Power and the American Mindset

By: Kira K. Self

September 2007

E-mail: kself@uga.edu

Throughout the centuries, empires have risen and fallen; no empire has withstood the test of time. For the past fifty years, the United States has risen to immense power remaining unchallenged after the fall of the Soviet Union in 1989. However, in the last few years, a new power has arisen and is already challenging the United States?place as the world hegemon: China. Like all empires, the United States? power seems to finally be weakening. Already, the U.S. cannot maintain the power it enjoyed following World War II when the U.S. gave billions of dollars in aid to European countries under the Marshall Plan. The United States is too small to do what it once did. As seen in the War in Iraq and the War on Terror, the U.S. cannot accomplish everything it wants to without consequence. As a consequence of the War in Iraq and a declining economy, the U.S. not only has the largest debt in its history, already in the trillions of dollars, but now has a $201.6 billion trade deficit with China, the country with the 2^nd largest economy in the world only after the United States (CIA ?st1:country-region w:st="on">U.S.?. China is a force to be reckoned with. While China is and will continue to be a threat to U.S. power and interests, the U.S. must find a way to regain its power and combat the threat of China.

The U.S. can accomplish both objectives if it joins economic forces with the European Union, Russia, Japan, and India to form what is known as the Grand Alliance. Purposed by Italian businessman Carlo Pelanda, the Grand Alliance calls for the formation of the major democracies in the world, including the United States, the European Union, and the strongest Asian democracies into an economic bloc. This economic bloc would be extremely powerful, surpassing China in size and having more resources to draw on to not only help other countries develop but specifically to help develop democracies. The Grand Alliance would, in theory, serve to bolster U.S. power diplomatically and economically. As a result, this economic bloc would serve as the central pillar of the global market and would maintain the stability of the market by enforcing market rules. However, in order for these countries to enter into the Alliance, they all must give up a piece of their sovereignty making themselves equal to each other in some ways. This paper will examine only the U.S. perspective and motivations for why it would join the Alliance. It assumes the other countries would already be willing to join it.

Before the United States would even consider joining the Alliance, it must view China as a threat to its power and its economic capabilities and, at the same time, realize its own shrinking power in the world. Once these two conditions are realized, the U.S. would be willing to look around for ways it could regain its power and combat China. This is when the Grand Alliance must be offered as an olive branch. One crisis that might speed up the U.S. realization of its weakening powers and the Chinese threat would be if the U.S. were to face a major economic or military blow. Finally, when the Grand Alliance is offered to the U.S. as a possible solution to this crisis, it would need to be altered slightly in order to entice the United States to participate. The Grand Alliance must be changed from a horizontal, matrix alliance, as Pelanda suggests, to a more vertical alliance, in some ways, giving the U.S. slightly more power and control of the economic bloc. Once this happens, the Untied States would be more likely to consider joining the Grand Alliance.

?/span>This paper will first look at why China should be considered a threat to the United States and how and why U.S. powers have weakened. Next, it will examine the circumstances under which the U.S. would join the Grand Alliance and how the Grand Alliance might be changed to improve the probability that the U.S. would join it. Finally, we will briefly review once again the factors that are necessary for the U.S. to contemplate joining the Grand Alliance.

The China Threat and U.S. Power

Thirty years ago, the United States and the world would not have considered China as a threat. Before the reforms of the 1970s, China had a centrally planned economy that was largely closed to international trade. Among the first reforms China implemented was the phasing out of collectivized agriculture. Household and village responsibility replaced the old system of collectivization in agriculture giving local officials more power. China also opened the country to foreign trade and investment. Since 1978, China’s economy has become more market-based. Its GDP has more than quadrupled. In 2006, China’s GDP of $10.21 trillion was second only to the $13.06 trillion GDP of the U.S. economy (CIA ?st1:country-region w:st="on">China?& ?st1:country-region w:st="on">U.S.?.?China’s GDP growth rate of 11.1%, when compared with the U.S.’s meager growth rate of 2.9%, indicates that China will soon surpass the U.S. and become the world’s largest economy (CIA ?st1:country-region w:st="on">China? & ?st1:country-region w:st="on">U.S.?. Moreover, the U.S. is dependent on China in trade. The United States faces its highest trade deficit in its history. In 2006, its trade deficit with China alone was already at $201.6 billion (Baja A1). Clearly, China’s improving economic conditions have made it a force to be reckoned with as it continues to close the gap between its power and the United States? power.

Already, China has gained entry into major trade organizations like the Word Trade Organization (WTO). It is a permanent member of the UN Security Council and has improved diplomatic relations by hosting and participating in the six-party nuclear non-proliferation talks with North Korea. China wants to be on good terms with most countries so as not to harm foreign investment in China, which has been instrumental in its economic growth and more, specifically the growth of urban jobs. At present, China remains on friendly terms with the United States and does not want to aggravate it. China continues to try to gain as much diplomatic and economic power as it can so that it can gradually become the largest regional power bloc in the world gaining it a seat at any multilateral negotiation table. China’s ultimate goal is to surpass the United States making China the new world leader (Pelanda 52).         ?

