Our So-Called Foreign Policy: Globalists Keep Abusing the Lessons of History

Tags

America First, globalism, John Maynard Keynes, Jonathan Kirshner, Our So-Called Foreign Policy, The New York Times, Trump, Versailles treaty, Wall Street, Woodrow Wilson, World War I

Although I’m a long ways past high school, I wouldn’t be at all surprised to learn that students are still being taught that the main lesson Americans should draw from their country’s foreign policy during the early decades of the twentieth century is that standing aloof from world affairs is a catastrophic mistake.

The most familiar feature of this claim holds that by preventing the United States from joining the League of Nations after World War I, America’s so-called isolationists guaranteed that no effective counter to fascist aggression could be mounted, and thereby guaranteed the outbreak of a far more destructive global conflict. But an economic indictment has been leveled against U.S. policy during those years as well.

As made clear between the lines of a December 7 New York Times op-ed piece, supporters of the foreign policy globalism opposed by President Trump and most of his backers have long ardently believed that international financial policies after the First World War also took a disastrous, “America First”-type turn. One big problem, though – history actually shows that the fundamental mistake Washington made was not too little international economic engagement after the war, but too much during it.

In the article – which usefully commemorates the hundredth anniversary of a seminal book by iconic twentieth century British economist John Maynard Keynes – Boston University political scientist Jonathan Kirshner rightly lauds Keynes’ eloquent case against the economic punishments levied against Germany by the 1919 Versailles peace treaty. He’s also right in criticizing the United States’ “stubborn” and “shortsighted” insistence that its allies fully repay the enormous war debts they’d racked up to America.

As Keynes himself insisted, those obligations were “a menace to financial stability everywhere,” imposing a “crushing burden,” that would be “a constant source of international friction.” An international financial order that was little more than a tangle of debts and reparations, he warned, could hardly “last a day.”

Kirshner, though, looks like he has a hidden – globalist – agenda. Echoing today’s criticisms of Mr. Trump’s trade and foreign policies (which, I need to note, have been far from models of consistent America First-ism), he condemned American leaders of the 1920s for ending a “brief flirtation” with internationalism (a pre-Trump term for globalism) under President Woodrow Wilson and returning to “nationalism and nativism.” “Domestic demands,” he continued, were placed above “global concerns.”

Even more pointedly, he repeated Keynes’ contention that it “will be a disaster for the world if America isolates herself.”

Nonetheless, you don’t need to buy into America First-ism or even simply criticize globalism to recognize that Kirshner (and Keynes himself, for that matter), have completely ignored the financial run-up to Versailles. During these years, private American banks lent massively to the belligerents before the U.S. entry into the war in April, 1917 (overwhelmingly to the allies, but including minor credits extended to Germany), and after America joined the conflict, Washington took over.  (Here’s a handy brief history.)

In other words, the eventually ruinous war debts amassed by the European victors were possible largely because Wall Street massively intervened in the conflict financially in its early years, and because the U.S. government continued underwriting the fighting in its latter stages.

Also – and comparably – crucial: Just as America’s very entry into the war both guaranteed its prolongation and ensured that its ending would become a exercise in self-righteous, destabilizing, and ultimately disastrous vengeance rather than the kind of cold-blooded but hard-headed diplomacy that had contained the damage from previous conflicts, its loans to the belligerents worsened the destructiveness of the fighting and the consequent challenges of reconstruction. Indeed, Wilson himself was worried that Wall Street’s largesse was helping the allies in particular to wage war far longer than they otherwise could have afforded, and helped ward off the sheer exhaustion that would force a negotiated peace.

Thus the real lesson of America’s early 20th century financial diplomacy isn’t that international engagement is always bad, or that international non-involvement is always good.  It isn’t even that the United States should never seek to have its cake and eat it, too – which was clearly the expectation of Wilson’s successors.  It’s that in this particular instance, America’s combination of actions backfired. 

And let’s not forget a broader lesson for students of foreign policy and its record that’s reinforced by Kirshner’s article:  Beware of scholars cherry-picking history.   

