The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era Read online

  Table of Contents

  ALSO BY MICHAEL MANDELBAUM

  Title Page

  Dedication

  Acknowledgements

  Introduction

  CHAPTER ONE - THE TYRANNY OF NUMBERS

  A NEW ERA

  ENTITLEMENTS

  FOREIGN POLICY LIMITS

  CHAPTER TWO - THE NOVELTY OF SCARCITY

  THE ARC OF AMERICAN FOREIGN POLICY

  THE LIMITS OF AMERICAN DECLINE

  THE WORLD’S GOVERNMENT

  CHAPTER THREE - ADAPTATION TO SCARCITY

  THE SEAT BELT EFFECT

  THE END OF INTERVENTION

  THE LIMITS OF COOPERATION

  CHAPTER FOUR - THE RETURN OF GREAT-POWER POLITICS?

  THE GLOBAL SECURITY ORDER

  CHINA

  RUSSIA

  CHAPTER FIVE - THE HEART OF GEOPOLITICS

  THE MIDDLE EAST

  OIL

  THE NEW CONTAINMENT

  CONCLUSION

  INDEX

  Copyright Page

  ALSO BY MICHAEL MANDELBAUM

  The Nuclear Question: The United States

  and Nuclear Weapons, 1946–1976 (1979)

  The Nuclear Revolution: International

  Politics Before and After Hiroshima (1981)

  The Nuclear Future (1983)

  Reagan and Gorbachev (coauthor, 1987)

  The Fate of Nations: The Search for

  National Security in the Nineteenth

  and Twentieth Centuries (1988)

  The Global Rivals (coauthor, 1988)

  The Dawn of Peace in Europe (1996)

  The Ideas That Conquered the World: Peace, Democracy,

  and Free Markets in the Twenty-first Century (2002)

  The Meaning of Sports: Why Americans Watch Baseball,

  Football, and Basketball and What They See

  When They Do (2004)

  The Case for Goliath: How America Acts as the World’s

  Government in the Twenty-first Century (2006)

  Democracy’s Good Name: The Rise and Risks of the World’s

  Most Popular Form of Government (2007)

  To my esteemed colleague,

  Fouad Ajami,

  and to his friend and my beloved wife,

  Anne Mandelbaum.

  ACKNOWLEDGMENTS

  The Frugal Superpower began as an address on the future of American foreign policy to the New York Alumni Club of the Johns Hopkins University School of Advanced International Studies (SAIS) on November 13, 2008. I am grateful to the SAIS Development Office and to the School’s New York alumni for making it possible and to Lee Kempler for playing host to the event. I developed some of the themes of this book in a talk to the staff of Baraboo Growth LLC in Milwaukee on March 31, 2009. I am indebted to the firm’s president, Richard Strong, for the invitation and for his hospitality.

  This is my fifth book with PublicAffairs. As with the previous four, I owe a great deal to its founder and editor-at-large, Peter Osnos, not least for having, as he did with the other four, thought of the title for this one. I am grateful to the president of PublicAffairs, Susan Weinberg, and especially to Clive Priddle, whose editorial suggestions substantially improved the manuscript. Melissa Raymond, Meredith Smith, and Antoinette Smith supervised the book’s production and Jaime Leifer expertly managed the publicity for it.

  Once again I am happy to express my thanks to my peerless agent, Morton L. Janklow, for his wise counsel. I benefitted from conversations on the subjects addressed in these pages with Thomas L. Friedman of The New York Times and James Klurfeld of the State University of New York at Stony Brook. My greatest debt, as always, is to my wife, Anne Mandelbaum, for her intellectual stimulation, her matchless editorial judgment, her enthusiastic encouragement, her unwavering support, and her love.

  INTRODUCTION

  On December 1, 2009, Barack Obama, the forty-fourth American president, delivered a speech at the U.S. Military Academy at West Point, New York. The purpose of the speech was to announce the dispatch of 30,000 additional troops to Afghanistan, where American armed forces had been fighting since 2001. In this sense, the address was an exercise in continuity: all of Obama’s predecessors over seven decades, beginning with the thirty-fifth president, Franklin D. Roosevelt, had had occasion to send American military personnel to distant lands.

  Yet Obama’s remarks, properly understood, marked a sharp and momentous break with the pattern Roosevelt established and all of his successors followed. For even as he ordered the troops to Afghanistan Obama sought to place limits on the duration of their stay and the mission they would be carrying out, and he made it clear that the reason for these limits was that America could not afford to do more. The most important theme of his remarks was the acknowledgment of economic constraints on American foreign policy, a theme very seldom heard from an American president since Roosevelt took the United States into World War II.

  Obama rejected “goals that are beyond what can be achieved at a reasonable cost.” He invoked “the connection between our national security and our economy.” He cited the need to “rebuild our strength here at home.” The only president he quoted was Dwight Eisenhower—of all the chief executives since Franklin Roosevelt the one most committed to limiting the costs of American foreign policy—and the words of Eisenhower’s that he cited, which referred to national security policy, were these: “Each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs.”

