If you were born any time after 1960, the first (and perhaps only) country that will come to mind when you think of “neutrality” is Switzerland—that tiny alpine nation that has been following a policy of “perpetual neutrality” for 200 years.

However, if you were born in the 1800s, the most obvious country that you would think of would be the United States of America.

George Washington declared American neutrality in his 1796 “Farewell Address.” “After deliberate examination […] I was well satisfied that our country, under all the circumstances of the case, had a right to take—and was bound in duty and interest to take—a neutral position,” the first U.S. president declared. He gave many reasons for his thinking, including that “a passionate attachment of one nation for another produces a variety of evils,” including binding the U.S. to interests and the wars of other states.

After that statement, neutrality remained a pillar of U.S. foreign policy for 150 years. But Washington’s definition of neutrality was hardly the only one in play.

Neutrality is a fuzzy concept that can mean a lot of different things to a lot of different people. In foreign policy, the term is used in at least three different ways: as a concept of international law, as a policy of states, and as an analytical category to describe the approaches of states toward certain conflicts. Within that framework, the meaning of neutrality frequently changes.

The U.S. history of neutrality exemplifies this. Indeed, the U.S. neutrality of Washington and of the early 19th century would look like a strange animal to us today, and very different from Switzerland’s version.

For instance, American neutrality did not preclude the U.S. from using warfare to achieve its goals elsewhere. It fought the Indigenous nations of North America in a series of bloody wars,  swallowed up the equally neutral Kingdom of Hawaii in 1899, and went to war with Mexico and Spain when that was in its interest.

From the beginning, U.S. neutrality policy was only directed toward Europe, and specifically toward European conflicts that the country wasn’t interested in. That included the first few years of the First and Second World Wars (1914-17 and 1939-41). The Americans only got rid of this neutrality-toward-useless-overseas-conflicts approach after the Japanese bombed them out of it in Pearl Harbor. So far, they haven’t returned to it.

At its time, this form of “occasional neutrality” was the norm. In fact, the 19th century was the global heyday of U.S.-style neutrality, because the balance of power that emerged after the early-1800s Napoleonic Wars provided relative stability to the Great Powers. That stability inspired more neutrality. Of course, this period was not peaceful—several small wars took place and the ramped-up colonization of Africa, Asia, and Australia killed millions of people. But the fact that no single Great Power could dominate the eight to 10 others led to each one of them having an interest in remaining neutral sometimes.

Hence, there was a strong desire for all powers to hammer out the concrete rules of engagement between belligerents and neutrals. This led to the codification of the “law of neutrality” in the 1899 and 1907 Hague Conventions. The conventions clearly stated the “do’s and don’ts” for neutrals and belligerents during war.

Today, the only states that still refer to these legalistic neutrality concepts are small, perpetually neutral states like Switzerland, Austria, or Ireland. They feel bound by neutrality law, which is why they refuse to export weapons to war zones (to Ukraine, for instance) or allow overflights to NATO countries that are engaged in military operations. Great Powers today, like the United States, China, or Russia, do not make use of this part of international law anymore.

The reason for that is well known. Since the Second World War, the U.S. has built what it now calls a “rules-based international system” that centers around alliance-building—from Israel to the NATO countries, Japan, the Philippines, and Australia. U.S. allies either help in interventions abroad (in Iraq, Syria, Libya, etc.) or allow the U.S. military to station personnel and assets on their soil and harbors, thereby enabling Washington to project unparalleled hard power with roughly 750 bases around the globe.

The allies, in return, receive guarantees of protection from Uncle Sam. No NATO country has ever been attacked by another state actor, nor has Japan seen any fighting since sticking to a grand bargain with the U.S. in the 1950s. In the Philippines and Taiwan, too, some believe that only their alliance with the U.S. deters China.

Instead, in the contemporary world neutrality is most often used to describe policies of states that, in one way or another, do not fall in line with other states toward a third-party conflict. Those states, however, don’t usually call themselves neutral, nor do they follow neutrality law; what they are neutral toward is often not even covered by the treaties of old.

Take, for example, the Non-Aligned Movement (NAM) that formed during the Cold War. In response to the bipolar conflict between the two superpowers, recently de-colonized countries in Asia and Africa developed a loose coalition united by despising the idea of having to choose sides in an ideological conflict among former European colonizers. Countries like India, Indonesia, Ghana, or Egypt had no desire to pick a side between the Soviets and the West when they could remain on good terms with both sides and use trade with both to develop their economies and move away from dependence on former oppressors.

The NAM was and still is only a loose association of countries. Some, like the Philippines and Saudi Arabia, are even fixtures of the U.S. alliance system with military base agreements, showing that nonalignment and alliances can and do go together—international politics rarely is a binary affair. But since the outbreak of war between Russia and Ukraine, the NAM as a neutral block has again become relevant, with members refusing to choose sides.

Similarly, the BRICS+ states (Brazil, Russia, India, China, South Africa and the 2024 additions of Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates) will likely also become a neutral block, because its members include friends and foes alike. China and India have open territorial disputes along their border, and Iran and Saudi Arabia are strongly opposed strategic rivals in West Asia. This all but ensures that the BRICS+ block won’t become a military alliance, but will remain institutionally tied to neutrality toward each other’s conflicts.

There is a propensity in the U.S. and Europe—especially in neoconservative circles—to view global security in a friend-foe schema, a Manichean black and white with the forces of good (democracies) on one side and evil (autocracies) on the other. But many nonaligned and neutral countries have a much more nuanced picture of international security.

There are moments when Western democracies and their allies make tremendous mistakes, like illegally invading Iraq and killing one million people, bombing Serbia and Libya, occupying parts of Syria in a stark breach of international law, or supporting the slaughter of tens of thousands of Palestinian civilians—not to mention the older mistakes of the Vietnam War or the overthrow of democratic regimes in Iran and Latin America. Such errors provide strong incentives to countries outside the immediate U.S. security regime to avoid hard alliances and opt for uncommitted, situational policies.

In short, there are many reasons why states decide to “go it alone” and not bind their fate to others. The international system’s dynamic and fluid amalgamation of interests and dependencies creates ever-changing compositions and conceptions of war, peace, and—indeed—neutrality.

The post When the U.S.A. Was Neutral appeared first on Zócalo Public Square.

The event, titled “What Would a New Cold War Mean for the World?” and part of a series on global challenges called “The World We Want,” offered a fast-paced look at dozens of aspects of the Chinese-American relationship, from their economic interdependence to their 5G networks, and from their military competition to the mutual hostility between countries that shows up in public opinion surveys.

The conversation also turned repeatedly to the possibility of military conflict of Taiwan, with two panelists suggesting China could move to reunite the island by force with the mainland in the next few years.

The event’s moderator, New York Times associate managing editor Philip P. Pan, who spent much of his career reporting in China, started the conversation by asking to what extent the features of the Cold War between the United States and the Soviet Union can be seen in conflict between the U.S. and China today.

Margaret MacMillan, the distinguished University of Toronto historian and author of War: How Conflict Shaped Us, said that the two conflicts both involved two large powers with global ambitions and reach. “The United States and the Soviet Union claimed to be speaking for a better part of the world,” she said. “We have elements of that in the current tension between China and the United States.”

But, she suggested, it is the differences that matter more. The U.S.-China relationship, MacMillan said, is not as ideological as the old Cold War, and the U.S. has a much closer relationship with China, especially as a leading trading partner, than it did with the economically isolated USSR. Another crucial difference: The U.S. and the Soviet Union were such dominant superpowers that they were able to pressure other countries in the world to take their side, while today’s world is more multipolar, with other major powers having enough autonomy and weight not to be drawn in.

Still, MacMillan cautioned, the fact that the U.S. and China are inherently closer to each other might actually produce more friction.