(What’s Left of) Our Economy: Krugman’s (Embarrassingly) Phony Tariff History

Tags

1920s, agriculture, Economic History Association, history, Paul M. Krugman, protectionism, tariffs, The New York Times, Trade, Trump, World War I, {What's Left of) Our Economy

To the many reasons I have to envy Paul M. Krugman (his high profile perch as a New York Times pundit, his Nobel Prize in economics, his surely stratospheric income), one more can now be added:  As strongly indicated by his latest column for The Times, he works for folks who allow him to publish any claim he’d like without being fact-checked or even questioned in any way.

In that piece, Krugman sought to debunk President Trump’s recently tweeted claim that “TARIFF is a beautiful word indeed” by showing that “the actual history of U.S. tariffs isn’t pretty.”  One major example he used:  Because America “took a sharply protectionist turn before the infamous 1930 Smoot-Hawley Act,” the country’s farmers “spent the 1920s suffering from low prices for their products and high prices for farm equipment, leading to a surge in foreclosures.”

“Part of the problem was that U.S. tariffs were met with retaliation; even before the Depression struck, the world was engaged in a gradually escalating trade war.”

Sounds pretty convincing, right? In fact, not even close. And not least of which because the only two sources cited by Krugman contain absolutely no mention of low farm prices or foreclosures or unaffordable farm equipment stemming from any trade-related developments. In fact, there’s not even a mention of “high prices for farm equipment” at all.

The sources – articles on the Economic History Association’s website on the 1920s tariffs, and on the U.S. economy in the 1920s (you can read them here and here) – demonstrate that agriculture’s woes during this period (not surprisingly) resulted from many cases. But tariffs don’t make the list. 

Simply put, the main culprits were excessive borrowing by American farmers late in the previous decade based on the assumption that agricultural output in war-torn Europe would remain long depressed, and that this market would for many years be importing ever greater amounts of U.S. farm products; and a subsequent price-depressing glut in American supply when European output recovered faster than expected once World War I ended.

A a result, U.S. farmers were left with lots of new acreage and machinery that suddenly became superfluous even though their new owners still needed to pay off the debts they incurred to buy them.  No wonder so many weren’t able to meet their mortgage payments.

Adding to American agriculture’s problems during this period were a productivity boom triggered by surging mechanization and other advances that permitted agricultural production to rise much faster than domestic (and foreign) consumption; and an economy-wide depression in 1920 and 1921 that primarily resulted from excessive monetary tightening by the Federal Reserve. Again, nothing about tariffs.

Importantly, the 1920s economic history article in particular is a gold mine of information about many developments of that time that shed considerable light on today’s major economic challenges – as I’ll be describing in some future posts.  In the meantime, I’d strongly recommend that anyone with an interest in the American economic invest the time needed to read it – starting with Paul Krugman.

Im-Politic: The Real Veterans Day Hypocrites

Tags

Armistice Day, Constitution, Emmanuel Macron, France, illegal aliens, Im-Politic, nationalism, patriotism, racism, Riverdale Park, sexism, Trump, Veterans Day, voting rights, white nationalists, World War I

Mentioning U.S. military cemeteries in France and my town of Riverdale Park, Maryland in the same sentence, or even the same piece of writing – that’s got to be a first. But due to the overlap of Veterans Day today with the hundredth anniversary of the armistice that ended World War I hostilities, both shed some light on the confused, often downright incoherent, and just as often hypocritical nature of America’s heated, intertwined political and philosophical battles over identity, nationalism, and related issues.

The military cemetery angle is clear enough, due to President Trump’s controversial decision to forego attending yesterday’s Armistice Day ceremony at the Aisne-Marne American Cemetery and Memorial outside of Paris. Mr. Trump’s administration attributed the decision to bad weather and the logistical complications it created. I’m no expert on these matters (chances are, neither are you) and for all I know, rain and the herculean task of moving American presidents in foreign countries may have genuinely rendered his initially announced schedule unrealistic. I also suspect that a major role was played by the simple exhaustion of a 72-year old man following a whirlwind last few weeks of criss-crossing America for speeches at campaign rallies aimed at electing Republican candidates in this month’s midterm elections.

