Globalist Analysis

The United States’ New Cold War

How is today's “cold war” not a war of containment, but a war of economic growth?

Takeaways


  • The United States, and the global economy as a whole, must realize that world growth is not a zero sum game.
  • If globalization is demanding a voice in both fiscal and monetary policy, is that foreign or domestic policy?
  • The single overriding foreign policy/defense issue facing the United States is the re-industrialization of America.
  • Globalization has forced the fusion of American foreign policy and domestic policy. They are now one and the same.

Shortly after the end of World War II, an American in Moscow, George Kennan, and a former British prime minister in Fulton, Missouri, Winston Churchill, called for the United States of America to see the world differently, to adapt its foreign policy to the realities of the post-World War II era.

Kennan's long telegram, a 5,500-word cable that he sent out in his capacity as the then-deputy chief of the U.S. mission in Moscow, described dealing with Soviet Communism as “undoubtedly the greatest task our diplomacy has ever faced and probably the greatest it will ever have to face.”

He then laid out his policy of containment, essentially an operating plan on how to combat this threat. Kennan's recommendations would grow, in various mutations, into the key principle of U.S. foreign policy for the next 45 years.

Two weeks later, on March 5, 1946, Winston Churchill, accompanied by Harry Truman, gave a speech at Westminster College. In the speech, Churchill first reminded the audience that, in the 1930s, he had warned his countrymen about the threats of Nazism — but was ignored.

Churchill then went on to sound a new warning to this American audience. He spoke of an iron curtain descending across the continent of Europe, giving voice to the urgent need for a new American foreign policy.

Now almost 65 years later, the United States finds itself in a period domestically strangely similar to 1946, with many on the right not wanting to see that America and the world have undergone radical changes that force the United States to dramatically re-orient its foreign policy.

The biggest of these changes is the fact that globalization has forced the fusion of American foreign policy and domestic policy. They are now one and the same. There are few domestic initiatives on the agenda — whether they are education, health care, taxation or budgetary issues — where a large part of the answer does not pertain to globalization.

And the single overriding foreign policy/defense issue facing the United States today is not terrorism. Rather, it is the re-industrialization of America, whether through manufacturing, technology or services, or the re-engineering of our energy policy.

The rest of the world perceives the United States as a declining economic power. No matter how slow or realistic that decline is, that change in perception is crucial. It can lead by definition to aggression either by state or non-state actors whose belief systems enable them to misread the nature of U.S. decline.

In addition, and probably more likely, the perceived decline will feed on itself, as our American voice in both geopolitical issues and world economic issues carries less weight.

There are some worries at this juncture that the world is evolving into an almost pre-World War I mercantilist reality, with nations and blocs competing for exports. At the same time, globalization — with its semi-free movement of capital, knowledge and manufacturing — has overlaid this reality with a randomness that currently defies America's current political ability to manage it.

So what does this all mean for the U.S. government? Constitutionally and historically, the U.S. president has greater power in foreign policy than over other areas of U.S. policymaking.

However, if globalization is demanding a voice in both fiscal and monetary policy — for example, if globalization is saying that our industries are less competitive globally because they have to carry medical and social welfare costs that in Germany are borne by the government — is that foreign or domestic policy?

We are at a time where, for the security and future of the nation, foreign policy and domestic policy must be considered one and the same — a time that the founders could obviously not have imagined.

The Republican mantra of limited government, which was successful especially for business interests during the continental market period of American history, now runs counter to globalization's demand for stronger government and smart increases in national expenditures. Indeed, they almost run counter to the needs of our largest and most innovative companies to compete abroad.

Similarly, the New Deal-based insurance policies that the Democratic Party issued to protect workers against the harsher aspects of the continental market fail today to protect them against the harsher aspects of globalization.

As during Kennan's day, the American political process must re-orient itself to fight a cold war — not a war of containment but a war of economic growth, a war where there are few, if any, enemies.

The United States, and the global economy as a whole, must realize in this process that world growth is not a zero-sum game, that the United States' re-emergence as a dynamic growth economy is not a threat to China, India, Europe or Japan. Indeed, these countries can only benefit from the revival of our economy.

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About Edward Goldberg

Edward Goldberg is the president of Annisa Group, a firm that advises business on global issues.

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