For half a century after World War II, the United States pursued one of world history's most successful national strategies: it nurtured the economic and institutional rebuilding of Europe and Japan, the development of other countries, especially in Asia, and bonded them economically, while protecting this strategy with superior military force. Beginning with the Marshall Plan, Presidents Truman and Eisenhower fashioned this bipartisan strategy, limiting military expenditure whenever it threatened resources for the core economic strategy, and all presidents through Clinton pursued it, the latter with particular vigor. This strategy defeated the Soviet Union, which also had a powerful military and a powerful ideology (however perverted the practice), but gave nearly exclusive priority to the military.
Analogues of this economics-focused strategy consolidated the security of U.S. allies. Japan became a big power despite lacking a strong military. In South Korea, General Park Chung Hee took over a country inferior to the North politically, economically, and militarily, and shifted to an overwhelming priority for economic development; today South Korea is stronger in all respects due to an economy more than twenty times the size of that of its military-obsessed adversary. In Indonesia, General Suharto abandoned territorial claims to most of Southeast Asia in order to focus on development and made Indonesia the clear regional leader. China's Deng Xiaoping, emulating them, cut the military budget from 16 percent of GDP to 3 percent in order to focus on development, and China became a great power in only thirty years.
In 2001, the United States abandoned its successful economics-focused strategy. For the first time in modern history, all major foreign policy positions were held by defense specialists: General Colin Powell as Secretary of State, Richard Armitage as his deputy, Donald Rumsfeld at Defense, Condoleezza Rice as National Security Advisor, all led by a former Defense Secretary, Vice President Cheney.
As a result, in planning the Iraq war, there was no economic voice; any development expert knew that dismissing the entire ruling class would be catastrophic. Even after Great Revolutions like those of France and Russia, a country can only be run by the experienced bureaucracy. In Afghanistan, expenditures on economic development were pitiful and Rumsfeld insisted that economic development must be controlled by the military; the accumulated civilian expertise and success of half a century were contemptuously dismissed.
With its overwhelming military priority, the United States now has the most powerful military in world history. Because of its exceptional competence and devotion, Americans rightly hold the military in higher esteem than any other government institution. But this great military has lost every war it has fought since the change of strategy, and continues to lose.
The problem lies not with the military but rather with lack of civilian leadership. Chopping off the economic arm and relying on one-armed military tactics was not partisan and was not a calculated decision. It was initiated by a right-wing Republican administration, then persisted under Democrats. It is sustained not by explicit strategy, but rather by inertia and interest group pressures. The lobby for ever-increasing military emphasis holds near-absolute sway in Congress, which imposes even weaponry and bases the Pentagon doesn't want while starving the State Department and economic institutions.
Nor is the problem lack of money for a positive economic policy. Much of the needed local institution building and international trade regime development have minimal cost. Given scarce resources, Eisenhower and Truman trimmed back the Pentagon budget. Moreover, the almost exclusively military-focused strategy has turned out to be wildly expensive. Future historians will likely say that the United States wasted at least $2 trillion on unbalanced strategy in the Middle East and Afghanistan. The problem is mis-allocation.
Although all presidents through Clinton, indeed particularly Clinton,
adhered to a balanced military-economic strategy, Congressional provincialism initiated the gradual abdication of U.S. economic leadership even before 2001.
The institutions of U.S. global leadership were the International Monetary Fund and World Bank (1944); the Marshall Plan (1947), followed by generous development assistance for the poorer countries; the U.S. dollar's global dominance; and U.S...