  As if to emphasize Obama’s message of economic constraints on foreign policy, the congressional opponents of adding to American troop strength in Afghanistan proposed a special war tax to pay for it. The war was being funded by borrowed money, and its opponents understood that if the American public had to pay for it directly and immediately, out of their own pockets, they might well refuse to do so.

  While the economic limits to which Obama referred will directly affect the foreign policy of the United States, their ultimate impact on the rest of the world is likely to be, if anything, even greater. As the president noted at West Point, “More than any other nation, the United States of America has underwritten global security for six decades.” Other countries have come to depend on a robust, ambitious, and extensive American foreign policy. The impending economic constraints will place in jeopardy the global tasks that the United States has performed since the 1940s; and what the United States has done has contributed greatly to global peace and prosperity.

  When Barack Obama was elected in 2008 he and his supporters expected that his presidency would transform the United States. In one way, at least—but not in a way that so many hoped—that will be the case. Mounting domestic economic obligations will narrow the scope of American foreign policy in the second decade of the twenty-first century and beyond. Because the United States will have to spend so much more than it has in the past on obligations at home—particularly caring for the ever increasing ranks of its older citizens—it will be able to spend less than in the past on foreign policy. Because it will be able to spend less, it will be able to do less. Just what the United States will and will not do will be the most important issue in international relations in the years ahead. It is the subject of The Frugal Superpower.

  The book’s first chapter describes the growing claims on the American budget. They stem not only from the cost of coping with the financial meltdown of 2008 and the subsequent recession but also, and above all, from the expenses of the country’s entitlement programs, Social
Security and Medicare, which will rise rapidly to historic highs with the retirement of the baby boom generation of Americans born between 1946 and 1964.

  Two aspects of the pressure to cut back on foreign policy expenditures that these rapidly mounting domestic costs will exert are particularly notable, and Chapter Two spells them out. First, while they may be normal for most countries most of the time, serious economic constraints on foreign policy did not affect the United States for almost seven decades before 2008. Second, such constraints will affect not only the United States but the entire world because the United States has played an historically unprecedented global role, functioning as the world’s de facto government. In an era of scarcity for American foreign policy, the world will get less governance.

  Scarcity may, to be sure, bring with it some benefits. It will make the foreign policy of the United States less prone to serious errors. As discussed in Chapter Three, the enormous post–Cold War American margin of superiority in usable power over all other countries bred a certain carelessness that led to two major errors: the ill-advised eastward expansion of the Western military alliance in Europe, the North Atlantic Treaty Organization (NATO), and the disastrously incompetent occupation of Iraq. Less constructively, economic constraints will cause the United States to abandon some of the international services it furnished in the first two post–Cold War decades. It will no longer provide as large a market for other countries’ exports. It will almost certainly launch no further military interventions that require costly, protracted, and frustrated exercises in state-building, like the operations in Afghanistan and Iraq.

  Abandoning these policies will still leave the United States with formidable international commitments, of which the most important will be ensuring security in Europe and East Asia, opposing the spread of nuclear weapons, and guaranteeing a secure geopolitical background for international commerce, including continuing global access to oil. Chapter Three also explains why it is that, while other countries benefit enormously from these policies, they will not give America much help in carrying them out.

  The most serious consequence of a reduced American international role would be a major war. The two countries capable of provoking one are Russia and China. With the exception of the United States, their foreign policies will do more to shape international relations in the second decade of the twenty-first century and beyond than any other country. The uncertain prospects for Chinese and Russian foreign policy are the subject of the book’s fourth chapter.

  Each of these countries derives more benefit from existing international political and especially economic arrangements than either is likely to achieve by attempting forcibly to alter them. Yet at the same time both have some capacity to disturb the international peace, and each has motives for doing so. Neither is entirely satisfied with the distribution of wealth, power, authority, or even territory globally and particularly in its home region. Whether, how, and to what extent Russia or China or both seek to take advantage of the new limits on American foreign policy is the most important question hanging over international relations in the second decade of the twenty-first century.

  Even if China and Russia practice the self-restraint each has generally displayed in the first two decades of the post–Cold War period, one region will continue to require the active, costly engagement of the United States. That region is the Middle East, the subject of Chapter Five. It is both politically unstable and, because it harbors most of the world’s easily accessible oil, economically vital. Past American efforts to transform the region to make it more peaceful and so decrease the cost of American operations there have failed.

  However, a different way to lower the costs of carrying out its responsibilities in the Middle East is available to the United States: a substantial reduction in the American consumption of oil through a major increase, via taxation, in the price Americans pay for gasoline. No single measure, in fact, would do as much to secure American interests worldwide in the face of the new economic limits on American foreign policy than a large reduction in American oil consumption. Mustering the political will to achieve this goal looms as the single most important foreign policy test the United States will face in the coming age of scarcity.

