Aquaculture Affirmative fyi



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Aquaculture solves econ

New support for aquaculture bolsters economic growth


Speer 4-23-14 [Dr. Nevil C. Speer is with Western Kentucky University and serves on the board of the National Institute for Animal Agriculture, “U.S. aquaculture could use jump-start,” http://feedstuffs.com/blogs-aquaculture-use-jumpstart-commentary-8433]
First, consider that U.S. imports of fish and fish products in 2013 equaled $17.8 billion, while exports totaled only $4.8 billion. At that level, the trade deficit for fish and fish products has been described as the third-largest category of imported products behind only energy and vehicles. We're missing a tremendous opportunity for U.S. agriculture in terms of net value added to the domestic economy. Second is the issue of food security. Fish consumption in the U.S. is ranked second in the world, but we import approximately 90% of our total supply. We seem to be content to depend on our trade partners to provide such an important component of our protein consumption. Third, and perhaps most important, is the issue of food safety. Inspection comes on two fronts: (1) the Food & Drug Administration is responsible for ensuring that seafood imports are safe for U.S. consumers, and (2) the National Oceanic & Atmospheric Administration is primarily responsible for audits of seafood processing plants, product inspection and training. However, despite having two government agencies involved, only approximately 1% of imported seafood is inspected, and a far smaller percentage is tested for various items such as banned substances or drug residues. Given the current demographics of the U.S. and the realities surrounding purchasing behavior, fish consumption isn't going to reverse direction. Furthermore, consumers increasingly want to know more about their food and where it comes from. Meanwhile, there's an enduring need to bolster the economy and create jobs. Granted, growing the U.S. industry means overcoming challenges. If it were easy, it would have been done already. Nonetheless, it's hard to imagine any industry better suited for incentivized public/private partnership than U.S. aquaculture. Jump-starting the industry would provide numerous benefits for consumers and the economy. There's no time like the present, because there's a huge opportunity waiting out there.

US aquaculture expansion saves the economy


ENS ’11 [Environment News Service, “Obama Administration Promotes Aquaculture in U.S. Waters,” http://ens-newswire.com/2011/06/13/obama-administration-promotes-aquaculture-in-u-s-waters/]
The United States needs to stop buying so much farm-raised fish from other countries and start producing its own, the Obama administration officials said Friday, releasing the first set of national sustainable marine aquaculture policies.¶ Foreign aquaculture accounts for about half of the 84 percent of seafood imported by the United States, contributing to the $9 billion trade deficit in seafood, said Commerce Secretary Gary Locke.¶ “Our current trade deficit in seafood is approximately $9 billion,” said Locke. “Encouraging and developing the U.S. aquaculture industry will result in economic growth and create jobs at home, support exports to global markets, and spur new innovations in technology to support the industry.” “Sustainable domestic aquaculture can help us meet the increasing demand for seafood and create jobs in our coastal communities,” said NOAA Administrator Jane Lubchenco, PhD. “Our vision is that domestic aquaculture will provide an additional source of healthy seafood to complement wild fisheries, while supporting healthy ecosystems and coastal economies.” Global wild fisheries are in decline, with habitat such as estuaries in critical condition. But the farming of fish that eat other fish, like salmon, does not help. Numerous studies have shown that salmon farming has negative impacts on wild salmon, as well as the forage fish that need to be caught to feed them. Aquaculture can be more environmentally damaging than wild fisheries on a local basis. Concerns include waste handling, side-effects of antibiotics, competition between farmed and wild animals, and using other fish to feed more marketable carnivorous fish.¶ To maximize growth and enhance flavor, aquaculture farms use large quantities of fishmeal and fish oil made from less valuable wild-caught species, including anchoveta and sardine.¶ In 2009, aquaculture for the first time supplied half of the total fish and shellfish for human consumption,¶ “Aquaculture’s share of global fishmeal and fish oil consumption more than doubled over the past decade to 68 percent and 88 percent, respectively,” wrote Rosamond Naylor, a professor of environmental Earth system science at Stanford University and director of the Stanford Program on Food Security and the Environment in a 2009 study published in the Proceedings of the National Academy of Sciences.¶ “The huge expansion is being driven by demand,” wrote Naylor. “As long as we are a health-conscious population trying to get our most healthy oils from fish, we are going to be demanding more of aquaculture and putting a lot of pressure on marine fisheries to meet that need.”¶ The new aquaculture policies, which reflect the public comments received after draft policies were released on February 9, focus on:¶ encouraging and fostering sustainable aquaculture that increases the value of domestic aquaculture production and creates American business, jobs, and trade opportunities¶ making timely management decisions based on the best scientific information available¶ advancing sustainable aquaculture science¶ ensuring aquaculture decisions protect wild species and healthy coastal and ocean ecosystems¶ developing sustainable aquaculture compatible with other uses;¶ working with partners domestically and internationally¶ promoting a level playing field for U.S. aquaculture businesses engaged in international trade, working to remove foreign trade barriers, and enforcing our rights under U.S. trade agreements¶ Along with the Obama administration’s new policy, the Commerce Department and NOAA announced additional steps in the future to support the development of the aquaculture industry through:¶ Developing a National Shellfish Initiative in partnership with the shellfish industry to increase commercial production of shellfish, which would create jobs, provide locally-produced food, restore shellfish populations and habitats, and improve water quality.¶ Implementing the Gulf of Mexico Fishery Management Plan for Aquaculture, which includes the regulatory infrastructure needed for offshore aquaculture development in the Gulf.¶ The domestic aquaculture industry – both freshwater and marine – currently supplies about five percent of the seafood consumed in the United States.¶ The cultivation of shellfish, such as oysters, clams, and mussels, comprises about two-thirds of U.S. marine aquaculture production.¶ Salmon and shrimp aquaculture contribute about 25 percent and 10 percent, respectively. Current production takes place mainly on land, in ponds, and in states’ coastal waters.¶ “This new focus on helping us develop and expand sustainable aquaculture is welcomed,” said Bill Dewey, a shellfish biologist and clam farmer of more than 27 years based in Shelton, Washington. “When done right, aquaculture can improve the environment, provide jobs and reclaim American dollars that are being spent on imported aquaculture products.”

