcy).
But it's not as though the United States hasn't started some big public works projects over the past decade or so; it just hasn't been doing them here at home. We've spent billions constructing military bases in Iraq and Afghanistan, for example, and another billion or more on a giant embassy in Baghdad and another one in Pakistan. Needless to say, those "public works" projects are a drain on the U.S. economy rather than a source of additional productivity.
As I've said before, Americans have come to believe that spending government revenues on U.S. citizens here at home is usually a bad thing and should be viewed with suspicion, but spending billions on vast social engineering projects overseas is the hallmark of patriotism and should never be questioned. This position makes no sense, but it is hard to think of a prominent U.S. leader who is making an explicit case for doing somewhat less abroad so that we can afford to build a better future here at home. Debates about foreign policy, grand strategy, and military engagement -- including the current debate over Obama's decision to add another 30,000-plus troops in Afghanistan -- tend to occur in isolation from a discussion of other priorities, as if there were no tradeoffs between what we do for others and what we are able to do for Americans here at home.
And no, I'm not suggesting a return to isolationism, a retreat to "Fortress America" or any of the other labels that hawks use to try to discredit those who want a more restrained foreign policy. Rather, I'm suggesting that national security spending should not be considered sacrosanct and that a nation's leaders can hurt the country just as easily by under-investing at home as by neglecting its defenses. And given that we currently spend more on national security than the rest of the world put together, have several thousand nuclear weapons, face no great power rivals, and don't have any serious enemies nearby, it's kind of hard to argue that we're "neglecting" our defenses. We are using them unwisely (see under: Iraq, Afghanistan) and Obama is about to make his own contribution to this bipartisan blunder, but we're not exactly scrimping.
President Obama didn't get any concessions during his recent visit to the People's Republic of China, and no one should be surprised. One of the most important lessons in life is that if you make a series of big mistakes, you should expect to pay a price for them. Back in 2000, the United States was running a budget surplus, our military was second-to-none, our image in most parts of the world was quite positive, and our economy had been growing steadily for nearly a decade. Some of that growth may have been illusory, however, and the next eight years featured a daunting combination of misfortunes (9/11, Hurricane Katrina), and self-inflicted wounds (e.g., the financial crisis, the invasion of Iraq, the endless war in Afghanistan, the abandonment of any sense of fiscal responsibility, etc.). There's no magic button or clever diplomatic sleight of hand that will allow the United States to retrieve its former position without some real sacrifices, and so far, nobody seems eager to make the changes that might be necessary.
Hence Obama's modest demeanor in Beijing. No president is going to be able to lay down the law on human rights, exchange rates, or sanctions on Iran when China owns over a trillion dollars in U.S. assets, when the U.S. economy is on life support, and when the American military Is mired in two losing wars. Until we get our house in order over here, nobody should expect China to be especially responsive to our wishes or expect its leaders to view the "American model" as especially appealing. An wide-open marketplace of ideas hardly looks attractive when the result is the intellectual ascendancy of Glenn Beck and Rush Limbaugh.
The follies of the past eight years were the greatest gift the United States could have given Beijing, and Obama's conduct in Beijing was the inevitable result. And if we keep doing what we've been doing (see under: Afghanistan, Middle East, etc.), I wouldn't expect things to change.
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Professional economists may be dismayed, but scholars and students of international politics should be delighted by the decision to award this year's Sveriges Riksbank Prize in Economic Sciences (aka the "Nobel Prize in Economics") to Elinor Ostrom of Indiana University. She is not only the first woman to win the economics prize, she's also the first political scientist. She holds a Ph.D. in the subject from UCLA and is a past president of the American Political Science Association.
Ostrom's main research is pretty far from my own concerns, but I did list her book Governing the Commons on one of my "top-ten" lists earlier this year. She is primarily known for her work on institutional solutions to collective action problems, most notably in the area of resources and environment. Via a combination of "soft" rational choice theory and careful empirical work, she shows that common resources can be shared and managed through various institutional mechanisms, but also shows that there is nothing inevitable about this outcome, due to familiar dilemmas of collective action (that's why we call them dilemmas!), and the complex interactions of humans, institutions, and larger ecosystems.