  However the nation performs on that test, American foreign policy will change in a fundamental way. For almost seven decades following the outbreak of World War II, in deciding what policies to pursue beyond their own borders Americans almost never asked themselves the first question that every other country had to address: how much will this cost?

  The United States was the billionaire among the world’s countries and, unlike the others, operated free of the need to distinguish carefully between necessities and luxuries. If building another missile or aircraft carrier or rescuing a particular country was deemed important, the United States could afford to do it. The international activities of ordinary countries are restrained by, among other things, the need to devote the bulk of their collective resources to domestic projects, such as roads, schools, pensions, and health care. For decades, the United States was exceptional in remaining largely free of such restraints, and the foreign policies that this freedom made possible did a great deal to shape the world of the twenty-first century.

  That era is now ending. In the future the United States will behave more like an ordinary country. The pages that follow explore the consequences, for both the United States itself and the rest of the world, of the end of this kind of American exceptionalism.

  CHAPTER ONE

  THE TYRANNY OF NUMBERS

  A NEW ERA

  September 15, 2008, is an important date in the economic history of the United States, and indeed the entire world. On that day the New York–based international investment bank Lehman Brothers collapsed, creating a panic in the nation’s financial system and an immense loss of wealth, and deepening an already serious global economic downturn. That day is also significant, however, for the history of American foreign policy.

  What happened on September 15, 2008, accelerated a series of developments that will change the resources at the disposal of policy-makers in Washington, limiting the financial means available to conduct American foreign policy. The events of that day, in combination with trends in the American economy that were already under way and will expand in the years ahead, will reduce what the United States does in the world.

  Because a credit crisis of the kind that the Lehman collapse produced, if severe and prolonged enough, can inflict catastrophic economic damage, the American government took radical steps to counteract it, expanding its role in the financial system to the point that it became, in effect, one of the country’s largest banks. The Federal Reserve Board offered loans to institutions that had never before been given them, and the government took control of the American International Group, a multinational insurance company, and two quasi-governmental purchasers of mortgages, known as Fannie Mae and Freddie Mac. The Congress appropriated $750 billion for the purpose of buying up bad housing loans, but the Treasury Department used the money instead to purchase shares in the nation’s largest commercial banks, in an effort to keep them solvent and unclog the flow of credit they provide. Despite these extraordinary efforts, with banks fearful of lending and consumers fearful of buying, the American economy, and economies all around the world, fell into a deep recession, the worst since the greatest and most destructive economic downturn of modern history, the Great Depression of the 1930s.

  In addition to the impact on the American and global economies, all this will eventually affect the foreign policy of the United States. For one thing, it shook Americans’ confidence in their government’s capacity for economic management, and confidence in government is crucial for foreign policy, which is, after all, conducted almost exclusively by the government. For another, in times of economic crisis Americans, like people everywhere, tend to turn inward and devote more attention and resources to their own concerns than to problems beyond their borders. Still, the countr
y experienced recessions after the Depression, including during the Cold War, which did not materially affect America’s major international commitments.

  What makes September 15, 2008, important for the history of American foreign policy is not simply the financial crisis that the Lehman collapse crystallized, or the recession that it dramatically worsened, but rather the impact of these developments in combination with the principal economic challenges that the United States will have to confront in the twenty-first century, in particular the benefits promised to older Americans, the ranks of which will swell in the years ahead. Together they will vastly expand the economic obligations of the American federal government, which will in turn narrow the scope of foreign policy by diminishing the resources available for it.

  In the immediate aftermath of the economic crisis of 2008, as well as in the years thereafter, one economic challenge destined to weigh heavily on American foreign policy is the nation’s debt, a challenge severely aggravated by the deep recession set off by the September 15 collapse. During recessions the revenues flowing to the government in the form of taxes decrease; people lose their jobs and therefore their incomes and so don’t pay taxes. At the same time, federal expenditures increase as programs that recessions trigger, such as unemployment insurance, grow larger.

  The standard remedy for fighting recessions is deficit spending—expenditures funded not by tax revenues but by federal borrowing—and the American government applied that remedy liberally. In early 2009 the Congress approved a $780 billion package of programs designed to stimulate economic activity in the United States. All of the money to be spent was borrowed rather than raised through taxing the American people. The deficit for fiscal year 2009 reached $1.4 trillion, fully 10 percent of an economy with a total annual value of about $14 trillion, and much higher than the 3 percent widely considered the maximum “safe” annual deficit. Moreover, the country faced the prospect of comparably large gaps between expenditures and revenues in the years ahead. The fiscal year 2010 deficit was projected to be $1.6 trillion. By the estimate of the Congressional Budget Office, annual deficits might well average more than $1 trillion every year for a full decade after 2009.