President Obama Between Exceptionalism and Primacy in Afghanistan

I thought that President Obama’s speech last night was extremely diptych1 It was a continuation of his tendency to split the partisan difference on the substance of the matter, with no one getting all of what they wanted, and then throwing all parties concerned a rhetorical bone. For instance, this part of the speech was all paleoconservative, Andrew Bacevich, Christopher Preble, The American Conservative, Coalition for Realistic Foreign Policy. He even invokes the patron saint of the movement, Dwight Eisenhower:

As President, I refuse to set goals that go beyond our responsibility, our means, or our interests. And I must weigh all of the challenges that our nation faces. I don’t have the luxury of committing to just one. Indeed, I’m mindful of the words of President Eisenhower, who — in discussing our national security — said, “Each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs.”

Over the past several years, we have lost that balance. We’ve failed to appreciate the connection between our national security and our economy. In the wake of an economic crisis, too many of our neighbors and friends are out of work and struggle to pay the bills. Too many Americans are worried about the future facing our children. Meanwhile, competition within the global economy has grown more fierce. So we can’t simply afford to ignore the price of these wars.

But as we end the war in Iraq and transition to Afghan responsibility, we must rebuild our strength here at home. Our prosperity provides a foundation for our power. It pays for our military. It underwrites our diplomacy. It taps the potential of our people, and allows investment in new industry. And it will allow us to compete in this century as successfully as we did in the last. That’s why our troop commitment in Afghanistan cannot be open-ended — because the nation that I’m most interested in building is our own.

On display is a recognition of multifaceted national objectives that trade off, of the need for choice in the face of scarce national resources, of real limits to the exercise of power, that conserving ones strength is an important means of cultivating it.

But then President Obama goes on to say the following and I hear Paul Wolfowitz, William Kristol, perpetual U.S. primacy, the Bush Doctrine and the neoliberal agenda forever:

Since the days of Franklin Roosevelt, and the service and sacrifice of our grandparents and great-grandparents, our country has borne a special burden in global affairs. We have spilled American blood in many countries on multiple continents. We have spent our revenue to help others rebuild from rubble and develop their own economies. We have joined with others to develop an architecture of institutions — from the United Nations to NATO to the World Bank — that provide for the common security and prosperity of human beings.

We have not always been thanked for these efforts, and we have at times made mistakes. But more than any other nation, the United States of America has underwritten global security for over six decades — a time that, for all its problems, has seen walls come down, and markets open, and billions lifted from poverty, unparalleled scientific progress and advancing frontiers of human liberty.

For unlike the great powers of old, we have not sought world domination. Our union was founded in resistance to oppression. We do not seek to occupy other nations. We will not claim another nation’s resources or target other peoples because their faith or ethnicity is different from ours.

The trite rhetorical temptation here is to write something like “So which is it going to be, Mr. President?,” but there’s no reason it’s got to be one path or the other. An incremental, experimental approach is possible and 30,000 seems as good a number as any — this is on top of the additional 40,000 soldiers that President Obama already approved in March 20092 — a not insubstantial commitment. Ideologues argue that while it’s all fine in practice, does it work in theory? But pragmatists tend not to be ideologically pure. President Bush disappointed many of the most maximalist elements when he announced the numbers for the surge in Iraq. The right wanted more, but the surge seemed to work. I’m aware that there’s a dispute as to whether the surge worked on the substance of the matter, but even if it didn’t work on the merits, it at least succeeded politically.

Notes

  1. President Barack Obama, Remarks by the President in Address to the Nation on the Way Forward in Afghanistan and Pakistan, Eisenhower Hall Theatre, United States Military Academy at West Point, West Point, New York, 1 December 2009

  2. Cooper, Helene and Eric Schmitt, “White House Debate Led to Plan to Widen Afghan Effort,” The New York Times, 28 March 2009, p. A1

The Continuance of the Savings Glut

With President Obama in China and the issue of the dollar-renminbi exchange rate presumably on the agenda, there has been a great deal of commentary about the threatening peril of the Chinese savings glut1. Here was Paul Krugman late in October on how the savings glut — the condition and a leading cause of the 2007-2008 financial crisis — remains unabated, continuing to propagate its distortions throughout the world economy2:

Until around 2001, you could argue that [the target value of the yuan was reasonable]: China’s overall trade position wasn’t too far out of balance. From then onward, however, the policy of keeping the yuan-dollar rate fixed came to look increasingly bizarre. First of all, the dollar slid in value, especially against the euro, so that by keeping the yuan / dollar rate fixed, Chinese officials were, in effect, devaluing their currency against everyone else’s. Meanwhile, productivity in China’s export industries soared; combined with the de facto devaluation, this made Chinese goods extremely cheap on world markets.

