Tag Archives: Economics

Looking Forward – Learning from the Past

Seven decades ago, the United States emerged from World War II relatively unscathed compared to other great nations of the world. It found itself in the position to help rebuild, and in doing so it prospered. This prosperity was evident in its purchasing power. A look through the cupboards and attics of our aging population will unearth the evidence of that purchasing power. Crystal and silver tea services, porcelain and fine china, flat ware of the highest quality, and linens too lovely to ever have been used except for the most special occasions. These imported items, often the gifts associated with marriage and new life, were made in recovery zones, and helped reestablish the war-torn markets and industries vital to the lives of those fortunate to have survived a horrific war. These items also confirmed to the U.S. populace that they had fully become a great power, much like the empires that had dominated the century before.

The purchasing power and abundance of the post war era in the United States also provided a balm for hardship from which so many had suffered. The world had been either at war or suffering financial depression for over three decades when WWII ended; an entire generation felt the burden of despair lifted when the industrial and economic potential of the United States was reached post-war. The youth, those too young to have felt the full brunt of hardship, reached adulthood in the glow of economic world domination. This glow was only slightly dimmed by the threat of nuclear war, a threat that increased as they aged but did little to blunt their earning power. War machines equaled economic growth as long as the nation continued to view such development as being vital. Once that view shifted, however, the realities of over extension and taxation created an ever growing sense of waste and loss. The greatness of their youth seemed to have slipped away and in its place, only a sense of uncertainty remained. The Cold War, with all its ills, provided secure jobs and a sense of proactive security. When it ended, a new generation faced the aftermath of war. For them, the balm came in the form of a technology boom, of rapidly falling interest rates, and open borders; these changes provided the American Dream the youth had heard about, but had worried would be outside their reach.

As the twenty-first century dawned, rumblings of change and challenge emerged: first with the Y2K fears and then with the market crash following the September 11 terror. A nation which had for so many years found economic stability in military development and distant wars, once again turned to war as a means to unify and solidify a shaken populace. However, unlike during the Cold War, the United States had lost its standing as superpower. Politically, economically, and militarily – others had risen from the ashes and emerged powerful equals. No longer was the United States seen as the great protector; rather, many saw the United States as a threat to peace. Others questioned if the political system, which had weathered over two hundred years of challenge, would survive the challenges of the new century. Unlike in recent history (the last three hundred years or so) the new century had seen a return of conflict dominated by non-state actors which thereby created a longing for the seemingly stable nature of the Cold War, stable despite its harsh suppression of ethnic conflict, damaging political interference, and costly proxy wars.

This longing for the stability and prosperity of the Cold War provided fuel for the fear, anger, and desperate hope which motivated many as they voted yesterday. The new century has not secured the American Dream for its younger generation; rather, it seems to only have jeopardized it for the older generation. Conservative or liberal, the policies formed in national and state capitals seem, at best, to be bandages rather than sutures. Few anticipated a speedy recovery, but many are willing to risk experimental treatment in the hopes of a miracle cure. The nation should survive from this latest illness, and from the treatment it has chosen; however, it is unlikely that the youth, the youngest voters, will find the balm their parents and grandparents found from an economic boom. Industry, and even much of technology, has gone elsewhere. The borders of nations are closing rather than opening. Peace is threatened as much from the turmoil within as it is from without, and the economy is adversely affected by all the uncertainty. The generations who have suffered the ills and recoveries of the past may be too fatigued to calm the fears and fevers of today’s youth. There simply may be no balm.

History often times seems to be about groups of people working against or for an issue. After destructive wars, terrible depressions, or horrific epidemics, people tend to work together to bring about recovery, with special concern for the young who are always the true hope for a better future. At this time when the ills that face the world are less tangible but no less threatening, it is vital, as we look to history for the lessons taught by groups of people in the past, that we remember the work always began and ended with the individual; the individual who created the cure, who did the work, and who didn’t lose hope. Never did they wash their hands and walk away from the crisis or turn their backs on the young; rather they recognized that the young are, in reality, the key to the stability and prosperity so sought after.

