Posted on 05/23/2002 7:30:32 AM PDT by LarryLied
Why do they hate us? In the next few days, this question, which has always agonised a small minority of America’s bleeding- heart liberals, may cast an occasional shadow over President Bush’s famously sunny and unreflective disposition. When he arrives in Europe today, Mr Bush will face a very different reception from the warm and emotional hero’s welcome that would have greeted him in the immediate aftermath of September 11.
The President’s hosts in Berlin and Moscow will doubtless encourage him to dismiss the anti-American demonstrators he sees from his motorcades as crackpot extremists. And in a sense they will be right.
But whereas such displays of outright hostility to America will certainly be unrepresentative of public opinion, Mr Bush and his advisers would be foolish to ignore the misgivings about America that are spreading from diplomacy to European domestic politics, popular culture and even finance and economics.
So the real question Mr Bush should be asking, as he drives through Berlin and Moscow, is not “why do they hate us so much”? It is “why do they respect us so little”? The fact is that few people anywhere in the world genuinely hate America (although the small pockets of hatred that do exist can sometimes be lethal). This is especially true in Europe, where the universal gratitude for America’s role in the two world wars, even among small children, often strikes unhistorical Americans as surprising. Indeed, most Europeans who feel intense passion about America are consumed not by hatred but by love.
The emotional sympathy for America is, of course, especially powerful in Britain, and this isn’t just a matter of teenagers driving coast-to-coast across the US or dreaming of Hollywood and New York. A retired British ambassador once amazed me with the following argument for his implacable opposition to joining the euro: “I want to be sure that my grandchildren will be fighting on the right side when it comes to the inevitable war between America and Europe.”
Yet even America’s instinctive supporters and admirers are getting worried — and not just about Mr Bush’s quixotic policies on Israel, Iraq and global climate change. In fact, economics, rather than terrorism and foreign policy, may pose the main danger to America’s global stature, just as it did from the late 1960s and 1970s.
While America is still doing far better economically than Europe or Japan, the long slump on Wall Street and the recent plunge of the dollar — which yesterday had to be supported by the Japanese Government to avert an even steeper fall — suggest that trouble may lie ahead.
People who saw America as a bastion of free-market economics have been horrified by Mr Bush’s tariffs on steel, textiles and timber. Worst of all has been the blatantly protectionist farm Bill, which seems to have reversed at a stroke all the progress towards liberalising both European and American agricultural markets — an initiative that would have offered the world’s poorest countries an opportunity to benefit from globalisation and free trade.
As one of the few genuinely free-market French economists I have ever met noted this week in a circular to his clients: “The great bull market of the 1980s and 1990s found its source in principled ideas. These principled ideas have been undermined in the very countries where they had originated and surprisingly enough without a proper debate.
To see a Republican Administration elected under a free-trade agenda pass not one, but three, blatantly stupid protectionist measures makes me sick to my stomach.”
Something is surely amiss in the world when the French have to lecture American conservative politicians on market economics. Yet that is exactly what has been happening in recent meetings between the US trade officials and the EU trade commissioner, Pascal Lamy.
The danger for America in this strange juxtaposition lies not so much in the damage that Mr Bush’s protectionism will do directly to the US economy, as in the impact it could have on America’s financial and economic standing relative to Europe and Japan. To put it in a nutshell, the financial markets are losing their respect for the US policy — and a loss of financial confidence is a problem that America simply cannot afford.
The US trade deficit is running at an annual rate of more than $400 billion and is expected to expand in the next few years to between $500 billion and $600 billion. To finance these deficits, America will have to borrow money from foreign governments and investors on an unprecedented scale, even in wartime. It is true that America has managed to finance vast deficits for more than a decade without much trouble, but the benign conditions that made this possible seem to be changing.
Most of America’s borrowing in the 1990s was undertaken by the private sector, but in the years ahead the US Government will become a massive borrower, as it was in the 1980s. While America’s borrowing in the Clinton era was used to support private investment, much of its future borrowing will be used to pay for Mr Bush’s tax cuts and military build-up.
To make matters worse, America’s attractiveness to private investors is looking more questionable than it has for many years. Shares on Wall Street are still expensive by historic standards, because the decline in prices after the bull market peaked in April 2000 has been more than matched by a collapse in profits, especially among the former stock market darlings of the electronic and telecommunications sectors.
Even more worrying for America’s global stature, there are growing doubts about two of the main pillars of US economic superiority in the 1990s — advanced technology and management methods. Few would question that the application of electronic technology by hard-nosed profit-maximising managers will help to drive the next stage of world economic growth. But it is much less clear now that America enjoys a natural advantage in these areas than it was before the bursting of the technology bubble on Wall Street, and the subsequent management troubles of Enron, Arthur Andersen, WorldCom, Merrill Lynch and other firms that seemed to epitomise America’s “new economy”.
Moreover, there are signs that the world economy may be moving into a new phase of technological development that could cast the US economic model in a less favourable light. American business, with its emphasis on flexibility, entrepreneurship, risk-taking and rapid decisions, may have had a natural advantage over the more ponderous and consensual ways of doing business in Europe and Japan. But the world economy may now be moving from a revolutionary period into one of incremental change, as new technologies are adapted, perfected and applied to everyday services and products.
In such an evolutionary economy, there may again be a premium on the patient perfectionism and long-term commitment that allowed Japanese and European industries, ranging from cars and aerospace to banking and insurance, to catch up with and overtake their American rivals between the 1970s and 1980s.
If this conjecture contains even a grain of truth, then America may find it increasingly difficult to attract foreign capital in the years ahead, just as the tax and defence priorities of the Bush Administration are putting the nation’s finances under unprecedented stress.
Mr Bush likes to compare his combination of economic, defence and diplomatic strategies with President Reagan’s blend of tax cuts, military assertiveness and massive borrowing in the 1980s. His economic advisers certainly seem to believe that America’s huge trade and fiscal deficits will be no more disruptive in the next decade than they were in the Reagan years.
There is, however, a less attractive precedent that they could hark back to: the decision, first by President Johnson and then by President Nixon, to finance the unpopular Vietnam War through borrowing and inflation, rather than higher tax. The ultimate result of that was not just America’s military humiliation but also the series of economic crises that began in the late 1960s and continued until 1982.
It would be premature, as well as overly pessimistic, to predict any similar disaster for the United States in the years ahead. But America’s economic vulnerability ought to be worrying President Bush.
I dislike the tariffs and the farm bill myself. I dislike even more the president's recent pledge to jack up foreign aid. I can only hope that at some point in the near future, he regains his ability to steer policy according to constitutional and free-market principles, rather than continue to craft giveaways to interest groups. Surely he's near the end of the list of groups and regions he promised special favors to -- ?
Freedom, Wealth, and Peace,
Francis W. Porretto
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Purely political reasons drove this action, spearheaded by Senator Max Baucus, watch-fob of big timber interests, but apparently more powerful than the President.
Just another destructive government intervention all done nice and legal. Move along-- nothing to see here!
Any true conservative feels the same. That's the difference
between being a conservative and a Republican.
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