Back to the Basics of Growth and Diplomacy: Four Questions to Answer
For economic diplomacy to work, it’s time to get the “little bric” out.
If American diplomacy is not to be about freedom and democracy, let it be about economic freedom and growth. And let the United States once again lead by example.
In September 2017, U.S. President Donald Trump took to the world stage, addressing the United Nations General Assembly for his first time. It was also a week in which the United States marked the 230th anniversary of the U.S. Constitution—a document that continues to serve as an example for nations around the world.
Trump began with words of appreciation to leaders of nations who had offered assistance and aid to the United States following hurricanes that had struck Texas and Florida. The U.S. president then continued with a few sentences about the state of the American economy.
“The stock market is at an all-time high, a record,” he said. “Unemployment is at its lowest level in 16 years, and because of our regulatory and other reforms, we have more people working in the United States today than ever before.”
“Companies are moving back, creating job growth,” he added.
Skeptics were plentiful on the cable television shows. But those would not be the words that captured global headlines and that would overtake social media posts around the world. Instead, it was Trump’s far-from-diplomatic language calling out the threat posed by North Korea, as well as the U.S. leader’s focus in part on Iran, Cuba and Venezuela, that dominated the news cycle and sent pundits—and some ambassadors—into a frenzy.
“The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea,” said the U.S. president. “Rocket Man is on a suicide mission for himself and for his regime.”
The reference was to North Korea’s Kim Jong-Un and the dictator’s push for intercontinental ballistic missiles, as well as his pursuit of ever-more-powerful nuclear weapons and the firing of missiles over U.S. ally Japan and elsewhere in the region.
This was not your grandfather’s, or father’s, language of diplomacy.
Yet amidst the attention-demanding rhetoric, there was also a simple, powerful line that deserves more attention in the battle of ideas and ideologies our world now faces. “In America,” the U.S. president said, “we do not seek to impose our way of life on anyone, but, rather, to let it shine as an example for everyone to watch.”
For much of this past century, the spread and defense of democracy and democratic values have often been at the heart of America’s diplomacy. This focus also has been part and parcel of the language surrounding many of America’s military actions—large and small—under presidents of both major U.S. political parties, Republican and Democratic.
Now, America under new leadership would pursue a policy of “principled realism”—guided by outcomes, not ideologies, said the new U.S. president. And at its heart, Trump’s rhetoric made clear, would be an economically stronger America.
This can be a good thing.
“As president of the United States, I will always put America first,” Trump said. “Just like you, as the leaders of your countries, will always and should always put your countries first.”
America first, in other words, need not mean the rest of you last.
An America that is “great again” economically may well be the best form of U.S. diplomacy if it encompasses shared growth—and greater grace and compassion—including for those increasingly left behind in today’s workplaces.
There can be no denying that certain jobs have vanished and businesses and factories have disappeared from America’s shores. Others, however, have appeared, and overall, international trade and commerce have grown in past decades. This growth though has come at a very real human cost. As American businesses move to create “jobs of the future,” they should also serve as role models for how more can be done for the people of today.
The very best U.S. companies will be responsible corporate citizens at home and abroad.
With “emerging market” economies now contributing by some measures a larger share to global gross domestic product than their developed counterparts, more and more U.S. businesses and investors are looking beyond the United States, Europe and Japan for the next drivers of growth.
Indeed, more than six years since I stepped down from my Manila, Philippines post as U.S. Ambassador to and a member of the Board of Directors of the Asian Development Bank, a question to me from the investment community, shareholders and policymakers alike persists. That is, who will be the next “BRIC”?
Who indeed will emerge to join Brazil, Russia, India and China to capture people’s imaginations and investment dollars? And will that nation be in the Asia-Pacific region (where I continue to be based, now with the Milken Institute—a nonprofit, nonpartisan economic think tank)? Indonesia is a mighty long-term contender, and the Philippines is now among the fastest-growing economies.