She recalled that before World War I, Germany and Britain were each other’s largest trading partners; four members of the British cabinet had been educated in Germany, and the British royal family’s lineage was quite German. Despite these elite connections, MacMillan said, public opinion turned hostile in each country against the other as war broke out.

“That is what concerns me today,” said MacMillan, nodding to the increasingly negative public sentiment in China and the U.S. toward the other at present. “The historical record isn’t that reassuring.”

Another panelist, Oriana Mastro, an FSI Center Fellow at Stanford University, warned that popular comparisons of the U.S.-China conflict to the Cold War could produce flawed strategies for dealing with today’s problems.

China, she said, is a profoundly different rival than the Soviet Union in that it is not trying to turn democracies into autocracies, and is not perceived as a military or security threat to other countries. Because China is in Asia, the most dynamic and populous part of the world, “China doesn’t have to be a power elsewhere to be a superpower; dominating Asia is enough, and that’s where it is focusing its energies and its military.”

But that focus on Asia might make this conflict more dangerous in some ways than the Cold War. “The military confrontation between China and the United States is going to happen in Asia,” said Mastro. “This competition is much more likely to turn hot than it ever was with the Soviet Union.”

After Pan asked whether countries would be pressed to choose sides between two superpowers, as in the Cold War, Mastro, who is also a Defense and Foreign Policy Fellow at the American Enterprise Institute, said that China is not going to form its own bloc because it does not want a coalition forming against it. She referred to writing from Chinese strategists noting that the U.S. already has locked up the best partners—the world’s democracies, and richest nations.

Instead, she said, China is turning its lack of coalition into an advantage in its contest with the U.S. While the American government makes heavy demands of partner countries (such as economic or democratic reform, or providing military bases), China typically asks other nations merely to choose neutrality in the U.S.-China conflict, and to avoid talking about sensitive topics like Hong Kong or Taiwan.

“When countries choose neutrality, when they choose not to take a side at all, in effect, they are choosing China,” Mastro said. “It’s very hard for the United States to build coalitions against China … because we ask so much more.”

Meanwhile, while China is more focused on economic issues than military ones, Mastro warned that the country is using its extensive economic and technological expertise to enhance the lethality of its military. And China’s ability to gather a lot of data through its technological expansion could allow it to target elites in other countries.

For instance, she said, “They could use targeted cyberattacks to disrupt someone’s life who says something bad about Taiwan.”

Striking a much more optimistic tone than the other two panelists, the third panelist, UCLA Anderson distinguished professor Christopher S. Tang, argued that China’s new trade agreement with the European Union—in which China expressed new willingness to cooperate on technology transfer and meeting international labor standards—might provide an opening for less conflict, and more peaceful cooperation between the U.S. and China.

Tang said the U.S. and other countries should say to China, “We embrace you, we recognize your success, but if you want to win respect in the world, you need to become a leader” in protecting the environment, workers, and intellectual property.

More broadly, Tang argued that the rest of the world needs the U.S. and China to set a strong example of peaceful cooperation. He cited four major global problems that threaten both countries that would be easier to solve if the U.S. and China worked together: COVID recovery and global public health, combating climate change, reducing poverty, and caring for the rapidly aging population

“I think there is a window,” said Tang, pointing to President Xi Jinping’s stated commitment, at last month’s World Economic Forum, to solve global problems. “Why not leverage this moment?”

He described the U.S-China rivalry as primarily economic, and compared it to a 50-year-long chess match. He described President Trump’s trade war as a middle game of this chess contest, which had failed to advance American economic interests, and suggested that President Biden could work to “keep it to a draw … so there will be no winners and no losers.”

The Zócalo/University of Toronto virtual event drew a global audience, and it concluded with questions from the YouTube chat room about whether the Cold War strategy of containment applies to China (not really, panelists said), how Canada should deal with China (carefully and in partnership with other countries, MacMillan answered), about technology’s role in the rivalry, and about how the U.S. should respond to any Chinese military aggression, especially against Taiwan.

On that last subject, both MacMillan and Mastro were emphatic that the threat of conflict over Taiwan is more serious and urgent than generally understood, in part because Chinese leadership is losing patience. Mastro pointed to opinion polls showing that a majority of Chinese citizens support armed reunification with Taiwan—and expect it within three to five years.

That could mean we’re heading toward a very hot U.S.-China war.

The post The U.S.-China Rivalry Isn’t a New Cold War; It’s Bigger Than That appeared first on Zócalo Public Square.

Similarly, the World Cup fuses sport and national identity on a quadrennial basis. In both cases, media coverage transforms feats of physical prowess into stories of national triumph or defeat, and in the process recasts athletes, many of whom the larger public has never cared about previously, into national heroes and sometimes even villains.

Lost in the drama and pageantry is the question of why sports should be framed in terms of political geography at all. How is it that we have learned to see the world as a collection of countries?

A nation is a group of culturally similar people who believe they belong together and deserve to govern themselves. This way of thinking about the world, or imagining the world, begins by kindergarten, when children are taught to read basic maps and globes depicting the world as organized into a jumble of colorful, interlocking shapes demarcated by clear borders, invariably accentuated as black lines. We are taught that these borders delineate distinct peoples, societies, and environments, and dutifully memorize their locations, names, and physical features—and of course their flags—by coloring maps with crayons. Teachers emphasize knowing our own place within this political jigsaw puzzle, and, over time, we come to identify ourselves as belonging to a nation.

The staging of the Olympics and the World Cup and the teaching of geography in the intimate confines of an elementary school classroom seem worlds apart, yet both are simultaneously cause and effect to how we think of the world as a world of borders, a globe comprised of clearly partitioned, sovereign political territories. The process of nationalization, however, is much more complicated than simply putting crayons in the hands of five-year-olds. It extends beyond education to encompass most aspects of daily life, from the media and popular culture to professional and political organizations.

Today’s most pressing debates are rooted in and around notions of borders. Some focus on overturning accepted borders, such as the attempts of ISIS to establish a new caliphate across Syria and Iraq, the Chinese government’s ongoing efforts to secure control over the South China Sea, or the disputes between Russia and Ukraine over eastern Ukraine and Crimea.

Other debates have little to do with the location of the borders, but rather involve how borders should function and be marked or policed. President Trump’s call to build a new southern border wall funded by Mexico is a prominent example. Another is the struggle among members of the European Union to maintain open borders while simultaneously strengthening border controls along their southern and eastern peripheries—demonstrating the poignancy and power of borders in contemporary politics. For better or worse, our disparate views on belonging, migration, trade, political populism, sectarian strife, natural resource extraction, environmental sustainability, climate change, and even, of course, global sports, are filtered through the spatial paradigm of a bordered world.

This is a relatively recent phenomenon, though. It is also one that is incomplete, inconsistent, and might ultimately prove to be transitory.

Scholars trace the origins of our modern notions of borders to Western Europe. As that region transitioned from the Middle Ages to the Early Modern Period, Europe was structured around a political system of mutual obligations and privileges between lords, vassals, and peasants, later known as feudalism. Lacking the ability to govern their kingdoms directly, kings granted nobles the right to administer certain areas, or fiefs, on the king’s behalf in exchange for allegiance and military service. The king retained nominal authority over the kingdom through this system of vassalage, but nobles soon gained considerable autonomy over their fiefs, including the rights of taxation and hereditary title.

Nobles repeated the basic arrangement with lesser nobles and further partitioned their estates into ever smaller fiefs, eventually creating a confused patchwork of overlapping loyalties and decentralized governance scattered across an assortment of principalities, duchies, counties, etc. In some cases, nobles held fiefs in different kingdoms and therefore nominally owed allegiance to multiple kings. The situation was further complicated by what we would today call non-governmental organizations, such as the Catholic Church, military or monastic orders, occupational guilds, and city-states. Within this feudal system, clear territorial borders were unnecessary, as long as lords and vassals honored their mutual obligations.