The result was a huge Chinese trade surplus. If supply and demand had been allowed to prevail, the value of China’s currency would have risen sharply. But Chinese authorities didn’t let it rise. They kept it down by selling vast quantities of the currency, acquiring in return an enormous hoard of foreign assets, mostly in dollars, currently worth about $2.1 trillion.

Many economists, myself included, believe that China’s asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China’s insistence on keeping the yuan / dollar rate fixed, even when the dollar declines, may be doing even more harm now.

Although there has been a lot of doomsaying about the falling dollar, that decline is actually both natural and desirable. America needs a weaker dollar to help reduce its trade deficit, and it’s getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere.

But China has been keeping its currency pegged to the dollar — which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency should be rising in value, is in effect engineering a large devaluation instead.

And that’s a particularly bad thing to do at a time when the world economy remains deeply depressed due to inadequate overall demand. By pursuing a weak-currency policy, China is siphoning some of that inadequate demand away from other nations, which is hurting growth almost everywhere.

For thirty years now the prevailing grand social bargain in the United States has been that outsourcing and offshoring will be the means whereby capital will capture an increased portion of national income and the resultant consumer goods price deflation will substitute for the also resultant wage stagnation. In shorthand, this might be called the Reagan Revolution, though Reagan only brokered the deal. The conditions that gave rise to parties militating against the preceding post-war social bargain lay much deeper in the structure of the post-war international order. This social bargain is the basis of the financial problems of the U.S. as well as of the China problem.

The savings glut is not merely a problem with China, but in its Chinese component it is driven by two factors, neither of which is likely to be resolved by U.S. action. First, owing to population growth and the massive migration from rural farms to urban wage labor, China needs to create around 25 million new jobs per year. The memory of Tiananmen Square demonstrations of 1989 remains potent in the mind of Chinese Communist Party officials. It is widely believed among Chinese officials that preventing a repeat of the unrest of 1989 and hence the survival of the Party depends on the ability of the Chinese economy to provide jobs for these millions, preventing them from becoming a mass of disaffected urban unemployed. Second, the savings glut exists as a part of China’s long-term grand strategy of pursing peaceful development first and regional political realignment only once they have attained sufficient economic and military weight. For the U.S., the G-8, the IMF or whoever to ask China to abandon its policy of undervaluing the renminbi is to ask the Chinese government to commit suicide and to accept their second-tier world-political status; it is to ask them to run the highest order of political risk as an act of charity to the rest of the world. We cannot rely on China doing the U.S. any macroeconomic favors here. The only way to eliminate the macroeconomic conditions of the next financial crisis is to get our own house in order.

On the right and amidst the Lou Dobbs crowd you here these constant sidelong remarks about China holding the strings of America’s economic future. But this is not the result of some insidious plot on the part of China to acquire a financial WMD stuffed full of T-bills for deployment against the U.S. at some opportune occasion (like a WMD, to actually use it would result in mutually assured destruction). This is result of the Wal-Mart low-wage, low prices, long supply chain model of doing business (surprise: the day-to-day purchasing decisions of millions of people reach up to the commanding heights of world finance). We can try to brow-beat China to forego the opportunities of the system that we have created, but the origin of that system reaches down into what is now, under the midwifery of the right, claimed as the American way of life. And perhaps we have decided that getting off on a bad foot with the world’s next superpower is preferable to confronting our own economic culture.

Notes

  1. Dominique Strauss-Kahn, the Director of the IMF, made a speech on the subject in Beijing, The International Monetary System: Reforms to Enhance Stability and Governance, International Finance Forum, Beijing, 16 November 2009; Krugman, Paul, “World Out of Balance,” The New York Times, 16 November 2009, p. A25; Wolf, Martin, “Grim Truths Obama Should Have Told Hu,” Financial Times, 17 November 2009.

