World Order 2.0 and National Debt

Richard Haass Stumps for a Reset of World Order, Targets National Debt

Centrist Big Thinker and President of the Council on Foreign Relations Richard Haass has a new book out, The World in Disarray: American Foreign Policy  and the Crisis of the Old Order. As I gleaned from an interview on NPR’s Morning Edition today, and from the summary offered on Amazon, he’s looking for a reset (my word) of our foreign policy that recognizes our limitations but still projects our strength—reflecting “the reality that power is widely distributed and that borders count for less.”

In case you were wondering, Haass was pretty satisfied with the world order from the Cold War up through September 11, 2001. It may have been a tense world order, but at least it was orderly. Sort of.

He names the reset “World Order 2.0.” (This is not software, by the way, in case you’re anticipating, with relish, a new skirmish between Microsoft and Apple. It’s “wetware,” the term used by techies for the messy human brain.) So you have to credit Haass with a public sense of humor, but his prescriptions for foreign policy are deadly serious.

Containing the national debt is a key part of Haass’s long-term strategy. Haass contends that a growing national debt weakens us as a world power.

Oh, dear—another installment of the timeless and stalemated controversy over the significance of the national debt. Over the years the analysis has ranged from Not-a-Problem to the Situation-is-Dire. Is the answer somewhere in between? Google “national debt” and you’ll see what I mean.

For myself, I go with the consensus among economists that the key statistic is the ratio of GDP to national debt. See Time magazine’s http://time.com/4214269/us-national-debt/  If that’s the concern, the best answer might be to get the rich to spend some of the the colossal wealth they’re squatting on, and get the economy moving, and that might produce enough jobs to enable even the lazy to get jobs where they can goof off in some positive way. Or at least pay taxes.

National Debt Affects Stature in Foreign Affairs?

So, what does the national debt, whatever its domestic implications, have to do with the international standing of the U.S. and its ability to project power? Without going into any depth (my favorite approach), we can consider just how the world’s two major military powers stack up debt-wise.

Test case: The U.S. versus Russia. Russia, pundits say, has a collapsing economy (which could revive if oil goes up). Putin’s international swagger, so goes the narrative, is a way to take his people’s attention away from their sorry economic plight.

What is the comparison between the GDPs and national debts of the U.S. and Russia? Funny thing, the ratios indicate to me (economics dummy), that on the domestic debt issue, The U.S.’s ratio is a profligate 107.4% of debt to GDP, and Russia’s is a stingy 17.7%. If these ratios signify anything about international power, per Dr. Haass, then Putin swinging his weight around makes good sense.

https://en.wikipedia.org/wiki/List_of_countries_by_public_debt

Note: China’s ratio is a stellar 43.9%, and Germany’s, bogged down in the supposedly economic swamp of the EU, is 71.2%.

What’s going on here? Beats me. We have a hazy knowledge, abetted by pundits, that Russia’s economy is in a shambles. But somehow, Putin seems to be managing foreign affairs like the cock of the roost. Maybe his calculation is that oil prices will rise before too long, and the Russian economy will float up to parity with the rest of Europe—after all, Russia already has a lock on natural gas supplies to its neighbors.(Note that a major war in the Middle East would boost oil prices through the roof.) Or is it  that Putin is a card shark who “knows when to hold up, and knows when to fold up” in a game with constantly shifting rules? If Disruption is the name of the game, then he’s up for a Guinness World Record, in contention with ISIS.

How about the balance of trade? As of November 2016, the U.S.’s was minus $45.2 billion. (This is the stat that Donald Trump is most worried about. His policies may get us into a trade war with China—which we are sure to lose—but at least he has his eyes on the right prize.)Russia’s balance is plus $6.6 billion (October 2016). On a per-capita basis, beats us hands-down: their average (143.4 million of them) is 46 cents in the black against the rest of the world, and the U.S. citizen (318.9 million) is $1.42 in the red.

Does Haass’s Hypothesis about Debt Stand Up?

The key statistic, as I best I can figure out (in some later post I might try to marshal the numbers to prove it), is not debt but absolute economic activity. (Which is supposedly represented by GDP: the absolute number, not a ratio.) Whatever the stumbles in our economy, and whatever wealth the rich are holding back, there’s still a lot of money sloshing around. (Whether it’s being used to our overall benefit is another story.)  There’s money pouring into Fantasy Football ($11 billion per year, $400 per capita) and other salubrious activities—all of which leave Russia in the dust, or tundra or whatever they have over there to be futile in.

I haven’t answered the question about the linkage between debt and foreign policy.  Like, duh. Best I can say is, based on the example above, is it’s flexible. Sorry!! In case you were hoping that  I would come up with some definitive pronouncement on World Order 2.0, besides that it’s a dry play on words, I’m clueless.