Offshore aquaculture benefits spill over to other industries


Knapp ’08 [Gunnar, Ph.D. in Economics from Yale University, Director and Professor of Economics at the Institute of Social and Economic Research at the University of Alaska Anchorage, former member of an evaluation team for the Moore Foundation’s Wild Salmon Ecosystem Initiative, “Chapter 8: Potential Economic Impacts of U.S. Offshore Aquaculture,” http://www.iser.uaa.alaska.edu/people/knapp/personal/pubs/Knapp_Economic_Impacts_of_US_Offshore_Aquaculture.pdf]
Figure 8.1 provides a simple categorization of industries associated with fish farming—¶ those industries which depend in some way on fish farming. We may group these industries into ¶ six categories: ¶ ¶ Figure 8.1. Industries associated with fish farming. • Fish farms. These are aquaculture operations growing fish or shellfish. ¶ ¶ • “Upstream industries” supplying fish farms. These are industries from which the fish ¶ farms purchase direct inputs. Among the industries which account for the greatest share ¶ of fish farm purchases are hatcheries, feed manufacturing, and cage and equipment manufacturing. • “Downstream” industries supplied by fish farms. These are industries in the distribution ¶ chain from fish farms to consumers, including processing, transportation, wholesaling, retail and food service. • Industries supplying upstream industries. These are industries from which the ¶ “upstream” industries purchase inputs. For example, the feed manufacturing industry ¶ purchases raw material for making fish feed from both the agriculture and the ¶ commercial fishing industries. ¶ ¶ • Industries supplying downstream industries. These are industries from which the ¶ “downstream industries purchase inputs. For example, the processing industry purchases ¶ boxes from the packaging industry. ¶ ¶ • Industries supported by household spending. These are industries throughout the entire ¶ economy that are supported by spending of household income earned in the other ¶ industries. ¶ ¶ Clearly the nature and degree of association with fish farming varies widely among these ¶ different categories of industries. There are only a few industries which would disappear entirely ¶ without fish farming, such as cage manufacture. However, there are many industries, across many sectors of the economy—which benefit in some way from fish farming. ¶ ¶ Figure 8.1 helps to illustrate two simple but important points. First, the economic impacts of fish farming are larger—potentially much larger—than those which occur at fish farms. We cannot count the employment created by aquaculture simply by adding up the jobs at ¶ aquaculture companies. ¶ ¶ Second, the economic impacts of fish farming are spread over a far greater geographic area than the communities where fish farms are located or from which they are supported. While ¶ the hatchery supplying a fish farm may be located relatively near the farm, the company ¶ manufacturing the cage or the restaurant selling the fish may be located thousands of miles away. ¶ ¶ One indicator of the relative significance of “upstream industries” in aquaculture ¶ production is the share of purchased product inputs in gross output value. As shown in Table 8.2, ¶ purchased inputs accounted for 69% of total gross output value of Canadian aquaculture in 2005, ¶ and feed purchases alone accounted for 31%. The shares of different inputs varied between ¶ provinces, reflecting different mixes of species in total production. ¶ Viewed in a different way, gross value added in Canadian aquaculture was only 31% of ¶ gross output in 2005. Thus more than two-thirds of gross output value was generated in other ¶ “upstream” industries. Estimating Total Employment and Income Impacts of Fish Farming ¶ ¶ Adding up how many people work on fish farms and what they earn is a relatively ¶ straightforward process. Speculating about how many people might work on future offshore fish ¶ farms is also relatively straightforward (although highly uncertain given uncertainty about the ¶ future scale and characteristics of the industry). It is far less straightforward to measure the full ¶ economic impacts, across all industries, of existing fish farms--or to project the potential full ¶ economic impacts of future fish farms. ¶ ¶ The standard technique for estimating economic impacts of an industry is input-output ¶ analysis, which calculates economic impacts using assumptions about inter-industry purchases ¶ per dollar of output of an industry. These are then used to caculate three types of economic ¶ impacts: “direct,” “indirect,” and “induced.” Applied to fish farming, “direct impacts” are those ¶ occurring within the fish farming industry; “indirect” impacts are those driven by purchases of ¶ the fish farming industry from other industries, and “induced impacts” are those driven by ¶ household spending of income created by direct and indirect impacts. . Each of these types of ¶ impacts is typically measured in three ways: annual average employment, wage and salary ¶ income, and sales or “output.” ¶ ¶ Input-Output analysis typically measures only the impacts of an industry and its ¶ associated upstream activities. If we wish to measure the impacts of the “downstream” activities ¶ of processing and distributing farmed fish, we may apply the same approach to estimating the ¶ direct, indirect and induced impacts of these industries (net of those associated with fish ¶ production). ¶ A significant challenge for input-output analysis is that it requires extensive data on inter-industry purchases. This is particularly a challenge for marine aquaculture, partly because it ¶ relies heavily on purchases from other industries, and partly because it is a relatively new ¶ industry for which relatively little data are available. The National Offshore Aquaculture Model is an input-output model which was ¶ developed for the specific purpose of estimating potential economic impacts of offshore ¶ aquaculture. Chapter 7 of this report uses this model to estimate economic impacts for ¶ hypothetical offshore farming operations for five different species. For each species, the model ¶ required specific assumptions about the scale of the operation and different kinds of expenditures ¶ such as farm installation costs, vessel maintenance, feed costs, etc. The model then calculates ¶ direct, indirect and induced impacts generated by the farming operation as well as “downstream” ¶ activities. ¶ ¶ Details of the model’s economic impact calculations are presented in Chapter 7. The ¶ purpose of our brief discussion here is to contrast the relative scales of different kinds of ¶ projected impacts, and of impacts from different kinds of farming. ¶ ¶ As shown in the first row of Table 8.2, the direct employment impacts of fish farming ¶ account for between only 11% and 19% of the projected total employment impacts of farming ¶ from all upstream and downstream activities as well as induced activity in the rest of the ¶ economy. As shown in the fourth row, the total impacts attributable to farming (as opposed to ¶ downstream activities) represent only 27% to 38% of total impacts. ¶ ¶ These estimates serve to emphasize the point made above: the potential total economic impacts of offshore fish farming are much larger than those which would occur at the farming operations alone—potentially five to ten times larger. Put differently, simply adding up jobs and ¶ wages at the farms would greatly underestimate the total economic impacts created by offshore ¶ farming.

