Abstract

Recent research by Helen Milner and Dustin Tingley (International Organization, Winter 2011) demonstrates that the US executive branch overwhelmingly supports global economic engagement. This is surprising, because economic theory and evidence demonstrates that while such engagement may maximize total world output, it can also cause follower economies to grow faster than leading economies, eroding the latter’s relative lead. Given that the national economic base is the fungible resource that underpins a state’s power – including the ability to procure military forces – this implies that the US executive is overwhelmingly supportive of an economic process that can weaken its own state’s relative power position.

Drawing on rationalist theory that explains how states respectively privilege security and consumption (“guns versus butter”), and utilizing indifference curve analysis to support its point, this paper argues that the executive’s observed preference for engagement – which maximizes present prosperity at the expense of the state’s long-term power position – can be explained by national leaders’ discount rates. Put simply, presidents do not reap a political reward if their state preserves its power position over a decade-plus time horizon, but they pay a political price if economic growth is weak today and tomorrow, and this is reflected in their respective prioritization of future standing and current growth. In addition to the contemporary context of relative US decline and the emergence of new great powers, most notably China, such an argument also has applicability to other great powers – even those with non-presidential systems of executive governance – that have played a role in driving their own relative decline by facilitating the catch-up growth of other great powers’ economies in past historical epochs. The Dutch Republic in the eighteenth century and Great Britain in the late nineteenth and early twentieth centuries are particularly relevant cases.