Prosperity through Diplomacy

As a young nation, the United States found itself in a conundrum. The desire to avoid the entanglements of European politics clashed with the desire for economic prosperity. Some early leaders, including Thomas Jefferson, believed that the plentiful natural resources of the Americas would remain in high demand by Europeans and would ensure that a predominately agrarian society would continue to prosper for decades, even centuries to come. Others were more doubtful and recognized that trade would mandate political interaction. While idealists would cleave to the notion that the demand for U.S. raw materials would force the nations of Europe to treat the new nation with respect and dignity, others rightfully worried that it would take strength to bring about international respect.

The United States would spend much of its first one hundred and fifty years debating how to be taken seriously as a world power while at the same time remaining distant from the conflicts of Europe. However, isolation was never the viable option that many envisioned it to be. By the end of the Second World War, the United States fully understood that international respect came both from military strength and from economic influence. Political finesse was also vital for peaceful coexistence, but it was too often overlooked or dismissed in the eyes of the general public. Even though the United States had produced a few outstanding diplomats during its youth and adolescence, too often the role of diplomacy was overshadowed by the feeling that military and economic strength could get the job done without diplomatic pageantry. Like a few of the early founding fathers, many in the twentieth century believed that the peoples of the world would wish to purchase U.S. products and thereby highly value peaceful relations with the United States. On the other hand, there were many who derived lessons from the decades when a strong navy equaled security at home, and encouraged prosperity through protected shipping routes and foreign markets. In the years following the end of the Second World War, U.S. economic and military might certainly seemed to be the key to prosperity, and not just to the prosperity of the United States, but prosperity for Europe as well. Unfortunately, what many failed to foresee was a day in which the rebuilding of Europe would be completed. Furthermore, many failed to anticipate a day when Europe might wish to free itself from the protection and economic influence of the United States.

Prosperous international relations, whether they are economic, military, or political, are dependent on diplomacy. At different times, the idea of isolation has appealed to policy makers and the public alike. At other times, policy makers and the public support aggressive relations and even war with the other nations of the world. In either case, diplomacy is underrated by those who hold to the notion that prosperity is something that can be controlled by one nation at the expense of others. History shows that such beliefs are founded on a limited understanding of the vital role of diplomacy during periods of strife and in times of prosperity.

 

Further Reading:

Bemis, Samuel Flagg. John Quincy Adams and the Foundations of American Foreign Policy. New York: Alfred A. Knopf, 1956.

Herring, George C. From Colony to Superpower: U.S. Foreign Relations Since 1776. New York: Oxford University Press, 2008.

Lind, Michael. The American Way of Strategy: U.S. Foreign Policy and the American Way of Life. Oxford University Press, USA, 2006.

Not Naive

In January 1789, the newly elected President George Washington wrote to his dear friend, Marquis de Lafayette, the following words.

While you are quarreling among yourselves in Europe – while one King is running mad – and other acting as if they were already so, but cutting the throats of the subjects of their neighbours; I think you need not doubt, My Dear Marquis we shall continue in tranquility here – And that population will be progressive so long as there shall continue to be so many easy means for obtaining a subsistence, and so ample a field for the exertion of talents and industry.

Washington, like so many of his countrymen, saw the American abundance of land and resources as a way to ensure the avoidance of foreign chaos, specifically the chaos that derives from overcrowding and the ills such chaos inspires. He wrote, “I see a path, as clear and as direct as a ray of light…Nothing but harmony, honesty, industry, and frugality are necessary to make us a great and happy people.”[1]

Men like Washington felt strongly that certain key moral principles would flourish in a land as abundantly blessed as America. As a leader of men for most of his adult life, he would not have been blind to the tendencies of human nature, but clearly he believed that those men dedicated to “industry and frugality” would prevail over those who sought slothful pursuits.  The United States was predominantly agrarian during those early years. Commerce, especially the trade of raw materials for finished goods, may have dominated the sea side areas of the new nation, but industrialization had not yet lured workers from the fields and into cities. Subsistence farming was still both the predominant occupation and an occupation that did not tolerate slothful pursuits. Washington was able to envision generations of “tranquility” rather than the chaos that derived from congested cities and limited resources. However, he was not naive to the realities of human nature; he simply could not foresee how quickly the world would change once industrialization took hold.

