'Pax Americana' Is in for a Much-Needed Makeover

 | Jan 21, 2017 | 12:00 PM EST
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The irrational and shrill pontificating by wealthy, educated and prominent white folks all over the world fearing the profoundly negative implications of a Trump presidency reminds me of the equally irrational but exuberantly expressed expectations of government-provided debt relief and other free-money programs that would rain onto the downtrodden following the election of President Obama to his first term in office. 

The hand wringing this time is coming from people like Lawrence Summers, Ian Bremmer and Nouriel Roubini warning about the end of "Pax Americana" that will result from Trump's foreign and economic policies. 

Another group including Christine Lagarde, Ray Dalio and others at the World Economic Forum (WEF) express worry about the rise of what they perceive to be "populism" and compare it to what occurred in the 1930s. 

As to the issue of Pax Americana, it's been an illusion purchased by the United States since the end of World War II. Most of the world has been provided military and/or economic support by the U.S. throughout that period, and has as a result essentially been "trust fund babies" of the U.S. 

This began with the reconstruction of Japan in 1945, the implementation of the Marshall Plan and the granting of capital by the U.S. to rebuild Europe in 1948, the China Aid Act of 1948, and the creation of the North Atlantic Treaty Organization (NATO) in 1949. 

Those starting points and the economic, trade and military support that continues to this day, provided by the quiet benevolence of the U.S. government and the tolerance of such by its citizens, have allowed for the illusion of Pax Americana. 

At some point in this process, the timing of which can be debated, three issues developed that are finally being addressed: 1) The countries receiving U.S. support were prevented from operating as true sovereign states because of their reliance on economic and/or military support from the U.S.; 2) these countries were afforded the opportunity to function economically inefficiently due to the support they received; and 3) the U.S. economic wherewithal to continue to provide the support without consideration became exhausted. 

The Trump plan and agenda are simply a recognition of these three issues with the corrective measures essentially being that the world must begin the process of being weaned off that support. 

As such, whether Pax Americana can survive the transition is up to the recipient countries, not the U.S. Trump will afford those countries the opportunity to truly act as sovereigns and participate voluntarily in the peace that comes from the Pax, rather than buying their acquiescence to it, as has been the case since the end of WWII. 

I don't think this reality is lost on the likes of Summers, Bremmer, Roubini and others. I think it's more probable that they are simply gaming the immediate insecurities, naturally wrought by change, to their own financial benefit and ideological preferences. 

As to the concerns being raised over the perceived threats of the rise of populism expressed by Lagarde, Dalio and others at the WEF, the comparisons to the 1930s and the insinuation that the constituencies of Trump or Marine Le Pen in France or others around the world are similar to those of Hitler, Stalin or Mussolini is grossly inappropriate and just plain wrong. 

The outcry by people all over the world about the lack of employment opportunities can and will be partially alleviated by new economic, trade, military and diplomatic relationships being structured, which will be beneficial to all. 

What can't be resolved through such actions, though, is the increasing loss of opportunities for human labor due to technological advances that are permanently displacing labor and leading to "structural unemployment," which ironically was also a big topic at the WEF this year. 

That is a global phenomenon that affects all of humanity and presents the greatest challenge to the existing economic constructs everywhere. 

The answers to these challenges are not unknown, though. Creating the political will to enact the changes necessary is the challenge. 

I last addressed the corrective actions necessary in the column, "We're Being Given the Wrong Answers on 4 Key Issues," but have addressed the issue numerous times over the past several years. 

The restructuring of Pax Americana is the first step in the process, is now necessary, is the easiest to implement and is capable of providing the quickest positive economic response for all.

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