  2. Krugman, Paul, “The Chinese Disconnect,” The New York Times, 23 October 2009, p. A35

Michael Lind’s Unified Theory of U.S. Political-Economic Grand Strategy

On Friday, 24 July 2009 I went to see a New America Foundation panel discussion of The Power Problem: How American Military Dominance Makes Us Less Safe, Less Prosperous, and Less Free, by Christopher Preble, the Director of Foreign Policy Studies at CATO. Mr. Preble is, along with Andrew Bacevich, Robert Jervis, Christopher Layne and others, a member of the Coalition for a Realistic Foreign Policy. It was a very Coalition-y event, with a panel comprised of ideological misfits amidst our ill-representative bipolar political spectrum. At one point Mr. Preble felt it necessary to state that people think he’s a Republican because he works at CATO, but that he is not.

I’m a fan of Mr. Preble, and a swath of other of the Coalition for a Realistic Foreign Policy thinkers. I have previously made Preble’s point with respect to Gareth Porter’s book, Perils of Dominance: Imbalance of Power and the Road to War in Vietnam (“Militarism: Loose It or Use It,” 3 February 2008). Mr. Porter’s book is a specific case study of Mr. Preble’s point with respect to the Vietnam War era.

What interested me most about this discussion was Michael Lind’s comments. When his turn came, off the cuff Mr. Lind spun one of the most trenchant, compelling and unified analyses of the last century of U.S. grand strategy I’ve ever encountered. Without saying it in so many words Mr. Lind shows how the present economic crisis is a systematic crisis resulting from the evolutions of an international system that is the product of a U.S. grand strategic and international political-economic bargain decided upon coming out of the interwar crisis years and the outbreak of the Second World War.1

A transcript of the relevant sections of Mr. Lind’s comments, as well as editor’s notes, follow (Mr. Lind’s comments are 0:43:03-1:00:15, I excerpt his comments starting at 0:45:11):

Michael Lind, Gordon Adams, Christopher Preble, Michael Cohen, The Power Problem, New America Foundation, Washington, D.C., 24 July 2009

I think if you look at both our national security policy and our global economic strategy — and there is one — these two things are not completely unrelated even though they’re usually discussed as though they’re on separate planets — you can understand both by referring to four countries, which happen to be the other four great powers or greatest powers: Germany, Japan, Russia and China. You can’t understand out national security strategy or our trade policies without thinking about these countries in particular.

First our national security strategy. As many people have pointed out — this is simply the standard interpretation2 — our foreign policy during the Cold War was one of dual containment. We were containing four countries, not just two. We weren’t just containing the Soviet Union and communist China, but we were also containing post-1945 West Germany and post 1945 Japan. And the reason the U.S. adopted this hegemonic global military strategy — which was not what it had intended in World War II. In the course of World War II the Roosevelt Administration in its planning assumed you would have a three power world, essentially the British, the Soviets and the Americans and that Chan Kai Check would govern China as a satellite of the Americans.

But in the Cold War this all broke down. And what evolved was a system in which the Germans and Japanese would be permanently demilitarized. Their security would be provided unilaterally by the United States. You can call it NATO, but it would essentially be a unilateral offer of guarantee for this disarmed Japan and this disarmed West Germany. At the same time the Soviet Union and China — which late in the Cold War became a geopolitical ally of the U.S. — would be contained, they would be outside of the system. And we would be protecting Japan and Germany — Japan from both China and the Soviet Union and Germany from the Soviet Union.

Now, what does that have to do with economics? There was a deal implicit in this strategy, which is, okay Germany and Japan you have this massive military industrial complex and unlike after World War I we’re not going to have punitive reparations and so on to bring about some future Hitler as a result of humiliation. We want to rebuild you and integrate you into this American-led system, including a global free trade system, or managed trade system. So the deal is, you don’t make tanks, you make cars, you don’t make guns, you make radios. So you will become civilian manufacturing superpowers and this is in the interest of the United States, at least according to American strategists because this will avert the reemergence of an independent Japanese military great power and an independent (even) West German military great power and the emergence of a multipolar world, with multipolar rivalries, like those of the 1930s.

So the deal, which was taken up more by Japan than by West Germany, which has had fairly liberal trade relationships, both with us and with its neighbors in Europe, was that you export to us and we will turn a blind eye to the fact that you, Japan, use non-tariff barriers to keep our products out of your markets, to the fact that you’re targeting particular industries in the U.S., to the fact that you’re hiring lobbyists in Washington to promote your industrial strategy in the 70s and 80s. We will turn a blind eye because we’re willing to sacrifice certain American industries — and here the libertarians part from my interpretation — we will sacrifice certain American industries in order to keep you part of the U.S. Cold War coalition and we will tolerate things that if we were not military allies and protectors we would never put up with. And so that was basically the pattern.

