[OPE-L:1324] Re: monetary inflows versus capital accumulationm

From: Gerald Levy (glevy@pratt.edu)
Date: Wed Sep 22 1999 - 16:02:07 EDT

Re Rakesh's [OPE-L:1323]:

Introductory comment: We began this exchange with a comment that Rakesh
made that (I paraphrase) economists often ignore non-economic subjects
and causes in general, in particular in relation to international
relations. This is a point I agree with _in general_. However, we differed
in terms of accessing the US-Japan relationship as it relates to US
military policy.

My position, in brief, has been that US military policy has been guided by
what the US government sees as its own "strategic interests" and would
have taken place pretty much the same with or without Japanese support,
including financial support. Rakesh, on the other hand, has emphasized the
financial benefit that the US receives from Japan for ensuring Japan's
"regional security".

And that brings us more or less to where we started this exchange ... but
with an odd twist.

I.e. it is my position that US international relations can not be properly
understood in narrowly economic terms. E.g. one has to consider the
political and military agenda of the US and its historical relationship to
other countries and regions.

It seems to me that Rakesh's insistence that the US's and Japan's foreign
policy are linked to Japan's willingness to pay for US military support
is not only, I believe, factually incorrect (as I have tried to point out
in several ways in several posts) but also reduces the relationship to
narrowly economic terms and, in so doing, Rakesh falls prey to precisely
the fault that he has (rightly in my view) accused economists of.

Now, back to specifics:

> > And as I have said again and again -- and you have not directly replied
> > to yet -- the US government is also concerned with the same regional
> > security ands would act in much the same way *with or without* the
> > financial support of Japan.
> Jerry, I don't get this. During the Cold War Germany must have been able
> to count on the US repelling any Soviet aggression even if Germany was not
> willing to pay for it, yet Germany did 'pay' for it, as Strange has
> suggested.

Yet, Japan is not Germany. And that is the point. I.e. one must examine
each relationship individually.

Furthermore, if Germany "paid for it", so did the US. Remember the
Marshall Plan? I.e. the US had its own interests in Europe, including its
concern with de-stabilizing the USSR, which it was determined to pursue
-- with the support of other imperialist powers or alone.

> If so much clout, then why does Japan cover a substantial portion of those
> costs?

The US put heavy pressure on Japan to partially foot the bill, e.g. in
the Gulf War. Had Japan not agreed, then the US could have increased
protectionism and -- at that moment in time given the terms of trade
between the 2 countries -- Japan had more to lose than the US. So, in that
negotiation the US had great bargaining power.

> And what about my point that the US can secure more open regimes if
> Japan is willing to pay for it?

Again: if you want to understand US foreign policy, begin by identifying
what the US government sees _as its own_ interests.

> Or perhaps the US can threaten to create
> more situations, i.e., insecurity, unless Japan is willing to pay for
> security.

Such a threat would be hallow indeed if Japan knew that the US *for its
own reasons* didn't want regional "insecurity".

>From a bargaining perspective, if you know that the other side wants what
you want, then why give them anything to get them to do what you know they
already want and plan to do?

The answer, I would suggest, lies ... *at the present time* ... in the
dependence that the Japanese economy has on exports to the US market.

In solidarity, Jerry

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