The fish industry is a huge economic engine- proper management is key


Smith 2-12-14 [Russell Smith, Deputy Assistant Secretary for International Fisheries, NOAA, “Commerce’s Smith on Support of International Fisheries Agreements,” http://iipdigital.usembassy.gov/st/english/texttrans/2014/02/20140214293095.html?CP.rss=true#axzz31L5oOxrk]
Before I address the four treaties, I wish to provide some context about why they are important to U.S. national interest. Marine fish and fisheries, such as salmon in the Pacific Northwest and cod in New England, have been vital to the prosperity and cultural identity of coastal communities in the United States. U.S. fisheries play an enormous role in the U.S. economy. Commercial fishing supports fishers and fishing communities, and provides Americans with a sustainable, healthy food source. The seafood industry in the U.S.—harvesters, seafood processors and dealers, seafood wholesalers and seafood retailers, including imports and multiplier effects—generated $129 billion in sales impacts and $37 billion in income impacts, and supported 1.2 million jobs in 2011.1 Recreational fishing also makes significant contributions to employment and the economy in the United States. Recreational fishing generated an estimated $56 billion in sales impacts, $18 billion in income impacts, and supported 364,000 jobs in 2011.2 Subsistence fishing provides an essential food source and is culturally significant for indigenous peoples.¶ To ensure the long-term benefits of these resources to the American people, NOAA relies on clear, science-based rules, fair, effective and consistent enforcement, and a shared commitment to sustainable management. Much of this work occurs under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), which sets forth standards for the conservation, management and sustainable use of our Nation’s fisheries resources. The application of these standards has resulted in a federal fishery management system that has made very significant progress in ending overfishing and rebuilding our Nation’s fisheries.¶ The United States is also one of the world’s largest importers and consumers of seafood. In 2011, seafood imports contributed 176,000 jobs, $48.4 billion in sales impacts, and $14.8 billion in value added impacts.3 As such, the United States is in a unique position to support sustainable fisheries around the world while providing a level playing field for our domestic fishermen. Working in collaboration with the Department of State and the U.S. Coast Guard, NOAA engages in international fisheries fora, such as Regional Fisheries Management Organizations (RFMOs), to ensure that global fish stocks are sustainably managed, including by ensuring that management is based on the best available science. As the United States is a leader in sustainably managing fisheries, often we seek to draw from our experience and convince RFMOs to apply, in the waters under their jurisdiction, management measures comparable to those applied in U.S. waters.¶ One of the greatest challenges to our international efforts to ensure the sustainable management of global fisheries is combating illegal, unreported, or unregulated (IUU) fishing. IUU fishing is a global problem that threatens ocean ecosystems and impacts fisheries, food security, and coastal communities around the world. Experts estimate the global value of economic losses from IUU fishing range between $10 and $23.5 billion.4 By circumventing conservation and management measures, companies and individuals engaging in IUU fishing cut corners and lower their operating costs. As a result, their illegally caught products provide unfair competition for law-abiding fishermen and seafood industries in the marketplace, and can undercut the sustainability of international and U.S. fisheries.5

Plan solves overfishing

Aquaculture restores fish populations


Pittenger et al ‘07 [Richard Pittenger is chairman of the Marine Aquaculture Task Force, former Vice President for Marine Operations and Arctic Research Coordinator for Woods Hole Oceanographic Institution, former Chief of Staff to the U.S. Naval Forces in Europe, and Oceanographer of the Navy, Bruce Anderson, PhD in biomedical sciences from the University of Hawaii, is president of the Oceanic Institute, holds an M.P.H. in epidemiology from Yale University, Daniel Benetti is Associate Professor and the Director of Aquaculture at the University of Miami’s Rosenstiel School of Marine and Atmospheric Science, has over 25 years experience in aquaculture worldwide, “Sustainable Marine Aquaculture: Fulfilling the Promise; Managing the Risks,” January, http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Protecting_ocean_life/Sustainable_Marine_Aquaculture_final_1_07.pdf]
In addition to the food fish production¶ that has been described, the aquaculture industry in the U.S. includes several other¶ segments, including restoration programs and the production of ornamental fish. Aquaculture can play an important role in restoration efforts for marine fish species, especially those that have declined from overfishing and habitat destruction. While¶ it does not address the root causes of the¶ decline of wild stocks, aquaculture can assist¶ in restoration efforts by supplying hatcheryraised individuals to supplement wild populations.¶ Efforts to restore endangered stocks¶ of salmon rely heavily on hatchery programs, although these programs have been costly,¶ controversial and have met with only mixed¶ success. Aquaculture has been an important part of the restoration efforts for many other species of finfish and shellfish, such as striped bass, sturgeon, and oysters.

