Supply-Side University Economics Lesson #7
Memo To: SSU Students
From: Jude Wanniski
Re: Jack Kemp, guest lecturer: "Why America Must Lead"
You are in for a treat! Instead of a lecture in political economy, you are going to get a lecture from Jack Kemp on the world political economy. I've known and advised Jack for 22 years, and I can tell you this is among the half dozen most important speeches he has ever given. It is also among the most interesting and instructive speeches I can remember him delivering, which is why I find it easy to slip it in here as Lesson #7. Things may change, of course, but at the moment I think Kemp will win the presidency in 2000, on the power of his experience and ideas. You will see what I mean when you read the speech. Please treat it as a lesson, not simply a political talk, and come back with questions and criticisms. The speech was delivered Monday evening before the Los Angeles World Affairs Council.
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Right from the outset, let me confess to you that I'm trying something new today. I know you probably came here expecting to hear me deliver a rousing pep talk about the flat tax, or the gold standard, or maybe a sermon on why politicians in high places should keep at least 50% of their campaign promises. If so, I'm afraid I'm going to have to disappoint you.
Today we're going to talk political philosophy. To butter you up a bit for what might be a trying experience, let me say that I passed up several opportunities in the last few months awaiting the right time and place. Today is the right time, this is the right place, and this prestigious forum is the right audience. What I hope to inaugurate here today is a series of discussions, through the course of this year and next, about the choices the American people must make in order to ensure the well-being of the United States and the American way of life in the 21st century.
These are complex choices for all of us, arising from the fact that we are now alone, uncontested as the sole leaders in a unipolar world. There is no book of instructions on how America should lead in the world. We have to write one and now is a good time to begin. Perhaps the best place to start is to examine how we came to be the world leader in the first place. Interestingly enough, although American power and influence played the decisive role in the major struggles of the twentieth century, the United States was not the initiator of those cataclysmic events.
In every case, we were called upon to defend and protect those threatened by oppression and tyranny ... and in every case American leaders were sustained by the unwavering support of the American people, who wisely understood that events far from home played a substantial role in our own survival and our own future.
We were not involved at all in the decisions that led up to the first World War. Not one bit.
History will show that we made some major policy blunders that helped bring on the Great Depression and indeed the second world war — particularly the insanely protectionist Smoot-Hawley Tariff Act of 1930 and the overwhelming isolationism of that whole decade. At the time, though, we were not aware of our power and influence on world affairs and were largely absent from the international scene as the world careened toward a second World War.
And, though we might have played our cards better with the Soviet Union after that war, we certainly didn't start the Cold War — they did. Rather, every time we have exerted our influence and power in this century, it has been in reaction to the inability of others to contend with the aggressive and evil intentions of their fascist and communist adversaries. And because we accepted these challenges so successfully, it is often said that the twentieth century has been the "American Century." It truly has been a time in which American ideals of freedom and democratic government prevailed over totalitarian beliefs, finally bringing a benign peace to the world and hope for the future.
It was a successful outcome, a time when mankind made incredible advancements, but still it was a century of war and turmoil and economic depression for much of the world. I believe not only can we improve on it, but we must, in order to be true to our highest ideals. My vision is that the twentieth century would be but a prelude to a new century founded on American ideas and precepts and rooted in America's lasting, democratic values — a century in which the achievements of.yesteryear will pale by comparison. This is what I'm waxing philosophical about — the possibility of a golden age of liberal democracy, peace and equality of opportunity, not only in America but throughout the world.
In thinking about how America is to lead, we will have to avoid being trapped in the false dichotomy that currently characterizes the discussion of America's role in the world — a dichotomy that distorts and unnecessarily limits our vision of what that role should be.
First, we hear suggestions from some that the United States should simply yield its power, trusting its fate to the collective will and judgment of a more powerful United Nations and other international bureaucracies like the IMF, the World Bank and the WTO. If America is really serious about democracy, so the argument goes, we should have no problem binding ourselves to the decisions of an international majority.
Second, we have the isolationist, what the media likes to call the "nativist," view that America should retire from the world scene, and withdraw behind protectionist barriers, in order to tend to the myriad problems that have beset our society during these last decades of wars and periodic economic privations. Ironically, though these two views are diametrically opposed, they arrive at the same result; that is, they contemplate little or no role for American leadership in the world, opting instead for an abdication of our moral responsibility to lead.
