November 29, 2016 by Anders Ingemarson
The other day we received an email from our President-Elect with a link to a survey asking how he should spend his first 100 days in office. It is a mish-mash of pragmatic details, some promising, others not so. Quite a few cover our relations with the rest of the world—military engagements and alliances, trade, immigration—which in a broad sense would fall under foreign policy.
No doubt, our foreign policy has been lacking principled direction for a long time. Most recently exemplified by pragmatic, short-range, agreements for agreement’s sake with communist (Cuba) and theocratic (Iran) totalitarian regimes, and of the United States sacrificially financing both the defense of half a welfare statist continent that mostly despises us (Europe) and parts of a backward corner of the earth that by and large hates us (Middle East).
Mr. Trump professes to want a foreign policy that puts America first. We thought we’d offer him our advice of what it would look like. Not as a nationalist collectivist end in itself, but as a result of measures aligned with the rational self-interest of individual Americans to have their rights to life, liberty and pursuit of happiness protected and defended at home and abroad.
A foreign policy is an extension of the proper role of government to protect us against foreign threats. The by far best foreign policy instrument available to us does not really involve other countries at all. That instrument is leading by example at home. If we were to turn our focus to protecting individual rights and expanding capitalism, we would send a very strong signal to the rest of the world as they saw our policies bearing fruit.
Cutting taxes, regulations and government spending would unleash growth and lead to an increase in wealth all around. Do you consider China’s past 10% annual growth rate impressive (assuming you can trust any numbers coming out of a totalitarian regime)? The United States would match this in a heartbeat once the reduction of government got on the right track. Do you think the rest of the world would take notice? Any chance they would start copying our policies? You bet they would. We saw it in the 19th century and we would see it again. They may initially do it reluctantly, but the power of our example would not go unnoticed among the citizens of other countries; over time, the pressure would build on their politicians to follow our example.
Obviously, our military would still be needed to protect us against foreign threats. Are you worried about military expenditures? With 10% growth we would be able to increase military spending drastically if needed while still seeing its share of GDP drop over time. But we would probably not need a dramatic increase in military spending. Why? Because the countries copying our policies would become freer, would increase the protection of individual rights, and over time would start to see us as friends and allies, drastically reducing the potential threat of military aggression.
We are currently far from leading by example at home. On the contrary, we seem all too willing to emulate the mistakes of the European welfare states with high taxation, suffocating regulations, and out-of-control government spending. Maybe Mr. Trump has the ambition to change direction, maybe not.
But let’s see the glass as half full and imagine that we had changed direction, that we were yet again leading by example at home, that we had reached the top in the Heritage Foundation’s “Index of Economic Freedom” (the 2016 edition ranks us 11th with a score of 75.4 which is only considered “mostly free”). And let us imagine that we were tasked with overhauling our relations with the rest of the world. What would we do?
As part of leading by example at home, we would unilaterally remove barriers preventing the free movement of goods and services. This is the only approach to trade that is consistent with individual rights and capitalism. Americans have the right to enter agreements with anybody, anywhere, without government interference (with the possible rare exception of countries that pose an eminent threat to us). Other countries may erect barriers against trade, but such policies are self-defeating as they deprive their residents of the benefits of free markets in the form of economic growth and wealth creation.
Defense agreements would provide us with an opportunity to speed up other countries in following our example. As part of a defense agreement with the United States, a country would have to agree to join us in “leading by example at home.” The prospective ally would have to put a plan in place for protecting individual rights and expanding capitalism by reducing government spending, rolling back regulations incl. trade barriers, and eliminating taxes. And as American taxpayers should not have to foot the bill for defending another country, the country would have to pay for its share of United States defense spending in exchange for being part of our defense alliance.
You say no country would take the bait? You would be surprised. We would probably see smaller countries feeling threatened by larger neighbors joining first. As their “leading by example at home” policies started to bear fruit—think a number of Hong Kong or Singapore-like economies emerging around the world—others would line up. And someday even Cuba and Iran may join.
As for our current defense agreements (NATO, etc.), we would give our allies sufficient notice to make up their minds if they want to join the new direction or take on their own defense.
Where does the rational self-interest of Americans come in? Due to economies of scale the cost of defending ourselves would be reduced, as the U.S. military together with its allies can protect more territory without a proportional increase in costs. This is in our self-interest. And with more countries becoming our friends and allies, real defense expenditures will start to go down. This is in our self-interest. And most importantly, with more and more countries joining us in “leading by example at home,” the world will become a more prosperous place. And the more prosperous the rest of the world, the more prosperous we become. This is definitely in our self-interest.