This decentralized system began to break down by around the 15th century for complex reasons, including the rise of capitalism and wage labor, advances in military technologies, and the growth of an urban-based merchant class. The incessant religious wars that marked the Reformation brought developments to a head, culminating in the Peace of Augsburg in 1555 and the Peace of Westphalia in 1648.

These treaties helped usher in the notion of territorially sovereign states, which became the foundation for the contemporary international system. Basically, these monarchs mutually recognized each other as possessing the right to exercise absolute authority over their territories free from outside interference. In theory at least, each monarch possessed absolute sovereignty over his or her territory and all the people within it.

During this transition, monarchs also began to acquire the tools to more directly exercise sovereignty, most notably standing militaries, professional bureaucracies, and systematic taxation. The grounding of state sovereignty in territory also created a need to precisely determine the territorial extent of the state. The blurry borders of the Middle Ages were incompatible with these new notions of territorial sovereignty. Aided by advances in surveying, navigation, and cartography, governments carefully mapped and marked their respective territories. Borders as we conceive of them today came into being.

The final shift occurred when royal sovereignty was replaced by popular sovereignty. The rise of nationalism as a mass social movement in the decades following the French Revolution led to the corollary idea that the political borders of the state should conform to the cultural borders of the nation. The idea of a nation-state—in which the French state should include all French people, while the German state should include all Germans—was born.

The idea of grouping culturally similar peoples within their own states makes sense in theory, but has proven impossible to put into practice without widespread forced migration and horrendous violence, as demonstrated by two World Wars, among other tragedies.

Those western notions of the nation-state, territory, and borders—and their underlying assumptions—would eventually be exported around the world by force through colonialism to form the foundation of the modern nation-state system. Still, this nation-state system contains a fundamental contradiction: The idea of territorial sovereignty exercised by states can’t always be reconciled with the right of national self-determination and sovereignty.

This leads to confusion and conflation between the terms state and nation. For example, the Charter of the United Nations simultaneously affirms its commitment to the territorial integrity of states and the right of national self-determination. The actual name of the United Nations is misleading since only states, not nations, can be members. The United Nations is actually an organization of disunited states.

Some saw the end of the Cold War, the advent of the internet, and the growth of multinational corporations, organizations, and treaties, among other developments, as heralding an embryonic borderless world. Globalization became a buzzword. Yet because of our continued proclivity to think of most issues, from politics and economics to identity and culture, in state-centric terms, the framework of territorially sovereign nation-states marked by clearly defined, linear borders continues to exert a powerful hold over our understanding of the world and our place in it.

During this year’s winter Olympics, television commentators debated whether America’s historically low medal count in PyeongChang should be a cause of national concern. Brazil’s 7-1 World Cup loss to Germany in 2014 provoked discussion of a national identity crisis. The fact that these issues were raised in earnest demonstrates the continued power of borders to frame how we think about the world, including in such apparently trivial matters as sports.

We may live in a world of unprecedented connectivity marked by dramatically increasing flows of people, goods, technologies, and information, as well as issues like climate change, sectarian strife, demographic transitions, and economic dislocation that seem to beg for global responses, yet the world will remain a very bordered one for the foreseeable future.

The post How National Boundaries Distort Our Understanding of the World appeared first on Zócalo Public Square.

By that measure, the United States has been in relative decline since at least the 1960s. Yes, the economic strength of America has grown, and continues to grow, in absolute terms. But its rivals and competitors—China, East Asia, Europe, Latin America—have grown at a stronger and more sustained rate.

This is the nature of relative decline: power in the world is a finite quantity (even if power is expanding), so the greater the power of others, the more the power of the United States decreases. Between 1940 and 2014, in terms of gross national product, the United States grew 12.5 times bigger. But the rest of the world has grown 26 times in gross product—more than double than that of the Americans.

Much of that gap in growth is from recent decades. In 1987, when Yale historian Paul Kennedy published his famous book The Rise and Fall of the Great Powers (which inaugurated the debate on American decline), the gap between U.S. and global growth was barely perceptible: Since 1940, U.S. GDP had grown six times in size, while the rest of the world’s GDP had grown seven and a half times. This slight difference did not prevent Kennedy from identifying the phenomenon with precision.

One can reasonably ask whether the growth differential of GDP can, by itself, give an account of the decline of a country, especially when it is only relative. Many other elements should be taken into account when comparing powers: variable economic factors, such as access to raw materials and their price; transport, research and development, productivity, finance, trade, investment; and then geography, military strength, demography, health conditions, education, the solidity of institutions, political stability. Finally, there are factors that are unmeasurable, but no less important: historical heritage, traditions, social psychology, ideologies, and religions.

Paul Kennedy wrote that, in examining the last five centuries of history, some “generally valid” conclusions can be drawn. The first is that there is a relationship between relative decline in economic power and shifts in the international political system.

The U.S. situation can be seen more clearly in this historical context. The country, said Kennedy, made “a vast array of strategic commitments” when the nation’s political, economic, and military capacity, as well as its ability to influence world affairs, was more assured than it was in 1987. The United States thus faced what Kennedy called “imperial overstretch,” with its obligations and interests adding up to more than its capacity. That’s a characteristic of relative decline.

Kennedy is sometimes dismissed because his predictions of American decline were based on the rise of Japan, and Japan’s rise was later impeded by its decades of stagnation. Still, this doesn’t undermine Kennedy’s historical analysis of decline. In more recent years, other voices have echoed him. In 2008, in its four-year report on international trends, the U.S. National Intelligence Council wrote that “owing to the relative decline of its economic, and to the lesser extent, the military power, the United States will no longer have the same flexibility in choosing as many policy options” as it once had.

In writing about relative decline, Kennedy took up again a concept formulated by political scientist Robert Gilpin: that over time, different levels of growth in power within a system eventually cause a fundamental redistribution of power within the system itself. State Department official Richard Haass later used that very same conclusion in order to argue that the United States needed to be ahead of the game so that any “new” balance of power in the world can be balanced from the United States’ perspective.

That argument has in turn been used to justify—and to explain—the theory of “preventive war,” applied later in Iraq. In one 2011 study, Paul MacDonald and Joseph Parent argued that there are only two possibilities to deal with “a decline in relative power”: retrenchment or preventive war. The authors defined retrenchment as “redistributing away from peripheral commitments and towards core commitments” for the purpose of “economizing expenditures, reducing risks, and shifting burdens.”

But in the history of the United States, there is also a third possibility for responding to decline, embodied today by Donald Trump: isolationism.

Isolationism is not retrenchment, since retrenchment distinguishes between “peripheral commitments” and “core commitments.” Retrenchment is not therefore a matter of abandoning the commitments, but of making choices, however painful, on the basis of a well-defined political strategy. In Henry Kissinger’s words, “to find a sustainable ground between abdication and overextension.” The difference between retrenchment and isolationism is the difference between ordered retreat and a catastrophic rout.

Isolationism in the United States today is fueled by fear of worsening conditions. A fundamental misunderstanding of the world has led many people to believe that the United States is being plotted against externally and betrayed internally. But such fears and such misunderstandings are not the product of Donald Trump and his ideologues. Indeed, these fears, particularly around globalization, were cooked up in the intellectual laboratories of the far left in the late 1990s and brought to the public square by the Seattle protestors against free trade in 1999. A matrix of isolationism and petit-bourgeois anti-capitalism has always been found in Jeffersonian democracy, passing through Andrew Jackson, the 19th-century populist movement, and the Catholic critics of the far right and far left during the time of Franklin D. Roosevelt.