Nonetheless, even though this event wasn’t the only, or even the main event on the Trump schedule, or even the only scheduled cemetery visit, I believe that the President should have sucked it up and attended. (Just FYI, he did wind up going to a second such ceremony today.) As a result, I have some sympathy for the critics’ charges that Mr. Trump’s decision undercut his high profile claims of championing patriotic values.

But I don’t have total sympathy, and here’s why: because these presidential opponents generally have a pretty dodgy, and thus often double-standard-infused, record on patriotic values themselves. Why else, for example, would they be so apoplectic about the President’s self-description as a “nationalist.” Many have not only equated this viewpoint with something they call “white nationalism” (a concept whose fatal internal contradictions are, revealingly, ignored only by them and by the fringe neo-Nazi types who have adopted it). They’ve also attacked it for clashing with the idea of diversity, as opposed to “inclusion,” and for asserting (in the words of France’s President, Emmanuel Macron), “our interests first, who cares about the others?”

At best, however, that’s a bizarre critique for at least two reasons. First, the United States exists in a world of other political units that are known as “nation-states,” and inevitably, their “national interests” (another term that’s not the least bit controversial) won’t always coincide. These interests aren’t always in conflict, either, and when they’re not, inclusion – in the form of fostering international cooperation in order to advance shared goals or repel share challenges – is a fine idea. But when these interests don’t coincide, and can’t be reconciled via diplomacy, inclusion can easily become a formula for delusion, and for harming U.S. interests. And Macron to the contrary, at that point, any national leader deserving his country’s trust would put their “interests first” and not care terribly “about the others.”

Second, Mr. Trump’s actual use of the word had nothing to do with jingoism or chauvinism, much less racism. Indeed, it had everything to do with promoting an entirely reasonable U.S. foreign policy goal. Here’s his description of the term: “All I want for our country is to be treated well, to be treated with respect. For many years other countries that are allies of ours, so-called allies, they have not treated our country fairly, so in that sense I am absolutely a nationalist and I’m proud of it.”

And here’s where Riverdale Park, Maryland comes in. This morning, the town held its annual Veterans Day observance. It took place at a pretty little patch created near the town center, complete with a memorial and a big American flag. Ever since I moved to the town in 2003, I’ve attended this ceremony nearly every year, along with the Memorial Day ceremony (when I was in town, which has usually been the case), and was proud to do so. This year, that streak came to an end.

I’m boycotting, and will continue to boycott, because earlier this year, as I’ve described, the town decided to permit illegal aliens to vote in local elections (along with 16-year olds). It’s a free country, and the decision is Constitutional, but it mainly rankled because, as I also wrote, during the debate, supporters of the idea made plain as day that they not only had no regard for the idea of citizenship, and of the community of values it has represented throughout our country’s history. They stated repeatedly their convictions that that community, along with the Constitution that organized its government and enshrined into law the liberties Americans enjoy, are nothing more than racist and sexist constructs concocted by a claque of dead white males determined to perpetuate their dominance and that of their descendants. Moreover, the town’s endorsement of non-citizen voting unquestionably represented endorsement of that perspective.

And these are folks – and the municipality – claiming to honor those currently serving in the military, and those who have lost their lives defending this political system? Sorry, but I found that proposition stomach-turning, along with the idea of taking part in this sham.

Further, these convictions are hardly confined to Riverdale Park. Polls – not a perfect measure of opinion, I know, but the best we have – show consistently that patriotic feelings are declining sharply among the American public as a whole, and among Democrats, liberals, and the young in particular – the last three categories are coming to dominate Riverdale Park’s population. (See, e.g., here and here. And according to the Gallup survey, the latter two trends predated Mr. Trump’s election as president.)

I have no evidence that most or even many of those with low patriotism levels have chortled at the President’s decision to skip the military cemetery ceremonies. But I’ll bet the number is more than a few. Ditto for a high correlation between the Trump cemetery critics and staunch opponents of his immigration policies – due to the President’s insistence that the United States as a sovereign nation, and even more important, one precious enough to be worth defending, has an absolute right to control its borders and decide who and how many are granted admission.  

There’s no obligation for any American to feel patriotic, and there’s certainly no obligation to like President Trump. Is it too much to ask, however, that Veterans Day, and associated professions of love of country, be made exempt from political football-dom?