Many of the 20th Century’s wars were ideological and would not likely have happened but for the internal politics of their participants: communism versus capitalism in the Cold War; competing nationalisms in the Third World’s Wars of National Liberation; and, most recently, the dramatic attempts to spread western-style democracy and institutions in the Middle East as an antidote to Islamic terrorism. A variety of worrisome trends, however, portend that the next wars may be a throwback to the power politics of the 19th Century: wars over access to resources in a world where they are increasingly scarce.
This terrain is not unfamiliar. The First Gulf War is a recent example through which western powers secured the flow of oil from friendly regimes in response to an unfriendly regional competitor. George Bush Sr.’s rhetoric of a “new world order” proved to be mostly window dressing. Russia throughout the 19th Century obsessed over access to a warm water port. The United States in the early 20th Century intervened in Central America to secure the Panama Canal and then to shore up Wall Street interests in the infamous Banana Wars. The British Empire served in large part as a free trade zone in which Britain had preferential access to the resources of its colonial subjects.
Americans have become used to decades of rising wealth through a variety of accidental and fragile developments. Cheap oil, comparative advantages in industrial organization and infrastructure, an educated work force, and our high levels of protection for property and contracts allowed the U.S. to be a dominant power for much of the 20th Century. Trade deficits created demands for dollar denominated government and business debt, further fueling a cheap-credit culture of consumption.
Today, however, competition and reforms overseas have driven up the power of competitors and the price of resources including oil, copper, tin, steel, and even corn. It’s hard to imagine that the U.S. will be able to preserve the same standards of wealth in the face of competition and the profligate use of energy in nations like China and India. Our manufacturers face the double burden of being outbid for raw materials and higher labor costs. One can imagine a nation like China or the United States demanding a monopsony buying power over oil or any number of other resources from weaker states, inviting strong-arm responses by others. China notably has already begun sending experts and diplomats to Africa and Iran to secure access to raw materials and oil respectively.
The developing economic crisis portends additional troubles, particularly in light of the government bailout of investors exposed to overpriced housing-related securities. The amount on the line is in the trillions, and the Treasury’s assurance of a big but manageable sum like $700B is almost certainly the tip of the iceberg. What will we do when GM seeks bankruptcy protection? What about other sectors like tourism, manufacturing, education, and agriculture? The current bailout (and its likely successors) put additional pressure on the Federal Reserve to inflate, while making dollar-denominated treasury bills more risky than previously. (Short-term T-Bills current spike only demonstrates the much higher risks of private commercial paper.) The music will stop one way or the other, whether in debt repudiation or hyper-inflation. The explosion of gold prices in the face of recent interventions is a signal that investors–both domestically and overseas–are more edgy about the fragility of fiat currencies and the reliability of related U.S. government promises. Any one-time repudiation of foreign-owned debt would undoubtedly expand natural friction with Russia, China, and Europe over resources by burdening them with the poisoned fruits of our recent inflationary and speculative housing bubble.
Conservatives have long warned against gratuitous adventures overseas. But resources are in a different class: even the most grizzled and stalwart isolationsits recognizes that resources and access to the same can be in the national interest. While we may not need the level of oil raw material imports that we have now, our relatively scant reserves of oil, our consumption culture, our consumption-based domestic infrastructure, and our competing demands with China and other nations may put us in a very difficult position. Technology may not bail us out, as it has in the past.
A forward-looking nationalist policy that emphasized national independence would look inter alia to some modest tariff to create a domestic economy less dependent on foreign trade, incentives for exploitation of domestic resources, strategic alliances with natural allies in our hemisphere (in particular Canada) to insulate ourselves from resource conflicts in other parts of the world, and an austerity policy to reduce our public and private spending (and cheap labor importation) from presently unbalanced levels. The current credit crunch might impose some of this pressure automatically, but so long as the goal is to resume business-as-usual globalism, the pressure to use military force to guarantee the big spending, low-saving domestic economy will remain, as will our hunger for resources.
The current crisis might be providential, but extremely painful. Whether that pain takes the form of something like the crises Argentina and Asia endured a decade ago or the Road Warrior remains to be seen, and its fallout depends in part upon how much the rest of the world is dragged down with us.
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