Debt is Not a Strategic Weapon (And Won’t Change the Pecking Order, Either)

(Much apologies for my absence on Monday – it’s Eid Al Adha here, which throws everyone off, so I missed the update.  Without further ado, here we go!)

Perhaps you have seen the Chinese moaning about democracy.  A great deal of people out there like to explain the U.S. debt problem as akin to a household’s – which is a great way to simplify a difficult topic, and also a great way to mislead your audience.  It’s this kind of thinking that’s really giving credence to the belief that the debt crisis signals the end of American power.

It’s not.  And here’s why.

#1 – Hard power and soft power 

International relations breaks the expression of power into soft and hard power.  ‘Soft’ power is the mushy, cultural, influence-based stuff, which is being harmed in quite a real way by the debt crisis and U.S. government shutdown.  To use soft power effectively, other forces within the world must accept it.  Much like fairies, it ceases to work as soon as we stop believing in it.  America can persuade you to do nothing if you decide it’s not worth listening to.

English: Excel chart made with Data from http:...

All made up anyway. (Photo credit: Wikipedia)

Hard power, by contrast, is very much a real, “I-can-hit-you-so-I-will” thing.  Hard power involves all the missiles, tanks, and other weapons systems that actually exist.  Go ahead and disbelieve in America’s drone program; it’ll vaporize you all the same.  Nations and leaders that don’t buy into a foe’s hard power are proven wrong in the long run – as Hitler was when he invaded the Soviet Union and as Saddam was when he challenged the United States over Kuwait.  You just can’t argue with a gun.

#2 – Debt is make believe

Like soft power, debt too is something that only has power so long as we accept it.  One must understand that, going back to the ancients, currency and everything that goes with it is a faith-based system.  You can’t eat gold; you can’t make any weapons or tools out of it; yet people die for it.   We believe it’s valuable and therefore it is.

Debt is made up of currency and does not exist in reality.  You can’t find debt at a store or hold debt in your hand.  You can hold paper that say it’s debt, that represents an idea, but much like God, you can never face debt alone in a room and yell at it.

#3 – Hard power comes from geography, demography, and resource distribution

Economics is the way we go about organizing these three aspects of ourselves to make more efficient societies.  But economics in and of itself cannot overcome the challenges of being a landlocked nation, a country without enough oil, or a land without a people.  American debt does not reflect American weaknesses in any of these areas.  No matter how much China or Japan or whoever owns, America will always have two coastlines, a large, reliable river system for transportation, a well-balanced population distribution and density, and tons of resources within its easily-controlled borders.

#4 – The global order is underpinned by hard power

Being able to kill one’s enemies at any given time gives a nation-state great power.  As of today, only the United States can do this on all seven continents and get away with it.  No other nation in the history of the world has managed that.  If China calls in all its debts tomorrow, and crashes the U.S. economy, the fact will remain that America will still have eleven aircraft carrier battle groups fully manned and fueled.  If China hoped to use that debt as a weapon to leverage themselves into #1, they’d be sorely mistaken, since the vast geopolitical advantages of American geography and demography mean that the U.S. could take that hit and come back swinging.

Currency crises don’t remake global orders.  They can undermine already weak systems, as the rotting away of Spain’s imperial economy in the 17th century eventually led it to being surpassed by Britain and France in the 18th century, but it was only with the Wars of the Spanish Succession that this new global order emerged.  It took hard power, not a weakened currency, to remake the top dogs.

#5 – Great powers don’t fight each other anymore 

The last great power war that remade the international system was World War II.  Everyone knows why that was the last one.  Had the Soviets or Americans attempted to finish the Cold War early, they’d have nuked one another and I wouldn’t be sitting here.  If China wants to make a play for top dog, it cannot do so solely through economics.  It can crash America’s economy if it likes, and reduce standards of living worldwide, but that alone won’t force the U.S. to slide down a ring.  Only the destruction of American military assets can do that.

U.S.S. Ronald Reagan

Not on loan.

While it would be possible for a weakened economy to, over time, lead to a weakened military and therefore a reduced global status, in the case of the United States, virtually all strategic resources needed to run its military machine are within its borders.  Under the circumstances that world trade collapses, or people start tossing around embargoes, it is China, not the U.S., that is well and truly fucked – after all, China doesn’t have the equivalent oil reserves or farmland to run its military as well as the United States.

This isn’t to say that debt doesn’t hurt standards of living

It sure does.  As I’ve stated before, it hammers away at soft power, which is the kind of power that most citizens see and feel.  Reduced American influence makes Americans feel like they’re weaker.  Reduced standards of living makes Americans feel like something’s gone wrong.  That’s all a very real effect of far too much debt.  And austerity is a bitch; paying those bills in order to keep the international system stable is not pleasant.

But it can’t change hard power

Because hard power is measured by other factors.  America is too big of a country, with too many local strategic resources, for a debt default to take down.  Lament as you like the failures of the U.S. political system, but don’t go too far.  Mountains don’t fall so easily.

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3 comments

  1. #1 – Soft power is not “like faeries.” A much better analogy for what soft power is one of favors, e.g. I scratch your back you scratch mine. Not having political favor with one country means that they are unlikely to help you in the future.

    #2 – Debt is not make believe. The author clearly understands the subjective theory of value that all trade is built on, but pretends that debt somehow doesn’t apply. Huge economic fallacy.

    #3 – The logic here may have worked in 1500, but certainly not anymore. And actually, economics *can* overcome the challenges of being a landlocked nation, or one without many resources, etc. Britain began as a small island nation with few resources, and built an empire that spanned the world. Human ingenuity is a huge deciding factor.

    #4 – The strength of currency and markets has and will continue to change the world order. There’s a reason that, though crushed in WW2, Japan and Germany have become economic powerhouses. Their militaries certainly are not what made them strong players in this day and age.

    #5 – The author really ought to research the effects of trade embargoes and sanctions on countries. The effects are very real, and can be devastating. Military action is by no means the only way to destroy a nation.

    Our financial situation erodes our hard power over time, but it corrodes our soft power quicker. And when you’re trying to establish peaceful and productive relationships with other countries, and avoid using your hard power, soft power is extremely important.

    1. Cheers for the comments Colin – I’d like to take just a moment to respond to a few of your mentions.

      Overall, my central argument is that debt alone cannot be used to take down a power as large as the United States. You are very much right that it can cripple smaller powers (witness Iran now, Iraq in the 1990s) but I was arguing that it’s not possible to do the same to take down a superpower. The very nature of a superpower is that it holds enough resources within its borders that embargoes and sanctions cannot undo its hard power. The United States has all the strategic resources it needs within its borders and so can’t be embargoed to the point of crippling its military capacity.

      I agree that Germany and Japan’s current world power status has nothing to do with their military prowess, but they’ve both been able to do so because they’ve spent the post-war world under American military protection. Geopolitically, they’re both major military powers waiting to happen, they’ve just not been allowed to because of their defeat during the war.

      And you’re right that while Britain did overcome some of its geographic weaknesses, it did have some geographic strengths that helped it along. Britain’s most powerful century – the 19th – was fueled in part by local coal and iron reserves. Being isolated from the continent helped as well, allowing it to avoid the costs of a large standing army. These factors made it hard for Britain to dominate the continent itself.

      Hope that clarifies! And if you disagree, please do reply!

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