BY JONATHAN TEPPERMAN, FAREED ZAKARIA
To mark the occasion of Foreign Policy’s 50th birthday, FP’s Jonathan Tepperman sat down recently with Fareed Zakaria—the author, CNN host, and one of today’s leading thinkers on international affairs—to discuss the moment of the magazine’s creation, the many similarities between then and now, what the last 50 years have taught us about U.S. strategy, and where the country should go from here. The following conversation has been edited for clarity and concision.
Jonathan Tepperman: Foreign Policy was founded as a journal in the winter of 1970-1971. Reading through the first issue today, one can’t help but be struck by the parallels to the present moment. In that issue’s introduction, FP’s founders, Samuel P. Huntington and Warren Demian Manshel, write about how “an era in American foreign policy, which began in the late 1940’s, has ended” and then go on to say they “think this is a good time for new—and … more constructive—controversies concerning the revision of goals, the reconsideration of means, and the reformulation of the responsibilities of the United States in a world which is rapidly reformulating itself.”
The backdrop for their writing, which they allude to, is the crumbling of what had been the key U.S. foreign policy of the postwar era, namely containment—the effort to hem in the Soviet Union—and the need to build a new consensus around a new approach.
That first issue also reveals a lot of other important things about the early 1970s. The United States was being rocked by new and confusing forces and had lost its nerve; the mood was grim. Graham Allison wrote in the issue that “we have already entered the twilight zone of American political and military influence in the world.” In other words, 50 years ago, FP’s writers were already preoccupied by the idea that the United States was in decline and that Washington’s whole strategy for dealing with the rest of the world no longer worked and had to be reinvented. Everything was up for grabs, and FP’s task was to create a new foreign-policy consensus and a new foreign-policy establishment. Doesn’t that sound a lot like today?
Fareed Zakaria: It’s an intriguing parallel. It reminds me of that old saying sometimes attributed to Mark Twain, “History never repeats itself, but it rhymes.” This feels like one of those rhyming moments.
The primary reason Foreign Policy was founded was because of the failure of U.S. policy in Vietnam and the establishment’s failure to have a really robust conversation about that failure.
You have to remember what a big deal Vietnam was—the failure was much more dramatic than people realize today. Over the course of the war, the United States sent 3 million troops to Vietnam. It dropped more bombs there than it did during World War II. It was a massive expenditure of American power and prestige. And it triggered a massive political crisis, destroying Lyndon B. Johnson’s presidency, which until then had been the most successful presidency since Franklin D. Roosevelt’s.
You also had the end of the Bretton Woods system, under which the United States had essentially guaranteed an international economic order that was backed by the dollar, which was backed by gold. You were seeing the end of a process in which the United States had been encouraging the rise of Western Europe and East Asia but on highly asymmetrical terms—helping them with aid, market access, and a defense umbrella. The United States had opened its markets with no fear that it would face any real competition, but by the 1970s, that era of unrivaled supremacy was beginning to end. By the time Foreign Policy was founded, Western Europe had been growing robustly for 30 years and Japan for 20. South Korea was also becoming a real industrial competitor. So all of a sudden, the United States was seeing global competition. It saw itself being buffeted by a series of global forces that it couldn’t control.
That feeling is somewhat familiar today, in two senses. One, there is a sense that the post-Cold War order, which had essentially been American unipolarity, is no longer sustainable, primarily because of the rise of China. And the second is that globalization, which has produced enormous benefits for the U.S. economy as a whole and for America’s large companies, has now also produced real fissures within American society because of the sharply unequal way those benefits have been distributed. And all these problems contributed, then as now, to a feeling that democracy itself was in crisis.
So you have the “shock of the global,” as the editors of a book on the 1970s called it. We have something very similar today.
FALL 1980 | 10 YEARS
Intellectual Insecurity
Although successive editors have reiterated Foreign Policy’s commitment—stated in its first issue—to publish writers at all points on the political spectrum, it is symptomatic of a larger national insecurity that the magazine has at times been under attack for allowing certain views into print. This insecurity, both cultural and intellectual, reflects significant shifts in the global distribution of power, shifts that did not benefit the United States.