Trump’s isolationism predates Trump. It’s a product of the end of the Cold War, when many Americans believed the time had come to finally “return to normalcy” and retreat to their island to enjoy the dividends of victory. In the 1990s, the United States refused to sign the Kyoto Protocol on climate change, to participate in the treaty to ban anti-personnel mines and nuclear experiments, or to vote for the creation of the International Criminal Court. Before September 11, George W. Bush was openly isolationist and unilateralist, proclaiming his intention to withdraw the United States from some of the institutions it had created and which had guaranteed the continuity of its world order.

September 11 and its aftermath suspended this isolationist tendency only temporarily. The anxieties from the 2008 economic crisis, multiplied by the harmful effects of reckless interventions in Afghanistan and Iraq, have restored it. During the presidency of Barack Obama, the United States adopted 317 protectionist measures on average each year—representing 20 percent of all trade restrictions adopted in the world, almost six times more than the second most protectionist country, India. And during the 2016 election campaign, both candidates called for the withdrawal of the United States from new strategic free trade treaties in the Pacific and the Atlantic.

The idea of “making America great again” is absurd. History does not walk backwards. When Americans talk of their greatness, they generally think of a bygone era in which their country dominated the economic, political, and military balances of the world, solitary and undisputed. It also was a time when unparalleled material superiority fueled their alleged moral superiority. Many of the most dramatic mistakes made by the United States during the Cold War derived from exactly this sense of moral superiority, and the corresponding conviction that Americans could shape reality without taking into account the annoying tangible and intangible constraints that exist in the real world. The absence of historical depth that characterizes the American ideology, combined with the rootlessness and the heterogeneity of the population, allows Americans to believe that the recipes that were successfully applied in the past—like deficit spending and protectionism—are reproducible under any circumstances.

Neo-Keynesians, for example, argue that they can overturn current trends by restoring the New Deal recipe of deficit spending, as though this were 1929. But public debt has changed with the times. Before the Great Depression began in 1929, the American public debt amounted to 16 percent of GDP. In 1941, it had reached 45 percent; in 2008, during the recession, the public debt was 68 percent of GDP; at the end of Barack Obama’s tenure, it was at 106.7 percent.

Today, the United States seeks to make itself great again on credit: In 2017, of the $20.245 billion of debt, almost one third ($6.349 billion) was in the hands of foreign governments—including Beijing ($1.189 billion) and Tokyo ($1.094 billion). In other words, in 2017 China and Japan funded more than 10 percent of U.S. public spending.

And yes, while the United States has been protectionist for most of its short history, and had great success under protectionism, that does not mean that today protectionism is a policy that could make the country great again. In a world of more shared power, where growth is based on the exchange of raw materials, financial products, ideas, and people, almost every type of production is linked by a thousand threads to the world market, and breaking one means breaking them all.

What gets left out of these protectionist discussions is that now, even the making of a hamburger—which involves cultivation, storage, transport, refining, production, packaging, and distribution—ties together 75 centers of activity from 15 different countries. According to a Boston Consulting Group report from 2017, an attack on NAFTA would be primarily an attack on the United States, given the country’s economic integration with its neighbors. Gordon Hanson of the University of California stated that if NAFTA had not existed, the entire American automotive industry would have already disappeared, swept away by competition from countries with lower wages, social protection, and public deficits.

In the future, Americans will no longer be able to afford to live as they have lived in the past. Such a reality has caused disquiet in all countries that once dominated world markets. But the anxiety has been much more intense in the United States, whose brief history has been marked by the promise, almost always maintained, of a constant improvement of the living conditions of most of its citizens.

Henry Kissinger wrote that the art of demagoguery consists of the “ability to distill emotion and frustration into a single moment.” But demagoguery cannot solve its problems; it only will aggravate them. In July 1971, when President Nixon took note that the United States was no longer in a position of complete pre-eminence, he was merely stating the obvious: that international relations are always multipolar. The question is the relative strength of the poles of power, and today, the relative strength of those poles is shifting at rapid pace. The distance between the United States and the rest of the world continues to shorten. According to the IMF World Economic Outlook of October 2017, the pace of growth of the so-called emerging countries (4.3 percent in 2016, 4.6 percent in 2017, and 4.9 percent in 2018) is more than double that of the United States (1.8, 2.1, and 2.3 percent). China’s growth is about three times higher (6.7, 6.8, and 6.5 percent).

There is no general law establishing how, when—and if—a country in relative decline enters a phase of absolute decline. And theoretically, at least, since decline is relative, it could reverse. Fareed Zakaria has argued that the world is becoming more “post-American” not because of the United States’ failures, but because of “the rise of everyone else.” If China or India or Germany were to enter a deep crisis, the United States could quickly be in a state of relative rise. But that presumes that the United States would not itself be infected by a deep crisis in the other powers. And such a prospect is very unlikely.

It is much more plausible that America will continue its relative decline, and will thus be obliged to surrender some of its global commitments and interests, creating imbalances in different places. Of course, things would be far worse if the United States were to withdraw from all commitments and interests in one fell swoop.

Politics, like nature, abhors a vacuum. If America were to abandon the field, it would create a kind of black hole, into which all the world would be drawn. America’s insular illusions would soon be overwhelmed by the tsunami of disruption. Such an uproar would turn today’s relative decline into absolute decline; it would mean, in the words of Bismarck, a “suicide from fear of death.”

The post America’s Decline Is Relative but Real—and Potentially Dangerous appeared first on Zócalo Public Square.

They were aboard the first American commercial jet to land there since the United States and USSR had imposed a Cold War “Ice Curtain” across the Bering Sea some 40 years earlier. Orr, a 26-year-old Siberian Yupik Alaska Native, grew up on the tip of Alaska’s St. Lawrence Island, the mountains of Russia’s Chukotka Peninsula visible on the western horizon. Her family’s shortwave radio sometimes picked up chatter in Russian. “That was the language of spies,” recalled Orr, who imagined Soviet frogmen splashing up on her village’s gravel beach.

The Alaska Airlines’ “Friendship Flight” helped melt the Ice Curtain by reuniting Alaska and Russia Native people separated for four decades. As soon as she made her way into Provideniya’s chaotic airport terminal that day, the first person Orr met was a member of her own St. Lawrence Qiwaghmii clan.

That flight and other headline-grabbing initiatives by citizen-diplomats to help end the Cold War launched decades of perilous but prolific progress. These citizen-led initiatives not only overcame a stalemate; they offered a durable model of grassroots international cooperation that could be useful around the world—and even in these familiar Northern climes, where the warming oceans have renewed geopolitical conflict over control of the Arctic.

The history of people-to-people connections here is an old one. After the Bering Land Bridge disappeared under the icy Bering Sea an estimated 18,000 years ago, indigenous peoples from Asia and North America plied the 55 miles between the Alaska and Russia in walrus-skin boats. These Inupiaq and Yupik people spoke common languages and shared similar subsistence cultures, with coastal residents surviving primarily on fish and marine mammals while interior Natives followed vast herds of reindeer, commonly known in Alaska as caribou.

The strait was the site of international cooperation during World War II, as the United States supplied nearly 8,000 Lend-Lease warplanes to assist the Soviet war effort. But soon after the war, Cold War suspicions froze those gestures of good will. The Soviets forcefully exiled Natives living on their own Big Diomede Island, replacing them with a military surveillance post aimed at Alaska.

In 1948, American FBI director J. Edgar Hoover, with the concurrence of Soviet leader Joseph Stalin, decided national security interests outweighed those of the region’s Natives. The United States and USSR suspended a 10-year-old agreement permitting visa-free travel by Natives, replacing it with an Ice Curtain which sealed the border and isolated indigenous families on either side.

