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Meeting of the Sapped Powers

By Jeffrey S. Nordhaus

USUALLY a summit, like the one between President Reagan and General Secretary Gorbachev last week, would seem momentous. Beyond the standard media hype accorded such events, this summit seemed to solidify the rapproachment between East and West. The two leaders signed the historic nuclear arms treaty negotiated at their last meeting. The criticism voiced by each leader about the other's country that has plagued previous summits was remarkably muted.

While Reagan and Gorbachev relied on the usual summit platitudes--talking of the coming of a new era of relations between their nations--the motives for these meetings were new. Both nations are superpowers, but their kind of power is no longer transcendent. They met to discuss arms, but what was really at stake was economic power. And both seem to be losing it.

WHILE East Asia was building its economic power, the superpower duo was building up their arms caches. Like bumbling giants, both have the strength of 10 nations but can't figure out how to use it. The U.S. may have figured this out in 1975 when Saigon fell; the Soviet Union is learning this critical lesson now as it tries to extricate itself from the disastrous campaign in Afghanistan.

The military strength of both nations is proving to be their weakness, due to their misuse of it. The U.S. is overextended with questionable commitments in Panama, historical duties in Western Europe, and the burden of protecting the world's oil supply in the Middle East. As a result, defense spending accounts for a disproportionate share of the skyrocketing budget--$300 billion this year.

Defense spending comes back to haunt the U.S. in two ways. Money spent on arms can't be spent on needed economic development. This leaves American companies lagging behind competitors whose governments follow a strategic industrial policy, and not just a strategic defense policy. At the same time, America also depends on foreign investors, especially the Japanese, to finance the deficit created by oversized defense outlays. This steals incentive and opportunity from American investors.

THE current international system is so interconnected that the U.S. could not hope to alter it at this stage, even if it did take advantage of American military might. It is not the thousands of warheads dotting the Eastern hemisphere and pointing at U.S. cities that are the main threat to our status as a superpower, but our increasing dependency on foreign powers. There has been a transfer of wealth from the U.S. to Japan that could not have been imagined 25 years ago, as America fell from being the world's largest creditor to the world's largest debtor.

It is not just America's fall, but rather the mechanics of this transition, that pose the greatest threat to U.S. security. Because Japan has purchased huge amounts of U.S. government bonds, the U.S. government is dependent upon that country for continued support. Japan has bought up Western banks and corporations, making its mark in the private sector. Even state governments are clamoring for the investment of what is now the world's foremost economic power. Japan does not simply control lands and stocks; it can wield its financial control to influence American policy.

American has dug itself into a hole so deep, that it is close to impossible to get out. Protectionism would clearly trigger a wave of retaliatory measures from Japan that would send the U.S. and the world into an even deeper depression than it is now experiencing. And Japan's control in America may prove a stumbling block to any attempt to reverse its gains in the U.S.

THE U.S. once was able to use its strength to set up an international arena for trade and investment, but now it is finding itself uncompetitive at the game it taught the world to play. And losing that game has spurred the United States to search for an alternative definition for our national purpose. This is difficult because our way of life has always been tied to our dominance as a superpower. It's like the line in Platoon when one U.S. soldier in the middle of a Vietnamese jungle says of his nation--we've been kicking ass for so long, I guess it's about time we got ours kicked.

This is not an easy fate to accept for a nation that has found its self-definition in being the best, or by kicking military and economic ass. But it would be a sad commentary if stripping away America's money and its guns would strip away its pride.

NONETHELESS, today it seems that the world is realizing more than ever before the primacy of money. Even the Russians seem to be coming around to the traditional American point of view--money is good. China too is opening up to international trade and foreign investment and allowing internal economic reforms.

The trend appears fairly clear: that ideological differences are becoming blurred and that the nations of the world are coming together to create for each state a teleological end of money, money, money. But if we have finally convinced the whole world to play a game for which we wrote the rules, a game we demonstrated could make a nation strong, proud and very rich, we must not change the rule or quit now that real competition exists. Rather, the U.S. must play harder.

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