—Charles William Maynes and Richard H. Ullman
FALL 1990 | 20 YEARS
America Turns Inward
In 1970, national divisions over the Vietnam War were at their peak, and the main goal of any sensible U.S. foreign policy was to end that war before the damage to America’s image and stability became irreversible. Today, the task of U.S. foreign policy is not extricating the country from a disastrous war but institutionalizing the unexpected peace that has broken out between the United States and the Soviet Union.
—Charles William Maynes
JANUARY/FEBRUARY 2011 | 40 YEARS
Bad Ideas
There is no inexorable evolutionary march that replaces our bad, old ideas with smart, new ones. If anything, the story of the last few decades of international relations can just as easily be read as the maddening persistence of dubious thinking.
—Stephen M. Walt
JT: In his introduction to that book, The Shock of the Global, the historian Niall Ferguson writes that the most destabilizing aspect of the 1970s was the opening up of so many different areas—finance, trade, decolonization, the fracturing of the communist bloc—at the same time. The result was an enormous and alarming increase in the fragility of the global system, which suddenly became much more prone to crisis.
FZ: Exactly. The ’70s represented globalization 1.0. It broke the Bretton Woods system. It broke the comfortable monopoly the United States had enjoyed over manufacturing. It broke America’s ability to simply impose its foreign policy across the globe.
Today, the shock of the global is coming from a kind of globalization 2.0, in which a whole slew of other nations are rising—mainly China but also India, Indonesia, Brazil, and Turkey—and in which everyone is connected but no one is in control. Another American era is ending, and we have to navigate the new system without the road maps of the past. Incidentally, these global pressures often have the effect of creating divides and dysfunctions at home. Then, as now, people talked about a crisis of democracy because Western democracies seemed unable to cope with the challenges of the moment.
Today, a whole slew of other nations are rising—mainly China but also India, Indonesia, Brazil, and Turkey—and everyone is connected but no one is in control.
JT: Just as with the end of Bretton Woods, so today interdependence is increasing dramatically at the same moment that the guardrails have fallen off. U.S. hegemony is declining, international institutions are weakening, everything is becoming more chaotic, and there’s no system for guidance or control.
But one important thing that happened in the 1970s that I don’t see happening today is an intensely energetic response to the failures on the foreign-policy side. The founding of Foreign Policy was very much a part of this response, as American thinkers started trying to craft a whole new set of doctrines to guide the United States into this new era. As the author Carl Gershman argued in Commentary magazine in 1980, containment failed so badly that not only was the doctrine discredited, he thought, but so was the whole generation of experts who had developed and promoted it.
To replace it, a whole new foreign-policy establishment began to coalesce in the 1970s, pitching all sorts of radical new ideas about how the United States should handle international affairs. I’m talking about people like Anthony Lake, Leslie H. Gelb, Paul Warnke, Richard Holbrooke, and Zbigniew Brzezinski. And they kicked off a period of tremendous productive debate—much of it conducted in the pages of Foreign Policy. I’m not sure I see something similar happening today.
FZ: Vietnam broke the back of the Democratic establishment, which really had been the governing establishment of the United States from 1932 until 1968. (The only Republican president in that period was FDR’s favorite battlefield general, Dwight Eisenhower.) And that fracture occasioned exactly what you described: a massive outpouring of doubt and reconsideration. But remember what then happened: The person who got elected in 1980, Ronald Reagan, basically returned to a hard-line version of the same containment policy that had dominated the earlier decades, and in applying it to the Soviet Union, minus interventions in so-called Third World countries, he succeeded. By 1991, the Soviet Union had collapsed, and that process of ending the Cold War was engineered by President George H.W. Bush and his team, who represented, in a sense, a new Republican internationalist establishment that had taken over from the old Democratic one—after imbibing most of its views and values. This was a big shift. The original Republican establishment of the 1940s and 1950s was filled with dedicated isolationists or crazy hawks calling for rollback abroad and witch hunts at home. But starting with Henry Kissinger, you saw the emergence of a skillful, internationalist, free-trading foreign-policy elite on the Republican side that dominated the 1980s and early 1990s.
JT: So did the liberal ideas dreamed up by the early writers of Foreign Policy get lost in the process? Look at what happened during the Jimmy Carter administration. The progressives finally get their paladin in the White House, who would inject values such as human rights into U.S. foreign policy for the first time and wouldn’t be constrained by fear of the Soviet Union. But then everything immediately fell apart, and by the end of the Carter administration, the Soviets had invaded Afghanistan, and Brzezinski was pushing for a restoration of containment.