Ostrom (and the co-winner, organization theorist Oliver Williamson) join a group of recent winners chosen more for theoretical insight and real-world relevance than for mathematical scholasticism. Others in this same group would include economic historians Douglass North and Robert Fogel, behavioral economist Daniel Kahneman, game theorist/strategist Thomas Schelling, and economist-philosopher Amartya Sen. Scholars with an international orientation have been doing pretty well in recent years too: Schelling was awarded for game-theoretic work on international conflict, Paul Krugman for his work on international trade, and Sen's work on poverty and famines has clear international implications. Kudos to the prize committee for their eclectic approach to the award--if only more economics departments thought this way.
One more thing: need I mention that Ostrom received the award for work she had already done, as opposed to some other Nobel Prize winners I can think of?
Photo: Indiana University via Getty Images
Not my favorite line from last night's speech, but it still caught my eye....
...the plan I'm proposing will cost around $900 billion over ten years - less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration.
Keep that in mind when your local school district is forced to cut a few more programs or lay off a few more teachers, when your car hits another pothole on a bridge that needs repair, when your public transit system cuts service or raises fares, and when the federal budget deficit continues to rise. Stupid foreign policy decisions don't just cause problems overseas; they undermine our quality of life here at home. And as I said once before, it remains a puzzle why the GOP is eager to tax us to pay for ambitious social engineering projects in faraway lands, yet loathe to fund programs designed to benefit Americans here at home. It's equally puzzling (to me at least), why Americans have gone along with this idea. So far.
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Late empires are known for several things: a self-obsessed, self-serving governing class, small over-reaching wars that bankrupt the Treasury, debt that balloons until retreat from global power becomes not a choice but a necessity, and a polity unable to address reasonably any of these questions -- or how the increasing corruption of the media enables them all.
Obama is, in some ways, a test-case.
He was elected on a clear platform of reform and change; and yet the only real achievement Washington has allowed him so far is a massive stimulus package to prevent a Second Great Depression (and even on that emergency measure, no Republicans would support him). On that he succeeded. But that wasn't reform; it was a crash landing after one of the worst administrations in America's history.
Real reform -- tackling health care costs and access, finding a way to head off massive changes in the world's climate, ending torture as the lynchpin of the war on terror, getting out of Iraq, preventing an Israeli-led Third World War in the Middle East, and reforming entitlements and defense spending to prevent 21st century America from becoming 17th Century Spain: these are being resisted by those who have power and do not want to relinquish it -- except to their own families and cronies.
Nepotism is part of the problem; media corruption is also part; the total uselessness of the Democratic party and the nihilism of the Republicans doesn't help. But something is rotten in America at this moment in time; and those of us who supported Obama to try and change this decay and decline should use this fall to get off our butts and fight for change."
Wish I'd said that. And it makes me wonder: would Obama agree with the above (meaning he is a reluctant prisoner of well-entrenched interests), or is he is part of the problem too?
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I don't want to be a killjoy, but a troubling thought occurred to me last night. If -- repeat, if -- Obama's economic team has in fact managed to ward off a major depression -- even at the price of greatly increased long-term debt -- will that make it harder for them to institute various long-term reforms that really ought to be considered?
Don't get me wrong: unlike some rightwing critics like Rush Limbaugh, I’m not hoping for failure. Avoiding a lasting depression is a very good thing for all sorts of obvious reasons, not least of which is reducing the suffering of Americans who would be poorer the longer the downturn lasted. But if you are one of those people who think that the United States had been living beyond its means for some time, and that certain aspects of our society need more fundamental rethinking (and here I'd include an overly ambitious foreign policy), then there's a black cloud in this potential silver lining.
A few months ago, support for major reforms was enhanced by the sense that the United States really was in serious trouble. Obama's team clearly hoped to take advantage of this perception, just as the Bush administration took advantage of 9/11. As Rahm Emanuel famously put it, "no crisis should go unexploited." But if people start thinking that the United States is out of the woods, business-as-usual priorities and the politics of gridlock will quickly reemerge.
My concern, as you might expect, is that a new sense of complacency will derail any attempt to rethink U.S. foreign policy priorities and bring long-term commitments back in line with resources. Trade and budget deficits will persist, important domestic priorities will be neglected, and eventually other countries will wake up and realize that U.S. foreign policy didn’t change that much after all. And the opportunity to move toward a more realistic foreign policy will have been lost. We'll get there eventually, of course, but more slowly and painfully than we should.
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A while back I commented on the two imbalances of power that drive American grand strategy. The first is the gap between the United States and the other major powers, which makes Americans think they are responsible for managing much of the world and convinces them that they can do so with near-impunity. The second imbalance is the strength and political clout of a host of different institutions and interest groups whose common agenda is encouraging greater international activism on the part of the United States. In recent decades, the forces in favor of "doing more" have been better-funded and better-organized than those who favor greater restraint, which is one reason why we spend so much on defense and why we find ourselves entangled in intractable conflicts on several continents.
