'The one pervading evil of democracy is the tyranny of the majority, or rather of that party, not always the majority, that succeeds, by force or fraud, in carrying elections.' -John Dalberg-Acton

Bretton Woods - Violence Implied

by Ethan Glover, Sun, Nov 30, 2014 - (Edited) Tue, Dec 26, 2017

Just two years after World War II, the world entered into the Cold War. The United States strategically knew that they had no chance of facing off with Russia directly, especially on their territory. What the United States did instead was built the largest and strongest group of alliances ever seen in history. This was done with the too good to refuse Bretton Woods system.

Bretton Woods not only established the International Monetary Fund and the International Bank for Reconstruction and Development, but it set up the United States as the protector of all maritime trade. It made sure that countries who agreed to the system would be guaranteed free trade with one another and protected by the largest navy in the world.

The following is my thoughts on the first eight chapters of a book by Peter Zeihan called 'The Accidental Superpower' regarding the effects of the Bretton Woods system and the consequences of moving away from it.

The Bretton Woods system resulted in the United States having the only navy in the world with global reach because the U.S. used it to protect all maritime trade. The U.S. insured that no one else would need a navy, thus guaranteeing their world superiority.

These global politics, while theoretically ensuring the safety of Americans, have had disastrous results. The United States did not fight the Korean and Vietnam wars to protect freedoms or even because they had any particular interests in doing so. Those wars were fought in order to prove a commitment to Bretton Woods and to maintain their alliance. That's over 3 million deaths for what was essentially a show of ‘friendship' between two countries. A number that could have been much lower, if not non-existent, if those wars weren't backed by superpowers.

Further, you hear about Middle Eastern wars such as Iraq and Afghanistan being about oil all the time. Yet, the United States produces plenty of shale oil. In fact, the country has only rarely sourced its oil from Persian Gulf imports. Half of the oil imported to the U.S. has come from prepositioned rigs in the Gulf of Mexico built by Saudi Arabia as a show of commitment to Bretton Woods.

The United States doesn't support Middle Eastern countries so it can use the oil. It protects those countries so Bretton allies like Japan, Korea, China, Taiwan, Thailand, India and Pakistan can import the oil. It makes you wonder how many lives from those countries have been lost to maintain 'free trade.' (The U.S. Isn't Dependent on Foreign Oil)

Building from these facts and others Zeihan says that in time the United States will withdraw from the Bretton Woods system simply because it no longer benefits. Russia is not a threat anymore, and the U.S. has the maritime superiority and independence to go without. He draws a bleak picture of essentially what happens without the free trade guaranteed by U.S. protection. His predictions are mostly based on the presumption that without U.S. policy, the whole world would either be at war or in chaos.

A U.S. withdrawal from Bretton would cause economic and energy crises for Europe, East Asia and South Asia and financial and security crises for the Persian Gulf states. This, he says, will more than likely lead to wars for resource desperate nations. And it may very well be true that as long as governments rule, violence rules.

He also notes that Norway is the only country that is oil and natural gas independent. Countries like Germany, France, Spain, Turkey, Czech Republic, Chile, South Africa, Taiwan, Morocco, Japan and South Korea depend on the free trade that Bretton Woods provides. On the flip side of that, there is not a single Middle Eastern country, including Israel that is 100% independent for food. Without imports, most would face famine.

Zeihan also notes that quickly aging populations (i.e., baby boomers) threaten world economies with the U.S. being the country to be the least affected by the issue. This means looming higher taxes and strains on government resources. Thus, moving away from Bretton only makes things worse for the rest of the world and better for the United States.

Zeihan calls this post-Bretton world Darwinian and Hobbesian. From Chapter 9 on, The Accidental Superpower offers predictions for the next two decades. I haven't finished the book entirely yet (and it truly is an enjoyable read) but these predictions, which I'll let you read for yourself, seem to be based on gerontocracy. Like a lot of history and future projections, it does not take into account changing culture and further enlightenment.

To me this book only highlights how fragile and ineffectual government strategy is. The whole reason global trade is so free is because of the U.S. government's fear of Russia. But what would happen if Bretton were offered to Russia? What would happen if Bretton were dismantled and the United States simply offered free trade to all without mafia style protection?

The vision offered in the book in a world without Bretton is as mentioned before, Hobbesian. Hobbes' view of a world without government was naïve both economically and socially. In the absence of government, people don't turn violent. It is in the presence of government that people are given the ultimate opportunity to be violent. Give a sociopath a chance to campaign for power and be mostly immune to the law, and they'll take it without question. Like Bretton to Japan, politics is a deal a smart criminal cannot refuse.

We can go back in time and talk about how much stronger global politics might be if the U.S. never enacted the Versailles Treaty, never entered World War I, or if the United States Constitution was never ratified. But the past is the past. What happens in the absence of Bretton? Would the world descend into economic destitution?

It's certainly possible. If countries remain the way they are, if governments act like governments, then I believe the author's claims. However, if we were to put some optimism into things, we have to look at changing culture and growing enlightenment. The ideas of liberty (libertarian minarchy and anarchy) are growing exponentially. In the past decade, it has blown up at an incredible rate. Not quite the technological "Moore's Law" rate, but at a very fast rate indeed.

Generation Y is looking more liberally at social issues and taking more of a classical liberal view towards economics.

As governments collapse economically, opportunities for change arise. I don't see the lack of Bretton causing chaos and war. I see it as a window of opportunity for a growing movement to develop even more. Government power is shrinking and becoming more open to minimization. Allowing for free trade and concentrating on defense.

Unfortunately, the book notes that the United States is geopolitically set-up to be most likely to survive leaving the Bretton Woods system. It has by far the best river system and availability of ports for trade. It is entirely self-sustainable, and easily defendable against enemies thanks to its allies on both borders and control over the Caribbean's, Alaska, Puerto Rico and Cuba. It is also in the best position for offense thanks to jumping points in Europe and Japan.

This does not ensure the safety of the American people. Free trade and location alone is plenty guarantee of that. This ensures the security of the American regime. The United States' potential immunity to a post-Bretton world allows for even more power grabbing. Without pointless wars to fight overseas, it means politicians (while maintaining their power) can turn their eye more towards the homeland and corrupting things locally.

Still, I do think the Bretton system needs to go, not only because I think government needs to go, but because its continuation means more war and less opportunity for the rest of the world to break away from U.S. influence and building real trade relationships that aren't based on old Cold War fears and bribery. When countries around the world are forced to maintain their own trade agreements, it means stronger relationships based on mutual trade and benefit that tears down borders and merges economies in a way that can't be manipulated by violence.

Selected highlights from "The Accidental Superpower"