FZ: The liberal dreams do crumble with Carter—partly because of his own ineptitude but mostly because of events that were beyond his control: the aftereffects of the defeat in Vietnam, the second oil shock, stagflation, Afghanistan, and the Iranian revolution and the subsequent hostage crisis. He was dealt a tough hand. And in response to these failures, Americans elect Reagan, and those dreams of a virtuous foreign policy go away—although Carter’s emphasis on human rights does endure. And there are other continuities. I always think of George H.W. Bush as basically a liberal internationalist in the Harry Truman mold. People forget now, but Bush was the one who popularized the phrase “new world order” in a speech after the fall of the Berlin Wall. What he meant was that the United States was entering a whole new era in which great-power cooperation, multilateralism, and international norms would be much more important. He envisioned a world after the Cold War that was similar to the one envisioned by FDR after World War II. It’s a quintessentially American idealism: not to simply engage in international politics but to transform it.
But one of the forces that held Bush back from really pushing this vision—and people forget this—is how broke Americans thought they were after the end of the Cold War. In his inaugural address, Bush said, “We have more will than wallet.” The implication was that the United States may have wanted to reshape the world but it couldn’t afford to. This wasn’t really true. But it limited the ability of the United States to effect a transformation of the international system at a time when it strode the world like a colossus.
JT: Don’t the 1990s, then, represent another hinge moment—one with great potential for reinvention that never quite delivered the way it was supposed to, just like the 1970s? The peace dividend earned by the end of the Cold War didn’t lead to a massive domestic reinvestment in the United States, as many had hoped it would. Nor did it lead to a new international order and world peace: Lots of nasty little wars broke out around the world during the 1990s. Genocide was committed in Rwanda and the former Yugoslavia. Neither Bush nor President Bill Clinton after him delivered on a new world order. What we got instead was a decade that happened to be very good for the United States because its economy boomed. But we didn’t get a revolutionary new foreign policy that set the world up for something better. What we did get was a lot of trade liberalization—and the failure of the Clinton administration to buffer Americans from the downsides of that liberalization.
FZ: I think you’re right that the ’90s were a great moment of missed opportunities. The biggest missed opportunity was geopolitical. The simplest lesson of the 20th century is that following a cataclysmic conflict, the victor has two choices: It can try to totally destroy its enemies, or it can try to rehabilitate them—and the latter is by far the more sensible strategy. At Versailles following World War I, the Allies tried to humiliate and destroy Germany. And the result was depression, fascism, and war. So in 1945, following World War II, the United States tried to rehabilitate and rebuild its enemies instead. It worked superbly. Yet the United States never thought seriously enough about this same challenge after the fall of the Soviet Union. There was never an ambitious effort to really help Russia get back on its feet and get integrated with the rest of the world. It may seem inevitable today that Vladimir Putin’s Russia became a hostile force on the world stage. But why did Putin come to power? Because of the complete chaos of the 1990s in Russia. The country’s economy contracted more in the 1990s than it did during World War II.
JT: The United States didn’t completely abandon Russia; it did something worse. It sent in a lot of Harvard Ph.D.s to rebuild the Russian economy on a capitalist basis. But their answer was shock therapy, which exposed ordinary Russians to a level of humiliation and misery they hadn’t experienced for decades. And the United States didn’t make any effort to help ease the pain. Meanwhile, on the foreign-policy side, Washington pushed to expand NATO into the former Eastern Bloc, which the Russians saw as an aggressive, punishing move and a betrayal of promises.
FZ: As the diplomat Strobe Talbott put it, there was too much shock, too little therapy. Because Washington never put in place the kinds of buffers that would have protected the Russian people from the sabotage and harsh downsides of an abrupt transition to market economics, Russians lost faith in the very idea of capitalism, the idea of openness, and in the supposedly superior Western model. The reason Washington didn’t create those protections, I think, is because Americans just didn’t want to spend money on Russia the way they had on Europe and Japan in the 1940s and ’50s. Shock therapy was convenient advice because it suggested that all that was needed was to adopt market-friendly policies. There was no need for large aid packages. But of course this was not what Washington did after World War II, when it spent many billions of dollars aiding Western Europe, Japan, and South Korea.