Now, the end of the Cold War comes along. There was a fascinating debate. I was sort of on the sidelines of it as executive editor of The National Interest, Irving Kristol’s foreign policy magazine by the way, back in the early 1990s, late 1980s. And you had the America first isolationists, you had the balance of power school, there were the liberal internationalists and so it was a fascinating debate. It was all shut down in the aftermath of the Gulf War and we’ve had the de facto basic same strategy under both Clinton and Bush and now under Obama — with the exception of the more aggressive neoconservatives slant.

And the decision was made — it sort of evolved, you know, it’s not a conspiratorial thing, but this became the new consensus after the Gulf War in 1991 — the decision was made we will continue the policy of dual containment. In other words, we’re not going to rethink it. We’re not going to say oaky, NATO, we’re going to admit Russia and turn it a concert of power, or we’re going to get rid of it, we’re going to come up with a new system and bring in the Chinese. No, basically we will continue to be Japan’s protector nation and South Korea’s, we will maintain these Cold War alliances and we will maintain NATO, which will be expanded, for fear — and I’m simply reporting, I’m not endorsing this because I agree, I think, with everyone on this panel that a certain paranoia has driven all of this — for fear that after reunification Germany would emerge as a Fourth Reich, this sort of lose canon neo-militaristic power. And so the geostrategic purpose for the expansion of NATO, it served both of the goals of dual containment after the Gulf War. You push NATO all the way up to the borders of a weakened, post-imperial Russia so you’re still containing Russia, no longer the Soviet Union, but the Russian Republic. And at the same time, you’ve embedded Germany even more deeply in this system of U.S. alliances, of hegemonic alliances.

It’s not a traditional alliance system. Traditional alliance system is more like the allies in World War I, World War II. … The American alliance system is a hegemonic system. We expect nothing, really, in return. They’re essentially client states and protectorates, most of our so-called allies. They’re not actual equal partners. We will protect them for what we perceive as out interest in a world order that’s beneficial to us. They really don’t have to do anything in return to protect us. But we don’t see this as charity, at least the establishment. This is promoting a world order.

We maintain this dual containment system after the Cold War. Paul Wolfowitz and others had a name for it in the early 1990s some of you may recall from stories in the New York Times and elsewhere.3 It was called Reassurance. That was the initial [name] during the first Bush administration. This was called the Reassurance Doctrine. We would reassure the other great powers of the world that because we would look after their geopolitical interests, they would not need to rearm and they could continue to devote their economic energy — in fact, George W. Bush said this at Westpoint in [2002].4 He said the other countries should concentrate basically on trade and we will maintain these enormous strengths [crosstalk]. My point is, this is not a crazy idea. I think all of us would agree that this is flawed and ultimately doomed, but there is a system here.

My final point in analyzing this consensus system is the economic counterpart since the Gulf War. And this is a system called Bretton Woods II. Bretton Woods II is the term that economists use for this very strange global economic order that evolved in the last twenty years. In which American consumers went into debt in order to purchase goods from primarily China. China has, at least up until the crash, 90 percent of the non-oil trade deficit with the United States. But even before China moved up in this decade, it was East Asian countries,5 to a lesser extent Germany in Europe. So you get this very odd system where the United States is the consumer market of first resort for the other three leading market or quasi-market economies of the world, which today are Japan, China and Germany. Japan, China and Germany all have substantial merchandise trade surpluses. The United States has had an ever growing merchandise trade [deficit].

When you read these discussions taking place on economy planet and national security planet, without the frame of reference to the bargain here it’s just kind of missing the point. There was a geopolitical bargain underlying America’s offer of unilateral access to U.S. markets, particularly to Japan which practices a fairly sophisticated form of mercantilism at the expense of U.S. exports. And then after the cold war the elites in the United States decided to extend this to China.

