Therefore America will find that the putting up of tariff barriers is not
enough. She will have to go one step further: she will have to be the policeman,
to enforce order over her sphere of influence, of the world outside the Soviet
After World War I the US left the league of Nations and withdrew into
isolationism. Nevertheless, inexorably, she was again drawn into the vortex of
war by December 1941.
The Soviet Union, since world War II, dominates her allies as satellites in
Comecon. The Soviets also maintain the balance between them and the other
aspiring communist societies like Cuba, Vietnam and Ethiopia. In like manner,
without adjustments through open and fair trade, the US must enforce some kind
of dominance on her own allies in Europe and Japan. And America and Europe
together must police and keep the peace between the other jostling and
contending societies in Asia, Africa and Latin America. The more dynamic
countries, prevented from thriving through trade, must be prevented from rechannelling
their energies towards expansion of their territory or of their
influence to get assured markets. Unfortunately, or perhaps fortunately for the
rest of the world, the US Constitution enshrines a system of open government
which does not allow its leaders to exercise such dominion over other countries
and governments in the same way that leaders of totalitarian states can.
Let us not forget that protectionism and less trade mean less growth for the
developing countries. This means debt burdens cannot be discharged. Defaults
may be unavoidable, with incalculable consequences for the international banking
system. Even if the banks survive the upheavals, these developing countries will
have to abandon all thoughts of liberalisation towards plurality and more
democratic freedoms. Severe or repressive government is the other side of
austere or negative economic growth.
An over-strong dollar has caused the huge trade deficits. A volatile and
speculative foreign exchange market has exaggerated the factors working
towards a strong dollar. The recent meeting in New York of the G5, Finance
Ministers of five largest industrial nations, has given grounds for optimism that
the over-valued dollar can be brought down by concerted action of the G5
Finance Ministers and their Central Banks. Congress should stay its hand and
allow these efforts time to work.