But these views represent the extremes, and, of course, those of us here in this room and the vast majority of the American people are not at the extremes. I hope we can agree that the uncomfortable equilibrium resulting from the countervailing pull of these two extremes is still preferable to either view. But that equilibrium cannot long persist, nor should it. If we are going to draft an architecture for the coming American Century, these competing forces have to be taken into account and composed.
But in the meantime, we must watch out for a third, potentially more dangerous development. In the midst of our deliberation we have recently developed a rather ambivalent posture toward world affairs — reacting to world events on an ad hoc basis — dabbling in the world's affairs when it suits our mood or our politics. We intend to keep silent on what should now be done with the world, but we continue to announce that we will intervene on our own motion in any circumstance or series of events which we find threatening. . . or interesting.
As we listen to all of these opinions on America's future role, and more alarmingly, ponder the assumptions which support them, thoughtful people must be given pause. Quite simply, America must lead. The United States cannot abdicate, we cannot withdraw from the world and we cannot simply dabble in its affairs.
Let me take on these arguments one by one. First, it is a gross mistake to assume that relinquishing power to the United Nations would constitute a giant step for democracy. The United Nations is not a body representative of people, only of governments. As such, it has no standing as a democratic body. The idea that sovereign powers should be yielded to an international body of elitists that could by majority vote decide what was best for the world, unreviewed by public opinion, would constitute the greatest loss of freedom in the history of the world. And besides, the notion that a United Nations with expanded powers could administer over a lasting peace in the world is an idyllic one at best. The United Nations was formed in a second American attempt to provide a forum for the countries of the world, so that disputes could be solved more peacefully and wars avoided. But today, that noble purpose has been undermined by political forces — notwithstanding the trip of the UN General Secretary to the Middle East.
Nor does it make sense to yield more power to the United Nations, thinking it will mean less responsibility for us. The day would not be far away when some action were taken which we clearly could not abide. Without our support, and financial backing, the United Nations would soon collapse, thus ending its present limited value as a global forum. Far better to withhold these new powers in the first place than agree to any charade of world government.
My guess is that if the people of the world could vote by secret ballot, they would reject the idea of giving their own representatives power at the expense of the United States. They are seriously looking up to us, I believe, for guidance in how to make the coming century one of harmony and prosperity. But this is all the more reason why we must also reject the other argument in the dichotomy. We cannot simply withdraw from the world, living a life of self-indulgence behind closed borders and trade barriers in an ill-fated effort to protect American jobs. We cannot hope to assure our well-being and national security by superior military might alone. Nor would building a fortress America relieve us from any responsibility for what happens in the rest of the world.
Even those who express such daydreams know they are impossible, that they are genuinely an anathema to an American spirit that tells each of us that the rest of the world sent its best people to the New World, hoping to some day learn from our experience how they too can succeed as we do. Mankind did not struggle over all these millennia to see America — the nation of nations — finally get to the top, only to find us pulling the ladder up and resolving to keep the rest of the world in its place, underfoot and outside our borders.
The benefits of being an American accrue to us individually, not communally. Crucial to the experience of enjoying these benefits is that fair competition is maximized, initiative rewarded and human beings encouraged to dream, and make those dreams come true. Even if we could do it, Americans don't wish to live in a protectionist world where choices are limited, mediocrity encouraged and the individual diminished. Without choice there is no freedom; without the risk of failure there is no chance of success. Neither the country the isolationists would create nor a world governed by a United Nations would be an America as we have known it or would want it.
The third approach to our future -- dabbling here and there and ad hoc responses to crises real or perceived — is the one I see taking shape in our national political establishment, by which I mean the movers and shakers of both political parties. This power core seems to have it in mind that it can be isolationist one day and internationalist the next, depending upon U.S. interest as they define it at the moment. They would have us indulge in whatever whim we might feel at the moment. They can be found citing our lack of interest in what happens to the world when we don't wish to act and citing our "grave national interest" or our UN Security Council obligations when we see a chance to intervene profitably. This is a strategy without a policy, a posture that would lead us down the path of imperialism and inevitably cause much of the world to conspire against us.
Can we say our reluctance to examine our future role in the world more positively stems from the fact that we never sought the kind of ascendancy which we presently enjoy? Perhaps. Unlike the great empires of the past, American has never really wanted imperial power. We know our country is special. We intuitively understand that Lincoln was right in saying America is the last, best hope for mankind.