But when I read some early reports about the Obama administration’s health care plans, I began to wonder if the various forces that favor global activism are going to face stiffer opposition in the future. We are likely to have a sluggish economy for some time to come and the U.S. population is getting older. Virtually everyone agrees that serious health care reform is badly needed but will cost a lot. Plus, Obama's various economic recovery measures are going to saddle us all with record deficit levels. Us baby boomers are not exactly noted for our altruism, and my generation is going to put a lot of pressure on politicians to deliver the entitlements we've been promised. All of this means that budget dollars are going to be very tight, and the Pentagon is going to face tougher scrutiny when it brings in gold-plated requests. The Nation and Mother Jones may not be all that formidable a political opponent, but what about the AARP?
One of the great triumphs of Reagan-era conservatism was to convince Americans that paying taxes so that the government could spend the money at home was foolish and wrong, but paying taxes so that the government could spend the money defending other people around the world was patriotic. Ever since Reagan, in short, neoconservatives supported paying taxes to promote a U.S.-dominated world order, while denouncing anyone who wanted to spend the money on roads, bridges, schools, parks, and health care for Americans as a “tax and spend liberal." But if I'm right about the emerging fiscal environment, that situation may be about to change.
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In my last post, I argued that the U.S. policy of "don't ask don't tell" is contrary to a realist view of world politics, because it excludes qualified people from military service and thus makes it harder for the United States to field the most effective forces in a competitive international environment. I think there are other objections to the policy as well, but I was primarily concerned in that post with the strategic implications. The policy obviously doesn't prevent the United States from producing highly capable fighting forces, but restricting the talent pool in this way means our forces will cost more than they have to and/or be less effective than they could be.
This got me thinking: might a similar logic be at work at a more global level? Specifically, does the competitive nature of international politics give some states an advantage because their political systems and social values make it relatively easy to attract and assimilate talented citizens from other countries, thereby enabling them to draw more-or-less selectively on the entire global talent pool? If so, then these states will be able to improve their relative position over time, and to the extent that globalization now facilitates people moving from place to place, that tendency should be increasing. By contrast, states that make assimilation difficult or that discriminate on other areas will tend to be less attractive destinations for highly educated and/or entrepreneurial individuals, and these states will for the most part have to work with the citizenry they've got or pay a very high premium to attract talent from abroad.
One can see this dynamic by comparing Japan and the United States. Japan is an ethnically homogeneous society, with small minority populations who remain objects of discrimination. It is possible for foreigners to become naturalized citizens after five years of continuous residence, but this practice is not widespread. Japan also has a rapidly aging and declining population, which will have significant long-term effects on its power and influence. Yet given Japan's current policies discourage talented foreigners from immigrating and assimilating, thereby making it harder for Japan to attract the best and brightest from around the world and reverse its demographic slide.
The United States, by contrast, is the very model of a melting-pot society. People automatically qualify for citizenship if either parent is a citizen or if they are born on American soil, and naturalization is quite common (about one million people became naturalized citizens last year). Although support for immigration has waxed and waned throughout U.S. history and remains a contested issue today (mostly due to issues pertaining to illegal immigration), the United States has had remarkable success attracting and assimilating some of the best and brightest from all over the world. All I have to do is look at my colleagues, whose ranks include an impressive number of scholars born outside the United States. Each of them was hired as a result of a global talent search, and we'd have a less distinguished faculty if we had looked only at U.S. citizens. Some of my colleagues eventually returned to their countries of origin (such as Andres Velasco, currently Minister of Finance in Chile), but others are likely to spend most if not all of their careers here in the United States.
The success of the American melting pot, as many scholars have commented, is due partly to good fortune (North America was rich in natural resources, arable land, etc.) but also to the particular nature of American civic nationalism (or what Anatol Lieven calls the American Creed): faith in liberty, constitutionalism, democracy, the rule of law, individualism, and political and cultural (but not economic) egalitarianism. Although the United States has hardly been free of racial or ethnic conflicts during its history, these features have made it possible for every new group to integrate itself as full citizens. The United States is an attractive destination not just because it is a wealthy society, but also because many different groups and individuals can become integral parts of that society instead of facing permanent second-class status.
