|How a US Presence in Global Trade Bolsters Nations’ Trust With Each Other|
|03/06/2018||Global Trade||Benjamin Roussey|
|keywords: Global Trade Trump administration global economy|
With the recent withdrawal of the Trump administration from the Trans-Pacific Partnership, the significant role America plays in the global economy has come to the forefront again.
The development has also led many to speculate how the global economy would look like if America were to withdraw completely from global commerce. But before getting into that, to get an idea of how significant an economic player the US is globally, a little peek into history is called for.
The rise of America in the global economy
America’s prominence in the global economy came soon after the Second World War. In fact, the nation went about creating a rules-based economic order with global resonance. Before that, America only had a minor role in influencing the global power equation. For one, the nation lacked a huge military.
In fact, even during the 1870s, the nation’s navy was smaller in size than that of Chile – a geographically tiny nation compared to America. Though force was employed to procure resources and land from different countries that was not being governed properly or had overstepped its bounds – like Mexico, mostly, the government kept itself from involving itself in global affairs.
America mainly focused on the Monroe Doctrine. Spain found out about that. And America gained most of its property via sound real estate buys (Alaska and lots of land via the Louisiana Purchase).
But the Second World War changed all that. With a significantly enhanced military and renewed national pride, the country was ready to become a big-time player in international affairs and global trade. The economic order that America put forward stressed free trade as well as the rule of law.
This saw America’s credibility growing among many foreign nations in the ensuing seven decades. The American presence in the global economy, and the vision the nation had about it, helped prevent many economic disputes among nations from becoming trade wars, or real wars, that would have helped no one. In fact, had such disputes went unchecked, they may even have led to violence as just insinuated.
But the relative stability that America brings to global trade helped even the poorest nations evolve socially and economically, while not worrying about predatory economic behavior by wealthier neighbors. In other words, America’s presence helps keep the element of fear out of global trade. This in turn helps decisions to be made on sound business principles.
When America turned inwards - a lesson from the past
To contrast, one could look at America’s behavior during the end of the 19th century when an interest in imperialism made the country look outside its own boundaries. But after the First World War, the focus turned inwards yet again. Two factors contributed to this. One was the huge cost that the First World War incurred. The second was the failure of the then President Woodrow Wilson’s vision to reform global politics.
He did initiate the League of Nations which became the anti-American UN though which has failed the world on so many levels it cannot be counted. And has proven to be corrupt!
In this context, policymakers began to try and advance the national interest, but by keeping America aloof from global economy. In fact, the predominant view was that global economy and politics constituted competition among nations who were always looking to get one over on the other. And when the Great Depression hit the nation, the policy they implemented was to impose tariffs on certain imported goods and to raise taxes on people who were not doing well already. Dumb!
FDR’s policies made it worse and made The Great Depression last even longer. FDR was the biggest job killer America ever saw besides Obama. FDR’s New Deal was a disaster as well in the 30s. It kept America in a depression. If the feds just kept taxes low and got out of the way and stopped their meddling and did not pass ridiculous laws, The Great Depression would have never occurred. It would have been The Great Stock Market Crash instead and only affected America for a year at most.
A more matured, and nuanced take on the global economy has been displayed by America since the years after the Second World War. Such an approach has not only made the nation stronger but also showed the world how America’s presence promotes a global economy that’s more participative and conducive for even less developed countries.
|Back to List|