Abandoning American Global Leadership Would Hurt American Consumers

By John Gustavsson

Sunday, September 10, 2023

 

Why should America be the world’s sole superpower? That is a question that has long been asked by leaders from Beijing to Moscow, but is also increasingly, and alarmingly, being asked by ordinary Americans who fail to understand why they should care where their country stands in the global pecking order. To many Americans, being the world’s foremost superpower has no apparent benefits, only downsides. Appearances are, however, deceiving: Even after years of high inflation, it is an undisputable fact that American consumers enjoy a “superpower discount,” a privilege they would lose out on if the U.S. ever lost its global position.

 

With no one country able to replace it, without U.S. leadership we would devolve into what is known as a “multi-polar world,” a world without a single global leader, where instead each geographic region has its own great power. This type of global power-sharing might seem nice at first, as it would allow the U.S. not to care about conflicts on the other side of the world, leaving it to mind its own backyard. On close inspection, though, a multi-polar world would have serious consequences for the U.S. and, crucially, for American consumers.

 

First, trade deals would get worse. Many, particularly on the right, bemoan the U.S. trade deficit and the supposedly terrible trade deals that the U.S. has agreed to over the years. It is more than a little bit ironic that those who complain about trade deals tend to be the same people who promote isolationism. In a multi-polar world, America’s influence would naturally be less than what it is today, and so would its leverage when negotiating trade deals. Today, countries seek trade deals with the U.S. not just because of the economic benefits, but because they understand the benefits of being a U.S. ally, whom the U.S. has an economic interest in protecting. In a multi-polar world with an isolationist U.S., there would no longer be any non-economic benefits to trading with the U.S., and it would become far more important for countries to stay on good terms with whichever country holds power in their particular region.

 

Worse trade deals would be bad news for the tens of millions of workers employed in U.S. export industries, not least manufacturing. Exports would suffer, unemployment would increase, and the U.S. dollar would depreciate. A weaker dollar would in turn mean higher retail prices on all imported goods, hurting American consumers.

 

As if this were not enough, a multi-polar world would grant greater influence over the very terms of trade and business conduct to the likes of China and other large, totalitarian countries. If you are concerned about Chinese copyright infringement, Chinese apps like TikTok, and Chinese influence over American businesses like the NBA, Hollywood, and Disney, rest assured that this is only the beginning. With the U.S. stepping back, Chinese influence over the World Trade Organization would grow. Even American businesses that do not trade with China would likely find themselves affected by the terms of global trade set by Beijing and other large totalitarian regimes under this new world order. It goes without a saying that this would be bad news for American consumers, workers, and entrepreneurs.

 

Second, there would be wars. A lot of wars. One must remember that a multi-polar world is not a new concept. In fact, for most of modern human history, it has been the norm. For most of world history, wars were far more common and more deadly than they are today, as countries fought one another for the position as their region’s dominant power. The U.S. rise to global hegemony put a wet blanket on most of these regional conflicts. The West united under the U.S. umbrella, and the prospect of U.S. intervention has kept despots all over the world from waging wars of conquest against their neighbors.

 

Without that prospect, wars would once again become commonplace. China would invade Taiwan, and North Korea might try its chances against South Korea. India and Pakistan are two other countries between which war could conceivably break out again. In Europe and Central Asia, Russia, even in its now-depleted military state, might well attempt to gobble up some of its smaller neighbors such as Moldova and Georgia. The Middle East and Africa are two regions with too many potential conflicts to list.

 

Then again, why should any of this concern ordinary Americans? Even if the world erupts into multiple regional conflicts, what does it matter so long as America doesn’t have to send its own sons and daughters to fight in them? Surely no country would try to invade America even if it were not the world’s undisputed superpower? No, of course not, but staying out of war does not mean being unaffected by it.

 

Which brings us to the next issue: Supply-chain disruptions would become everyday occurrences. Few have forgotten the supply-chain disruptions that followed the Covid-19 lockdowns, with serious shortages, delays, and rising prices. These disruptions, however, are nothing compared to the disruptions that would follow the rise of a multi-polar world. Wars are well-known for breaking down supply chains. Shipping tends to be a lot more difficult and expensive when the seas are teeming with mines. Not being able to import consumer goods from China and semiconductors from Taiwan would be bad enough, but in all likelihood a war would also cause varying degrees of supply-chain breakdowns across the entire region. Significant shortages and price increases would follow.

 

Any nation in Europe that managed to stay independent and neutral throughout the World Wars can tell you that war affects you even if your country isn’t a combatant. This time, however, the supply disruptions would arguably be worse than back then. At the time of the World Wars, the world was still not a very global place. Most things were still manufactured not far away from where they were sold, using parts sourced in the country of production or a neighboring country. In today’s interconnected world, even goods manufactured in America frequently have essential components produced in dozens of different countries, and a war in any of them — or even in the proximity of any of them — could disrupt imports and halt production. Each such halt in production would see workers furloughed, and cause shortages and higher prices even on goods manufactured in the U.S.

 

Making matters worse, stockpiles are not what they used to be. In the past, manufacturers would frequently stockpile months of supplies in warehouses to ensure that they could continue production in the event that supplies were interrupted. With the rise of just-in-time logistics, an approach that minimizes inventory in favor of ordering new supplies only as old ones are used and sold, this is no longer the case. Under JIT, even a short-lived disruption in the supply chain could be enough to shut down a plant.

 

Of course, in a multi-polar world, manufacturers are likely to abandon JIT. While this would go some way towards mitigating the impact of supply-chain shocks, it would also increase retail prices as manufacturers passed on the increased storage costs to consumers.

 

Many nations around the world that have enjoyed safety under the umbrella of U.S. protection would also have to rearm themselves. These countries would have to raise taxes to fund larger militaries, and dedicate a greater proportion of their labor force to maintaining those militaries in order to deter hostile neighbors. This goes in particular for countries in the vicinity of Russia or China. Higher taxes and larger armies mean higher costs of production and fewer workers available for the private sectors of these countries, including for the industries that manufacture exports to the U.S. These costs would be passed on to American consumers.

 

If, however, global supply chains in a multi-polar world would be so unreliable, wouldn’t this incentivize businesses to bring home manufacturing to the U.S.? In theory, the answer is yes. Unfortunately, those Americans who dream of a new golden era for manufacturing towns, like the one that occurred after World War II, would almost certainly be disappointed. Just as outsourcing reduced costs, reversing it would increase them. With labor costs so much higher in the U.S. than in the developing world, any manufacturers who were forced to return would first and foremost rely on automation technology to reduce the number of employees it needed.

 

There would still be an increase in manufacturing jobs, but all but the most skilled jobs would be unlikely to pay very well. Instead of paying the kinds of salaries that Americans ask for, businesses would likely lobby to increase immigration in order to access cheaper workers from the developing world. Today it may seem like Americans would never accept this, but at this point in our multi-polar-world scenario, global supply-chain breakdowns would have caused shortages and inflation worse than anything seen these past few years. The vast majority of voters do not work in manufacturing, and they would likely be desperate for anything that could provide relief, including cheap migrant labor.

 

Seeing as how America would remain an uninvadable safe haven even under this scenario, a massive increase in the number of asylum applications would also be likely. Increasing legal immigration could be sold both as a humanitarian measure and as a way to reduce the costs of production and ease inflation. In a multi-polar world, America might just finally get the infamous “taco trucks on every corner.”

 

While America’s role as the sole superpower has come at a cost to Americans, both financially and in human lives, it is important that American voters understand what the isolationist policies that would allow a multi-polar world to rise would mean not just for their country’s reputation on the world stage, but for their wallets too.