Overfishing internals

Solving overfishing bolsters economic growth


Safina ’13 [Carl Safina, president of the Blue Ocean Institute “The Continued Danger of Overfishing,” http://issues.org/19-4/safina-2/]
New studies continue to chronicle how overfishing and poor management have severely hurt the U.S. commercial fishing industry. Thus, it makes sense to examine the effectiveness of the Sustainable Fisheries Act of 1996, which overhauled federal legislation guiding fisheries management. At the time, I predicted that, if properly implemented, the act would do much to bolster recovery and sustainable management of the nation’s fisheries. Today, I see some encouraging signs but still overall a mixed picture.¶ The 1996 legislation amended the Fisheries Conservation and Management Act of two decades earlier. The original law had claimed waters within 200 miles of the coast of the United States and its possessions (equivalent to some two-thirds of the U.S. continental landmass) as an “exclusive economic zone.” In so doing, it set the stage for eliminating the foreign fishing that had devastated commercially important fish and other marine life populations. Although it set up a complicated management scheme involving regional councils, the original legislation failed to direct fishery managers to prohibit overfishing or to rebuild depleted fish populations. Nor did it do anything to protect habitat for fishery resources or to reduce bycatch of nontarget species. Under purely U.S. control, many fish and shellfish populations sank to record low levels.¶ The only sensible course is to move forward: to eliminate overfishing, reduce bycatch, and protect and improve habitat.¶ The 1996 act addressed many of those management problems, especially the ones connected with overfishing and rebuilding. In the previous reauthorization of the earlier act, for example, the goal of “optimum yield” had been defined as “the maximum sustainable yield from the fishery, as modified by any relevant social, economic, or ecological factor.” A tendency of fishery managers to act on short-term economic considerations had often led to modifications upward, resulting in catch goals that exceeded sustainable levels and hence in overfishing, depletion, and the loss of economic viability in numerous fisheries.¶ The Sustainable Fisheries Act changed the word “modified” to “reduced.” In other words, fishery managers may no longer allow catches exceeding sustainable yields. Other new language defined a mandatory recovery process and created a list of overfished species. When a fish stock was listed as overfished, managers were given a time limit to enact a recovery plan. Because undersized fish and nontarget species caught incidentally and discarded dead account for about a quarter of the total catch, the law enabled fishery managers to require bycatch-reduction devices.¶ Although I had high hopes for the act when it was passed, its actual implementation, which began only in 1998, has been less than uniform. Fishery groups have sued to slow or block recovery plans, because the first step in those plans is usually to restrict fishing. Meanwhile, conservation groups have sued to spur implementation.¶ In that contentious climate, progress has been somewhat halting. On the one hand, overfishing continues for some species, and many fish populations remain depleted. One of the most commercially important fish–Atlantic cod–has yet to show strong increases despite tighter fishing restrictions.¶ On the other hand, in cases in which recovery plans have actually been produced, fish populations have done well. For example, New England has some of the most depleted stocks in U.S. waters. But remedies that in some cases began even before the law was reformed–closures of important breeding areas, regulation of net size, and reductions in fishing pressure–have resulted in encouraging upswings in the numbers of some overfished species. Not least among the rebounding species are scallops, yellowtail flounder, and haddock. Goals have been met for rebuilding sea scallops on Georges Bank and waters off the mid-Atlantic states. There has even been a sudden increase in juvenile abundance of notoriously overfished Atlantic swordfish. That is because federal managers, responding to consumer pressure and to lawsuits from conservation groups, closed swordfish nursery areas where bycatch of undersized fish had been high and cut swordfishing quotas. Some other overfished species, among them Atlantic summer flounder, certain mackerel off the Southeast, red snapper in the Gulf of Mexico, and tanner and snow crabs off Alaska, are rebounding nicely.¶ The trend in recovery efforts is generally upward. The number of fish populations with sustainable catch rates and healthy numbers has been increasing, and the number that are overfished declining. And rebuilding programs are now finally in place or being developed for nearly all overfished species. Maintaining healthy fish populations is not just good for the ocean, of course, but also for commerce: Fish are worth money. Ocean fishing contributes $50 billion to the U.S. gross domestic product annually, according to the National Oceanic and Atmospheric Administration. But because fish are worth money only after they are caught, not everyone is pleased with aggressive efforts to ensure that there will be more fish tomorrow. Some people want more fish today. Restrictions designed to rebuild depleted stocks are costing them money in the short term.¶ For that reason, various amendments have been introduced in Congress that would weaken the gains of the Sustainable Fisheries Act and jeopardize fisheries. In particular, industry interests have sought to lengthen recovery times. Currently, the law requires plans for rebuilding most fish populations within a decade, with exceptions for slow-growing species. (Many fish could recover twice as fast if fishing was severely limited, but a decade was deemed a reasonable amount of time: It is practical biologically, meaningful within the working lifetime of individual fishers, and yet rapid enough to allow trends to be perceived and adjustments made if necessary.) Longer rebuilding schedules make it harder to assess whether a fish population is growing or shrinking in response to management efforts. The danger is that overfishing will continue in the short term, leading to tighter restrictions and greater hardship later on.¶ Recovered fish populations would contribute substantially to the U.S. economy and to the welfare of fishing communities. In just five years since the Sustainable Fisheries Act went into effect, the outlook for U.S. fisheries has improved noticeably, for the first time in decades. The only sensible course is to move forward: to eliminate overfishing, reduce bycatch, and protect and improve habitat. It would be foolish to move backward and allow hard-gotten gains to unravel just when they are gaining traction. Yet the debate continues.

Low deficit k2 econ

Reducing the deficit is key to sustainable growth- outweighs any alternate causes


Tonelson ‘11 [Alan, Research Fellow at the U.S. Business & Industry Educational Foundation, July 29, “Trade Deficit Reduction -- America's Only Way Out,” http://americaneconomicalert.org/view_art.asp?Prod_ID=4658]
This morning’s dismaying report from the government on gross domestic product confirms that economic growth is virtually dead in the water. It also reveals that none of the recovery strategies dominating the headlines, and none of the issues being debated during the current budget crisis, by themselves can generate desperately needed output and hiring without boosting America’s already dangerous levels of debt. Literally trillions of dollars of stimulus from the Fed and the last two administrations obviously have flunked this test since the crisis began. And major tax cuts plus more Fed stimulus flunked it in the pre-crisis years, producing the weakest U.S. expansion until the present. The message to the President and Congress, and Republicans, Democrats, and Tea Partyers alike couldn’t be clearer: America’s damaged economy will never be healed unless recovery programs emphasize slashing the nation’s still-massive and chronic trade deficits. Greatly narrowing the gap between exports and imports represents the only realistic way to foster growth without artificially boosting anemic domestic demand further – whether through more government spending or more tax cuts. As a result, it’s the realistic way to promote output and job-creation without plunging the economy even deeper into the red financially. The new government report revised the economy’s growth figures going back to 2003, and thus included an update on U.S. performance from the last recession’s official onset at the end of 2007. Its verdict: the downturn, which officially ended in mid-2009, was considerably worse than originally estimated. Rather than growing at an average annual rate of 0.1 percent between 2007 and 2010 (after inflation), the government now says the economy shrunk by an average annual rate of 0.3 percent in real terms. This year’s “soft patch” in growth, moreover, is looking more worrisome, too, as a result of the revisions. Rather than expanding at a 1.9 percent annualized rate in real terms during the first quarter of 2011, growth was only 0.4 percent – barely measurable. Preliminary figures for second-quarter annualized growth were better, but still sickly at 1.3 percent. Real growth for 2010 was revised upward slightly, from 2.9 to 3 percent. But the new data also showed that the second half of last year saw a sharper-than-reported slowdown in real growth, with the fourth quarter number being slashed from 3.1 percent to 2.3 percent. As this morning’s report showed, a greater worsening of the trade deficit than originally estimated dragged down first quarter growth this year much more than either weaker consumption, business investment, or government spending. Although the new data peg export growth during the quarter at an annualized 7.9 percent rather than 7.3 percent, they also show a much greater rise in imports – from an annualized 5.1 percent increase to 8.3 percent According to preliminary figures, moreover, the trade deficit’s shrinkage made the private sector‘s biggest contribution to the modest growth speed-up in the second quarter. But these new government numbers also demonstrate that the way the trade deficit is narrowed matters greatly. Since the economic crisis broke out in the summer of 2007, the only significant progress on this front has come when domestic demand has nosedived, and sharply depressed imports. Trade deficit reduction strategies must emphasize replacing imports with domestically produced goods and services on a massive scale. Only this way can growth be accelerated without inflating current levels of demand – and indebtedness. In fact, trade deficit reduction can boost growth even if domestic demand falls. Increasing U.S. exports, as President Obama has proposed, can help of course. But as the U.S. Business and Industry Council keeps reminding him, export expansion per se can only increase growth and job-creation on net if it’s great enough to reduce the trade deficit. And given today’s world of still-formidable foreign trade barriers and slowing growth, that’s clearly a pipe dream. These conditions, of course, also further undermine the weak case for the Colombia, Korea, and Panama trade agreements as American growth and employment bonanzas. Bottom line: Without tight curbs on imports, such as those the Council has long urged, the U.S. economy will be stuck in a slow-growth/high-unemployment mode for years. And that’s the most optimistic scenario.

