Your humble blogger will be making his first visit to South Korea in less than twenty-four hours, and is very excited about that prospect.  Blogging will therefore be on the lighter side for the next few days. 

Talk amongst yourselv-- wait, then again, maybe you shouldn't do that. 

Before I explain what I mean, let's have some disclosure.  I blog at the foreign affairs portal in the United States.  I'm a member of the Council on Foreign Relations.  I've done the occasional consulting gig.  I'm on reasonably good terms with foreign policy wonks from across the spectrum.  Occasionally I get invited to swanky DC events and interview Tiger Moms.  The point is, relative to a lot of people reading this paragraph, I'm pretty damn insider-y. 

I bring all of this up because I probably have a higher tolerance for inside-the-Beltway bulls**t... and yet after reading this and this, I had to suppress my desire to vomit on my computer screen.  The first link merely confirms the epistemic closure that pervades much of the right wing in Washington, DC.  The latter is, on the other hand, the most incestuous thing ever written about anything, ever, in the history of mankind.  Really, compared to those stories, the George W. Bush library ceremony seems... tame. 

Combined, the two stories either function as a damning indictment on the state of DC insideriness... or I'm overreacting to the standard offal that comprises much of political journalism.  I'm honestly not sure.  Contrary to a lot of outside-the-beltway folk, I've come to see a utility for rent-seeking and back-scratching in politics.  It functions as a necessary lubricant to get useful legislation passed.  One could argue that part of the problem with Washington as it currently functions is that there's not enough earmarking, vote-buying, or other cross-cutting political exchanges. 

At the same time, the revulsion I felt after reading these essays was quite real.  I could barely finish Allen's Politico story, it was that insipid.  These are the kind of essays that cause even a jaded foreign policy hand like myself to mutter "you'll be the first ones up against the wall when the Revolution comes" after reading Politico.  Sure, much of this behavior is baked into the cake that is American political science... but I still ponder about the future of the Republic.  

So I'll leave this as something for readers to ponder while I'm in the ROK -- over the next week there's going to be some serious foreign policy questions being debated:  whether to react to Syria's chemical weapons use, or what to do about inter-Korean tensions, for example.  Will this conversation be taking place in a policy universe that is just too damn small? 

What do you think? 

This week, there's been a rash of articles on the state of GOP foreign policy thinking, as well as some interesting and constructive responses to my Foreign Affairs essay on the same subject.  I will try to respond to some of these over the weekend -- but first I think it would be useful to talk more precisely about the claimed benefits of military power. 

One of the points I made in my essay was that Republicans need to take economic statecraft more seriously, but to be fair, this holds for the foreign policy community more generally.  The relationship between military power and economic influence is often talked about in general terms, with a lot of casual assertions getting tossed around.  But I think a lot of these assertions are wrong. 

For example, prominent American foreign policy commentators often trump the benefits of America's overseas military presence.  Danielle Pletka gets at this in her Foreign Policy essay when she says, "Americans have benefited tremendously from their involvement abroad," though she stays in generalities.  To talk specifically, how exactly does the U.S. gain economically from its outsized military footprint? 

Fortunately, we do have an attempt at an answer.  In the latest Foreign Affairs, Stephen Brooks, John Ikenberry, and William Wohlforth argue strongly in favor of "deep engagement."  They proffer a number of reasons why the U.S. benefits from current grand strategy -- but one of the more intriguing ones is that the U.S. receives direct economic benefits from its security arrangements: 

A global role also lets the United States structure the world economy in ways that serve its particular economic interests. During the Cold War, Washington used its overseas security commitments to get allies to embrace the economic policies it preferred -- convincing West Germany in the 1960s, for example, to take costly steps to support the U.S. dollar as a reserve currency. U.S. defense agreements work the same way today. For example, when negotiating the 2011 free-trade agreement with South Korea [KORUS], U.S. officials took advantage of Seoul's desire to use the agreement as a means of tightening its security relations with Washington. As one diplomat explained to us privately, "We asked for changes in labor and environment clauses, in auto clauses, and the Koreans took it all." Why? Because they feared a failed agreement would be "a setback to the political and security relationship."

Now, this gets specific!!  According to this paragraph, reliance on U.S. security means that Washington can obtain better economic terms.  Sounds great!! 

Except that I don't think it's true. 

With respect to West Germany, it's certainly true that Washington was able to get Berlin to accommodate to U.S. preferences -- but only for a few years.  The Bretton Woods system ended in 1971 because the Germans finally said "Nein!!" to U.S. inflation.  So the economic benefit wasn't that great. 

The South Korea case is more intriguing, because it's present-day and there's a real, live policymaker quote there.  If a U.S. administration official asserts that the security relationship mattered, then it mattered, right? 