JT: Let’s move on to the 2000s: the lost decade. Following 9/11, the United States became consumed with the war on terrorism and then the invasion of Iraq, which sucked up all of Washington’s energy, blew up the Middle East, and destroyed what little appetite Americans still had for international engagement.
FZ: The Iraq War broke the back of the Republican internationalist establishment in a way similar to how Vietnam broke the back of the Democratic establishment. That’s an important factor in explaining the rise of Donald Trump. People always talk about the global financial crisis as laying the groundwork for Trump’s takeover of the Republican Party, and that’s obviously true. But Iraq’s role is equally important. The failure in Iraq is what has allowed Trump to heap scorn on the Republican elite, on both the Bushes and Sen. John McCain. The Republican base has lost its trust in those figures.
The Iraq War broke the back of the Republican internationalist establishment in a way similar to how Vietnam broke the back of the Democratic establishment—and that’s an important factor in explaining the rise of Donald Trump.
JT: Before we get to Trump, though, let’s talk about Barack Obama. Obama took office in 2009 at a moment when the wars in Iraq and Afghanistan seemed to be waning. He talked a lot about retrenchment: about reducing foreign commitments and focusing inward. So this moment seemed like yet another opportunity for reinvention. It was arguably the third big opportunity since the 1970s. Yet it didn’t happen this time either. Because Obama’s plans ran into the buzz saw of Syria and then Libya. And Afghanistan got so much worse that, rather than withdraw, Obama ended up surging troops to the country.
So yet again the United States lost the chance to enjoy a peace dividend or to retrench and reinvest domestically. In many ways, Obama seemed to leave the United States as, or more, entangled with the rest of the world—and still engaged in a heavily militarized foreign policy. It’s a version of the same policy that pundits and voters had been complaining about since Vietnam and still complain about today. What actually changed, if anything?
FZ: Obama is a very interesting figure because he comes to the job with a very clear sense of how he wants to be different and make a sharp break with the U.S. foreign policy that he’d inherited. He wants to pivot away from the Middle East and toward Asia. He wants to massively demilitarize America’s engagements with the world. He wants to try to find a way to negotiate and stabilize relations with adversaries like North Korea and Iran. The problem he faced was that the world was more intractable than he expected.
Start with the Middle East. The war in Iraq upended the old order in the region. Despite the fact that the war was a failure, it helped unleash powerful new forces that led to the Arab Spring and the vicious repressions that followed. All of this meant instability, and when push came to shove, even Obama found that he couldn’t walk away from that turmoil. I once said to him in an interview that the Middle East was to him what the Mafia was to The Godfather’s Michael Corleone: “Just when I thought I was out, they pull me back in.” So he stayed engaged and tried intervening in Libya and not intervening in Syria. Both ended up a mess, and the continuing turmoil there and in Afghanistan helped prevent Obama from ever managing to pursue his own foreign-policy ideas.
Meanwhile, the acceleration of globalization and the information revolution had caused considerable instability and anxiety for some Americans. Part of the country was also uncomfortable with the election of a Black man. And Trump was able to weaponize those discontents, including discontent with America’s role as global superpower. He saw America as having lost out in this new world. Trump represents a big break in American history. Usually the United States picks as president the more optimistic candidate. Trump, on the other hand, was this dark, pessimistic figure who believed that America was in terrible shape, weakened in particular by its openness to the world, whether to goods and services or to people. Yet he won, and that to me felt very new for American politics.
JT: What does this all mean for today? Are we at another one of these hinge moments that we’ve identified in the ’70s, the ’90s, and 2008? And will that require a revolution in thinking or merely a return to competent management, which is what President-elect Joe Biden seems to be promising right now? In your new book, Ten Lessons for a Post-Pandemic World, you write that the pandemic won’t reshape history so much as accelerate it.
FZ: I think that the acceleration of history in the international sphere will be an acceleration away from the comfort zone that America has lived in for a long time: one in which the United States is still the world’s leading player, the country that everybody looks to organize coalitions—the ultimate guarantor, supporter, and stabilizer of the international system. We’re moving into a world in which other countries are going to play a more assertive role. Many of the newly emerging regional powers have had almost 30 years of economic growth, political stability, and, as a result, a cultural resurgence and growing national confidence. That is most dramatically the case with China, but it’s also true of others. Look at Brazil, India, Turkey: None of these countries are willing to be pawns on a chessboard in which only the two big players make the decisions.
