How Americans Spent Themselves into Ruin... But Saved the World

In the 1/1/24 edition of the Silicon Valley newspaper and online journal Metroactive, I have an editorial: Power of Consumption describing how the American consumer came to propel the export-driven development of Japan, Korea, Malaysia, China and now India.

That process, spanning more than six decades, is almost always portrayed -- especially in Asia -- as having come about as a result of eastern cleverness, in catering to the insatiable material appetites of decadent westerners.  But there is a far more interesting, complex, and even inspiring explanation for how the greatest wealth transfer of all time -- which has lifted several billion people out of poverty -- actually came about.  I reveal how George Marshall and the United States chose, in 1946, to behave differently from any other "pax" empire, and thereby changed the world.

I'll now repost that essay here, in expanded form.

If your politics operate on reflex - from either left or right - you are likely to find something here that will offend. But please, dear fellow believers in tomorrow, bear in mind that I'm an internationalist who opposed jingo-chauvinists, all his life.

And yet, I feel it is long past time that someone spoke up in defense of Pax Americana.

==The Far-Right's Caricature Version of Pax Americana==

Sure, that phrase Pax Americana (PA) fell into disrepute during the era of the mad neocons, whose misrule left the United States far worse off by every clear metric of national health.  During their time in near-total power, steering the American ship of state, fellows like Richard Cheney, Richard Perle, Kenneth Adelman and their ilk made a point of proclaiming imperial triumphalism - exoling an America invested with sacred, perfect and permanent rights of planet-wide dominance, based upon inherent qualities that were said to be unaffected by any objective-reality considerations, like budgets or geography; like world opinion or the end of the Cold War; like science or technology; like rationality or morality or the physical well-being of our troops.

Indeed, the only factor that they felt might undermine America’s manifestly-destined and eternal preeminence could be a failure of will, should the wimpy liberals ever have their way.  But if led with a firm-jawed determination to bull past all obstacles, the American pax could linger indefinitely, with all the privileges of governing world affairs and few of the responsibilities or cares.

Sure, it has been proper to oppose the policies of such deeply delusional men -- policies which unambiguously and uniformly brought ruin to the very things they claimed to hold dear. Capitalism, freedom, fiscal and national health, as well as U.S. influence in the world all plummeted under their rule. (These metrics all skyrocketed under Bill Clinton, whose endeavor in the Balkans was inarguably one of Pax Americana's finest hours.)

==But The Left Goes Too Far The Other Way==

And yet, something is very wrong with the unselective manner in which some folks on the other side have allowed those neocon nincompoops to define the argument.  It is an unfortunate habit of the left to assume that any appreciation of the American contribution to human civilization must be inherently fascistic.  This reflexive self-loathing has given (unnecessarily) a huge weapon to the right, in their ongoing treason-campaign called "Culture War," allowing them to retain millions of supporters who might otherwise have abandoned them.

By abrogating the natural human phenomenon of patriotic pride, these fools on the left have allowed guys like Sean Hannity to claim love-of-country as a sole monopoly of the right!  If they get away with pushing simplistic “greatest nation ever” rants and portraying themselves as the implicit opposite of homeland-hating liberals, that gift comes gratis from the left.

Moreover, there is another reason for liberals to re-examine this reflex and to find good -- and even great -- things to proclaim about America.  Because, without any doubt, America deserves it.  Yes, self-criticism is a useful tonic, and there definitely were crimes committed, during our time on top.  Nevertheless, the net effects of Pax Americana have been generally positive, compared against every single previous era in human history.

This can be proved, with just a single example -- one that was as decisive as it is ironic, and that has spanned an entire lifespan.

==The Miracle of 1946==

Mr. Wu Jianmin is a professor at China Foreign Affairs University and Chairman of the Shanghai Centre of International Studies.  A smart fellow whose observations about the world well-merit close attention.  Specifically, in a recent edition of the online journal The Globalist, Wu Jianmin's brief appraisal of  "A Chinese Perspective on a Changing World" was insightful and much appreciated.

However I feel a need to quibble with one of his statements, which reflected a widespread assumption held all over the world:

 "After the Second World War, things started to change. Japan was the first to rise in Asia. We Asians are grateful to Japan for inventing this export-oriented development model, which helped initiate the process of Asia’s rise."