High trade deficits cause economic instability


Elwell ’10 [Craig K., Specialist in Macroeconomic Policy at the Congressional Research Service, “The U.S. Trade Deficit: Causes, Consequences, and Policy Options,” July 12, http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA525490]
Trade deficits often raise concern about the potential instability of external sources of finance. What if foreign investors begin to pull their funds out of the United States, causing interest rates to rise sharply, disrupting domestic capital markets and the wider economy? 19 The “dollar crash” scenario is as follows. Growing perceptions of an unsustainable accumulation of foreign debt in the U.S. economy result in a widespread expectation that the dollar will eventually depreciate substantially. It is argued that this expectation raises the prospect of a run on the dollar that leads to a rapid and disorderly depreciation of the dollar that goes far beyond what is needed for the desired economic adjustment. The fear in some minds is that the move out of dollars could become a stampede if investors try to simultaneously sell their dollar assets on a large scale. This leads not only to a sharply falling exchange rate, but also to sharply rising interest rates in U.S. financial markets as lower asset prices translate into higher effective interest rates. Sharply rising interest rates in the United States will dampen spending in interest-sensitive sectors and stress financial markets. There are, of course, positive impulses associated with a falling dollar, such as increased export sales in the United States and stimulus to interest sensitive sectors abroad. In the dollar crash scenario, however, the negative impulses have a more immediate effect.


Deficit=China war

A high trade deficit independently risks a trade war with China


World Politics News Review ‘11 [Online news service, “A Coming Trade War With China?” October 8, http://worldpoliticsblog.wordpress.com/2011/10/08/a-coming-trade-war-with-china/]
The United States runs a $273 billion annual trade deficit with China, meaning it imports much more than it exports to the rising Asian power. The Economic Policy Institute (EPI) recently estimated that this U.S.-China trade deficit cost the U.S. 2.8 million jobs between 2001 and 2010, with all 50 U.S. states affected by job losses in the manufacturing and services sectors. As EPI notes, “increases in U.S. exports tend to create jobs in the United States, and increases in imports tend to lead to job loss. Thus, a growing trade deficit signifies growing job loss.” American leaders have increasingly blamed this trade deficit on China’s unwillingness to “play fair” when it comes to trade by keeping its currency’s value artificially low relative to the dollar. While a weak currency doesn’t sound like a good thing, it makes a country’s exports cheaper abroad and it makes other countries’ imports more expensive at home. This means goods and services produced in China are more competitive both in China and abroad, which creates jobs and economic growth in China and harms competing countries’ economic prospects. In retaliation for China’s currency manipulation, the United States Congress is now considering legislation that would impose tariffs (essentially a tax) on Chinese imports. China has claimed that such action would violate the rules of the World Trade Organization, which focuses on lowering trade barriers worldwide, but Congressional supporters of the legislation dispute that. Proponents claim these steps could ultimately create up to 2 million American jobs. The Senate is in favor of the bill but House leaders have blasted it as “dangerous” and President Obama appears unenthusiastic but noncommittal. For its part, China has warned that such action could lead to a trade war, which would not be good for America’s economy. In New York Times editorial last week noted economist Paul Krugman downplayed the risks of a trade war: “And the reality of the unemployment disaster is also my answer to those who warn that getting tough with China might unleash a trade war or damage world commercial diplomacy. Those are real risks, although I think they’re exaggerated. But they need to be set against the fact — not the mere possibility — that high unemployment is inflicting tremendous cumulative damage as we speak.”

That escalates to global war and economic collapse


Droke ’10 [Clif, editor for the Momentum Strategies Report, “America and the Next Major War,” 3-29-10, http://www.greenfaucet.com/technical-analysis/america-and-the-next-major-war/79314]
In the current phase of relative peace and stability we now enjoy, many are questioning when the next major war may occur and speculation is rampant as to major participants involved. Our concern here is strictly of a financial nature, however, and a discussion of the geopolitical and military variables involved in the escalation of war is beyond the scope of this commentary. But what we can divine from financial history is that "hot" wars in a military sense often emerge from trade wars. As we shall see, the elements for what could prove to be a trade war of epic proportions are already in place and the key figures are easily identifiable. Last Wednesday the lead headline in the Wall Street Journal stated, "Business Sours on China." It seems, according to WSJ, that Beijing is "reassessing China's long-standing emphasis on opening its economy to foreign business....and tilting toward promoting dominant state companies." Then there is Internet search giant Google's threat to pull out of China over concerns of censorship of its Internet search results in that country. The trouble started a few weeks ago Google announced that it no longer supports China's censoring of searches that take place on the Google platform. China has defended its extensive censorship after Google threatened to withdraw from the country. Additionally, the Obama Administration announced that it backs Google's decision to protest China's censorship efforts. In a Reuters report, Obama responded to a question as to whether the issue would cloud U.S.-China relations by saying that the human rights would not be "carved out" for certain countries. This marks at least the second time this year that the White House has taken a stand against China (the first conflict occurring over tire imports). Adding yet further fuel to the controversy, the U.S. Treasury Department is expected to issue a report in April that may formally label China as a "currency manipulator," according to the latest issue of Barron's. This would do nothing to ease tensions between the two nations and would probably lead one step closer to a trade war between China and the U.S. Then there was last week's Wall Street Journal report concerning authorities in a wealthy province near Shanghai criticizing the quality of luxury clothing brands from the West, including Hermes, Tommy Hilfiger and Versace. This represents quite a change from years past when the long-standing complaint from the U.S. over the inferior quality of Chinese made merchandise. On Monday the WSJ ran an article under the headline, "American Firms Feel Shut Out In China." The paper observed that so far there's little evidence that American companies are pulling out of China but adds a growing number of multinational firms are "starting to rethink their strategy." According to a poll conducted by the American Chamber of Commerce in China, 38% of U.S. companies reported feeling unwelcome in China compared to 26% in 2009 and 23% in 2008. As if to add insult to injury, the high profile trial of four Rio Tinto executives in China is another example of the tables being turned on the West. The executives are by Chinese authorities of stealing trade secrets and taking bribes. There's a touch of irony to this charge considering that much of China's technology was stolen from Western manufacturing firms which set up shop in that country. It seems China is flexing its economic and political muscle against the West in a show of bravado. Yet one can't help thinking that this is exactly the sort of arrogance that typically precedes a major downfall. As the Bible states, "Pride goeth before destruction, and an haughty spirit before a fall." In his book, "Jubilee on Wall Street," author David Knox Barker devotes a chapter to how trade wars tend to be common occurrences in the long wave economic cycle of developed nations. Barker explains his belief that the industrial nations of Brazil, Russia, India and China will play a major role in pulling the world of the long wave deflationary decline as their domestic economies begin to develop and grow. "The are and will demand more foreign goods produced in the United States and other markets," he writes. Barker believes this will help the U.S. rebalance from an over weighted consumption-oriented economy to a high-end producer economy. Barker adds a caveat, however: if protectionist policies are allowed to gain force in Washington, trade wars will almost certainly erupt and. If this happens, says Barker, "all bets are off." He adds, "The impact on global trade of increased protectionism and trade wars would be catastrophic, and what could prove to be a mild long wave [economic] winter season this time around could plunge into a global depression." Barker also observes that the storm clouds of trade wars are already forming on the horizon as we have moved further into the long wave economic "winter season." Writes Barker, "If trade wars are allowed to get under way in these final years of a long wave winter, this decline will be far deeper and darker than necessary, just as the Great Depression was far deeper and lengthier than it should have been, due to growing international trade isolationism. He further cautions that protectionism in Washington will certainly bring retaliation from the nations that bear the brunt of punitive U.S. trade policies. He observes that the reaction from one nation against the protectionist policies of another is typically far worse than the original action. He cites as an example the restriction by the U.S. of $55 million worth of cotton blouses from China in the 1980s. China retaliated by cancelling $500 million worth of orders for American rain. "As one nation blocks trade, the nation that is hurt will surely retaliate and the entire world will suffer," writes Barker.