Darlene Pungowiyi Orr (left) of Alaska meets distant relatives from the Russian Far East village of Sireniki. Photo Courtesy of Darlene Orr.

For the next 40 years, Alaskans and Soviets eyed each other through rifle scopes and the cockpits of fighter jets. At the height of the Cuban Missile Crisis in 1962, an Alaska-based U-2 spy plane drifted into Soviet airspace and was nearly shot down by Soviet MiG’s. In 1983, the Soviet military blew up a Korean civilian airliner in this same North Pacific neighborhood, killing all 269 on board.

By the 1980s, the last Alaska Natives to interact with long-lost relatives in the Soviet Far East wanted one final opportunity for reunification before passing from the scene. Their quest coincided with Mikhail Gorbachev’s rise to power. Unlike his predecessors, Gorbachev encouraged interactions with the West, burnishing his image as an enlightened reformist.

But Alaska Natives faced intransigence from their own national government. President Ronald Reagan resisted people-to-people overtures as incompatible with his “peace through strength” foreign policy.

So average Alaskans joined the campaign to reunify Bering Strait Natives. Business and civic promoters also jumped at the prospect of contacts with the mysterious Soviet Union after 40 years of isolation.

A Nome realtor engaged in “balloon diplomacy,” attempting to launch weather balloons across the strait carrying goodie bags and messages of friendship. A Juneau musician led 67 Alaska Natives and other performers singing and dancing their way across the USSR to promote peace.

In 1987, a California endurance athlete swam the 2.5 miles between Alaska’s Little Diomede Island and Russian Big Diomede in 38-degree seas in nothing but a swimsuit, goggles, and cap to highlight Cold War tensions. A medical doctor born to glitterati Hollywood parents returned to his Alaska Native roots to dedicate his career to reuniting Bering Sea Natives by addressing their common health challenges.

These efforts finally won the blessing of both national governments and launched decades of chaotic but often productive interactions in business, culture, science, and education, with thousands of Alaskans and Russians crossing the International Date Line on regular flights by Alaska Airlines and other air carriers. Nearly 60,000 Russians learned western business practices in training centers set up by Alaskans across the Russian Far East. Enticed by Alaska’s guarantee of in-state tuition, more Russian students attended the University of Alaska Anchorage than any other American university.

Alaskans helped form dozens of Russian Rotary Clubs that improved care to elderly pensioners hit hard by the Soviet Union’s 1991 collapse. Alaska and Russia communities rushed to establish sister cities to strengthen civic and commercial ties. And scores of Alaskans and Russians married, settling in each other’s countries and advancing cultural understanding.

Endurance swimmer Lynne Cox approaches a snowy beach on Soviet Big Diomede Island after becoming the first person to swim across the Bering Strait from Alaska’s Little Diomede Island in 1987. Photo by Claire Richardson.

With the dawn of the 21st century, relations cooled across the strait as well as between Moscow and Washington. Russia’s rip-the-bandage-off transition to a market economy under Boris Yeltsin was too chaotic for many U.S. companies. Vladimir Putin’s subsequent rise to power was initially welcomed for stabilizing the economy, but as his regime restricted the operations of international companies and non-profits and infringed on human rights, many westerners ceased their involvement with the country.

Today in the Bering Strait air service is limited and visits are burdened by bureaucracy and high costs, so contacts are rare. Relations between countries at the highest levels also have deteriorated as tit-for-tat sanctions, expulsion of diplomats, and crackdowns on “foreign agents” harken back to the Cold War.

The year 2017 was the 150th anniversary of America’s purchase of Alaska from Russia. At many events marking the occasion, Alaskans said they remained inspired by the vision of William Seward, President Lincoln’s Secretary of State, who consummated the Alaska purchase. Seward, a bold internationalist, believed Alaska could advance a U.S.-Russian relationship and strengthen America’s standing in the world.

Fulfilling Seward’s vision of U.S.-Russia cooperation could start with the natural affinity between citizens of the Far North regardless of national borders. Alaskans and nearby Russians are challenged by common problems—climate, geography, transportation, indifference from our national capitals—for which common solutions can work.

That’s especially the case among the indigenous peoples who struggle on both sides of the strait to preserve traditional languages and culture, combat substance abuse, and scratch out a subsistence way of life endangered by climate change. A 1989 U.S.-Soviet “visa-free” agreement for travel by Alaska and Russia Natives remains in place, but contacts suffer from costly and irregular transportation.

Managing a rapidly changing Arctic is the area of greatest potential cooperation between our countries. Nearly half the world’s Arctic falls within Russia, and the United States is an Arctic nation only because of Alaska. As Russia beefs up its fleet of some 40 ice-breaking vessels and opens scores of mothballed Soviet-era Arctic military bases, the United States and Russia should expand joint efforts for search and rescue, environmentally sound resource development, and scientific research.

Three decades ago, Alaskan and Russian citizen-diplomats melted the formidable Cold War Ice Curtain separating them in the face of significant resistance. Many were branded kooks, communists or worse. Juneau musician Dixie Belcher was summoned to the Alaska legislature to explain her suspected ties to the KGB, while Alaska Gov. Steve Cowper was criticized for cozying up to “reds.”

Darlene Orr was so inspired by that day-long visit to Provideniya that she mastered the Russian language and returned to the Russian Far East 13 times, dedicating her career to researching Native languages and native plants. On one trip, she ignored warnings about visiting restricted areas, dressed herself as an average Russian, and spent a long day on the coast harvesting seaweed and mushrooms.

“It was worth any risk to me to visit the shoreline where my ancestors had walked,” she said.

Inspired with courage and persistence like Darlene Orr, Alaska and Russia citizen-diplomats overcame enormous obstacles to transform history.

The post When Alaskan and Russian Native People Thawed the Cold War’s ‘Ice Curtain’ appeared first on Zócalo Public Square.

On an October evening when many Angelenos were pondering the opening game of the World Series rather than end-of-the-world scenarios, a Zócalo/UCLA panel discussion explored the question, “Is War With North Korea Inevitable?” By the end of an intense hour-long discussion at the National Center for the Preservation of Democracy in downtown Los Angeles, the consensus was that a catastrophic confrontation isn’t unavoidable. But to lower the odds of it happening, America’s policymakers and its public need a more nuanced and humanistic perspective on the reclusive rogue Asian nation, the panelists said.

As President Donald Trump and North Korean ruler Kim Jong Un have waged a battle of insults this year, Western attention has focused on the dueling egos and chest-thumping rhetoric of the two leaders. But the panelists stressed instead the importance of understanding Korea’s complex history, the motivations and fears driving its leadership, and the yearnings and hardships of its 25 million people.

Suk-Young Kim—a South Korea native who is a professor and cultural researcher at UCLA’s School of Theater, Film, and Television, and an expert on North Korean propaganda—said that North Koreans are a very proud people who crave respect from the outside world. Their country’s well-oiled propaganda machine encourages North Koreans to see themselves as the true protectors of Korea’s historic and cultural essence—and to view their South Korean neighbors as the lapdogs of an imperialistic United States, she said.

Despite the suffering inflicted on North Koreans by their own regime, and further imposed on them by Western economic sanctions, “Pride is what keeps them going,” Kim said. And if it’s the case that the North Korean state dehumanizes Americans—who often are depicted as sadistic, war-mongering barbarians in official propaganda—the American media likewise tends to stereotype North Koreans as a monolithic, brainwashed population in thrall to a demagogic madman, she suggested.

Hannah Song, President and CEO of Liberty in North Korea, an international NGO that helps North Korean refugees with escape and resettlement, said the United States and the West need to develop a “holistic understanding” of North Korea, cognizant of the important economic, social, and informational changes that have swept the country in recent decades, such as the epic 1990s famine.

