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Outside View: The economy and geopolitics

The fundamental forces of freedom are, as they always have been, economic in nature.
by Shanker Singham
Washington (UPI) Oct 27, 2008
During the high-water mark of realpolitik in Europe in the 19th and early 20th century, all issues were viewed through a geopolitical lens. To manage relations between nations, one needed a genius like Bismarck. Every foreign policy action was looked at in terms of how it impacted the delicate balance between allies and enemies, even if those allies and enemies were constantly changing.

Much later, during the Cold War, every international economic policy was viewed through the lens of how it impacted our "permanent" enemy, the Soviet Union. But the collapse of the Berlin Wall heralded the "end of history," and the pursuit of commercial objectives. Secretaries of state, instead of worrying about thermonuclear exchange, worried about chicken exports. After Sept. 11, 2001, we have returned to a Manichaean worldview, in which each of our actions on the global economic stage is judged by how it plays into the ongoing war on terror or the current conflicts in Iraq and Afghanistan.

Some regard the end of history as an exceptional period between 1991 and 2001, 10 years when the Earth flattened in extraordinary ways, at least for a time, before returning to its more usual three-dimensional reality, of peaks and valleys that obscured the political and economic forces that once could be seen so plainly.

But there is another, perhaps equally Manichaean lens through which international economic issues should now be viewed. Rather than thinking about how these issues impact the current geopolitical firmament as it exists today, it would be better to ask how the pressing of certain issues impacts another, no less important economic-strategic map -- where there are two very different, almost diametrically opposed worldviews.

The first view seeks economic freedom and individual empowerment of firms and consumers; the second believes that capitalism can be beneficially steered by government interference and that countries best compete by building national champions and protecting "their" producers from the producers in other countries. If this is the battlefield that is channeling the immutable economic forces at play, then foreign economic policy actions should be judged by reference to their impact on this battlefield, not on the geopolitical lens of the war on terror or with respect to Iraq or Afghanistan, important though those battles are.

Unfortunately this geopolitical approach to foreign economic policy allows certain countries that espouse the right rhetoric with respect to terrorism, or are publicly hostile to nations we are suspicious of, to get away with bad domestic economic practices. Indeed, by allowing countries to get away with domestic actions that distort their markets to deliver on political goals, simply because they are with us on unrelated geopolitical issues at the moment (or convince us that they are) makes no sense, especially if we are thereby thwarting the overall direction of their economic policies toward fewer market distortions and less government interference in the economy. Better to ensure that nations are built through the operation of immutable economic forces that channel economic freedom delivered through free and competitive markets, open trade and property rights protection. Such nations are much more likely to be more allied to our "permanent interests," in the words of Lord Palmerston, and see the world as we do at any given time.

Such a foreign economic policy is more in line with what the United States traditionally has stood for from its founding. Indeed, viewing economic freedom issues through a geopolitical lens historically has been the province of more cynical European powers. The United States' highest and best contributions to global civilization have been when it has stood as the "freedom nation." But this requires us to understand what freedom actually means.

The fundamental forces of freedom are, as they always have been, economic in nature. True freedom is more than about elections. It is about the individual empowerment of people. That empowerment can come about only when markets are undistorted and free of governmental restraints. It can come about only when countries pursue open trade policies. It can come about only when the property of individuals is protected and cannot be taken from the people by their governments. Ensuring that nations advance down this path should be the non-negotiable foreign policy objective of any U.S. administration. It should not be compromised for the sake of limited, present geopolitical gain. Societies that embrace these principles will be societies that can have a dialogue about how best to achieve these goals. Such societies will be viable partners on economic as well as geopolitical issues. In the case of the vital issue of the war on terror, building such societies will starve terrorist organizations of recruits and cash, their lifeblood. Ultimately, whatever the rhetoric, we will not be able to dialogue with nations that move down a statist, central-control economic path. The poverty and hopelessness to which such societies inevitably will lead, by contrast, will feed the terrorist networks' need for cash and foster global differences.

(Shanker Singham is the leader of Squire Sanders & Dempsey L.L.P.'s market access/WTO practice and chairs the International Roundtable on Trade and Competition Policy Inc. He is the author of "A General Theory of Trade and Competition: Trade Liberalization and Competitive Markets," Cameron May, 2007.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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SKorea makes biggest-ever rate cut in face of crisis
Seoul (AFP) Oct 27, 2008
South Korea Monday announced its largest-ever interest rate cut and urged legislators to approve big tax cuts and spending increases to shield the economy from the global financial crisis.







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