My own guess is that we have been reluctant to map out our role in the world because we assumed or hoped the future would take care of itself, without our worrying about it. That is proving not to be the case. The Cold War is over, the Berlin wall is down and Apartheid is dead. Stock markets and bond markets are bustling in Beijing and Moscow and records are being broken on Wall Street every time you turn around. But suddenly comes a huge downdraft in Thailand and we are watching a trapdoor open up below the Tigers of Asia, a great sucking sound as capital disappears down a black hole somewhere in the Pacific. Now there are people in Nevada traipsing around with anthrax, perhaps looking for a way to end the short history of civilization. And there is Saddam Hussein and the Palestinians and the Bosnians and Serbs.
The future is not taking care of itself, it is showing up in most unexpected and even threatening ways, and it is spoiling our Sunday afternoons at the ballpark and giving us bad dreams at night. No question about it, ladies and gentlemen. We cannot afford to let the fixture take care of itself. We have to think this through. Otherwise, as the prophet warned, the people will perish for lack of vision. Clearly, we need a new rationale or policy to explain our actions. We need a new compact with the American people which sets out our goals and explains our actions in the context of achieving those goals. And particularly, we need a vision of boundless opportunity of which the whole world can be a part.
Winston Churchill said "In victory, magnanimity." By this Ifm sure he did not simply mean the country that comes out on top in a competition should be a good sport and buy the next round of drinks. Rather, Churchill advises us that there are two ways for those who lead to stay in the lead. One is by conniving to keep all potential competitors weak, kicking out at those who seem to be climbing up close. The other is by sharing the secrets of our success with them so magnanimously that the pyramid grows and lifts us even higher.
Dare I say everyone in this room agrees with Churchill that we want to stay in the lead by being so good at that historic assignment that those below will fight off any contenders who seek to displace us. It is in that spirit that I have for several years been calling for reform of the International Monetary Fund, which has over the decades since it was founded in 1944 gathered up its own kind of Evil Empire. I'm sure that its boss, Michel Camdessus, is a loving father and grandfather, but his record is the worst record of a financial institution in the history of the world. He can't help it. It is in the nature of the institution, which was co-opted by the world's most powerful bankers 30 years ago. It served the purpose of our power brokers during the Cold War, handing out money to this country or that dictator, to keep them in line. It has now become an international menace.
Three years ago, almost anyone with one eye in Washington could see that the IMF helped engineer the peso devaluation in Mexico, so its friendly supporters at the banks could cash in. The people of Mexico looked up to the United States and hoped through the NAFTA agreement that we could finally protect them from the periodic monetary devaluations that are creatively arranged to keep poor people in their place. But open trade without a sound international monetary arrangement can easily be destabilized by an international bureaucracy like the IMF, willing to use extortion to foster beggar-thy-neighbor currency devaluations. How tragic that it takes so little effort by so few international bureaucrats to cause such so much pain and suffering. Does anyone doubt that the Asian currency crisis that has hit the Pacific rim so hard was at least encouraged by Michel Camdessus and his associates at the IMF?
This is why I said on CNN a few days ago that if it were up to me, I would not give one dime, one nickel, one cent to the IMF — which is asking our taxpayers for $18 billion — until it changes its policies and top personnel. Clearly, we have to figure out a way to improve the performance of the IMF, totally reform it, or abolish it altogether- because the people of the world do see it as our agent. The world does not need a lender of last resort for banks and corporations to save them from currency meltdowns like we have seen in Asia.
What the world needs is a stable monetary regime that would prevent currency meltdowns in the first place. The greatest threat to worldwide economic stability today is the international monetary arrangement of floating currencies in which no currency is linked to a stable anchor and all countries are being encouraged to used currency devaluation as an economic policy instrument during times of economic duress. In the same way, we must adopt a strategy for dealing with ruthless and unpredictable tyrants like Saddam Hussein, that does not inevitably corner the United States into blowing Baghdad to bits, or sending young men and women into harm's way.
When I heard last night that the Secretary General of the United Nations was returning from Iraq with a deal, my first reaction was great relief. Then, I began to listen to the news reports in detail, and some of that relief turned to uncertainty as it became clear that we do not really know what is in the agreement. But I do know, we must have a strategy that provides for and accommodates the use of force as a final option but does not create the circumstances that necessitate its use from the very beginning.