This brings us up to the present and why this system is collapsing before our very eyes. What worked for Japan, a country much smaller than the United States, they could trade with us while protecting their markets from American exports. This cannot work, that export-oriented model was doomed the moment China, the world’s most populous nation adopted it. There are simply not enough first word consumers in the U.S., or in the U.S., the E.U. and Japan put together, to accommodate all of the stuff that first China and now India are capable of doing. In that sense this bargain is doomed. This is one of the underlying reasons for this crash, because China would not have had these enormous dollar surpluses — some of the oil-exporting countries would have, but China would not have — had it had a more demand-oriented domestic consumption driven policy. It’s this export-oriented policy that allowed it to accumulate these dollar surpluses and indirectly, through purchasing American debt, for reasons we need not get into, but that also helped their exports, enabling American consumers to go on this binge which then helped build up what is really gross overcapacity in Chinese manufacturing.6 So this system has crashed now. It’s not coming back. … It’s run into its limits. So Bretton Woods II is dead as a global economic system. There is no other domestic consumer market, apart from the U.S., that is capable of accommodating all of the export capacity, not only of China, but of Japan and even Germany, which has trade surpluses with all its European neighbors.7

So how does this effect security policy? Well, my prediction is that the costs of digging our way out of this collapsed 1990s, 2000s post 1992 global economic system, which again rested on this geopolitical bargain between the U.S. and these potentially threatening great powers, except for Russia, which is becoming more and more of a resource power, but it was the other three major industrial great powers: China, Japan and Germany. We’re simply not going to be able to afford a military that’s at four of five percent, particularly a military which had as its actual purpose — and let me wrap up just by saying this — the actual purpose if you read Michael Mandelbaum, who wrote a very good book setting forth what I think is the establishment position,8 I’d recommend it to everybody, if you want a view from the inside. [crosstalk]

But he says the real reason we have this giant military is not because we need all these aircraft carriers in order to prevent jihadists from sneaking into the U.S. and getting on airplanes. We don’t actually need this giant army to deal with the North Koreans or this or that rogue state. Rogue states and terrorists — which are real problems I’m not diminishing this I may take them more seriously than some of the other people up here, I mean they’re problems.

If you look at the structure of our military, it is designed to intimidate China, Germany and Japan and Russia if they even think about rearming. That’s why we have the size of the military. Because it’s grossly oversized if you actually want to fight jihadists and AFPAC. But when people come out and say — as President George W. Bush is — that’s the purpose of our military: no one should even think about competing with our capabilities. Well, who’s thinking about competing with the capabilities of the U.S. military? A bunch of guys in suburbs or a cave in Afghanistan, Pakistan? No. We know what the countries are, the ones that can never be named as objects of U.S. Strategy: China, Germany, Russia, Japan.

I’ll end with a prediction. The collapse of Bretton Woods II is going to bring down this Reassurance strategy by creating a fiscal crisis for the American state, of which we are in the early stages because of the enormous debt from the bailout, combined with, if we avoid future bubbles, a fairly slow rate of growth. And this is going to create enormous political conflict in the United States. The defenders of the Pentagon — of whom I am one — I don’t want to cut to dangerous levels — but there’s going to be a battle between the Pentagon and the American Association of Retired Persons over if we’re going to cut government spending by two or three percent, is it going to come out of the Pentagon budget or are we going to slash Social Security … or are we going to slash and reform Medicare. And so my money is on the old people.

Editor’s Notes

  1. A thumb-nail sketch of this history: The formative political experience for the Second World War and early post war foreign policy establishment was the failure of Wilsonianism in the Interbellum years: the Great Depression, the downward spiral of beggar-thy-neighbor economic policies, the rise of fascism and militarism, the intensification of great power competition leading to a repeat of “the war to end all wars” and the eventual need for the United States to return to Europe for a second major war within 25 years. The post-war international system that these people — Harry Truman, George Marshall, Dean Acheson, George Kennan, Paul Nitze, Harry Dexter White; in Europe: John Maynard Keynes, Jean Monnet, Robert Schuman, Ernest Bevin — created was only partly spurred by suspicions of the Soviet Union. Its other motivating force was the avoidance of a third repeat of the pattern of world war that dominated the first half of the Twentieth Century. That system consisted of the suppression of great power competition under the political-military preponderance of the United States as the just guarantor of international order, combined with with market — and market only — based access to resources under a pseudo-legal international economic order in the IMF, the IBRD (World Bank) and GATT, eventually WTO. Already by 1960 this system was being challenged by a world recovering from the devastation of World War (Arthur Schlesinger reported that President Kennedy often said that “the two things which scared him most were nuclear weapons and the payments deficit”). For a decade the United States fought a rear-guard action to uphold its obligations, until the strain of guns and butter (the Vietnam war era inflation and current account deficit) lead the Nixon administration end the Bretton Woods policy of dollar-gold convertability on 15 August 1971.