Prior to that government-abetted disaster, the North Korean state was at the center of everything, Song said. Since the famine, during which some starving North Koreans were reduced to eating tree bark, North Korea’s relatively miniscule but growing economic markets have taken on a much more important role. The famine also exposed the profound inequalities between the lives of ordinary North Koreans and the ruling military and political elite. Refugees fleeing famine conditions bolstered the population of roughly 30,000 North Koreans now living in South Korea, where, as outsiders, they often face harsh discrimination and are stereotyped as backward by the South Koreans.

Since the famine, ordinary North Korean citizens’ knowledge of the outside world has increased, said Song, adding: “A lot of people don’t realize that North Korea has really changed a lot in the last 20 years on the ground level.” Song said that the vast majority of North Korean refugees who work with her NGO have little or no interest in Kim Jong Un’s machinations. They’re far more concerned about sending money back to their family members in the north, and trying to adjust to the competitive rigors of South Korea’s capitalist system.

Citing an old Korean proverb about survival, moderator Jean H. Lee, a journalist and former Pyongyang Bureau Chief for the Associated Press, asked the panelists how Korea’s historically precarious position in a tough part of the world has shaped its identity.

John B. Duncan, a UCLA scholar of Korean history, said one reason Koreans are so proud is because they’ve lived for 2,000 years under the shadow of an economic, military, and cultural giant—China, which at times has looked down on Korea while trumpeting the presumed superiority of Chinese culture. For their part, Koreans—north and south—have responded by asserting their own nationalistic pride, Duncan said. (Later during the panel, Duncan noted that North Korea was outpacing South Korea in per capita income until the latter part of the 1970s.)

But even if North Korea can’t be judged solely by the outlandish acts of its young leader, the panelists agreed that the potential for a resumption of war exists on the Korean peninsula, particularly as North Korea has accelerated its testing of intercontinental ballistic missiles, while boasting about its development of atomic weapons.

Paul Carroll, the senior advisor at N Square, a nuclear disarmament and nonproliferation collaborative, said that the United States must learn to live with North Korea “as it is, not as how we wish it to be.”

“We need to assume that North Korea could make a nuclear weapon with a ballistic missile that can reach North America,” he said. “Their pace also shows that they are doubling down.”

Lee, the moderator, asked how President Trump factors into this equation—she didn’t specifically mention his derisive nickname for Kim Jong Un (“Little Rocket Man”) or his declaration last month at the United Nations that if the United States “is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.”
Carroll shot back in response: “He’s not helping.”

Duncan, who was stationed in Korea in the 1960s while serving with the U.S. Army, said that period also was marked by severe tensions, as a flurry of North Korean cross-border attacks killed South Korean and U.S. troops. That decade’s tensions culminated in the January 1968 seizure by North Korean forces of the USS Pueblo, a U.S. Navy spy ship.

“I was in the U.S. Army, and we thought we were going to war,” said Duncan, who credited the avoidance of war to the restraint shown by President Lyndon B. Johnson.

“I hope the current occupant of the White House shows the same good sense,” Duncan said.

During a question-and-answer session with the audience, one attendee asked how much influence China could wield in holding back North Korea from war. Not a lot, the panelists said, despite the two countries’ historical symbiosis and North Korea’s role as a buffer state between China and its Japanese rival, as well as the Western powers.

A final audience question asked the panelists to review the question that had framed the discussion: Is war inevitable?

“Let me say this: Kim Jong Un will not fire first,” Duncan replied.

Carroll said that “inevitable is a pretty high bar” to set, but human behavior is harder to calculate, and we could blunder into war by accident or misunderstanding.

“Humans are incredibly fallible,” he said. “The odds need to be lower.”

The post Before Going to War in North Korea, Try Understanding the Place First appeared first on Zócalo Public Square.

In particular, the notable victory of Emmanuel Macron in France led many to conclude that the populist tide had turned. Exceeding all expectations, the young centrist not only claimed the French presidency, but also managed to secure a parliamentary majority in the legislative elections on June 18.

While his success is remarkable by any measure, there is little reason for anti-populists to celebrate, as it is possible that Macron’s triumph may end up fuelling more populism.

For starters, it’s important not to exaggerate popular enthusiasm for a Macron presidency. His support base during the presidential elections grew primarily out of opposition to Le Pen. According to an Ipsos poll, more than 40 percent of the people who voted for Macron in the second round did so in opposition to the far-right leader.

Second, Macron’s triumph during the parliamentary elections, which was widely described as a “landslide victory,” was tempered by low voter turnout. In the second round of the two-round legislative elections, fewer than 45 percent of registered voters showed up at the polls—a record low in the history of the Fifth Republic. While there are different ways of interpreting dwindling participation, the high rates of abstention (coupled with spoiled ballots and unregistered voters) suggest that popular support for Macron’s movement may be less strong than it seems.

Third, it is easy to forget that Marine Le Pen secured 10.6 million votes for her right-wing populist Front National (FN) party, thereby nearly doubling the number of votes her father, Jean-Marie Le Pen, won in 2002. This means that even though she was defeated in the decisive round of the elections, about one in three French voters backed Le Pen.

As Harvard’s Yascha Mounk has pointed out, populist candidates fared particularly well among the young; in the first round of the Présidentielle, half of the voters between the ages of 18 to 24 supported either Marine Le Pen or the far-leftist candidate Jean-Luc Mélenchon, while just one in five of the voters over age 70 did. These young voters are not going to go away anytime soon.

All of this is to say that Macron has not flushed away populism; his victory has merely served to keep it at bay. Populism is a very complex phenomenon, and the idea of a “populist wave” flooding Europe, is misleading at best. The political scientist Larry Bartels has written that the “wave” of populist sentiment is better understood “as a reservoir—and its political potential is still largely submerged.”

On the one hand, the fate of French populism depends on whether the Front National can re-mobilize lingering populist sentiment. To do so, the party will need to overcome internal turmoil and reinvent itself. On the other hand, it hinges on the success of Emmanuel Macron. Unless the French President manages to address the underlying causes that fueled populism, these tendencies are likely to resurface.

It’s also doubtful that Macron’s brand of centrism can present a lasting antidote to populism. Similar to Barack Obama in 2008, the newly-elected French President ran on a platform of optimism that promised hope and progress in the guise of political reform. In the United States, Obama’s hopeful vision was followed by popular disillusionment that helped pave the way for Donald Trump.

Macron’s strand of centrism is perhaps best described by what the American critical theorist Nancy Fraser has dubbed “progressive neoliberalism” in that it conflates “truncated forms of emancipation and lethal forms of financialization.” In other words, his agenda combines a socially progressive vision and economically neoliberal policies. Indeed, Macron has sought to appeal to voters from both sides of the political spectrum by proposing a combination of liberal and social reforms, and—perhaps more importantly—by insisting that he is both right and left (“et droite, et gauche”). This “middle of the road” strategy comes with the risk of pleasing neither and upsetting both camps.

It could even further stoke populism. In Western Europe, some of the strongest populist movements emerged in countries with centrist coalition governments. In the Netherlands for instance, the anti-Muslim populist Pim Fortuyn rose to fame in the early 2000s after eight years of “purple” coalition governments between social democrats and liberals. In general, when parties from different ideological traditions converge at the center to govern together, it frees up space at the political extremities. It also forces parties to agree on a lowest common denominator, which often disillusions voters who feel that they are not being offered a real choice.

Of course, the French political context is different in that it operates under a majoritarian voting system, which generally favors bigger parties, rather than a parliamentary one, which produces smaller parties and thus makes coalition governments more likely. But these systemic differences haven’t spared France from the consequences of centrism.

