Saturday, March 21, 2009

Protectionisms Threat – Pt. 6

What is needed right now is stability in free-trade. Without, this crisis will force America to take on a lesser role in the world. The fact is, to maintain a worldwide presence militarily, America needs a strong economy in order to pay for this influence. With countries such as Japan and China buying a large portion of our government backed debt, and our country running decades long deficits – with a few notable exceptions – if other countries take on a protectionist view and say that they need to encourage spending at home at the expense of foreign direct investment our deficit spending will be immediately halted by those countries not buying our bonds and the United States will be forced back into an equilibrium.

Capitalism has currently run into a problem, but as earlier stated, this isn't the first – nor will it be the last time that an economic crisis will raise its head. The problem isn't that the system is imperfect. The problem is that governments, pop culture, and citizens are blindly calling for a return to economic nationalism to try to fix the maladjustments to the economy while not taking the time to consider the implications to not only their wallets, but to the peace and security of their homes and countries if protectionism wins out. Boris Fyodorov, the late Russian economist, has the understanding of what needs to be done to correct the problem. He said, "Without a moral basis, capitalism would just become the means by which the powerful would concentrate their wealth." The solution isn't to destroy capitalism and free-trade, but to make sure that the mistakes that were made prior to World War I and II are not repeated:

The answer is found at the domestic level: the economic and political Open Doors – in other words, America's liberal (Wilsonian) ideology – caused the United States to seek hegemony. The Open Door is a complex set of linkages among economic and political (ideological) openness abroad, America's prosperity, and the security of its core values domestically…international economic openness and the spread of American ideology abroad create peace and security for the United States, and the U.S. military presence in Europe, East Asia, and the Middle East creates the conditions that allow for international economic openness and the spread of American ideology. By the same token, the Open Door posits that closure abroad – either economic or ideological – would endanger the safety of America's core values at home by forcing the United States to adopt regimented economic policies and to become a garrison state. (Layne, The Peace of Illusions: American Grand Strategy from 1940 to the Present, 2006)


Drawing on the experience of two world wars, postwar U.S. officials believed there could be no stability on the Continent – the sine qua non for the United States to realize its economic Open Door goals – if the Europeans reverted to their bad old ways of nationalism and power politics. Washington therefore promoted integration and supranational institutions in Western Europe precisely to de-nationalize interstate relations among the Western Europeans. (Layne, The Peace of Illusions: American Grand Strategy from 1940 to the Present, 2006)

The fear is that with the United States entering a period a definite economic decline and policies being enacted by both European and American governments supporting protectionist measures, the next several years for the United States and its national security need to be reevaluated and reappraised with the possible contingency of closure of overseas markets, re-armament and nationalism in Europe and Asia, and the implications that our role in the free-trade Liberalism that has been the standard for the past 6 decades could be coming to an end.

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