    What followed was a period of monetary instability and a number of ad hoc attempts to remedy it — the Smithsonian Agreement (1971), The European Snake (1972), The Exchange Rate Mechanism (1979), the Plaza Accord (1985) — as well as a period of financial crises of increasing of increasing size and scope — the Latin American Debt Crisis of 1982-1985, the June 1982 ERM realignment and François Mitterrand’s liberal turn in the face of intense dollar-Deutche mark pressure on the franc, The Mexican peso crisis of 1994, the Asian Financial Crisis of 1997-98. All of these developments are evolutions of a system of dollar hegemony. Throughout this period the current account deficit grew in fits and starts, leading to the current crisis, whose primary cause is the faltering of the United States in its attempts to prop up the world economy by turning its consumer base into the buyer of last resort and mopping up the worlds excess money in its current account, consumer and fiscal debts.

    For my part, whatever its failings, this system has obvious competitive advantages over what came before it. Mr. Preble ends the session saying, “Power held by others is something to be welcomed, not feared.” I’m not so sure about that. There is, however, one failing with which I cannot argue: as Mr. Lind’s said, that of its being doomed.

  2. E.g. this is the interpretation of the reigning standard work on the early Cold War formation of U.S. grand strategy, Melvyn Leffler’s A Preponderance of Power: National Security, the Truman Administration, and the Cold War (Palo Alto, CA: Stanford University Press, 1992).

  3. Tyler, Patrick E., “U.S. Strategy Plan Calls for Insuring No Rivals Develop,” The New York Times, 8 March 1992, p. A1. The document in question was the Defense Planning Guidance of 1992, early drafts of which were leaked to the New York Times. At the time, the Secretary of Defense was Dick Cheney. Mr. Wolfowitz was Undersecretary of Defense for Policy in the Pentagon. Secretary Wolfowitz had delegated the job of writing the document to his deputy, Scooter Libby, who had in turn delegated it to Zalmy Khalilzad. Participants in the discussions surrounding the Defense Planning Guidance included DOD Office of Net Assessment head Andrew Marshall and independent defense intellectuals Richard Perle and Albert Wohlstetter. These are the usual suspects. A subsequent, whitewashed Planning document omitting the language of dual containment was released as the official, final version, Tyler, Patrick E., “Pentagon Drops Goal of Blocking New Superpowers,” The New York Times, 24 May 1992, p. A1. See Mann, James, Rise of the Vulcans: The History of Bush’s War Cabinet (New York: Viking, 2004), pp. 208-215.

  4. Bush, Jr., George W. “Commencement Address at the United States Military Academy at West Point,” West Point, New York, 1 June 2002, http://georgewbush-whitehouse.archives.gov/news/releases/2002/06/20020601-3.html (accessed 26 July 2009). The key passage would be as follows:

    Competition between great nations is inevitable, but armed conflict in our world is not. More and more, civilized nations find ourselves on the same side — united by common dangers of terrorist violence and chaos. America has, and intends to keep, military strengths beyond challenge (applause) thereby, making the destabilizing arms races of other eras pointless, and limiting rivalries to trade and other pursuits of peace.

    While overt talk of the strategy of hegemony was originally suppressed in the Defense Planning Guidance of 1992 (supra, note 1), after September 11th, 2001, the neoconservative element in the administration was ascendant, peoples’ sensitivities to bald talk diminished and the strategy became overt in the September 2002 National Security Strategy of the United States. Sanger, David E., “Bush to Outline Doctrine of Striking Foes First,” The New York Times, 20 September 2002, p. A1.

  5. Mr. Lind is here telling the long history of the present crisis. The intermediate history goes back to the dot-com bubble and the developing nation foreign direct investment bubble, precipitating the Asian financial crisis of 1997-1998, on which I have previously commented (“The Committee to Save the World, Ten Years On,” 26 March 2008).