If I'm right, then the pressures of international competition give an advantage to any society that can "cream" some of the smartest and/or hardest working people from all over the world. How? By making that society an attractive place to live and work, mostly by creating an atmosphere of equality and toleration. By contrast, societies that limit their de facto talent pool by defining citizenship narrowly, by treating minorities badly, by discriminating on the basis of race, religion, or other characteristics are placing themselves at a competitive disadvantage vis-à-vis the rest of the world.
Over time, therefore, we should expect a growing gap between "cosmopolitan" societies that develop institutions and cultures in which diversity and tolerance are prized and where potential conflicts between them are managed well, and more restrictive societies that are either attractive only to a fixed population of particular ethnic identity, or who are face recurring internal conflicts between various contending groups. My bet would be that, other things being equal, the former do better over time.
And note that this argument isn't just about ethnic assimilation. In effect, what I'm suggesting is that from a realist perspective, there is a strong case for "small-l" liberal toleration. All else equal, societies that establish strong norms and institutions that protect individual rights and freedoms (including those governing sexual preference, I might add) will become attractive destinations for a wider array of potential citizens than societies that try to maintain a high degree of uniformity. And when you can choose from a bigger talent pool, over time you're going to do better.
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Barry Eichengreen has an excellent piece on how the economics profession went astray in the years before the Great Meltdown (hat tip: Matt Yglesias). I'm not an economist, but it's more nuanced and convincing than some of the other jeremiads I've read on this subject. Money quote:
The late twentieth century was the heyday of deductive economics. Talented and facile theorists set the intellectual agenda. Their very facility enabled them to build models with virtually any implication, which meant that policy makers could pick and choose at their convenience. Theory turned out to be too malleable, in other words, to provide reliable guidance for policy.
In contrast, the twenty-first century will be the age of inductive economics, when empiricists hold sway and advice is grounded in concrete observation of markets and their inhabitants. Work in economics, including the abstract model building in which theorists engage, will be guided more powerfully by this real-world observation. It is about time."
Of course, I like this line of argument because I once wrote something similar about the imperial tendencies of rational choice theorists in the field of security studies. The point is not to eschew all formal approaches or become atheoretical, however; the point is to maintain a healthy balance between deductive theorizing (whether done with formal tools or not) and various forms of empirical testing (experimental, quantitative and qualitative/historical).
I don't have strong views about this week's G20 summit. It clearly won’t produce a grand plan to revive the global economy, and so I'm mostly hoping it doesn't do any real harm. It's abundantly clear that there are genuine differences among the various members, which reflect both divergent historical attitudes and traditions and the very different economic circumstances that each state now faces. With bigger safety nets and greater fear of inflation, European powers oppose calls for big fiscal stimulus packages and are emphasizing the need for more regulation. The Obama administration is leaning the other way: acknowledging the need for some regulatory reform but emphasizing the need for more direct efforts to boost economic activity.
These differences won't get resolved at this meeting; let's just hope that evidence of dissensus doesn’t spook the markets or energize the protectionist forces that are already emerging in various countries. A final communiqué that committed the parties to reject the latter would be most welcome.
The meeting is also Obama's debut appearance at such a gathering, and I'm thinking that he needs to walk a rather fine line. On the one hand, he'll want to show that he’s not George W. Bush, and to firmly reject the one-way approach to diplomacy that Bush practiced, especially during his first term. This is the easy part: given Obama's innate confidence, likeability, and penchant for listening to diverse views, he should have little trouble getting on with the other attendees.
But on the other hand, Obama also needs to show that he's no pushover, and that our economic problems haven't made the United States just one out of twenty. Leaders like French President Nicolas Sarkozy have a penchant for grandstanding, and may be eager to score political points at home by hogging the spotlight or by taking pot shots at the United States. Here Obama needs to make it clear that the United States is still a global superpower with ample capacity to defend its interests -- including its economic interests -- and that even close allies will pay a price if they provoke U.S. disfavor. The U.S. economy is still the world's largest and most advanced, and it faces fewer long-term problems than many other G20 members. Key allies in the G20 remain dependent on American military power and on the collective goods that the United States still provides. Now is not the time to look or act (to use Richard Nixon's Vietnam-era phrase) like "a pitiful, helpless giant."
Obama's tough handling of General Motors shows that he's not afraid to play hardball when circumstances require. I hope he finds a way to remind the other nineteen leaders of that fact. But I also hope he does it with some subtlety. Like I said: He's got a rather fine line to tread.
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Stephen M. Walt is the Robert and Renée Belfer professor of international relations at Harvard University.