So the United States faces a huge new international challenge that could also be an opportunity. How does it navigate this new international system? Is it still possible to achieve its goals, which have historically been to establish a more open, more ordered, and freer international system? Can it still do that under these conditions, given that it is not the sole dominating superpower?
JT: I take comfort in the fact that Holbrooke, when describing America’s position in the world in the early 1970s, used very similar language to argue that the United States was still a leading power but no longer a hegemonic one able to get its way by fiat. I find that reassuring because, of course, things still ended up going pretty damn well for the United States in the following decades. But if we take your point about how the ground is shifting, what kind of response does that call for from Washington? Does the United States need a radically new foreign policy? Can it get by with more of the generally competent management that characterized much of the last 50 years, as we’ve just laid out? Or does it really need something that feels revolutionary, either for optics or for substantive reasons?
FZ: I think we need more than competent management. The world is just so different today; things have changed on a fundamental basis, much more so than during the earlier hinge points we’ve talked about. Let’s return to China once more. Whatever you may think about its future—and it has plenty of problems—it is four times the size of the United States in population. It does not need to achieve per capita parity with the United States to be the other superpower on the world stage. The U.S. economy is bigger than China’s, but China’s is almost as large and is bigger than the next four economies put together. America’s defense budget is No. 1, but China’s is second and, again, larger than the next four countries’ put together. China is competitive with the United States at the very cutting edge of technology—in artificial intelligence, quantum computing, and biosciences. Look at the current landscape of internet companies. Only two countries have created internet behemoths: the United States and China. In many ways, today’s China is the mirror image of the Soviet Union. The late Soviet Union had parity with the United States in military terms but nothing like parity in economic and technological terms. China is the opposite. Its military is still much, much smaller than the United States’, but it has great economic and technological heft. I think that makes it a more difficult challenge.
Washington needs a strategy that allows it to act as the prime mover, the organizer, the agenda setter but not the guarantor, subsidizer, and military bulwark.
The other huge difference is that the United States doesn’t want to play its traditional role anymore. It’s not just Trump. Obama’s presidency was also about a certain kind of withdrawal from the country’s traditional domineering role. Whatever Biden will do, he cannot reembrace the Kennedy Doctrine: pledge that the United States will “pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure the survival and the success of liberty.” That isn’t going to happen. What Washington needs instead is a strategy that allows it to achieve the goals that I described, with the United States as the prime mover, the organizer, the agenda setter but not the guarantor, subsidizer, and military bulwark. That means learning to play with others in a profoundly different way than the Washington establishment—of both parties—is used to doing.
JT: If I keep pushing back on the possibility for revolutionary change, or at least a very deft reordering of priorities and techniques to allow for a more minimalist and accommodating foreign policy, it’s because I’m skeptical that it’s doable, for several reasons.
The first is institutions. In Foreign Policy’s first issue, Holbrooke wrote an article called “The Machine That Fails,” in which he argued that if U.S. foreign policy was really going to change, the institutions for making it would need to change, too. Because otherwise the machine—what we’d call “the Blob” today—would keep lumbering along. But rather than a reinvention of our foreign-policy machine, what we’ve seen in recent years is a sharp decline in America’s foreign-policy making and diplomatic institutions.
The second, related, challenge is people. I find the fact that Biden’s cabinet is shaping up to look like Obama’s third term both comforting and concerning. While I’m relieved that experienced professionals will finally start running things again, I also wonder whether all that experience will make it harder for them to come up with something dramatically new. Remember, one of the reasons it was so hard for the United States to get past containment was because that was all the establishment knew how to do.
Third, I worry about politics. Biden could well find himself being hemmed in by progressives on the left and Republicans on the right, especially if we get a split Senate or one dominated by Republicans.
Finally—and this is what worries me the most—there’s the fact that the United States has tried to revolutionize its foreign policy so many times now and failed each time. What reason is there to hope that this time will be different?