In fact, with due respect for their industriousness, ingenuity and determination, the Japanese invented no such thing. The initiators of export-driven world development were two military and diplomatic leaders of Pax American at its very peak:  George Marshall, who was Secretary of State under President Harry Truman and Gen. Douglas MacArthur, during his time as military governor of Japan, in the ravaged aftermath of the Second World War.

While Marshall crafted a historically unprecedented, receptively open trade policy called “counter-mercantilism” (I’ll explain in a minute), MacArthur vigorously pushed the creation of Japanese export-oriented industries, establishing the model of what was to come.  Instead of doing what all other victorious conquerors had done – looting the defeated enemy -- the clearly stated intention was for the United States to lift up their prostrate foe, first with direct aid.  And then, over the longer term, with trade.

(One might well add a third American hero, W. Edwards Deming, whose teachings about industrial process -- especially the importance of high standards of quality control -- were profoundly influential in Japan, helping  transform Japanese products from stereotypes of shoddiness into icons of manufacturing excellence.)

Look, lest there be any misunderstanding, I am not downplaying the importance of Japanese, Korean, Malaysian, Chinese and Indian efforts to uplift themselves through the hard work of hundreds of millions who labored in sweatshops making toys and clothes for U.S. consumers.  Without any doubt, those workers... (like the generations who built America, before 1950,  in the sooty factories of Detroit and Pittsburgh)... and their innovative managers, were far more heroic and directly responsible for the last six decades of world development than American consumers, pushing overflowing carts through WalMart.

Nevertheless, those consumers —plus the trade policies that made the WalMart Tsunami possible, plus a fantastically generous and nearly unrestricted flow of intellectual capital from west to east — all played crucial roles in this process that lifted billions of people out of grinding, hopeless poverty.  Moreover, it now seems long past time to realize how unique all of this was, in the sad litany of human civilization.

==The Thing About Empires==

Let's step back a little.  First off, if you scan across recorded history, you'll find that most people who lived in agricultural societies endured either of two kinds of global situations. There were periods of imperium and periods of chaos.  A lot of the empires were brutal, stultifying and awful, but at least cities didn't burn that often, while the empire maintained order.  Families got to raise their kids and work hard and engage in trade.  Even if you belonged to an oppressed subject people, your odds of survival, and bettering yourself, were better under the rule of an imperial "pax."

That doesn't mean the empires were wise!  Often, they behaved in smug, childish, and tyrannical ways that, while conforming to ornery human nature, also laid seeds for their own destruction.  Today, I want to focus on one of these bad habits, in particular.

The annals of five continents show that, whenever a nation became overwhelmingly strong, it tended to forge mercantilist-style trade networks that favored home industries and capital inflows, at the expense of those living in in satrapies and dependent areas.

The Romans did this, insisting that rivers of gold and silver stream into the imperial city.  So did the Hellenists, Persians, Moghuls... and so did every Chinese imperial dynasty. This kind of behavior, by Pax Brittanica, was one of the chief complaints against Britain by both John Hancock and Mohandas Ganhdi.

Adam Smith called mercantilism a foul habit, that was based in human nature.  A natural outcome of empire, it over the long run almost inevitably contributed to self-destruction.  But alas, everybody did it, when they could.  Except just once.

==The Exception to the Rule of Imperial Mercantilism==

In fact, there has been only one top-nation that ever avoided the addiction to imperial mercantilism, and that was the United States of America. Upon finding itself the overwhelmingly dominant power, at the end of World War II, the U.S. had ample opportunity to impose its own vision upon the system of international trade.  And it did. Only, at this crucial moment, something special happened.

At the behest of Marshall and his advisors. America became the first pax-power in history to deliberately establish counter-mercantilist commerce flows.  A trade regime that favored the manufactures of many foreign/poor countries over those in the homeland. Nations crippled by war, or by millennia of mismanagement, were allowed to maintain high tariffs, keeping out American manufactures, while sending shiploads from their own factories to the U.S., almost duty free.

Moreover, despite the ongoing political tussle of two political parties and sometimes noisy aggravation over ever-mounting deficits, each administration since Marshall's time kept fealty with this compact -- to such a degree that the world's peoples by now simply take it for granted.