[1] George Washington, George Washington: Writings, vol. 91, Library of America (New York: Library of America, 1997), 717 – 718.

Rumors and Rhetoric

In 1783 at the army camp located in Newburgh, New York rumors of revolt were quelled when General George Washington addressed his men. The rhetoric, which had grown from frustration with Congress over back pay, was effectively countered when Washington spoke, “…let me entreat you, Gentlemen, on your part, not to take any measures, which, viewed in the calm light of reason, will lessen the dignity, and sully the glory you have hitherto maintained…”[1] Scholars have argued over whether the crisis in Newburgh was one of rhetoric only, or if an actual conspiracy existed which threatened the stability and future of the United States.[2] Regardless, the Newburgh Affair highlights how political rhetoric can lead to crisis, and how calm leadership rather than dramatic action can be the solution.

Conspiracy theorists and politically motivated historians have inferred that orchestrated nationalist machinations were the cause of the rumors and implied threats that swirled around Newburgh in the fall and winter of 1782-83. Others argue that frustration at the lack of pay, and the worry of a post-conflict future, organically inspired the rhetoric Washington felt needed addressed on March 15, 1783. Pamphlets, newspapers, public meetings, and personal correspondence were the main vehicles for the spreading of news and the airing of grievances prior to the technological age. The years leading up to the outbreak of war proved that these were effective tools in rousing public opinion in order to force change. It stood to reason then that these same tools would be used when Congress ground to a standstill on the issue of military pay and veteran benefits.

Even in the days before technology transformed the ways in which the world communicated, rumors once started were difficult to suppress. Enflamed rhetoric was even harder to manage for often it was printed and preserved for posterity. Fortunately for the young republic, General Washington was a man who had learned that brash language and rash actions were counter-productive to stability and prosperity. While he understood the frustration[3] of his men, he also understood that a liberty so newly achieved could not withstand civil discord.[4] A nation built from the fire of revolution would have to learn how to handle and even embrace civil discord.; however, Washington was wise in objecting to discord created by “insidious design” and spread by rumor and extreme rhetoric.

 

Endnotes

[1] George Washington, George Washington: Writings, vol. 91, Library of America (New York: Library of America, 1997), 499.

[2] Edward C. Skeen, and Richard H. Kohn, “The Newburgh Conspiracy Reconsidered,” The William and Mary Quarterly 31, no. 2 (1974): 273–298.

[3] Mary Stockwell, “Newburgh Address,” George Washington’s Mount Vernon, http://www.mountvernon.org/research-collections/digital-encyclopedia/article/newburgh-address/.

[4] Washington, 500.

Military Superiority Leads to Decline

As the twentieth century ended and the specter of the Cold War appeared to be fading into history, political scientists pondered the question of how a new world order would take shape under the direction of a victorious superpower. As John Ikenberry stated, victors try “to find ways to set limits on their powers and make it acceptable to other states.”[1] The United States, having spent a century building its image as military power determined to protect the world from evil and in doing so spread democracy, found itself in a dilemma. While talking heads and braggarts proclaimed U.S. superpower greatness, diplomats faced the harsh reality that yesterday’s protector can quickly become today’s bully and tomorrow’s enemy. Additionally, the economic strain military spending places on a society can become politically detrimental once victory occurs. In the past it was said that to the victor goes the spoils, but in modern times with plundering being frowned upon, the victor tends to win a headache both at home and abroad without seeing any real benefit. Without change in policy, particularly policy pertaining to its military superiority and status, a victorious nation discovers that military superiority can lead to economic and political decline.

Of the many headaches the United States developed as a single superpower in the years following the end of the Cold War, probably the most contentious one was the headache of being asked to intervene in conflicts great and small. Seldom was there a clear right side and wrong side to support. In many cases the crises that prompted the debate over intervention occurred in regions that had been previously under the political, economic, and military supervision of the Soviet Union. Even when using the umbrella of the United Nations, U.S. intervention could stir conflicting emotions in the crisis region. The United States had been both the enemy and possessor of enviable commodities for fifty years. Envy and distrust were not feelings easily eradicated simply because war was over. In a world that seemed to be rupturing in the absence of Cold War superpower dominance, the United States struggled with its expanded role of policeman, banker, and social worker.