  6. The idea that capitalism has entered a phase of overcapacity and hence perilously declining profit margins can be found in its most Marxist “propensity of capitalism to crisis” version in the two works of Robert Brenner, The Economics of Global Turbulence (Brooklyn, NY: Verso, 2006) and The Boom and the Bubble: The U.S. in the World Economy (W. W. Norton & Company, 2002), both based on his special issue of New Left Review, “The Economics of Global Turbulence,” series I, no. 229, May-June 1998. Similar theories can be found in more mainstream versions in Robert Reich’s Supercapitalism (New York: Knopf, 2007) which draws heavily upon John Kenneth Galbraith’s The New Industrial State (Boston, Mass.: Houghton Mifflin, 1967).

  7. The unnamed theory behind Mr. Lind’s reasoning about the current crisis is that of the “savings glut” (or alternately, demand dearth) advocated by, among others, Federal Reserve Chairman Ben Bernanke “The Global Saving Glut and the U.S. Current Account Deficit” (Virginia Association of Economics, Richmond, Virginia, 14 April 2005) and Financial Times economic correspondent Martin Wolf, first in his special comment and analysis column, e.g. “The Paradox of Thrift: Excess Savings Are Storing up Trouble for the World Economy,” Financial Times, 13 June 2005, then in his book, Fixing Global Finance (Baltimore: Johns Hopkins University Press, 2008). I’m tempted to say something to the effect that in these articles you have the “economy planet” whose orbit never crosses that of “national security planet,” of which Mr. Lind spoke — that the grand-strategic bargain underlying the savings glut is never addressed — but in the 2005 piece, Mr. Wolf writes:

    True, the huge current account deficit gives the US the happy combination of guns and butter in the short run. Since the external deficit is bigger than the fiscal deficit and also bigger than the amount that the US is spending on its armed forces, either of these can be regarded as a free lunch, if only for the moment.

  8. Mandelbaum, Michael, The Case for Goliath: How America Acts as the World’s Government in the Twenty-First Century (New York: Public Affairs, 2005)

Photograph, left to right, Michael Lind, Gordon Adams, Christopher Preble, Michael Cohen; courtesy of the New America Foundation; used under the Creative Commons Attribution-Noncommercial-Share Alike 2.0 Generic license.

When Realpolitik and Principle Converge

Apropos my two previous posts about keeping non-proliferation goals in the mix with democracy permotion, Matthew Yglesias spells out the logic for why this is probably not tenable (“Engagement With a Post-Crackdown Iran,” Think Progress, 23 June 2009):

The hope behind an engagement strategy was that the Supreme Leader might be inclined to side with the more pragmatic actors inside the system — guys like former president Rafsanjani and former prime minister Mousavi. With those people, and most of the Iranian elites of their ilk, now in open opposition to the regime, any crackdown would almost by definition entail the sidelining of the people who might be interested in a deal. Iran would essentially be in the hands of the most hardline figures, people who just don’t seem interested in improving relations with other countries. Under the circumstances, the whole subject of American engagement may well wind up being moot.

So maybe the realpolitik and the principled position have converged here. All-in with the dissidents may be the only option that can produce progress on the nuclear issue at this point.

The Approaching Moment of Decision

A terrible moment of decision is rapidly approaching where the outcome of the revolution in Iran will be determined. It has been said — and I largely agree — that the fate of Iran is for the Iranians and there is little that the United States can do. But little is not nothing and should the prospects of the dissidents begin to dim, that little will become much greater in stature. The Obama administration faces a dilemma here — a real dilemma that leaders in the real world face (discouragingly, one must add this last qualification because on the right there is no acknowledgement that our means are limited and our objectives trade-off here). The United States presently has two objectives with respect to Iran:

  1. We would like to do reach an agreement regarding their nuclear program. The best situation would be that they abandon enrichment altogether, but one where they pursued a nuclear energy program, but verifiably ruled out weaponizing their nuclear material would suffice.

  2. We would like to see a liberalized, less theocratic Iran. This is in part the traditional, principled position of United States, but it is also practical. A liberal democratic Iran will have a moderating effect on the rest of the Middle East, that epicenter of that global war on terrorism that we are fighting. And a liberal democratic Iran will presumably be less likely to provide support to militant elements in Palestine.

Presumably if two obtains, that will be progress toward one. A new, popular, modernizing régime looking to distinguish itself from its predecessor will be much more willing to deal with the United States and the Obama administration will have much less problem with its domestic constituents in dealing with such an Iran.

