Superbroke, Superfrugal, Superpower?

In recent years, I have often said to European friends: So, you didn't like a world of too much American power? See how you like a world of too little American power — because it is coming to a geopolitical theater near you. Yes, America has gone from being the supreme victor of World War II, with guns and butter for all, to one of two superpowers during the cold war, to the indispensable nation after winning the cold war, to “The Frugal Superpower” of today. Get used to it. That's our new nickname. American pacifists need not worry any more about “wars of choice.” We're not doing that again. We can't afford to invade Grenada today.

Ever since the onset of the Great Recession of 2008, it has been clear that the nature of being a leader — political or corporate — was changing in America. During most of the post-World War II era, being a leader meant, on balance, giving things away to people. Today, and for the next decade at least, being a leader in America will mean, on balance, taking things away from people.

And there is simply no way that America's leaders, as they have to take more things away from their own voters, are not going to look to save money on foreign policy and foreign wars. Foreign and defense policy is a lagging indicator. A lot of other things get cut first. But the cuts are coming — you can already hear the warnings from Secretary of Defense Robert Gates. And a frugal American superpower is sure to have ripple effects around the globe.

“The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era” is actually the title of a very timely new book by my tutor and friend Michael Mandelbaum, the Johns Hopkins University foreign policy expert. “In 2008,” Mandelbaum notes, “all forms of government-supplied pensions and health care (including Medicaid) constituted about 4 percent of total American output.” At present rates, and with the baby boomers soon starting to draw on Social Security and Medicare, by 2050 “they will account for a full 18 percent of everything the United States produces.”

This — on top of all the costs of bailing ourselves out of this recession — “will fundamentally transform the public life of the United States and therefore the country's foreign policy.” For the past seven decades, in both foreign affairs and domestic policy, our defining watchword was “more,” argues Mandelbaum. “The defining fact of foreign policy in the second decade of the 21st century and beyond will be ‘less.' ”

When the world's only superpower gets weighed down with this much debt — to itself and other nations — everyone will feel it. How? Hard to predict. But all I know is that the most unique and important feature of U.S. foreign policy over the last century has been the degree to which America's diplomats and naval, air and ground forces provided global public goods — from open seas to open trade and from containment to counterterrorism — that benefited many others besides us. U.S. power has been the key force maintaining global stability, and providing global governance, for the last 70 years. That role will not disappear, but it will almost certainly shrink.

Great powers have retrenched before: Britain for instance. But, as Mandelbaum notes, “When Britain could no longer provide global governance, the United States stepped in to replace it. No country now stands ready to replace the United States, so the loss to international peace and prosperity has the potential to be greater as America pulls back than when Britain did.”

After all, Europe is rich but wimpy. China is rich nationally but still dirt poor on a per capita basis and, therefore, will be compelled to remain focused inwardly and regionally. Russia, drunk on oil, can cause trouble but not project power. “Therefore, the world will be a more disorderly and dangerous place,” Mandelbaum predicts.

How to mitigate this trend? Mandelbaum argues for three things: First, we need to get ourselves back on a sustainable path to economic growth and reindustrialization, with whatever sacrifices, hard work and political consensus that requires. Second, we need to set priorities. We have enjoyed a century in which we could have, in foreign policy terms, both what is vital and what is desirable. For instance, I presume that with infinite men and money we can succeed in Afghanistan. But is it vital? I am sure it is desirable, but vital? Finally, we need to shore up our balance sheet and weaken that of our enemies, and the best way to do that in one move is with a much higher gasoline tax.

America is about to learn a very hard lesson: You can borrow your way to prosperity over the short run but not to geopolitical power over the long run. That requires a real and growing economic engine. And, for us, the short run is now over. There was a time when thinking seriously about American foreign policy did not require thinking seriously about economic policy. That time is also over.

An America in hock will have no hawks — or at least none that anyone will take seriously.