Well.... no.  We need to compare KORUS with something equivalent to provide a frame of reference.  If security really mattered that much, then the Korea-United States free trade agreement should contain terms that are appreciably more favorable to the United States than those contained in, say, the Korea-European Union free trade agreement, which was negotiated at the same time.  This is a great test.  After all, the U.S. is the most important security partner for South Korea, whereas the only thing the European Union could offer to Seoul was its large market.  So if Brooks, Ikenberry and Wohlforth are correct, the U.S. should have bargained for much better terms than the E.U.  Right?

A Korean analysis of the two agreements, however, do not reveal that result: 

[T]he United States has more favorable treatment in meat and vegetable products and transportation, while the EU has better treatment in processed foods, chemicals, and machinery. The large difference in outcomes in animal and animal products between the KORUS FTA and the Korea-EU FTA can be ascribed to the the reflection of greater sensitivity of the Korean market in this sector in the Korea-EU FTA compared with the KORUS FTA. Therefore the EU received a less favorable tariff reduction schedule than the United States in this area. This is true in the areas of raw hides, skins, leather, and furs, and transportation.

We have the opposite case, however, in the foodstuff sector: the many differences in Korean tariff liberalization schedules in the U.S. and European FTAs could be a result of the reflection of the EU positions, which preferred earlier tariff eliminations on many items in the Korea-EU FTA. This is also true in the manufacturing sectors such as hemicals and allied industries, plastics and rubber, textiles, and machinery and electrical products.

In (slightly) plainer English, the U.S. got better terms on the export sectors it cared about more, and the E.U. got better terms on the export sectors it cared about more.  Both agreements are comprehensive in scope and contain roughly similar terms across most other sectors.  Indeed, both the Congressional Research Service and U.S. Trade Representative's office acknowledge the basic similaritry between the deals, as well as the areas where the Europeans did better.  So, in other words, America's ongoing security relationship with South Korea did not lead to any asymmetric economic gains. 

Now, this is not to say that there are no economic benefits to America's forward military presence.  There are other arguments out there, and they should also be evaluated.  My point here is simply to cast a skeptical eye on claims that America's overseas military presence pays for itself in the form of geopolitical favoritism.  Because I don't think that's true.   

Your humble blogger is currently knee-deep in a pedagogical project on the foundations of economic prosperity.  You can imagine my delight, then, that Daron Acemoglu and James Robinson have a new book coming out on that very topic:  Why Nations Fail: The Origins of Power, Prosperity, and Poverty.  There's an excerpt in the Montreal Review -- let's see how it opens, shall we?

To understand what these institutions are and what they do, take another society divided by a border. South and North Korea. The people of South Korea have living standards similar to those of Portugal and Spain. To the north, in the so-called Democratic People's Republic of Korea, or North Korea, living standards are akin to those of a sub-Saharan African country, about one tenth of average living standards in South Korea. The health of North Koreans is in an even worse state; the average North Korean can expect to live ten years less than their cousins to the south of the 38th parallel.

These striking differences are not ancient. In fact they did not exist prior to the end of the Second World War. But after 1945 the different governments in the north and the south adopted very different ways of organizing their economies....

It should be no surprise that the economic fortunes of South and North Korea diverged sharply. Kim Il-Sung's command economy soon proved to be a disaster. Detailed statistics are not available from North Korea, which is a secretive state to say the least. Nonetheless, available evidence confirms what we know from the all too often recurring famines: not only did industrial production fail to take off but North Korea in fact experienced a collapse in agricultural productivity. Lack of private property meant that few had incentives to invest or exert effort to increase or even maintain productivity. The stifling repressive regime was inimical to innovation and adoption of new technologies. But Kim Il-Sung, his son and successor, the "dear leader" Kim Jong-Il, and their cronies had no intention to reform the system, or to introduce private property, markets, private contracts, and economic and political freedoms. North Korea continues to stagnate economically, and there is no sign that anything will be different under the new "dear leader" Kim Jong-un.

Meanwhile in the south economic institutions encouraged investment and trade. South Korean politicians invested in education, achieving high rates of literacy and schooling. South Korean companies were quick to take advantage of the relatively educated population, the policies encouraging investment and industrialization, the export markets, and the transfer of technology. South Korea became one of East Asia's `Miracle Economies,' one of the most rapidly growing nations in the world. By the late 1990s, in just about half a century, South Korean growth and North Korean stagnation led to a tenfold gap between the two halves of this once-united country---imagine what a difference a couple centuries could make. The economic disaster of North Korea, which not only prevented growth but led to the starvation of millions, when placed against the South Korean economic success, is striking: neither culture nor geography nor ignorance can explain the divergent paths of North and South Korea....

