Posted by Davy on November 5th, 2007 in Politics
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A quote from today’s FT caught my eye:

The US may be reckless. It may be unwise. But it no longer looks like a hyperpower. France is less worried.

While the article is addressing French President Sarkozy’s relationship with Washington, I am reminded of the neoconservative agenda as exemplified by the “Wolfowitz Doctrine.” One of the primary objectives of this doctrine, which became the foundation for the Bush administration’s policy, was to establish America’s sole dominance in the post-Soviet world. The doctrine makes little distinction between assumedly competitive China and old ally France.

Admittedly, the quote above is completely subjective but to the extent one would agree with that statement, it illustrates the American policy disaster so far this century. Putting aside any objections to the soundness of adopting such a doctrine as policy (and I have many objections on this front), judging the neocon agenda by its own objectives leads one to conclude that it has been a complete failure.

A primary goal was to prevent the emergence of a new rival or a hostile country dominating a strategically vital region. By 2007, it’s becoming clear that China is preparing to take its place as a rival to the US. Not a day goes by that some US bureaucrat doesn’t have hat in hand begging for the Chinese to revalue their currency for our economic benefit. We are the largest debtor state in the history of this world and it is hard to argue that a country has achieved the goal of maintaining the dominant superpower status in the world when said country does not control its own economic fate.

The Wolfowitz doctrine also calls for the neutralization of Russian nationalism. The Europeans can attest that this has failed miserably. Putin enjoys 80% approval levels despite imposing openly authoritarian measures at home and wielding Russia’s energy weapon abroad. While Dubya Bush and Putin may be best buddies, it is clear that the resurgent Russia that Paul Wolfowitz feared is alive and very well.

Finally, the doctrine recognizes the strategic importance of oil. Since the document was written in 1992 but put into policy beginning 2001, the price of oil has risen 4 times over, far outpacing any reasonable inflation target. While there is clearly a geopolitical risk premium embedded in the oil price, our foreign policy in this region is directly responsible for this risk premium. Also, our inability to contain Russian and Chinese power affords them the will and opportunity to obstruct many of our diplomatic initiatives in this region. As a result, the sky-high oil price today threatens to derail the American economy. Surely this is not what the neocons had in mind for this strategic resource.

To repeat, my assessment does not take into account whether the objectives laid out by Wolfowitz were indeed the right policies. I would argue that in a world approaching peak oil and perhaps the natural limit on known resource utilization (water, metals, etc.), America should have spent the first decade of the century recalibrating our economy and establishing new technologies, methodologies and priorites to ensure our competitiveness and ability to flourish in a globalized world. But even if you agree that Wolfowitz and co. did have the correct priorities, they have failed in every way to achieve even the slightest success.

Of course, one can argue policy points back and forth ad nauseum. Is there a way to objectively measure the success of America during this period? Perhaps an examination of our currency via the US dollar index might shed some light. The graph below shows the value of our currency, i.e. the ability of America to access goods, services and resources compared to the rest of the world, since the year 2000. It turns out American buying power and American power in general isn’t what it used to be.