Does U.S. Bloated Foreign Policy Provide Tangible Economic Benefits? One Empirical Test

Daniel Drezner at Foreign Policy questions vague assertions that projecting U.S. power everywhere at crippling expense pays great dividends and finds some interesting things:

In the latest Foreign AffairsStephen Brooks, John Ikenberry, and William Wohlforth argue strongly in favor of "deep engagement."  They proffer a number of reasons why the U.S. benefits from current grand strategy -- but one of the more intriguing ones is that the U.S. receives direct economic benefits from its security arrangements... 

Brooks, Ikenberry et al. specifically talk about how the U.S. got Germany and South Korea to agree to economically beneficial policies by its security commitments. But Drezner says:

With respect to West Germany, it's certainly true that Washington was able to get Berlin to accommodate to U.S. preferences -- but only for a few years.  The Bretton Woods system ended in 1971 because the Germans finally said "Nein!!" to U.S. inflation.  So the economic benefit wasn'tthat great. 

The South Korea case is more intriguing, because it's present-day and there's a real, live policymaker quote there.  If a U.S. administration official asserts that the security relationship mattered, then it mattered, right? 

Well.... no.  We need to compare KORUS with something equivalent to provide a frame of reference.  If security really mattered that much, then the Korea-United States free trade agreement should contain terms that are appreciably more favorable to the United States than those contained in, say, the Korea-European Union free trade agreement, which was negotiated at the same time.  This is a great test.  After all, the U.S. is the most important security partner for South Korea, whereas the only thing the European Union could offer to Seoul was its large market.  So if Brooks, Ikenberry and Wohlforth are correct, the U.S. should have bargained for much better terms than the E.U.  Right?

After going into the specifics of the trade deals in some detail, Drezner concludes:

the U.S. got better terms on the export sectors it cared about more, and the E.U. got better terms on the export sectors it cared about more.  Both agreements are comprehensive in scope and contain roughly similar terms across most other sectors.  Indeed, both the Congressional Research Service and U.S. Trade Representative's office acknowledge the basic similaritry between the deals, as well as the areas where the Europeans did better.  So, in other words, America's ongoing security relationship with South Korea did not lead to any asymmetric economic gains. 

U.S. throwing its military weight around the globe surely provides economic benefits to the people employed to run (and to be apologists for) that brand of expansive foreign policy, and to those who sell weapons and services to our military complex. But that is a different matter.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Almanian.||

    No doubt about the economic benefits from where we sit. It's really a no brainer.

    s/ Every Defense Contractor EVAR

  • Pro Libertate||

    Screw that. Why not charge for our services? I mean, if we simply must meddle, why not get paid for it?

  • Anonymous Coward||

    What's the point of imperialism is the subject nations aren't paying their fair share?

  • Pro Libertate||

    It's not imperialism, it's payment for world peace and stability. We've been doing it free of charge, but that special introductory period has expired.

  • Sam Grove|| peace and stability

    Really? You're saying that it would have been worse without our military presence all over the world?

  • Pro Libertate||

    Nice planet you have there, bub.

  • Calidissident||

    "World peace and stability"?

  • John||

    So if Brooks, Ikenberry and Wohlforth are correct, the U.S. should have bargained for much better terms than the E.U. Right?

    Not necessarily. Maybe the US just didn't press its advantage like it should have. It is not like nations and the US in particular don't fail to act in their own self interests.

  • Calidissident||

    Define self-interests? And whose interests are we really talking about?

  • tarran||

    One could argue, however, that fractionally better trade deals isn't where the action is.

    When I was in the Navy, the overall mission of the Navy was held to be to keep the sea lanes open so trade could take place. So, one could argue that the benefit isn't that the U.S. gets a better deal than someone else, but that the military intervention allows the U.S. to get a better deal than it would absent the intervention. A trade deal with a quasi fascist South Korea is better than no trade deal with a unified commie Koryo.

    I don't agree with that argument, but that's I think the big one that needs to be rebutted, not that our military gets the other side to be nicer to us than they would be if we didn't have it and someone else was stepping up to the plate.

  • waaminn||

    Sounds like a pretty solid plan to me dude.

  • LTC(ret) John||

    Considering the money we pour into Germany and Korea, I should think there is little to no benefit we get from being there, in particular. Were those facilities and troops paid for by the Germans and Koreans, maybe...

    If you have to have folks overseas, for God's sake put them near where they need to be, and in an affordable place to boot.

  • Steve G||

    Starting to think I shoulda asked for a discount at the juicy bars...


Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.