A few months ago, I complained about some calls on the left for "economic statecraft." Now I see an argument from two Georgetown political science professors to the effect that progressives should leverage U.S. economic power to force other countries to adopt specific policies:
... A progressive administration could get started right away, using executive action, as well as reentering the Paris climate agreement and reinstating President Barack Obama-era tailpipe standards, which shape not only U.S. auto- manufacturers but also their global competitors, which want access to the U.S. market. The U.S. Treasury Department’s Office of Foreign Assets Control could bolster these efforts through what are known as green sanctions, targeting carbon-intensive sectors. Such sanctions would raise the cost of financing carbon-intensive sectors in the United States and, because of the central position of U.S. banks in the global economy, would raise these costs worldwide.
On the fiscal side, market power could be turned to end global tax evasion. Warren, for example, has proposed a country-by-country minimum tax, which would prevent firms from hiding their cash in countries with zero corporate tax. Instead, firms with U.S. sales would have to pay the difference between the foreign tax rate and that in the United States, guaranteeing that corporations pay their fair share. To avoid future regulatory whiplash, Congress could legislate stronger parameters for using standards to combat climate change, money laundering, offshoring, and other major challenges.
I'm having some trouble with all the ideological labels being thrown around these days. Who exactly are the neoliberals? Why are American politicians calling themselves socialists? And what does it mean to be a progressive on foreign policy issues? I would have thought progressives believed in cooperation with other countries and were skeptical of using economic power to boss other countries around. But these progressives seem to want to do exactly that. It's sort of like progressive imperialism. (To be clear, it looks like their plans do involve some cooperation. However, they are pretty quick to bring up sanctions as a possible tool.)
This approach goes against all my instincts, but foreign policy isn't my field, so it's hard to come up with a sophisticated critique. I'm sure there is an extensive literature on "economic statecraft," and as soon as trade policy calms down, maybe I'll try to give it a read. But in the meantime, I would hope that people considering this policy ask themselves a few questions:
1. Will it be effective, in both the short- and the long-term? Countries don't always like being bossed around and may react badly. Keep in mind that the policies any particular economic power will be demanding from other countries will vary over time. One day it may be longer copyright terms; the next day it may be a carbon tax; then on to property rights; and then something about religious or reproductive freedom. After a while, people might get sick of the ever changing demands.
2. How sure are you that you know what is good? The basic idea here seems to be that we should use our economic power for good rather than bad. That distinction is fine for domestic policy, where we have to pick a policy of some sort. Whoever comes to power believes they know which policies are good, and believes they will support good policies instead of bad ones. But in terms of bossing other countries around, there is a third option: We don't actually have to make a policy choice at all. We could simply decide to let others choose for themselves, rather than deciding what we are going to tell them to do. For instance, rather than deciding whether to push for long copyright terms or more fair use rules, we could simply let others follow their own path. Of course, our market is big enough that our choices are always likely to have to some incidental impact on others, but that's different from a conscious effort to induce them to take specific actions.
3. Are there alternatives? I would have thought a more progressive approach would be to set a good example, try to make persuasive arguments, and sign international agreements when it seems like that would help. It could be called progressive internationalism. As I said, I don't know what any of these labels mean anymore, but that seems like it could be a useful one.