For evidence, look no further than Le Pen’s father, Jean-Marie, who was able to advance to the second round in the 2002 presidential elections after half a decade of cohabitation featuring a conservative president and a socialist prime minister. The mushy coalition policies that grew out of this time played their part in generating a political backlash. Macron’s centrism could have a similarly galvanizing effect in that he may end up stoking populism by alienating the hard left as well as the far right, who, after all, represent a sizeable portion of the electorate.

The hopes and expectations for Macron’s presidency are sky high. Macron’s success depends on whether he can implement his ambitious agenda. This will prove challenging—not in the least because he is backed by an inexperienced parliament composed of many political novices. And even if he pushes through legislation, it’s possible his reforms will simply end up reinforcing the status quo. Although he managed to present himself as an outsider, it’s worth remembering that he served as economy minister under his predecessor, François Hollande, for two years.

But if he finds a way to succeed, it wouldn’t be the first time that Macron has surprised. Indeed, if there is anything we can conclude from these past years, it is that electoral politics in Western democracies have become more volatile and less predictable.

The post Emmanuel Macron’s Centrist Victory May Only Add Fuel to the Populist Fire appeared first on Zócalo Public Square.

I understand that when things are going badly it is our human instinct to find the culprit among the “others,” which often means foreigners (excluding the countries from which our personal ancestors immigrated). Per President Trump, the Chinese and Mexicans are the wolves currently devouring our jobs. Let’s breathe deeply and think hard about this issue.

I think we have a good reason to be afraid. There really are aliens taking our jobs. These aliens carry out their assigned tasks with alarming accuracy, they work long hours without complaint for very low wages, they don’t join unions, and they don’t fall in love, which can be very disruptive at the workplace.

You know who might soon take your job, don’t you? It’s the robots. It’s the microprocessors. It’s WALL-E and R2-D2. That’s something to worry about. If your children and grandchildren can only carry out mundane repetitive tasks, they will be in a world of hurt, since they will be in direct competition for jobs with those efficient, reliable robots.

Those robots will do not just the physical tasks but also the intellectual tasks that require only artificial intelligence. Traditional lecture-and-exam-style education creates artificial intelligence; simply put, it merely programs the students to respond the way their instructors think is wise. With the surge of computerized artificial intelligence all around us, we are making traditional education obsolete. Be afraid, university lecturers.

Yes, trade is a factor in jobs evaporating—especially the surge in imports from China—but more as symptom than disease. It’s not barriers to our exports to China that are the problem. It’s our failing educational system—which is not producing enough people ready for a world economy ever more reliant on artificial intelligence—and our pathetically low national savings rate, which requires us to rely on the savings of countries with high savings rates, like China. These problems of education and savings are homegrown, and can’t be blamed on the Chinese and the Mexicans.

Before we scapegoat anyone or get scared about trade, we need to understand it. So let’s start by contrasting balanced trade, with imports and exports equal, and then unbalanced trade, with imports well in excess of exports (as is currently the case in the United States).

If the U.S. had balanced trade, the right question would be, “Are China and Mexico partners of the U.S. or competitors?” Competitors produce the same goods, but partners specialize and do not produce the same products. If we were partners, China would produce the T-shirts and jeans and consumer electronics, while we would produce Boeing aircraft but no T-shirts or jeans or consumer electronics. If we were partners, China would stock the shelves at Walmart with low priced goods, while we would produce none of the same goods in the U.S. That kind of partnership is a win for all Americans who would get to buy Chinese goods at low prices without any downward pressure on wages from Chinese competition. If we were partners, the U.S. should work to maintain that partnership by increasing its economic distinctiveness by elevating the educational attainment of our workforce. Think of it as a global educational race with the leaders enjoying a partnership relationship with the followers, but with the great mass of runners behind competing fiercely against each other. Look behind us. Can you see them all catching up?

On the other hand, if we were to find ourselves back in the pack, and Chinese products were still produced in the U.S., then China and the U.S. would be competitors, and wages of U.S. low-skilled workers would be set in Beijing, not Los Angeles. If we were competitors, not partners, we could put up barriers to imports which would reduce the competitive pressure on wages of our low-skilled manufacturing workers. Of course, that would shrink both imports and exports, thus forgoing some of the benefits of specialization according to comparative advantage.  

That might be wise public policy if the benefits to our middle class exceed the lost gains-from-trade. But we should insist on some evidence for that view, especially given the ongoing force of automation on our middle class. And even then, barriers to imports from China and Mexico would be treating the symptom, not the real cause of lower wages—our failing educational system.

Of course, the Trump administration is not thinking about that education system, or about balanced trade. It is obsessed with our trade deficit, and using it to fuel an anti-trade backlash. But Trump doesn’t understand where that deficit comes from.

The trade deficit is a consequence of our low savings rate, not impediments to our exports. When the investment opportunities in the United States exceed the flow of U.S. savings, we are forced to borrow from foreigners to fund some of our investments. That borrowing creates a demand for U.S. dollars, an elevated value of the dollar, suppressed exports, and increased imports.

The right public policy to reduce our external imbalance is to encourage savings, for example through a matching by Uncle Sam of your contributions to your retirement accounts, or by getting the federal deficit under control. It isn’t good policy to go to our Chinese lenders and insist on higher interest rates!

Workforce development and greater national savings—that’s what we need. With those problems solved, there is no reason to worry about wolves devouring our jobs.

The post The “Aliens” Taking Our Jobs Are Not the Illegal Kind appeared first on Zócalo Public Square.

These reactions are predictable because we have heard them all before. Back in the 1980s, the trade villain de jour was Japan. (China was just emerging into world markets.) Proposals to address trade deficits with Japan provoked the same reactions from professional economists and foreign policy experts that we hear today.

But there was one exception in the 1980s. On May 3, 1987, famed financier Warren Buffett published an essay in The Washington Post entitled “How to Solve Our Trade Mess Without Ruining Our Economy.” His solution was thoughtful and new.

He proposed a market-based system similar to the “cap-and-trade” arrangements currently in use to limit greenhouse gas and other pollutants. Very simply, Buffett suggested that for each dollar of exports from the U.S., the exporter would receive a government voucher entitling the bearer to import a dollar’s worth of goods or services.

The vouchers could be used directly by the exporter or sold to some third party (an importer). That is, there would be an open market for vouchers. But, since no one could import without the requisite vouchers, the value of imports would be limited to the value of exports. U.S. trade with the entire world would be balanced.

The idea seemed to find a middle ground in the arguments over trade deficits. It was neither protectionist (it included no tariffs or quotas) nor did it involve Japan-bashing (the analog of today’s China-bashing). But Buffett’s piece, after causing a brief flurry of interest among the D.C. chattering class, was quickly forgotten.

Why? Perhaps it was because Buffett was not an academic economist, so his view could be dismissed as an amateur’s musings. Perhaps it was because there wasn’t enough of a consensus that a trade deficit is a problem. Perhaps it was because even among those inclined to be more worried about deficits, Buffett’s proposal was seen as a solution to a problem that would soon go away without further action. At the time, the dollar’s value in international currency markets happened to be falling. It was easy to argue that a declining dollar would correct the trade imbalance by making American goods more affordable in world markets.

But the problem didn’t go away. Moreover, within a few years, China joined Japan in running large trade surpluses with the U.S. Now, when Trump’s complaints are discussed, we again hear that the problem with China is yesterday’s issue, and that the problem will soon disappear, as wages in China go up, along with the value of its currency. But it didn’t in the 1980s and it won’t now. Which is why we should revive Buffett’s idea.

The problem of America’s trade imbalance isn’t specific to one or two countries—our nation runs a massive “$500 billion net export deficit” with the rest of the world.

