For some time now we Americans have had a double image of ourselves, as being both powerful and inadequate. Yet the characterization is more than an image; it is also true. We are powerful beyond the measure of any other nation in history and, as time passes, we are becoming more ordinary, more like the others, subject to unaccustomed constraints. How can we reconcile these two truths with each other and with what Walter Lippmann, over a generation ago, laid down as a fundamental principle of a wise foreign policy: that it be solvent? By this he meant that a nation must bring into balance, with a comfortable surplus of power in reserve, its commitments—economic, political, military—and its power. For well over a decade we have not done so. As a consequence, the central question for American foreign policy is how to manage our domestic and foreign affairs in order to bring about a solvent foreign policy, if indeed we can.
In the two great crises of the last twenty years—the Vietnam war and the dramatic rises in oil prices accompanied by periodic oil shortages—America has pursued a policy of profligacy, unable to reconcile the excessive demands of a consumer society with the limitations of our economic power. Once again we find ourselves in a position to make critical choices. Faced with an expanding Soviet Union which appears to have a global reach it did not possess even during the height of the cold war in the 1950s, the defense strategists associated with the Reagan administration claim that to maintain parity, or gain superiority, over the Russians in strategic forces, and to have equal conventional forces as well, we must have large increases in the US military establishment.
The Soviet Union, however, runs a command economy, able to increase military spending at the expense of the consumer without evident political costs. Must the United States seek to match, and outmatch, the USSR on such a grand military scale? Grave doubts can be raised whether the military buildup now being proposed is necessary for the defense of our national interests. If the US government does engage in such a competition, it faces a grim choice. Either it must persuade its citizens to accept increasing taxation and lower public and/or private spending, while increasing industrial productivity. Or the government will have to print money to provide both the military and the consumer goods we are accustomed to, with all the social dangers that such inflation entails. As has happened at several major turning points during the last twenty years, we once again risk weakening our society by failing to face the real costs of overambitious policies.
Of all the consequences of the Vietnam war—to take the first of these failures—one of the least noticed at the time, and yet one of the most permanent, was the damage done to the American economy. The United States spent over $100 billion on the destruction of Southeast Asia …