When I was writing my book, I spent a lot of time thinking about what conditions are necessary for radical change and painful reform. The answer, I found, is that you need crisis severe enough that it convinces the public and the people in charge that if they keep doing things the old way, it will lead everyone to ruin. Then you need politicians courageous enough and skilled enough to act on that realization.
What alarms me today is that neither a majority of the U.S. public nor its leaders seem to recognize that this is one of those moments. The wolf is at the door, and big things must change—or we’ll all end up in even worse trouble than we are today, on a whole other scale of magnitude.
FALL 1975
Early Disarray
The postwar international economic system, grounded in the American principles of economic liberalism and dependent on the special roles played by this country in several different dimensions, appears to be in disarray.
—Marina von Neumann Whitman
SUMMER 1998
The Case for Hegemony
The truth is that the benevolent hegemony exercised by the United States is good for a vast portion of the world’s population. It is certainly a better international arrangement than all realistic alternatives.
—Robert Kagan
JULY/AUGUST 2002
Crash Out
The real question is not whether U.S. hegemony is waning but whether the United States can devise a way to descend gracefully, with minimum damage to the world, and to itself.
—Immanuel Wallerstein
NOVEMBER 2011
Build Back
Our capacity to come back stronger is unmatched in modern history. It flows from our model of free democracy and free enterprise, a model that remains the most powerful source of prosperity and progress known to humankind.
—Hillary Clinton
Subscribers get full access to Foreign Policy’s 50-year print archive. Excerpts have been lightly edited for space and clarity.
FZ: Look, I’m an optimist. Maybe that’s because I’m an immigrant. I came to the United States because I believed, and still believe, that it is better at reinventing itself than any other country. And I do think that if you look back on the last 50 years, the United States has reinvented itself to a substantial degree. It reinvented itself in the ’80s. It reinvented itself economically in the ’90s in many ways. The United States is much more open, more flexible, much more diverse, and much more accepting of that diversity than it was when I came here almost 40 years ago.
On the international front, the reason the United States keeps failing to make major changes is that it remains so remarkably successful. In the 1980s, it was able to win the Cold War by demonstrating how it was so much more vital and vibrant than the Soviet Union. Then during the 1990s, when the Europeans and Japanese seemed as if they were coming into their own, the United States dominated the emerging information revolution. Even in the aughts, which I agree with you was essentially a wasted decade, the United States was able to bring its incredible military power to bear in dealing with the Middle East, which dominated the events of that decade. The results were ultimately destructive, but the display of power was awesome. And the United States can still mobilize an incredible energy and dynamism and power today. But all that makes it very hard to see when it’s failing. And in some core dimensions, it is clearly failing.
That’s why I think the China challenge is so categorically different from those that have come before. China is the first country that is able to present itself as succeeding at the same game. Think about it. It has handled the pandemic better than the United States. Its economy is now growing, while the United States’ remains troubled. It has managed to adapt to the information revolution, to the internet, to advanced manufacturing, to green energy. That’s what I think makes this moment so different for the United States.
The big question, again, is whether the U.S. political system can recognize this challenge and reform. You’re right in your insight from your book. To produce big changes, what you need more than anything else is to learn from failure. In Mancur Olson’s great book The Rise and Decline of Nations, he asks why, 20 years after World War II, West Germany was in such better shape than Britain—when Britain had won the war and Germany lost it. Well, the answer turned out to be precisely that: Because Germany had lost the war, it was willing to radically reform itself in a way that an arrogant Britain was not. So Britain became sclerotic, while Germany became dynamic.
If there is a threat to the United States today, it doesn’t come from the fact that it hasn’t succeeded; it comes from that the fact that it has succeeded enough that it doesn’t feel the pressure to reform.
If there is a threat to the United States today, it doesn’t come from the fact that it hasn’t succeeded. It comes from the fact that it has succeeded enough, at least in relative terms, that it doesn’t feel the pressure to reform. The American economy remains in many ways highly dynamic. The United States has made all the mistakes you describe, but in the long run, who among its enemies did better? Nazi Germany? The Soviet Union? Saddam Hussein? The Islamic State? Even U.S. economic competitors like Japan do not loom as large today as they once did. But China won’t be like that. China will be a challenge the United States has to learn to live with.