Yet around the world, significant challenges remain as commitments to vital financial and economic reforms have faltered as nations emerged from the Global Financial Crisis and an earlier Asian financial crisis. A test for Trump and U.S. congressional leadership today is whether they can push through needed tax reforms and infrastructure investments. Their success will help define America’s regained strength as an economic ambassador for free markets, sustainable growth and for free and fair trade—particularly in the face of China’s continued economic rise.
In the United States and around the world, we must ask our leaders four simple questions. And partisanship aside, the U.S. president and U.S. Congress must ask themselves these questions too.
Building consensus around the answers will strengthen U.S. economic diplomacy by helping shape solutions that address the true constraints to economic growth—the “little bric” of bureaucracy, regulation, interventionism and corruption that too often holds back individual businesses and organizations, and, ultimately, entire nations and economies.
First: Is our government bureaucracy hindering or fostering economic growth?
Whether in Asia, the Americas, Europe or Africa, a real fight against bureaucracy is less about new organization charts and the size of government, and more about assessing what works and what does not. And then, it is about getting rid of the latter.
It is not just the size, but also the service quality, of the bureaucracy that matters. One step forward will entail building mutual respect between the public and private sectors.
Second: How are regulations impacting job creation?
Businesses and investors are often challenged not just by too many or too few regulations, but also by unequal application and uneven enforcement. Clearly, not all regulation is bad. Basic environmental and labor protections are an example of essential safeguards.
But policymakers must ask if near-term job creation and growth are losing out to red tape and regulatory excess. Well-intended regulations that limit access to capital can also reduce the potential for stronger growth.
Third: When is government intervention appropriate?
Governments, particularly in Asia, have long been both praised and criticized for seeking to pick winners and losers, often distorting the market in favor of national players.
Too often, however, government interventions and inefficiency can go together. In the long run, policymakers need to ensure that interventions, if any, are limited and used only as last resorts. And as nations mature, what was once seen as necessary government involvement should be revisited as a new focus is placed on innovation and entrepreneurship. Singapore is an example of this.
Fourth: What more can be done to root out corruption?
Most every government leader voices the intent to root out corruption—to “drain the swamp,” if you will—but every nation’s long-suffering citizens are perhaps best positioned to judge whether progress is being made in the fight to strengthen judicial systems, improve the rule of law and increase transparency.
Allegations of favoritism or leniency must be investigated, institutions strengthened and individuals held accountable if there is to be confidence in leaders and systems of governance.
At the end of the day, from Washington to Beijing, policymakers know at some level that the prescription for future growth is simple and straightforward: improve the bureaucracy, regulate fairly, intervene rarely and stamp out corruption.
That prescription is also neither “Eastern” nor “Western,” and in the United States, it should be neither “Republican” nor “Democrat.”
As economies and economic systems interact and converge, every nation will find its own way, but one destination is clear: a free, accountable and transparent private sector that will drive sustainable development and job creation in the long run.
Decades back and throughout his presidency, U.S. President Ronald Reagan depicted America as “a shining city upon a hill” whose beacon light guides freedom-loving people everywhere. For all too many nations and Americans, that light has dimmed as the U.S. economy has changed, if not weakened, relative to “the rise of the rest” including China.
On November 3, 1980, the evening before the U.S. presidential election, the former California governor addressed the American people to declare, “Many Americans today, just as they did 200 years ago, feel burdened, stifled and sometimes even oppressed by government that has grown too large, too bureaucratic, too wasteful, too unresponsive, too uncaring about people and their problems.” America agreed, and he went on to win the first of his two landslide presidential elections.
This September, Trump addressed a very different audience at the United Nations and delivered a very different speech. Yet at the heart of the two addresses, there was at least one common vision: that of an America that could be better. For U.S. diplomacy, economic and otherwise, to be credible, it is time to get back to the basics of moving the U.S. and global economies forward. Let us begin in the United States by setting an example of getting the “little bric” out of the way.
Asia Fellow, Milken Institute
Managing Directory, RiverPeak Group, LLC
United States Ambassador to the Asian Development Bank, 2007-2010