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The U.S. is stuck in the Cold War

The U.S. is stuck in the Cold War
America is following security and trade policies that made sense just after World War II, but are disastrous now
By Michael Lind

What does America's deepening war in Afghanistan have to do with the American trade deficit? Answer: Both are the results of Cold War policies that made sense at one time but are now harmful to the United States.

During World War II, the Roosevelt administration planned for a postwar world in which the wartime cooperation of the Big Three -- the United States, Britain and the Soviet Union -- would continue indefinitely. The Bretton Woods system was designed to allow countries to pursue domestic policies of full employment and to avert the kind of trade wars and beggar-thy-neighbor currency revaluations that had wrecked the global economy in the interwar years.

But the Cold War divided much of the world between rival blocs, symbolized by the division of four countries -- Germany, China, Korea and Vietnam -- into communist and non-communist states.

During and after the Korean War, the U.S. rebuilt its military and stationed troops along "tripwires" from Central Europe to East Asia. The U.S. encouraged the formation of the European Common Market (now the European Union) in part to provide the West Germans with markets. In Asia, Mao Zedong's victory in China cut off Japan's China market, so the U.S. offered the American market to Japanese exporters, which initially were not considered a threat to American businesses.

Thus began the Grand Bargain at the heart of U.S. Cold War strategy toward West Germany and Japan, the "markets-for-bases" swap. In return for giving up an independent foreign policy to their protector, the United States, the West Germans and Japanese would be granted access to American markets (and, in the case of the Germans, access to Western European markets).

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