While the Grand Alliance might provide the United States with a solution to regain some of its power and ensure that China will not surpass the United States, the U.S. will not consider joining the Grand Alliance until it recognizes its weakening power and views China as a threat. Already, there are signs that the U.S. is beginning to understand the ramifications of China’s new power. One of these signs is the rising U.S. trade deficit with China. No longer can the United States force China to do its bidding. The most prominent example of China’s harm to the U.S. already is its under-valued currency. Since 1994, China has kept its currency undervalued relative to the U.S. making Chinese exports cheaper to the U.S. and U.S. imports into China more expensive (CIA ?st1:country-region w:st="on">China?. As a result, thousands of manufacturing jobs across the United States have been lost. This has contributed to the United States? shrinking middle class, since U.S. businesses cannot compete against China, and has helped create a massive trade deficit with China (Labonte 2). Although the U.S. has pressured China to allow its currency to be determined by market forces, the U.S. cannot force China to raise its currency. The U.S. is dependent on China for imports and more importantly, China holds a significant amount of U.S. treasury bonds. If China were to decide to cash in these bonds, the U.S. economy would be put into jeopardy. Thus, the U.S. is beginning to feel the limits of its influence in China.

Besides this example, a new poll released by United Press International (UPI) found that out of 5,141 U.S. residents in May 2007, 59.8%, a clear majority, thought China was an economic threat compared with 5.6% who saw China as an economic partner and ally. However, there is still a clear debate within the current Bush administration about China and its objectives. Some officials view “China as a growing potential danger, engaged in strategic deception to mask hidden goals?while others, like many members of the U.S. State Department, view China as a developing power that will “evolve into a benign power through trade and other global economic interaction?(Gertz A4). Without a doubt, the U.S. remains wary of China. While it is slowly coming to the realization that it must do something to strengthen its power against China, it has not actually reached the conclusion that China is an imminent threat to U.S. interests.

To further this realization, journalists, businessman, and government officials must continue to monitor China’s motivations and practices to make the United States see the threat China poses. For instance, look at the recent recall of poisoned toys by American toy giant Mattel (Weeks A4). Mattel recalled thousands of toys that had been manufactured for Mattel in China because they were believed to have excess lead poisoning. One cause of this can be found in the harsh conditions of Chinese factories where many times safety for the workers and for the material found in the toys falls through the cracks (Barboza C5). As an emerging power, China should be attempting to correct these problems, but China maintains these practices are necessary for China to grow its economy. Not only do these types of practices hurt the welfare of Americans and the Chinese people but also these practices may indicate how China will act to enforce global market rules if it replaces the U.S. as the new leader in the global market.

As China continues to grow, U.S. power will continue to weaken affecting the ability of the United States to do what it wants to around the world. With the U.S. national debt reaching into the trillions of dollars, the U.S. military stretched to its breaking point, and the U.S. economy doing poorly as has been seen in its housing market, the United States may likely go into a recession or worse a depression. A depression would provide the ultimate economic blow to the U.S., which would likely provide the spark that would awaken it to the need to find allies that could help stabilize and grow its economy. At this point, the Grand Alliance could be offered to the U.S. as a way back. The Alliance would help it retain its power and combat China. Also, a significant military defeat in Iraq may awaken the U.S. to the need to reform itself. As the Iraq War progresses, countries around the world, including China, are starting to fill the void left by the U.S.’s preoccupation with Iraq. By the time the U.S. gets done with Iraq, U.S. diplomatic power may have been replaced by diplomatic initiatives from other countries like China. Thus, the U.S. will begin to feel the limits of its power and realize that it needs to form alliances to regain it. According to international trade specialist Maria Sampanis (14), a declining hegemon will seek to form coalitions among its peers in an attempt to gain back some of its power by increasing its international bargaining position. She goes on to argue that the hegemon will be willing to sacrifice some costs to its independence to achieve its goals. However, to cooperate, the declining hegemon must have shared incentives with its coalition partners or a coincidence of purpose (Sampanis 14). For the U.S. and all the other potential members of the Grand Alliance, the coincidence of purpose would be to combat the threat of China while the incentive would be to achieve greater economic power.

