Technology & Trade

What Goes Around Comes Around

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By William Reinsch

John Maynard Keynes famously said, “In the long run, we’re all dead,” addressing the chronic dilemma economists face in sorting out short term from long-term consequences of policy actions. You can infer from his comment that economists’ statements that things will work out all right in the long run do not provide much comfort to people having to live in the here and now.

However, the dilemma of whether to focus on short-term fixes or long-term policy changes is one that has vexed politicians for decades. Because politicians are beholden to the voters, they tend to go for the short-term quick fix and go home to brag about the results, knowing full well that the problem of dealing with — or paying for — the mess they have created will probably fall on others. That adds a macabre note to Keynes’ observation. We may not all be dead in the long run, but the people responsible for the mess we find ourselves in then will certainly be dead and therefore beyond blaming.

The short term-long term dilemma has obvious domestic implications. Harry Reid went for the short-term fix when he used the “nuclear option” to change Senate rules to make it easier to confirm Obama administration nominees that were being slow-walked by the Republicans. He got a lot of his nominees, but the long term damage to the Senate as an institution remains uncertain and in jeopardy as the Republicans now consider doing the same thing if necessary to get the Supreme Court nominee through. If you mess with the rules, it comes back to bite you, as we are now seeing with Senate Democrats inability to block President Trump’s nominees because of Harry Reid’s rule change. The real damage, though, is to the Senate, designed to be the slower, more contemplative institution that would cool the fever of the electorate (and the House) through a more deliberate pace.

Sen. John McCain was right when he said, “What goes around, comes around.” He was talking about Senate rules changes, but the same goes for our international relations. The president has just offended the Australian prime minister over a previously negotiated agreement to accept 1250 refugees. The president may get what he wants on the refugees (which would be a mistake in my view), but he alienated one of our best and most reliable friends in the Pacific region as well as a substantial number of Australians who will stand behind their leader. There is already a debate among Australians about their relationship with the U.S. and whether it is in their long-term interest to move closer to China, and the government has already negotiated an FTA with China. The president’s intemperate phone call adds fuel to that fire and weakens our long-term position in the Pacific. And don’t think for a minute that this episode was not noticed by leaders in New Zealand, Indonesia, Malaysia, and other countries in the region.

We are facing the same problem with Mexico. The president’s tendency to treat Mexico as — what some have called — a ‘vassal state,’ and might bully them into a revised NAFTA agreement he can brag about. But it will also seriously damage a relationship that it has taken years to build up and which we badly need when it comes to cooperating on drug trafficking and terrorism. Again, the long-term is being sacrificed to deal with a short-term issue.

I predict the next target, if you listen to Peter Navarro, will be Chancellor Angela Merkel who will be attacked for her “undervalued” currency as if the Germans alone controlled the value of the euro. Germany has no doubt benefitted from the euro’s depreciation, but the reasons for its decline cannot be laid at the feet of a single government (and, by the way, it hasn’t stopped Germany from experiencing the same decline in manufacturing jobs that we have seen). The German chancellor has been our best friend on the continent and an important partner with the U.S. on numerous foreign policy issues. Pushing Germany away will complicate our relations with the rest of the EU as well as our efforts to maintain a united front with respect to both Russia and Iran. In this case it’s not even clear what we gain in the short-term, while the long-term dangers are obvious.

These are not the only cases. It’s a big world out there, and there is no shortage of leaders left to offend, many of whom we will need in the future, and who will not be there if we don’t treat them with respect now. In my view, presidencies should be more about the future than the present. Leaders ought to make a world that will be safe for our children and their children and to manage an economy so future generations can grow and prosper. Sometimes that requires ignoring the political demands of the moment and taking the higher and longer road.
William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative

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