High trade deficits risk a trade war with China


Prasad ’10 [Eswar, teaches trade policy at Cornell University, Marketplace, "The House's bill against foreign currency manipulation," 9-29-10, http://marketplace.publicradio.org/display/web/2010/09/29/pmthe-houses-bill-against-foreign-currency-manipulation/]
RYSSDAL: For all that we are talking about currency now in this country, and we have been for a number of months -- at least in Congress -- is this all going to go away after the election? Does politics explain the popularity? PRASAD: Right now in the U.S., there is a very combustible mix not only of leading up to election season and we have very vulnerable Congressmen. But in addition to that, the jobs picture is very weak, the trade deficit in the U.S. is beginning to rise again -- and China counts for about half of that so far this year. So it is a volatile mix and that I think is what is being reflected in what is typically overheated rhetoric now getting translated into more substantive actions directed at China.

US k2 global econ

US is key to the global economy


James and Lombardi 12-3-13 [Harold James is Professor of History and International Affairs at Princeton University, Professor of History at the European University Institute, Florence, and a senior fellow at the Center for International Governance Innovation, Domenico Lombardi is Director of the Global Economy Program at the Centre for International Governance Innovation, “Who Should Lead the Global Economy?” http://www.project-syndicate.org/commentary/harold-james-and-domenico-lombardiconsider-whether-china-or-the-eurozone-has-what-it-takes-to-replace-the-us-as-the-world-s-economic-leader]
In terms of global economic leadership, the twentieth century was American, just as the nineteenth century was British and the sixteenth century was Spanish. Some Chinese and Europeans think that they are next. Are they? And should they even want to be?¶ The most important prerequisite for global economic leadership is size. The bigger an economy, the greater its systemic importance, and the more leverage its political representatives have in international decision-making. The United States is the world’s largest economy, with a GDP of roughly $16.7 trillion. The eurozone’s $12.6 trillion output puts it in second place, and China, with a GDP of around $9 trillion, comes in third. In other words, all three economies are conceivably large enough to serve as global economic leaders.¶ But an economy’s future prospects are also crucial to its leadership prospects – and serious challenges lie ahead. No one thinks that the eurozone will grow more quickly than the US in the coming years or decades. While China is expected to overtake the US in terms of output by 2020, decades of rigid population-control measures will weaken growth in the longer run, leaving the US economy as the most dynamic of the three.¶ Another key requirement for global economic leadership is systemic importance in commercial, monetary, and financial terms. Unlike China, a large trade power with underdeveloped monetary and financial capabilities, the eurozone meets the requirement of systemic significance in all three areas.¶ There is also a less concrete aspect to leadership. Being a true global leader means shaping and connecting the global economic structures within which states and markets operate – something the US has been doing for almost 70 years.¶ At the 1944 Bretton Woods conference, the US crafted the post-World War II international monetary and financial order. The basic framework, centered around the US dollar, has survived financial crises, the Soviet Union’s dissolution, and several developing countries’ integration into the world economy.¶ Today, American leadership in global trade and financial and monetary governance rests on inter-related strengths. The US provides the world’s key international currency, serves as the linchpin of global demand, establishes trends in financial regulation, and has a central bank that acts as the world’s de facto lender of last resort.¶ Beyond delivering a global public good, supplying the world’s central currency carries substantial domestic benefits. Because the US can borrow and pay for imports in its own currency, it does not face a hard balance-of-payments constraint. This has allowed it to run large and sustained current-account deficits fairly consistently since the early 1980’s.¶ These deficits raise persistent concerns about the system’s viability, with observers (mostly outside the US) having long predicted its imminent demise. But the system survives, because it is based on a functional trade-off, in which the US uses other countries’ money to act as the main engine of global demand. In fact, export-oriented economies like Germany, Japan, and China owe much of their success to America’s capacity to absorb a massive share of global exports – and they need to keep paying America to play this role.¶ Given this, the big exporters have lately come under intense pressure to “correct” their external surpluses as part of responsible global citizenship. While this has contributed to a sharp contraction of the Chinese and Japanese surpluses, the eurozone’s current-account surplus is growing, with the International Monetary Fund expecting it to reach 2.3% of GDP this year (slightly less than the Chinese surplus).¶ A global economy led by a surplus country seems more logical, given that creditors usually dictate terms. At the time of the Bretton Woods conference, the US accounted for more than half of the world’s manufactured output. The rest of the world needed dollars that only the US could supply.¶ Chinese or European leadership would probably look more like the pre-World War I Pax Britannica (during which the United Kingdom supplied capital to the rest of the world in anticipation of its own relative economic decline), with the hegemon supplying funds on a long-term basis. But this scenario presupposes a deep and well-functioning financial system to intermediate the funds – something that China and the eurozone have been unable to achieve.¶ Despite the 2008 financial crisis, the US remains the undisputed leader in global finance. Indeed, American financial markets boast unparalleled depth, liquidity, and safety, making them magnets for global capital, especially in times of financial distress. This “pulling power,” central to US financial dominance, underpins the dollar’s global role, as investors in search of safe, liquid assets pour money into US Treasury securities.