Forgetting all of history and ignoring the self-destructive behavior of other empires, we all have tended to assume that counter-mercantilist trade flows are somehow a natural state of affairs!  But they aren't.  They are an invention, as unique and new and as American as the airplane, or the photocopier, or rock n' roll.

==Why Did This Happen?==

Now, of course, more than pure altruism may have been involved in the decision to create counter-mercantilism. The Democratic Party, under Truman, and Republican moderates, such as President Dwight Eisenhower, held fresh and painful memories of the Hawley-Smoot tariffs, instituted under Herbert Hoover and the Republican Congress of 1930, which triggered a trade war that deepened the Great Depression.   Both Truman and Ike saw trade as wholesome for world prosperity -- and as a tonic to unite world peoples against Soviet expansionism.

 (Indeed, as another example of his farsighted ability to plan ahead for decades, Marshall also designed the ultimately victorious policy of patient containment of the USSR until, after many decades, that mad fever broke, for which he deserves at least as much credit as Ronald Reagan.) 

Nevertheless, if you still doubt that counter-mercantilism also had an altruistic component, remember this -- that the new, unprecedented trade regime was instituted by the author of the renowned Marshall Plan — both a name and an endeavor that still ring in human memory as synonymous with using power for generosity and good. Is it therefore plausible that Marshall -- along with Dean Acheson, Truman and Eisenhower -- might have known exactly what export-driven development would accomplish for the peoples of Europe, Asia, and so on?

Cynics might doubt that anyone could ever look that far and that sagely ahead.  But I am both an optimist and a science fiction author.  I find it entirely plausible.

==Alas No One Seems to Notice==

Unfortunately, while recipients of the Marshall Plan's direct aid could clearly see beneficial results, right away, other parts of the program -- especially counter-mercantilist trade policy -- were slower in showing their effects, though they were far more vast and important, over the log run.

What they amounted to was nothing less than the greatest unsung aid-and-uplift program in human history.  A prodigious transfer of wealth and development from the United States to one zone after another, where cheap labor transformed, often within a single generation, into skilled and educated worker-citizens of a technologized nation. A program that consisted of Americans buying continental loads of things they did not really need. Things that they could easily done without and stopped buying, any time that they, or their leaders, chose to call a halt.

(Oh, sure, the U.S would sometimes make a stink and nibble away at the edges of these unfair trade flows.  But such efforts were never serious, intense, or undertaken with anything like full power or national will behind them. No plausible theory was ever raised, to explain that tepidness... until now.)

Yes, yes.  There are a few obvious cavils to this blithe picture. One might ask -- does anyone deserve "moral credit" for this huge and staggeringly successful "aid program"?

Well, that is a good question. Perhaps not the American consumers, who made all this happen by embarking on a reckless holiday, acting like wastrels, saving nothing and spending themselves deep into debt.  Certainly, even at best, this wealth transfer seems less ethically pure or pristinely generous than other, more direct forms of aid. (See my posting: Saving the World Through Walmart.)

Moreover, as the author of a book called Earth, I’d be remiss not to mention that all of this consumption-driven growth came about at considerable cost to our planet.  For all our sakes, the process of ending human poverty and creating an all-encompassing global middle class needs to get a lot more efficient, as soon as possible.  Call it another form a debt that had better be repaid, or else.

Nevertheless, if credit is being given to the Japanese, "for inventing this export-oriented development model," then I think it is time for some historical perspective.   Because the impression that one gets from many, especially in the East, is that the West must forever remain counter-mercantilist as if by some law of nature, and that the vigorously  pro-mercantilist policies of the East are some kind of inherently perpetual birthright.   Or else, these trade patterns are purely the result of asiatic cleverness, outwitting those decadent Americans in some kind of great game

This view of the present situation may feel satisfying, but it is wholly inaccurate.  Moreover, it could lead to serious error, in years to come... as it did across centuries past

==What Might The Future Bring?==

Even if America is exhausted, worn out and a shadow of her former self, from having spent her way from world dominance into a chasm of debt, the U.S. does have something to show for it the last six decades.

A world saved.  A majority of human beings lifted out of poverty. That task, far more prodigious than defeating fascism and communism or going to the moon, ought to be viewed with a little respect.  And I suspect it will be, by future generations.