Military dominance, which had spurred the U.S. economy in the years following World War II, became a burden following the end of the Cold War. In the wake of international cooperation and the perception of peace, nations could shift away from military technology as a basis of economic growth. Nations which remained entrenched in military development became economically dependent on wars that seldom required Cold War technology. Furthermore, Cold War technology had been all about fighting a war from a distance, and the conflicts of the twenty-first century required boots on the ground. When President Truman and President Eisenhower put their support behind the development of nuclear technology and behind the technology to deliver nuclear weapons from a distance, part of their justification was that it would save U.S. casualty and hypothetically shorten, if not prevent war. Their reasoning was based predominantly on the notion that nations would fight nations, and that the days of tribal warfare were becoming part of the past. When the theories and perception of modern war shifted after the attacks on the United States in 2001, the world powers seemed taken by surprise. When the Second Gulf War did not produce the results predicted, when peace did not flourish, and when terrorism spread rather than diminished, the United States seemed not only surprised but confused. The U.S. war strategy and military development, so honed during the twentieth century, did not work in the twenty-first. A nation which had grown powerful through military superiority, found itself the targeted enemy rather than the celebrated hero. Furthermore, it found itself struggling to justify increasing national debt, made larger due to wars that seemed to have no end. Like many great powers which had come before, the United States faced decline despite continued military superiority. In fact, it could be argued, the United States faced decline because of its military superiority.

 

 

Endotes

[1] John G. Ikenberry, After Victory: Institutions, Strategic Restraint, and the Rebuilding of Order after Major Wars (Princeton: Princeton University Press, 2001), xi.

 

Further Reading

Hixson, Walter L. The Myth of American Diplomacy: National Identity and U.S. Foreign Policy. New Haven, CT: Yale University Press, 2008.

Kennedy, Paul. The Rise and Fall of the Great Powers. New York: Vintage Books, 1989.

Obligated to Intervene

In 1820, the Congress of Troppau was convened. The great powers of the day determined that they held the right to intervene in the revolutionary conflicts of neighboring states. Maintaining the status quo and preventing the spread of nationalism and revolution was viewed as vital in the quest to quell the type of conflict that had erupted in Europe during the French Revolution and the Napoleonic Era. While the beginning of the century had been fraught with what some called the first worldwide war, the remainder of the century saw only regional conflicts, most that were harshly quelled before they could spread outside their borders. However the policy of intervention did not quell nationalism. During the twentieth century nationalism would be at the heart of many conflicts, and the notion that great nations had the right to intervene to protect the status quo would be at the center of international policy for many nations including the United States.

In the case of the United States, intervention became a tool to either protect or disrupt the status quo in a region depending on which was most beneficial to interests of the United States. Intervention often placed the nation at odds with its own revolutionary history and patriotic rhetoric. Despite seeming hypocritical in nature, the United States was not forging new diplomatic patterns but rather following the patterns established by the great powers of the past. The U.S. Founding Fathers may have wanted to distance themselves from the politics and practices of Europe, but their decedents embraced the policies as the United States rose to international supremacy during the twentieth century.

During the rise to superpower status, the United States benefited economically and politically. The right to intervene allowed the United States to protect economic markets, and in some cases add new markets and resources to its growing stock pile. While the nation doggedly denied that it was an empire, by the end of the twentieth century the problems associated with empires began to plague the nation. Most prominently, it could be argued, the United States faced the growing international expectation that it would intervene when conflict threatened a region’s status quo. After a century of gaining prominence and wealth through international intervention, often with the sole goal of protecting resources and markets, the United States found that the right to intervene had transformed into an obligation to intervene.

The Good Old Days

Memory is a tricky thing that tends to filter events by removing the negative aspects from our recollection. When current events are not to our liking, we look to the past and remark on how much better the past was in comparison to the present. While it is also true the positive aspects of an event or period of time can be filtered leaving us with only a bleak recollection of the time, it is more often the case with collective memory that we glorify rather than demonize the past. History, the record and study of that record, helps remove the myth that memory creates.