In 1990,1 assure you I was among the most enthusiastic supporters of President Bush in his conduct of the Gulf War. I was in his Cabinet. What made it easy for me to be enthusiastic is that Iraq's neighbors supported our demand that he get out of Kuwait. What distresses me now — and I think what upsets the young people in Ohio and Minnesota who criticized the President's team last week — is that Iraq's neighbors do not want us to use force. They want us to use diplomacy. Until this past weekend, the President seemed to be saying that diplomacy would fail - and force would be required. Iraq appeared to believe that we had absolutely no intentions of ever lifting the sanctions as long as Saddam remained in power. And rightly or wrongly, they believed that our demand for unfettered and unlimited access to the so-called presidential palaces was merely a pretext for escalating the conflict. Based upon previous statements by our Secretary of State one can concede that such an interpretation was at least possible, not only by the Iraqis but also by the rest of the world.
We all hope that the diplomatic solution the Secretary General is bringing back will give us unfettered and complete access to every square inch of the country. But we should not delude ourselves into thinking that even with such access, we could ever prove a negative. Thus at some point in the near future — after we have reached a reasonable level of comfort through a successful inspections process — we must be willing to lift the sanctions and rely on deterrents to ensure that any weapons we may have missed will never be used.
Let's face it. We have Saddam in a box, the so-called presidential palaces. We have begun the end game, and Saddam is cornered. He is taunting President Clinton, trying to goad him into making a horrendous mistake. The President, I fear, has been playing into Saddam's hands. He has demanded that Saddam acknowledge his ultimate checkmate and resign from the game immediately or else Mr. Clinton has threatened to tip over the chess board in frustration and let the pieces fall where they may.
A great nation does not rush to the use of force, particularly with insufficient information. A great nation, led by great statesmen, exhibits self-restraint, self-discipline and the patience to play out the diplomatic mission to its conclusion. Yes, Saddam Hussein is a ruthless dictator, but we did clean his clock in the gulf War, and his neighbors now believe he is not an immediate threat to them. Our onward rush to make 100% sure that every inch of Iraq is clean of weapons concerns me greatly because it sends a signal to the world that America is undisciplined, acting not from a position of strength but out of fear, or perhaps duplicity. The entire Arab world and the entire Islamic world of 1.4 billion people may very well take our bombing campaign as a sure sign the United States will use its supreme power petulantly to crush anyone who refuses our dictates.
These are the unintended consequences of ill-considered use of force. If there is to be order in the world, and the long hoped for peace which should come from it, such an event cannot occur without the most powerful and wealthiest country making plain when it will act and when it will not. If America is to have good friends and close allies in the future, it will be because others see that we have a plan, that we are sincere in trying to accomplish it and that it seems to be working. We must find the confidence and consensus among us, to agree on that plan and execute it.
To me, America is a country whose destiny has yet to be fulfilled, whose people stand ready to support its leaders once new goals can be set and the means for obtaining them envisioned.
But perhaps most important is the business of deriving a lasting and durable peace with freedom, a project which has so far eluded the ingenuity of man. The absence of war is not peace; such a peace is only possible through development of a shared, world-wide economic and political system, based on individual freedom, the rule of law, the defense of human civil rights (including the right to property) and capable of providing the boundless opportunity for all the world's people to realize their God-given potential.
How do we do this? Believe me I do not have all the answers, nor even half of them. As I have today, in the months ahead I shall be exploring with groups such as yours, which have a special interest in foreign affairs, my own views on what course America's leadership should take. I would hope that others will give their views as well. Admittedly, there is much work to be done on the domestic front and much that bothers the people about the condition of American politics.
But unless we can adjust our vision to the world scene, and convince the people they can have confidence in America's guidance on how to address the world's problems, nothing we do here at home will have the lasting value we all want. As powerful as we are, our future today will not be secure unless we use that power to create a world which honors those things we hold sacred: human life, individual freedom, faith, family, democracy and equality of opportunity for all.
Throughout our history, each generation of Americans has assumed y the burden of making a commitment to what was best for their country. They fought and died in wars, gave willingly of their abilities and money in order to preserve our unique way of life. Such a commitment must be made by this generation of Americans so that al history will record that the great American experiment in giving freedom didn't flunk its final test.