The contrast of South and North Korea illustrates a general principle: inclusive economic institutions foster economic activity, productivity growth and economic prosperity, while extractive economic institutions generally fail to do so. Property rights are central, since only those who have secure property rights will be willing to invest and increase productivity. A farmer, for example, who expects his output to be stolen, expropriated or entirely taxed away would have little incentive to work, let alone any incentive to undertake investments and innovations. But extractive economic institutions do exactly that and fail to uphold property rights of workers, farmers, traders and businessmen.

It will not shock you, my dear readers, to learn that I agree with Acemoglu and Robinson.  Indeed, as Ezra Klein showed with the following chart, the divergent paths of North and South Korea represents ironclad evidence about the power of instituions to determine prosperity: 

Well, that's pretty damn persuasive, isn't it?  It seems pretty friggin' obvious which institutions work and which ones don't! 

Actually, to be more accurate, it seems pretty friggin' obvious now.  Here's another chart that extends that graph back another two decades: 

Things look sightly different in this chart.  That massive divergence is still there, but what's stunning is that for the 25 years before that, the DPRK and ROK looked exactly the same in terms of per capital income.  Indeed, as Nicholas Eberstadt notes: 

Around the time of Mao Zedong's death (1976), North Korea was more educated, more productive and (by the measure of international trade per capita) much more open than China. Around that same time, in fact, per capita output in North Korea and South Korea may have been quite similar. Today, North Korea has the awful distinction of being the only literate and urbanized society in human history to suffer mass famine in peacetime. 

My point here is not to defend Kim Il Sung or suggest that the DPRK's economic institutions are underrated.  Rather, my point is that as data analysts, we're all prisoners of time.  Had Acemoglu and Robinson written Why Nations Fail in the mid-1970s, it would have either made a different argument or it would have had a much tougher case to make about the merits of inclusive vs. extractive institutions (during the 1970s, commodity extracting states were looking pretty good). 

Keep these charts in mind whenever anyone confidently asserts the obvious superiority of a particular model of political economy.  Because, I assure you, there was a point in time when such superiority was far from obvious.  And there might be another such point in the future. 

There's going to be a lot of scholars, policy analysts and enthused amateurs who are going to drink up the Wikileaks documents as a great new empirical resource. So they should -- they did nothing to cause their release, and these are documents that ordinarily would have taken 25 years minimum to be declassified.

That said, there's going to be a natural inclination to think that any Wikileaks document will endow it with the totemic value of Absolute Truth. "If it was secret, then it must be true," goes this logic. That's a more serious problem. For Exhibit A, let's go to Simon Tisdall of The Guardian's interpreting what the Wikileaks documents reveal about how China views North Korea:

China has signaled its readiness to accept Korean reunification and is privately distancing itself from the North Korean regime, according to leaked US embassy cables that reveal senior Beijing figures regard their official ally as a "spoiled child"....

The leaked North Korea dispatches detail how:

•  
  •  
    • South Korea's vice-foreign minister said he was told by two named senior Chinese officials that they believed Korea should be reunified under Seoul's control, and that this view was gaining ground with the leadership in Beijing.
    • China's vice-foreign minister told US officials that Pyongyang was behaving like a "spoiled child" to get Washington's attention in April 2009 by carrying out missile tests.
    • A Chinese ambassador warned that North Korean nuclear activity was "a threat to the whole world's security".
    • Chinese officials assessed that it could cope with an influx of 300,000 North Koreans in the event of serious instability, according to a representative of an international agency, but might need to use the military to seal the border.

In highly sensitive discussions in February this year, the-then South Korean vice-foreign minister, Chun Yung-woo, told a US ambassador, Kathleen Stephens, that younger generation Chinese Communist party leaders no longer regarded North Korea as a useful or reliable ally and would not risk renewed armed conflict on the peninsula, according to a secret cable to Washington.

Ah, OK, this explains why China has slowly distanced itself from North Korea's recent actions. Oh, wait, I'm sorry, China has done nothing of the sort.

I don't doubt that Chinese officials said everything reported in the documents. I do doubt that those statements mean that China is willing to walk away from North Korea. It means that Chinese diplomats are... er.... diplomatic. They will tell U.S. and South Korean officials some of what they want to hear. I'm sure that they will say somewhat different things to their North Korean counterparts.

The key is to determine whether China's actions reflect their words. And over the past six months, China has not acted in a manner consistent with Tisdall's claims.

This is not to imply that China is acting in a particularly perfidious or underhanded manner, by the way. They're acting like any great power would -- stall for time while trying to figure out the best way to handle a troublesome ally. The point is, just because someone says something in a Wikileaks memo doesn't make it so.