US is key to the global economy


McIntyre 1-15-14 [Douglas, partner at 24/7 Wall St., LLC. former Editor-in-Chief and Publisher of Financial World Magazine, first president of Switchboard.com when it was the 10th most visited website in the world, former CEO of FutureSource, LLC and On2 Technologies, Inc, is a magna cum laude graduate of Harvard, “U.S. Key to Global Recovery, Says World Bank,” http://247wallst.com/economy/2014/01/15/u-s-key-to-global-recovery-says-world-bank/]
While the developed economies of the world will stage improvements this year, and the growth of the developing world will accelerate sharply, the United States, the largest nation based on gross domestic product (GDP), is the key to a strong global recovery in 2014. At the core of the U.S. effect is the activity of Federal Reserve and its efforts to taper its stimulus programs. The recovery, in other words, may come down to the decisions of a single central bank. Economists in America and abroad say that if access to money at extremely low interest rates in the United States begins to disappear, the American economy cannot sustain growth, which has only picked up sharply in the past few quarters, both based on GDP improvement and employment gains. The jobless rate in the United States, at 6.7%, is still well above the average when the economy is in strong recovery. American consumer activity is still about two-thirds of GDP, and the foundations of that activity are still modest.¶ The World Bank reports in its new “Global Economic Prospects” analysis that:¶ Growth prospects for 2014 are, however, sensitive to the tapering of monetary stimulus in the United States, which began earlier this month, and to the structural shifts taking place in China’s economy.¶ China likely will continue to step into the limelight as its cements it position as the world’s second largest nation as measured by GDP, and one that is growing much faster than the United States.¶ Other World Bank forecasts:¶ The report forecasts growth in developing countries to pick up from 4.8 percent in 2013 to a slower than previously expected 5.3 percent this year, 5.5 percent in 2015 and 5.7 percent in 2016. While the pace is about 2.2 percentage points lower than during the boom period of 2003-07, the slower growth is not a cause for concern. Almost all of the difference reflects a cooling off of the unsustainable turbo-charged pre-crisis growth, with very little due to an easing of growth potential in developing countries. Moreover, even this slower growth represents a substantial (60 percent) improvement compared with growth in the 1980s and early 1990s.¶ Global GDP is projected to grow from 2.4 percent in 2013 to 3.2 percent this year, stabilizing at 3.4 percent and 3.5 percent in 2015 and 2016, respectively, with much of the initial acceleration reflecting a pick-up in high-income economies.¶ In other words, the consuming economies will help those that produce the goods that are fruits of the recovery in the United States, Europe and Japan.

Impacts- Econ=nuclear wars

Economic decline causes every major impact


Green ‘09 [Michael J., Senior Advisor and Japan Chair at the Center for Strategic and International Studies (CSIS) and Associate Professor at Georgetown University, Asia Times Online, 3.26.9, http://www.atimes.com/atimes/Asian_Economy/KC26Dk01.html AD 6/30/09]
Facing the worst economic crisis since the Great Depression, analysts at the World Bank and the US Central Intelligence Agency are just beginning to contemplate the ramifications for international stability if there is not a recovery in the next year. For the most part, the focus has been on fragile states such as some in Eastern Europe. However, the Great Depression taught us that a downward global economic spiral can even have jarring impacts on great powers. It is no mere coincidence that the last great global economic downturn was followed by the most destructive war in human history. In the 1930s, economic desperation helped fuel autocratic regimes and protectionism in a downward economic-security death spiral that engulfed the world in conflict. This spiral was aided by the preoccupation of the United States and other leading nations with economic troubles at home and insufficient attention to working with other powers to maintain stability abroad. Today's challenges are different, yet 1933's London Economic Conference, which failed to stop the drift toward deeper depression and world war, should be a cautionary tale for leaders heading to next month's London Group of 20 (G-20) meeting. There is no question the US must urgently act to address banking issues and to restart its economy. But the lessons of the past suggest that we will also have to keep an eye on those fragile threads in the international system that could begin to unravel if the financial crisis is not reversed early in the Barack Obama administration and realize that economics and security are intertwined in most of the critical challenges we face. A disillusioned rising power? Four areas in Asia merit particular attention, although so far the current financial crisis has not changed Asia's fundamental strategic picture. China is not replacing the US as regional hegemon, since the leadership in Beijing is too nervous about the political implications of the financial crisis at home to actually play a leading role in solving it internationally. Predictions that the US will be brought to its knees because China is the leading holder of US debt often miss key points. China's currency controls and full employment/export-oriented growth strategy give Beijing few choices other than buying US Treasury bills or harming its own economy. Rather than creating new rules or institutions in international finance, or reorienting the Chinese economy to generate greater long-term consumer demand at home, Chinese leaders are desperately clinging to the status quo (though Beijing deserves credit for short-term efforts to stimulate economic growth). The greater danger with China is not an eclipsing of US leadership, but instead the kind of shift in strategic orientation that happened to Japan after the Great Depression. Japan was arguably not a revisionist power before 1932 and sought instead to converge with the global economy through open trade and adoption of the gold standard. The worldwide depression and protectionism of the 1930s devastated the newly exposed Japanese economy and contributed directly to militaristic and autarkic policies in Asia as the Japanese people reacted against what counted for globalization at the time. China today is similarly converging with the global economy, and many experts believe China needs at least 8% annual growth to sustain social stability. Realistic growth predictions for 2009 are closer to 5%. Veteran China hands were watching closely when millions of migrant workers returned to work after the Lunar New Year holiday last month to find factories closed and jobs gone. There were pockets of protests, but nationwide unrest seems unlikely this year, and Chinese leaders are working around the clock to ensure that it does not happen next year either. However, the economic slowdown has only just begun and nobody is certain how it will impact the social contract in China between the ruling communist party and the 1.3 billion Chinese who have come to see President Hu Jintao's call for "harmonious society" as inextricably linked to his promise of "peaceful development". If the Japanese example is any precedent, a sustained economic slowdown has the potential to open a dangerous path from economic nationalism to strategic revisionism in China too. Dangerous states It is noteworthy that North Korea, Myanmar and Iran have all intensified their defiance in the wake of the financial crisis, which has distracted the world's leading nations, limited their moral authority and sown potential discord. With Beijing worried about the potential impact of North Korean belligerence or instability on Chinese internal stability, and leaders in Japan and South Korea under siege in parliament because of the collapse of their stock markets, leaders in the North Korean capital of Pyongyang have grown increasingly boisterous about their country's claims to great power status as a nuclear weapons state. The junta in Myanmar has chosen this moment to arrest hundreds of political dissidents and thumb its nose at fellow members of the 10-country Association of Southeast Asian Nations. Iran continues its nuclear program while exploiting differences between the US, UK and France (or the P-3 group) and China and Russia - differences that could become more pronounced if economic friction with Beijing or Russia crowds out cooperation or if Western European governments grow nervous about sanctions as a tool of policy. It is possible that the economic downturn will make these dangerous states more pliable because of falling fuel prices (Iran) and greater need for foreign aid (North Korea and Myanmar), but that may depend on the extent that authoritarian leaders care about the well-being of their people or face internal political pressures linked to the economy. So far, there is little evidence to suggest either and much evidence to suggest these dangerous states see an opportunity to advance their asymmetrical advantages against the international system.