For many who came to maturity during the 1980s, the decade has come to represent a better time, or in other words, The Good Old Days. The decade is viewed as one where U.S. power and culture was strong and celebrated. The music and clothing were distinctive and memorable. Soft Power was used in conjunction with traditional methods of political power, and the influence of the United States was felt worldwide. The notion that the Cold War was won by forceful rhetoric and the exportation of McDonalds and MTV has resonated with those who now view the 1980s as the glorious decade of U.S. supremacy. While few will argue against the notion that the United States reached a superpower zenith as the twentieth century neared its end, historians will be quick to note that there was more to the decade than glory and power. There was fear – fear of nuclear destruction, fear of pandemic spread of disease, and fear of an ever increasing drug use in mainstream society. However in a decade where politicians could harness the media, or at least greatly influence the script, and where social media was yet unborn, it was easy for the general public to hear the strong rhetoric and believe the message. Imbedded in the rhetoric was the notion that war was the answer to all the ills that plagued the nation. Whether an ideological war with an evil enemy, a hot war often conducted in secrecy, or a war on drugs that often impinged on civil rights but had a moral justification, war was the solution. War was also the solution to a lagging economy. Investment into the machines of war burdened the nation with debt, but it also put people to work and made a select group wealthy in the process. War and power went hand in hand, and those who viewed power as the ultimate evidence of success sought to encourage and perpetuate the notion that only through the constant demonstration of strength could the fears of a nation be quelled. Decades later their efforts have caused many to look back in longing for a better time – a time of strength.

Memory is a tricky thing. Few in the public participated directly in the world changing events of their youth, and fewer still have found a need to crack open the history books to learn more about period of time in which they lived. Historians seek to delve beyond collective memory and search for the data that reveals a greater image of the people and events of a period of time. For those who seek to understand the history rather than the myth of the 1980s, The Good Old Days were days of rhetoric and war, a nation recovering from an economic recession, and a time when money equaled political power. So, in a way, those days are not so dissimilar to the present.

 

 

Further Reading

Chollet, Derek, and James Goldgeier. America Between the Wars: From 11/9 to 9/11; The Misunderstood Years Between the Fall of the Berlin Wall and the Start of the War on Terror. New York: PublicAffairs, 2008.

Gaddis, John Lewis. We Now Know: Rethinking Cold War History. Cambridge, MA: Oxford University Press, 1997.

Leffler, Melvyn P., and Jeffrey W. Legro, eds. In Uncertain Times: American Foreign Policy after the Berlin Wall and 9/11. Ithaca, NY: Cornell University Press, 2011.

Saull, Richard. The Cold War and After: Capitalism, Revolution and Superpower Politics. London: Pluto Press, 2007.

 

Idealism versus Realpolitik

Machiavelli advised, “… never in peaceful times stand idle.”[1]

The newly formed United States was idealistic in its desire to separate itself from the conflicts of Europe. Many believed that foreign nations would wish to maintain peaceful relations with the United States in order to obtain the vast raw materials provided by the new nation. The idealism of the founding fathers was challenged, both by the French and the British well before the nation had reached its fiftieth birthday. In order to secure the economic benefits of international trade, the nation had to be prepared to handle international conflict and intrigue. As the Adam’s administration quickly discovered in the late 1790s, this would mean investing in the military, particularly in the navy. The idealistic notion of ‘free trade’ among nations had turned out to be anything but free. While the United States had found a diplomatic solution with Britain, albeit a temporary one, their solution raised the ire of the French and led to what became known as the Quasi War. The United States faced the harsh reality that in order to become economically strong, it would also need to become militarily strong. In a world dominated by realpolitik, idealistic notions such as ‘freedom of the seas’ were viewed as naïve more than noble.

Endnotes

[1] Niccolò Machiavelli, The Prince, trans. W. K. Marriott (Superior Formatting Publishing, 2010) Kindle.

 

 

Further Reading

Grey, Edward. “Freedom of the Seas.” Foreign Affairs. Last modified April 1930. https://www.foreignaffairs.com/articles/oceans/1930-04-01/freedom-seas.