The key for America is to not squander its considerable power. A good metaphor here is the fate of the dollar. Throughout all of America’s missteps over the past 20 years, the U.S. dollar has only grown in strength—and it continues to grow today, to the point where it’s more dominant now than ever before in history. Almost 90 percent of transactions in the world take place in dollars. Some 60-65 percent of foreign central banks use the dollar as their reserve currency. Why? Because the dollar is bad but still better than all its potential competitors.
Instead of wielding that power wisely and judiciously, however, Washington has been abusing the power of the dollar. It uses it to impose secondary sanctions on dozens of countries, even close allies. It uses it to impose secondary sanctions on people. It goes beyond Washington. Zealous prosecutors in New York use the dollar’s power to penalize foreign banks for violations of U.S. domestic law, raking in huge fines. Any single case might seem justified, but cumulatively, it amounts to an abuse of power. I worry that this abuse will eventually cause a backlash, and an alternative will arise. When a country like the United States has this kind of dominant, monopolistic power, it always gets lazy. And then it gets into trouble.
What gives me hope, however, is that in our new world, the fact that so many other countries are able to compete effectively may act as a disciplining factor on the United States. That pressure from other countries might force the United States to not violate the rules or spirit of the system it says it wants to uphold. In other words, it could lead to a waning of American hypocrisy. We have long complained that China violates the U.N. Convention on the Law of the Sea with its actions in the South China Sea. But we are ourselves not a signatory to that pact. We accuse China of trade violations that are similar to ones that we make. We refuse to sign up for the International Criminal Court yet use that system to warn others of the consequences of their actions. There must be an end to that hypocrisy. We have to try to strengthen the international system by supporting its rules and norms if we want countries like China to adhere to them as well.
JT: I think that of everything you’ve said, this last argument—that the decline of U.S. power, plus the rise of foreign players, could constrain the United States and thereby force it to pragmatically accommodate itself to the new reality—offers the most compelling grounds for hope. I, too, am an immigrant and an optimist—at least I was, until recently. (I’m still an immigrant.) But I’m not sure I still believe, as Obama claimed and you seem to feel, that history is teleological—that it necessarily bends toward justice or progress. Many leaders around the world no longer believe that about the United States either because what Trump showed them is that U.S. history does not move forward in a linear way but actually looks more like a yo-yo. And that’s led them to conclude that Washington can no longer be trusted, since any progress or commitments made by one president can then be completely erased by the next.
I also worry about the fact that while Biden will have relative freedom to do what he wants internationally—as all U.S. presidents do—the keys to competing with China are largely domestic: reinvesting in America’s educational system, in research and development, in the green revolution, and so on. Yet the U.S. policymaking process required to implement those investments has broken down and will be incredibly difficult to fix. Self-imposed wounds like Buckley v. Valeo and Citizens United—the Supreme Court cases that opened the door to massive corporate spending on political campaigns—plus the gerrymandering of congressional districts have set up a system in which all the political incentives point away from reform. How will we tax emissions or limit the power of the tech giants when massive corporations can legally outspend any person or coalition? How can we get bipartisan support for important legislation when members of Congress have no political incentive to compromise—and will lose their next primary if they do?
FZ: I have to confess that I’m more optimistic about the international scene than I am about the domestic scene. Domestically, we face this very unusual circumstance. Since 1992, the Republican Party’s presidential candidate has only won a majority of the vote a single time. That has produced a furious determination among Republicans to maintain power using the most aggressive means, which are often both ethically and legally dubious. The Electoral College and the Senate help them mightily in this effort. But it produces a deadlocked system and real political paralysis of a kind that is historically rare. So the struggle is about whether the United States can continue to function as a democracy that the world will look up to. I’m not one of these alarmists who warn that the United States is about to become a tyranny. But it could become a very dysfunctional democracy in which reform becomes impossible. We need reforms to tackle immigration, infrastructure, health care, education. All of these are stuck in a messy, suboptimal deadlock. And if that continues, you’re right, it will become harder and harder for the country to play a constructive international role. I do still think that the broader arc of history bends toward progress in the world at large. But it can be a very complicated, messy, and violent process with many setbacks and long periods of decay in any one country. That’s why it’s imperative to work to make things better in America today. And I still have enough of that immigrant’s faith to believe that a more well-functioning, confident, open America would be a good thing for the whole world.
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