In the same weeks that are seeing the Middle East (with all its oil and geopolitical significance) begin to transform itself into we know not what, important economists are predicting that, if current trends continue, not only China, but India also will within a generation have larger economies than ours. And, of course, with strong economies almost inevitably come equivalently strong military capacities.
So as we enter the great deficit and debt fights of this budget season both in Washington and the states, the question that enters my mind is: Will the people of the United States be content to merely settle down and become a relatively affluent, second-level satellite to a great Chinese colossus? Are we Americans prepared to play Britain to a post-WWII America? And is it likely that China is prepared to be so benign a giant as we have been -- and are?
Assuming that most Americans are adamantly not willing to roll over into a national economic fetal position, then certain implications, certain actions must follow from our intent to remain on our hind legs, strong right arms uplifted to the world. And it begins with the current deficit fight.
First, and most obviously, we actually have to have this fight. It is economically naive to believe that we can continue to be the world's strongest, largest economy if we don't soon get our fiscal books in order. Moreover, huge and painful as that task will be, it will not assure our economic strength -- it is merely one of several necessary preconditions to such economic health.
It also is naive to believe it possible for about $10 trillion to be taken out of anticipated federal budgets (and perhaps a trillion or more dollars out of the 50 state budgets) over the next decade without beneficiaries of such spending not organizing to defend their pots of gold. We see a first example of this in Wisconsin, where the public employee unions are going beyond both law and decency in their furious effort to keep a grip on their bounty.
It is not enough that we get our deficits and debt down -- it centrally matters how we do it. This agonizing national civic task either can be: 1) merely the "tiresome squabbles of discontented affluence" (economic historian Adam Tooze's phrase describing post-war Western European politics); or 2) a new birth of economic greatness. For those who don't want to assume a national economic fetal position, this budget fight must lead to the latter.
President Lincoln in January 1863 transformed the Civil War from merely an attempt to hold the union together (a good and important thing) into "a new birth of freedom" with his Emancipation Proclamation. By expressing the national intent to free the African-American slaves, he directly connected the war with our first (incomplete) birth of freedom -- the Revolutionary War. It may not be a coincidence that within ten years of that "new birth of freedom", America became the largest economy in the world -- a condition we have maintained to this day.
So today, we must not only fight the war to bring the deficit and debt under control; we must do so in a way that strengthens our economy vis-a-vis China and the other aggressive economies (Brazil, India, etc.).
Fundamentally, that means not only reducing our spending, but doing so in a way that increases the proportion of government money and policies going to capital investment, and reducing the amount that subsidizes operating costs. It not only means reducing anticipated spending on Medicare and Medicaid, but probably means getting more of the precious dollars to improve the health of our soon-to-be-productive children, even if it means spending fewer tax dollars on the end-of-life care of elderly people.
Justice, fairness and equity (despite the desirability of gaining such objectives) cannot be the primary guides to spending decisions. The guide must be: What makes our economy more competitive; what increases American manufacturing, mining, commercial construction and intellectual property value; what increases our domestic energy production; what puts the most productive tools in the hands of our children; what trains our children to economically compete and defeat the able children around the world; and what is needed to keep us militarily strong enough to protect our interests?
By way of example on the latter point, last week, our storied sixth naval fleet that for 65 years has maintained the Mediterranean Sea as an American lake, could not muster a single destroyer, frigate or other modest naval ship to save a few hundred Americans stranded in Libya. The State Department had to rent a ferry that was not seaworthy to do the job. The whole world is watching -- and drawing its cruel conclusions. And you can be assured that China, too, is watching.
If you doubt it, read the excellent book review in this week's Weekly Standard of Yoshihara & Holmes groundbreaking new scholarly book "Red Star Over the Pacific: China's Rise and the Challenge to U.S. Maritime Strategy."
Before we conclude that the defense budget "must take its fair share" of cuts, we should understand that it is not the Pentagon that will be hurt -- it is 300 million Americans and our economy that is threatened by a weak military and Navy that cannot protect our interests. Where cuts can be made because of inefficiencies, such as in procurements -- excellent.
But whether it is in education (where unionized workforce rules protect the destructive work of the worst 10 percent of teachers) or health care, or military spending -- the watchword for budget cuts should be what is best for America's continued and expanding economic greatness -- whatever its short-term consequences.
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