US economic decline causes WMD wars


Nyquist ‘05 [J.R. renowned expert in geopolitics and international relations, WorldNetDaily contributing editor, “The Political Consequences of a Financial Crash,” February 4, www.financialsense.com/stormw...2005/0204.html]
Should the United States experience a severe economic contraction during the second term of President Bush, the American people will likely support politicians who advocate further restrictions and controls on our market economy – guaranteeing its strangulation and the steady pauperization of the country. In Congress today, Sen. Edward Kennedy supports nearly all the economic dogmas listed above. It is easy to see, therefore, that the coming economic contraction, due in part to a policy of massive credit expansion, will have serious political consequences for the Republican Party (to the benefit of the Democrats). Furthermore, an economic contraction will encourage the formation of anti-capitalist majorities and a turning away from the free market system. The danger here is not merely economic. The political left openly favors the collapse of America’s strategic position abroad. The withdrawal of the United States from the Middle East, the Far East and Europe would catastrophically impact an international system that presently allows 6 billion people to live on the earth’s surface in relative peace. Should anti-capitalist dogmas overwhelm the global market and trading system that evolved under American leadership, the planet’s economy would contract and untold millions would die of starvation. Nationalistic totalitarianism, fueled by a politics of blame, would once again bring war to Asia and Europe. But this time the war would be waged with mass destruction weapons and the United States would be blamed because it is the center of global capitalism. Furthermore, if the anti-capitalist party gains power in Washington, we can expect to see policies of appeasement and unilateral disarmament enacted. American appeasement and disarmament, in this context, would be an admission of guilt before the court of world opinion. Russia and China, above all, would exploit this admission to justify aggressive wars, invasions and mass destruction attacks. A future financial crash, therefore, must be prevented at all costs. But we cannot do this. As one observer recently lamented, “We drank the poison and now we must die.”

AT: Past recession disproves

Despite the past recession, it could be much worse if we can’t stave off another downturn


Reich ’10 [Robert, professor of public policy at the University of California at Berkeley and former secretary of labor during the Clinton administration, “The root of economic fragility and political anger,” 7-13-10, http://www.salon.com/news/great_recession/?story=/news/feature/2010/07/13/reich_economic_anger]
The crash of 2008 didn’t turn into another Great Depression because the government learned the importance of flooding the market with cash, thereby temporarily rescuing some stranded consumers and most big bankers. But the financial rescue didn’t change the economy’s underlying structure — median wages dropping while those at the top are raking in the lion’s share of income. That’s why America’s middle class still doesn’t have the purchasing power it needs to reboot the economy, and why the so-called recovery will be so tepid—maybe even leading to a double dip. It’s also why America will be vulnerable to even larger speculative booms and deeper busts in the years to come.

Continued worsening of the recession increases likelihood of war


Mead ‘09 [Walter Russell, Senior Fellow in U.S. Foreign Policy at the Council on Foreign Relations, New Republic, February 4, http://www.tnr.com/politics/story.html?id=571cbbb9-2887-4d81-8542-92e83915f5f8&p=2]
So far, such half-hearted experiments not only have failed to work; they have left the societies that have tried them in a progressively worse position, farther behind the front-runners as time goes by. Argentina has lost ground to Chile; Russian development has fallen farther behind that of the Baltic states and Central Europe. Frequently, the crisis has weakened the power of the merchants, industrialists, financiers, and professionals who want to develop a liberal capitalist society integrated into the world. Crisis can also strengthen the hand of religious extremists, populist radicals, or authoritarian traditionalists who are determined to resist liberal capitalist society for a variety of reasons. Meanwhile, the companies and banks based in these societies are often less established and more vulnerable to the consequences of a financial crisis than more established firms in wealthier societies. As a result, developing countries and countries where capitalism has relatively recent and shallow roots tend to suffer greater economic and political damage when crisis strikes--as, inevitably, it does. And, consequently, financial crises often reinforce rather than challenge the global distribution of power and wealth. This may be happening yet again. None of which means that we can just sit back and enjoy the recession. History may suggest that financial crises actually help capitalist great powers maintain their leads--but it has other, less reassuring messages as well. If financial crises have been a normal part of life during the 300-year rise of the liberal capitalist system under the Anglophone powers, so has war. The wars of the League of Augsburg and the Spanish Succession; the Seven Years War; the American Revolution; the Napoleonic Wars; the two World Wars; the cold war: The list of wars is almost as long as the list of financial crises. Bad economic times can breed wars. Europe was a pretty peaceful place in 1928, but the Depression poisoned German public opinion and helped bring Adolf Hitler to power. If the current crisis turns into a depression, what rough beasts might start slouching toward Moscow, Karachi, Beijing, or New Delhi to be born? The United States may not, yet, decline, but, if we can't get the world economy back on track, we may still have to fight.



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