Superfrugal, Superpower?

In recent years, I have often said to European friends: So, you
didn’t like a world of too much American power? See how you like a world of too
little American power – because it is coming to a geopolitical theatre near
you. Yes, America has gone from being the supreme victor of World War II, with
guns and butter for all, to one of two superpowers during the cold war, to the
indispensable nation after winning the Cold War, to “The Frugal Superpower” of
today. Get used to it. That’s the new nickname. American pacifists need not
worry any more about “wars of choice.” America is not doing that again. The
United States can’t afford to invade Grenada today.

Ever since the onset of the Great
Recession of 2008, it has been clear that the nature of being a leader –
political or corporate – was changing in America. During most of the post-World
War II era, being a leader meant, on balance, giving things away to people.
Today, and for the next decade at least, being a leader in America will mean,
on balance, taking things away from people.

And there is simply no way that
America’s leaders, as they have to take more things away from their own voters,
are not going to look to save money on foreign policy and foreign wars. Foreign
and defence policy is a lagging indicator. A lot of other things get cut first.
But the cuts are coming – you can already hear the warnings from Secretary of
Defense Robert Gates. And a frugal U.S. superpower is sure to have ripple
effects around the globe.

“The Frugal Superpower: America’s
Global Leadership in a Cash-Strapped Era” is actually the title of a very
timely new book by my tutor and friend Michael Mandelbaum, the Johns Hopkins
University foreign policy expert. “In 2008,” Mandelbaum notes, “all forms of
government-supplied pensions and health care (including Medicaid) constituted
about 4 percent of total American output.” At present rates, and with the baby
boomers soon starting to draw on Social Security and Medicare, by 2050 “they
will account for a full 18 percent of everything the United States produces.”

This – on top of all the costs of
bailing ourselves out of this recession – “will fundamentally transform the
public life of the United States and therefore the country’s foreign policy.”
For the past seven decades, in both foreign affairs and domestic policy, the
defining American watchword was “more,” argues Mandelbaum. “The defining fact
of foreign policy in the second decade of the 21st century and beyond will be
When the world’s only superpower gets weighed down with this much debt – to
itself and other nations – everyone will feel it. How? Hard to predict. But all
I know is that the most unique and important feature of U.S. foreign policy
over the last century has been the degree to which America’s diplomats and
naval, air and ground forces provided global public goods – from open seas to
open trade and from containment to counterterrorism – that benefited many
others besides us. U.S. power has been the key force maintaining global
stability, and providing global governance, for the last 70 years. That role
will not disappear, but it will almost certainly shrink.

Great powers have retrenched
before: Britain for instance. But, as Mandelbaum notes, “When Britain could no
longer provide global governance, the United States stepped in to replace it.
No country now stands ready to replace the United States, so the loss to
international peace and prosperity has the potential to be greater as America
pulls back than when Britain did.”
After all, Europe is rich but wimpy. China is rich nationally but still dirt
poor on a per capita basis and, therefore, will be compelled to remain focused
inwardly and regionally. Russia, drunk on oil, can cause trouble but not
project power.

“Therefore, the world will be a
more disorderly and dangerous place,” Mandelbaum predicts.

How to mitigate this trend?
Mandelbaum argues for three things: First, Americas need to get themselves back
on a sustainable path to economic growth and reindustrialization, with whatever
sacrifices, hard work and political consensus that requires. Second, they need
to set priorities. They have enjoyed a century in which they could have, in
foreign policy terms, both what is vital and what is desirable. For instance, I
presume that with infinite men and money there can be success in Afghanistan.
But is it vital? I am sure it is desirable, but vital? Finally, Americans need
to shore up their balance sheet and weaken that of their enemies, and the best
way to do that in one move is with a much higher gasoline tax.

America is about to learn a very
hard lesson: You can borrow your way to prosperity over the short run but not
to geopolitical power over the long run. That requires a real and growing
economic engine. And, for them, the short run is now over. There was a time
when thinking seriously about American foreign policy did not require thinking
seriously about economic policy. That time is also over.

An America in hock will have no
hawks – or at least none that anyone will take seriously.