Cassandras whose counsel should no longer be ignored

from John Benedetoo and RWER issue 93

In the 1980s and early 1990s, mainstream economists railed against heterodox economists and non-economist thinkers for questioning the appropriateness of “free trade” and for advocating national industrial policies. The debate was resolved, at least among the arbiters of acceptability, in favor of the mainstream economists. And yet, the heterodox arguments ring now like the unheeded warnings of prophets, while the mainstream economic view looks more and more debunked by reality.

The appearance of the United States as a unipower over 1990-2015 depended on policies that damaged the future of the United States and hurt a large segment of its population. It is likely that even during 1990-2015, the United States was never really a unipower. It was a very powerful Great Power that lived beyond its means, selling off the seed-corn of its past, in order to have the appearance of being far more powerful than it really was. Other nations engaged in a “rope-a-dope” strategy of staying out of the U.S. way, or appearing to fall into the ropes exhausted, while in reality building their strength.

The policy implications of such a conclusion should also be clear. Since the United States was never really a unipower, then it should certainly not be behaving like one now. Its policies should be to restore its own industrial economy and balance its trade, so that its own people’s living standards and infrastructure can again be world class. To do so, some alliances will need to go through deep and painful adjustments. Military bases in foreign countries may need to be shuttered and the troops relocated to U.S. soil. Diplomatic initiatives may need to be abandoned, and the United States may need to accept that some countries on the other side of the earth, that border each other, may wish to develop closer relationships with each other than they have with the United States, and do so on their own terms. And of course, the adjustment back to a balanced trade will present short-term adjustment pain for the U.S. economy.

There are many examples of nations past and present accepting the limits of their reach and thriving in the aftermath. Rome under Hadrian and Trajan slowed expansion and focused on internal infrastructure. It lasted another 300 years in the West. Similarly, many European nations with extensive colonies pulled back from those colonies after World War II. They recognized that they were no longer going to be able to hold other nations under thrall, and their own nations’ citizens benefitted greatly from ceasing to try to do so.

However, recognizing reality will require reexamining the belief that mainstream economists’ views on international trade are beyond question. Instead, the heterodox authors of several decades past were Cassandras whose counsel should no longer be ignored.  read more