The Grand Alliance

Once the United States realizes its weakened power and sees how China could soon surpass the United States as the largest economy and new world power, then the United States would be more likely to look towards the Grand Alliance as Sampanis indicates a declining hegemon would do. The Grand Alliance calls for the formation of an economic bloc of democracies that would combat China. For countries in this economic bloc, a certain measure of sovereignty must be given up. The Alliance calls for a more European style horizontal model as opposed to the vertical American model where countries are controlled by the United States. According to Pelanda (146), the United States must treat the other countries in the Alliance as equals not as subordinates that must follow the United States?will. This is where it gets tricky. The United States has never succeeded in alliances of this nature. Americans see themselves, their methods and their ideology as superior (Pelanda 23). Their strong nationalism is reflected in numerous polls and surveys. According to the Pew Global Attitudes survey, 79 percent of the Americans polled agreed, "it's good that American ideas and customs are spreading around the world"; 70 percent said they "like American ideas about democracy?(Pei 30). This strong nationalism has contributed to the way Americans deal with other countries when it forms alliances with them. However, with the right motivation and incentives, the U.S. can give up portions of its sovereignty.

Only once in U.S. history has America formed an alliance in which it gave up even a portion of its sovereignty. This was when it signed the North American Free Trade Agreement (NAFTA) of 1994. NAFTA eliminated many tariffs among goods between the U.S., Canada, and Mexico in an attempt to liberalize trade between the countries. By giving up the right to enforce tariffs on many of its goods, the U.S. gave up a portion of its sovereignty. When the U.S. signed the agreement, there was a great deal of controversy within the United States about the agreement and worry that it would hurt the U.S. economy, since the U.S. could not longer implement protectionist policies on certain goods covered in the agreement. However, the U.S. signed the deal anyway because the U.S. realized the possible benefits of the alliance including the desire to remove market barriers in Mexico providing better access for U.S. investors and traders, to provide a counter weight to the growing influence of the EU, and to improve economic conditions in Mexico by possibly relieving some emigration pressure on the U.S. (Abbott 522). Also, good diplomatic relations with both countries may have helped the deal go through. While these factors provided the principle incentives for the U.S. to sign the deal, the U.S. was willing to give up a portion of its sovereignty because the alliance was a vertical alliance with the U.S. being the dominant economic actor in the agreement (Abbott 521).

Thus, for the U.S. to consider the Grand Alliance, in which the United States must give up much more of its sovereignty by merging its finances with the European Union and the Asian democracies, the United States must be given incentives to join. Also, diplomatic relations with Europe must improve, especially with those that opposed U.S. intervention in Iraq, namely the French.

While the Grand Alliance calls for all countries to treat each other equally, the U.S. would be more likely to join, as has been seen in NAFTA and in numerous other alliances, if the Grand Alliance incorporated some characteristics of a vertical alliance. As Sampanis said, while the U.S., since it will have recognized its declining power, may be willing to sacrifice some of its autonomy to achieve its goals, the Alliance as is requires the U.S. to give up too much of its autonomy by U.S. standards. Thus, the Alliance, as a good faith gesture for the U.S., must be changed into more of a vertical alliance. Certain countries in the Grand Alliance would have more say so than others by getting more votes than others. The U.S. should get two more votes than other countries since it is the largest economy and will contribute the most resources to the Alliance. Eight other countries would serve with the United States as the major ruling body of the Alliance as Pelanda (141) states in his strategy: the G8 countries and India. Thus, the nine countries would be: Japan, Russia, Italy, Germany, France, Great Britain, Canada, the United States, and India. The U.S. would accept them as the U.S. already holds these countries in a much higher regard than more minor European countries. Also, these countries already serve as leaders in their region and are powerful enough to be central figures in many of the world’s major organizations including the United Nations and the World Trade Organization. India must be included since its population and economy are so big. As India is a rising power, the Grand Alliance cannot afford to have it align itself with China. Therefore, these nine countries would have greater influence on the decisions the Alliance makes than would other countries. When other countries join the Alliance, it would be under the assumption that these countries make the decisions. For instance, a majority vote would determine when the Alliance would pull together its resources to act as the lender of last resort. This change would greatly increase the likelihood that the U.S. would join the Grand Alliance.

Conclusion

          ?The Grand Alliance would provide many in the world a workable solution to the threat posed by China. For the United States, joining the Grand Alliance would not only help it to regain some of its lost power, but it would keep China from economically surpassing the United States and replacing the U.S. as the central pillar of the global market. The Grand Alliance would become the central pillar of the global market ensuring the global market ran smoothly and helping to develop democracies. The United States must view China as a threat and realize its weakening influence in order for it to even think about giving up a portion of its sovereignty and joining the Grand Alliance. A major economic or military blow may speed this process up. Once it realizes these problems that it faces, the United States will seek a solution to its problems. Thus, it will look towards the Grand Alliance. Because of its history of joining alliances where the U.S. is in control of other countries, the Grand Alliance must be changed to accommodate this U.S. view in some ways. This change in combination with the right incentives will entice the U.S. to join the Grand Alliance. Without a doubt, if successful, Carlo Pelanda’s idea of a Grand Alliance would provide the necessary solution to the problem posed by China. The formation of the Grand Alliance would bring about a new economic empire, which would implement market rules while spreading democracy around the world.

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