There are two ways such a significant trade imbalance hurts us. The first—but lesser—element is the displacement of American manufacturing jobs. That issue is clearly the one with the most political salience. Manufacturing would definitely benefit from a correction of the U.S. trade imbalance, but trade isn’t entirely to blame for the fact that only about one in ten U.S. jobs are in that sector nowadays (down from three out of ten after World War II); technology has played a major role in that downsizing as well.

The second, more significant if less politically salient problem with all those deficits is that it forces the country to sell off its assets and/or run up its debt—which is just what the U.S. has been doing for decades. In one way or another, this generation’s imbalanced consumption will be paid for by future generations. There is a fundamental unfairness in that intergenerational transfer which correcting the trade balance would alleviate.

The Buffett proposal addresses both these economic ailments. The Buffett system also doesn’t require negotiating “great” trade deals. And there is no need to bash any country in pursuit of such deals; the impersonal voucher market brings about the zero-trade balance, not some hardline negotiation. And if any one country tries to grab a bigger share of the U.S. market for imports through tactics such as currency manipulation, it can only do so by reducing the market shares of other countries. So the pressure is on those other countries, not the U.S., to enforce rules of fair trading. If you’re an American diplomat worried about the international political effects of China-bashing, the Buffett plan is ideal for you.

But what if you’re a professional economist worried about “protectionism”? Your first reaction to the Buffett plan is likely to be that, given the current trade imbalance, the vouchers amount to a subsidy to exports and a tax on imports. You want to holler protectionism! But instead take a deep breath and think it through.

The Buffett voucher plan is equivalent to resetting the dollar exchange rate to a level that would bring about balanced trade. It is equivalent to a sufficient devaluation of the dollar to accomplish that end. Note that under current arrangements, the dollar regularly goes up and down in currency markets although it has never been low enough to create a zero trade balance (exports = imports). Is every drop in the dollar’s value a move into protection? Is every dollar appreciation a move toward free trade? Such up-and-down labeling makes no sense. Indeed, one nice feature of the Buffett plan is that you could in principle lower or eliminate remaining U.S. tariffs and other trade barriers and still end up—due to the voucher system—with balanced trade.

In short, it’s time to dust off the Buffett plan of three decades ago before the U.S. embarks on a road to frictions with China and other trade partners. Sometimes, when it comes to people and ideas, there is wisdom in the old.

The post The Cap-and-Trade Solution to Our Trade Dispute With China appeared first on Zócalo Public Square.

I am here in Myanmar teaching an international business class. After the gloom and doom of the rancorous U.S. election, spending winter break in a beautiful place where everyone is looking towards a brighter future is refreshing. At UCLA Anderson, we offer these classes to our MBA students as a way of showing them contrasts to the U.S. business climate.

And what a contrast Myanmar is.

The distance between the two largest cities in Myanmar, Yangon and Mandalay, is about the same as that between Los Angeles and San Francisco. The road to Mandalay is relatively good. But Yangon, the major port for the country, is another story.

Singapore’s Straits Times accurately observes that Myanmar’s “main port has changed little since the end of British colonial rule nearly 70 years ago—emblematic of ramshackle infrastructure.” The key here is not that Yangon’s port facility uses old technology; it does, but the port operators are changing that rapidly. The operative word is “ramshackle.” The port does not function because the natural degradation of equipment and structures from usage over time has not been countered with maintenance and repair. That’s because repair costs money and government funds were directed to immediate rather than future needs.

And the Yangon port is more the rule than the exception. Aside from the aforementioned road to Mandalay, surface transport is quite poor. A drive from Yangon to Thilawa, site of the new deep water port under construction, reveals roads far worse than pothole-marked Sunset Boulevard in Los Angeles. By rail, it takes three days at best to deliver goods from Yangon to Myitkynia, the capital of the 1.7 million-population Kachin State in the north. That adds up to about 300 miles a day. By contrast, shipping by rail from the Port of Long Beach to Chicago, more than twice the distance, takes not much longer and is more reliable.

In addition to the problem with transportation, power generation is another challenge. Everywhere in Yangon are small generators used to back up an unreliable electrical system. As one investor I spoke with put it, “even a low-tech textile factory needs power.” While that seems like a truism, it’s also a reminder that expectations of growth must confront physical limitations that might take a long time to ease.

This is a country that has now awakened from a 50-year economic slumber. Myanmar’s economy was asleep on purpose. Back in 1962, after a turbulent 14 years of independence, the military stepped in. The dominant ethos under General Ne Win was isolation. He and his generals wanted to avoid Western “exploitation” and to create economic development through centralized direction and protectionism.

But, in 2011, the military voluntarily turned the government over to an elected civilian government. The election was controversial as the military-friendly USDP won, but it was a step forward. The giant step came in 2015 with the opposition NLD party led by Nobel Peace laureate Aung San Suu Kyi prevailing in elections. The peaceful transition to an opposition government is, of course, a key element of a true democracy and it has arrived in Myanmar.

The optimism in this country is palpable. The re-pats—Burmese who fled the country for Singapore, Thailand, the U.K., and the U.S. but have recently moved back home—say things like: “I never expected to return to my home country, but there are so many opportunities to build something good and to prosper while doing it.”

And for the world, this resource rich country is now arguably the best new thing since China opened up in the mid-90s. Myanmar is blessed with natural resources, fertile land, and a central location between the fast-growing economies of India and China. Everything seems possible here—but with a caveat you often hear: “possible is only for those who are patient.” This advice is understandable: Corruption and bureaucracy, hallmarks of the previous regime, fade slowly. But, that is not the only reason why patience is counseled in Myanmar.

The real issue in Myanmar is infrastructure. Understanding that issue here offers a strong lesson—and warning even—for the U.S.

Why does Myanmar matter to our country and its relatively good roads, air and seaports, and railways?

It matters because usage means depreciation, in the U.S. as in Myanmar. If fiscal austerity puts repair, maintenance, and upgrades on the back burner, the ability of infrastructure to support economic growth diminishes. And the U.S. has failed to keep up with repairs, maintenance and upgrades to its infrastructure.

For example, a city street has about a 30-year life before it needs to be replaced. If it is periodically capped with asphalt slurry, that life can be extended. But if it deteriorates beyond a certain point, capping it is no longer possible. About one-third of the city roads in Los Angeles are in this condition right now. It is still possible to navigate these roads without too much disruption, but for how long?

The bottom line is that, if it is difficult to get goods and services to market and people to jobs, rapid growth doesn’t occur. So the notion of sustained 3 percent growth—much less the 4 to 5 percent growth promised in the U.S. Presidential election—looks more challenging when you consider our infrastructure constraints.

President-elect Trump has promised a $1 trillion infrastructure plan, but it is in trouble even before Inauguration Day. The public-private partnership that was supposed to fund a significant portion of the plan is fatally flawed. Even with big tax breaks, the private sector won’t be interested in building infrastructure that doesn’t produce sufficient revenue streams. And the types of infrastructure we most need do not generate such streams. Bridges in Missouri, potholes in San Francisco and levees in Louisiana generate economic growth but not direct revenue for the developer.

Thus the Federal Government would have to fund the bulk of the $1 trillion spending. The appointment of a fiscal hawk, the South Carolina Congressman Mike Mulvaney, as Director of Management and Budget, coupled with Mr. Trump’s promise to end deficits, might be the final nail in the massive-infrastructure-plan coffin.

This brings me back to the road to Mandalay. The U.S. has been letting its infrastructure depreciate for some time. The less we do now, the more likely we’ll learn once again the lessons of Myanmar: that everything is possible, but a lot of patience and optimism are needed for the infrastructure to catch up to the possible.

The post A Warning From the Bumpy Road to Mandalay appeared first on Zócalo Public Square.