Fehlings, Gregory E. “America’s First Limited War.” Naval War College Review 53, no. 3 (Summer 2000): 101.

 

 

Change Came Quickly

In 1918, Fritz Haber was awarded the Nobel Prize in Chemistry. World War I delayed the presentation of the award because Haber was a German scientist, one who had gained the name ‘the father of chemical warfare’. Haber was a patriotic German committed to the German cause, however, less than fifteen years after he was celebrated as a great scientist, he fled his homeland fearing for his life. Fritz Haber was a Jew. He was also an intellectual who too closely associated with a war that had been lost rather than won. Like many other German citizens, Haber discovered that under the right set of circumstances hate could replace friendship with great rapidity. Those circumstances included an economic recession, a turbulent political climate, an abundance persuasive rhetoric, and a highly effective propaganda campaign. In less than two decades, a population who once celebrated Haber’s achievements turned their backs on the evidence that their government had implemented a policy of incarceration and extermination. Race, religious affiliation, sexual orientation, and intellectual interests were more than enough justification for the public to look the other way, or worse join the Nazi agenda. Change came quickly while the public clung to the notion that they were justified in their actions.

When Buying Foreign Was in the U.S. National Interest

Historian Stephanie M. Amerian recently published an excellent article about the Marshall Plan and the U.S. government’s promotion of “buying European” in the years following the end of World War II.[1] It was of vital national interest for the citizens of the United States to spend money on European goods, to travel to European destinations, and to support the members of the European community of nations. If the U.S. didn’t spend its currency in Europe and on European manufactured goods, then a devastated Europe would not be able to purchase U.S. raw materials and finished goods.

Protectionism and isolationism had not been successful economic or political policies during Thomas Jefferson’s day when, as president, he supported an embargo as the means to pressure Great Britain. Nor had such policies been successful in combating the effects of recession, great or small, in the years between the Jefferson administration and WWII. The United States, while large and possessing a high level of self-sufficiency, was dependent on an international flow of trade as much as any other nation by the mid-twentieth century. Whether it was importing luxury items from distant lands or exporting raw materials to European manufacturing hubs, the United States had a history of benefiting from international trade and in defending the notion of free markets.

War had brutally destroyed infrastructure, manufacturing capability, and all but obliterated the purchasing power of the European nations. Consequently, U.S. manufactured goods and raw materials lost a huge portion of the international market due to the war. The United States, as a nation relatively undamaged due to the destruction of war, had the opportunity to lend a hand. Many politicians felt that in doing so, the United States could rebuild Europe following the U.S. model of capitalism and democracy. Economic support for Europe was seen as vital in preventing a third war from developing. Additionally, the United States was convinced that Soviet influence and expansion needed to be halted at Europe’s borders. Unfortunately, as the U.S. public became more aware of the Soviet threat, their support moved from lending a hand to supporting military buildup. Simply put, investment in military muscle could protect the United States and its friends but did not require knowledge of economic theory. Buying foreign might have made sense to the economist, but exporting the United States in all its various forms made sense to the common U.S. citizen.

 

Endnotes

[1] Stephanie M. Amerian, “‘Buying European’: The Marshall Plan and American Department Stores,” Diplomatic History 39, no. 1 (January 2015): 45, (accessed March 14, 2015), http://dh.oxfordjournals.org/content/39/1/45.

 

Further Reading

Belmonte, Laura A. Selling the American Way: U.S. Propaganda and the Cold War. Philadelphia: University of Pennsylvania Press, 2010.

Boyce, Robert. The Great Interwar Crisis and the Collapse of Globalization. Reprint edition. Basingstoke: Palgrave Macmillan, 2012.

Hoganson, Kristin L. Consumers’ Imperium: The Global Production of American Domesticity, 1865-1920. 1 edition. Chapel Hill: The University of North Carolina Press, 2007.

Mariano, Marco. “Isolationism, Internationalism and the Monroe Doctrine.” Journal of Transatlantic Studies (Routledge) 9, no. 1 (Spring 2011): 35–45.

“Embargo of 1807.” Thomas Jerfferson’s Monticello. http://www.monticello.org/site/research-and-collections/embargo-1807.