This should be contemplated, soberly, as other nations start to consider their time ahead as one of potential triumph.  As they start to contemplate the possibility of becoming the next great pax or "central kingdom."

 If that happens -- (as I portray in a coming novel) -- will they emulate Marshall and Truman, by starting their bright era of world leadership with acts of thoughtful and truly farsighted wisdom?  Perhaps even a little gratitude? Or at least by evading the mistakes that are written plain, across the pages of history, wherever countries briefly puffed and preened over their own importance, imagining that this must last forever?

==Is Anybody Still Reading==

Probably not.  This unconventional assertion will meet vigorous resistance, no matter how clearly it is supported by the historical record.  The reflex of America-bashing is too heavily ingrained, within the left and across much of the world, for anyone to actually read the ancient annals and realize that the United States is undoubtedly the least hated empire of all time.  If its "pax" is drawing to a close, it will enter retirement with more earned goodwill than any other.  Perhaps even enough to win forgiveness for the inevitable litany of imperial crimes.

But no, even so, the habit is too strong.  My attempt to bring perspective will be dismissed as arrogant, jingoist, hyper-patriotic American triumphalism.  That is, if anybody is still reading, at all.

Meanwhile, on the American right, we do have genuine triumphalists of the most shrill and stubborn type -- mostly moronic neocons -- who share my appreciation for Pax Americana... but for all the wrong reasons, and without even a scintilla of historical wisdom.  Indeed, it is as if we are using the same phrase to stanf for entirely different things.  If they are still reading, I can only point out that their era of misrule deeply harmed the very thing they claim to love.

Alas, my aim does not fit into stereotypical agendas of either left or right.  Instead, I am simply pointing out the necessary sequence of causation events that had to occur, in order for the International Miracle of export-driven development, of the last sixty years, to have taken place at all.  Indeed, it is the fervent, tendentious and determined denial, that American policy played any role at all, that beggars the imagination.

And so, at risk of belaboring the point, let me reiterate. If the U.S. had done the normal thing, the natural human thing, and imposed mercantilist trade patterns after WWII -- as every single previous "chung kuo" empire ever did before it -- then the U.S. would have no debt today.  Our factories would be humming and the country would be swimming in gold...

...but the amount of hope and prosperity in the world would be far less, ruined by the same self-centered, short-sighted greed that eventually brought down empires in Babylon, Persia, Rome, China, Britain and so on.

Also, by this point, every American youth would be serving in armies of occupation, and the entire world would by now be simmering and plotting for the downfall of the Evil Empire.  That is the way the old pattern was written.  But it is not how this "pax" was run. Instead, the greater part of the world was saved from poverty by the same force that rescued it from the fascistic imperialism and communism.

Yes, America's era of uplifting the globe by propelling the world's export-driven growth must be over.  Having performed this immense task, Americans cannot expect (if Wu Jianmin is any example) any credit or thanks.

But that is okay. Nobody needs to be angry and we certainly do not have to be thanked.  It simply is done.  Other dire problems now stand waiting for this much richer world to address them. And meanwhile, the U.S. must rebuild.

In other words, soon it will be time for someone else to start buying, for a change. The products, the services, and especially the ideas -- of which we will always have plenty.

New ideas, for a new century, when efficient production and care for the planet will combine with far-sighted mindfulness of generations to come.  Ideas that – just like George Marshall’s – the world will need and want.

 And just watch. America will be happy to sell.

==========

David Brin is a scientist, technology speaker, and author.  His 1989 ecological thriller, Earth, foreshadowed global warming, cyberwarfare and the world wide web.  A 1998 movie, directed by Kevin Costner, was based on The Postman.  His fifteen novels, including New York Times Bestsellers and winners of the Hugo and Nebula awards, have been translated into more than twenty languages.  David appears frequently on History Channel shows such as The ARCHITECHS, The Universe and Life After People.  Brin’s non-fiction book -- The Transparent Society: Will Technology Make Us Choose Between Freedom and Privacy? -- won the Freedom of Speech Award of the American Library Association. http://www.davidbrin.com
On Twitter: https://twitter.com/DavidBrin

For more of David Brin's articles on the economy: See: The Economy: Past, Present, and Future