Alternately, no matter what the United States does, should President Ahmadinejad and Supreme Leader Khamenei succeeded in their bid to retain power, it will have become considerably more difficult for the President — any president for some time to come — to make progress on the nuclear issue. However, should the United States throw its weight behind the second objective and the Iranian dissidents fail, then the prospects for future progress on the nuclear issue will be even worse still than if we hadn’t — perhaps lost altogether. Not only will it be extremely difficult for any U.S. administration to deal with Iran, the Iranian government will return to the siege mentality of the 1980s and will perhaps — evidence that foreign powers will act to destroy the régime in hand — conclude that a nuclear deterrent is a necessity if the régime is to survive.

I have generally agreed with the position of restraint that the administration has taken. This is the Iranians’ struggle and strong words only make us feel puffed up — they do nothing for the Iranians. But that time may be coming to a close. Indications are that the Iranian government is moving with increasing forcefulness to suppress the dissidents. This is an effort that the government will win. Dissidents can route the police when it’s rocks versus batons. When the machine guns come out, it will be a different story. We cannot decide this conflict, but we can tilt the balance. The international community can make the government of Iranian aware that the consequences of suppressing its citizens extend beyond its own domestic politics. And perhaps — perhaps — this could bring them to the tipping point, or cause them to draw back from what they are about, or change the calculus of costs where a compromise solution becomes desirable.

But the United States and the Obama administration have to carefully weigh its principles and its objectives, its possibilities of success versus its consequences of failure. I’m not going to game it out here, but the range of options, consequences and rewards and probabilities attaching to each one should be fairly obvious. The nuclear issue is real and momentous and it would be terrible to sacrifice what possibility for progress exists chasing pie in the sky. But our principles are real too. It would be terrible for us to sacrifice them to cynical realpolitik over meager tactics when another world is possible. But not everything is possible and the future is uncertain. Judgment and luck are all that there is.

A Western Union?

Okay, I’m going to advocate one of those bigthink political ideas that has absolutely no possibility of becoming reality (see, e.g., Foreign Affairs).

The United States should join the European Union.

Commentators are concerned that the world may be breaking into competing trade blocks, with North America and Europe being the most contentious. Both are constantly at odds over their respective agricultural subsidies. The U.S. engages the E.U in an epic battle at the WTO over its banana import regime. European antitrust czar Mario Monti vetoes the merger of General Electric and Honeywell and finds Microsoft €497 million for anticompetitive practices after the U.S. gives both a free pass. Both countries have strategically critical airplane manufacturers, Boeing and AirBus. The U.S. complains that AirBus is E.U. subsidized. The E.U. retorts that the U.S. hides its subsidies of Boeing in the Department of Defense budget. Why not take all these high-stakes squabbles out of the indeterminate realm of international disputes and bring them under the more normal procedures of federal politics?

In denial of its complete impracticality, the United States and Great Britain have already experienced a considerable amount of political harmonization — which I take to be the prerequisite to political union. Margaret Thatcher and Ronald Reagan ushered in simultaneous conservative revolutions in each country. Both were followed by short-lived toadies in the persons of John Major and George Bush, Sr.

But it doesn’t stop at Britain. Much of mainland Europe seems to be on a nearly synchronized political periodicity. As Thatcher and Reagan were putting their revolutions in place, French President François Mitterrand was backing off from his socialist program to become one of that country’s historic liberalizers. Germany was also headed by the conservative Helmut Kohl in the 1980s, to be followed by the third-way Gerhard Schröder in 1998. Indeed the trio of like-minded politicians Bill Clinton, Tony Blair and Gerhard Schröder seemed quite a phenomenon at the time.

The United States already has a treaty of military alliance with Europe in the form of NATO. At the WTO the U.S. and the E.U. form a more or less unified negotiating block against the G-20 group of developing nations and Mercosur.

There is much idol discussion of a league of democracies so supplement or maybe supplant the United Nations. A U.S.-E.U. union would get us most of the way there. Throw in the British Commonwealth of Nations — Canada, Australia, New Zealand, India and so on — and what more is left?

If we’re on the way to one world government, but convergence is what is required, this seems like the next most logical step.

Finally, there is a persistent, nagging, Spenglerian fret over the decline of the West. Call it civilizational status anxiety. If the United States is serious about the idea of the West and defending it, why not make it official. Instead of the West being an idea from books or a lose political affiliation, make it a real political entity.

On the downside, it would really get us well on the way to Oceania, Eurasia and Eastasia and would reify the clash of civilizations.