In anticipation of the presidential debate on national security and international relations last week, I took down one of the best books I know on the subject, The Weary Titan:
It was not that I thought there was any very direct correspondence between then and now. There are some intriguing superficial resemblances, it is true: the British Empire was tested by a war in
But what really interested Friedberg (and me) is the question of how statesmen form their opinions of their place in the world, how they take the measure of the leaders of other nations with whom they deal. Do they rely mainly on cold calculation – economic indicators, intelligence estimates and so on? Or on belief – meaning shared images of national traits and “stories”? Both, surely, but in what degree?
These are always very interesting questions. They are especially interesting in the
Friedberg wrote his book in the 1980s, when the commercial contest with
And on the subject of
This much was clear, he wrote:
With its ability to enforce its will in the region thus demonstrated, Friedberg wrote, China’s leaders would feel free to press Japan to curtail its treaty relationships with the US, whereupon the ultimate object of its campaign – reunification of Taiwan on mainland terms – would be a mere formality.
At that point my lofty contemplation of grand strategy was interrupted by events underscoring the continuing fragility of financial markets. Only a week before President Bush had called Congressional leaders to the White House to sell an emergency plan devised by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke designed to avert a meltdown in global financial markets. Democrats rebelled, demanding a number of compromises. This time it was a Republican minority that threatened to bolt an agreement that had been approved by GOP leaders the day before.
Much of the difficulty had been precipitated by a number – the $700 billion that Paulson wanted Congress to authorize him to disburse to financial firms, in exchange for suspect loan-backed securities so complicated that the market for them had simply ceased to function out of fear. The government would hold them for a time until their underlying value could be better understood, then sell them back to market participants, recouping at least some of its investment. The shock and awe evoked by the big number was intended to calm the markets.
Instead it was everyday voters whom the number shocked. They quickly produced an insurgency of their own – or rather their legislators did, reflecting their constituents’ wrath. First it was the Congressional Democrats who demanded – and quickly received – a number of concessions from the White House, including oversight, salary caps, warrants and some measure of aid for homeowners threatened with foreclosure. Then it was the Republicans’ turn.
President Bush thus found himself in the position of the boy who once before had cried wolf to bad reviews. After all, wasn’t this pretty much the way he had sold the invasion of
Meanwhile, it is election season. People often go a little crazy in the late stages of an election. Not only are angry voters bombarding their Congressional representatives with telephone calls; an interesting array of technical economists, left and right, were proffering alternative bail-out plans of their own. There were at least four of these in circulation, as nearly as I could tell. The proposals evoked the “teach-ins” that broke out on campuses across the country in the first days of widespread opposition to the Vietnam War in the mid-1960s. These alternatives elicited a good deal of useful commentary, mostly online, but otherwise went nowhere, as the administration and Congressional leaders stuck to the heavily modified Paulson plan. Financial economist Robert Merton, himself the veteran of an earlier rescue, put it this way, “A superior theoretical solution that cannot be executed within the constraints of time and robustness is not superior.”
And then the thing subsided, as markets waited nervously in hopes that Congress would complete its deliberations over the weekend. I watched the presidential debate, reassured that the 47-year-old Obama mentioned
So I went back to The Weary Titan. This time I looked a little harder at the chapter on the financial crisis of 1901-05. It had been precipitated by the Boer War, Friedberg wrote, not so much caused by it as catalyzed: for years the sense had been growing among conservatives that government spending was getting out of hand. Government spending by some calculations had reached 9.8 percent of national income; surely it could go no higher; the practical limits of
So in 1905
That made me think, not of weapons system and battlefields, but of the prospects for the reform of financial regulation. Financial capacity will have much to do with the global competition with
Should the bailout then be viewed as a matter of national security? Certainly it has that dimension.