Implications of US move for the world
The Taliban’s takeover of Afghanistan, including the capital city of Kabul, has triggered concern across the planet , and rightly so. Afghanistan wouldn’t have fallen to the Taliban had the us not withdrawn its troops from the country. While the US had announced its troop withdrawal much earlier, the very fact that it didn’t reconsider its decision even within the face of a near meltdown of the Afghan government’s resistance has drawn widespread criticism. The move has left an outsized section of the anti-Taliban Afghan population at the mercy of the group. because the world, especially India, will need to come to terms with the fallout of the Taliban establishing an Islamic Emirate in Afghanistan, the US’s indifference to the event has raised questions on its role as a worldwide superpower.
Many commentators have written that the US withdrawal from Afghanistan is primarily driven by domestic political-economic concerns, albeit they undermine its self-proclaimed role because the vanguard of liberalism and democracy.
An HT analysis shows that this is often a reality which actually goes beyond the US’s willingness (or lack of it) to undertake military commitments outside its borders. The US has been displaying an identical tendency in fulfilling its role because the global capitalist leader, a term which was first popularised by Charles P Kindleberger, an economic historian who gave among the simplest accounts of the good Depression of the 1930s. While the humanitarian and strategic implications of the US’s withdrawal from Afghanistan are likely to be catastrophic, the fallout of its economic actions (detailed below) is probably going to be equally, if less , profound for the planet as we all know it today. Here are three charts which explain this argument intimately .
Among the various things that forced the US to withdraw from Afghanistan was the value of fighting a war which it couldn’t decisively win even after 20 years . consistent with an estimate by the value of War project by Watson Institute at Brown University , the Afghan war cost $2.26 trillion to the US between 2001 and 2021. this is often almost 10% of the present annual GDP of the US. While saving dollars may need been a pressing concern within the US withdrawal from Afghanistan, the so called “War on Terror” itself was an aberration within the US’s declining military spending from the height of the conflict era. International Bank for Reconstruction and Development statistics on the share of military spending in US GDP – it decreased from slightly below 10% within the 1960s to only above 3% by the top of 1990s – proves now . With the US out of both Iraq and Afghanistan now, its military spending is sure to come down further.
Kindleberger, among the foremost influential economic historians of the planet , whose work on the good Depression of the 1930s is taken into account to be a masterpiece, spoke about the necessity for a worldwide capitalist leader for the steadiness of the international economic order. the good Depression, consistent with Kindleberger, happened because Britain wasn’t during a position to fulfil this role and therefore the US, the emerging superpower, wasn’t willing to require on the mantle. The US assumed this role within the period after the Second war , triggering what’s described because the Golden Age of capitalism. The US began its hegemonic phase with the Marshall Plan , where it funded reconstruction of war-ravaged Europe and also ran large trade deficits with many countries with anti-communist regimes. Being a “lender of last resort” and providing home market access were important requirements of what Kindleberger described because the role of a worldwide capitalist leader. What began as a “stop the spread of communism” project, eventually culminated within the US aiding the increase of China as an economic superpower, emerging the most important marketplace for Chinese exports.
A rise in outsourcing, destruction of domestic blue-collar jobs and therefore the associated economic pain triggered a huge backlash in US’s domestic politics against globalisation, the most important manifestation of which was Donald Trump’s victory in 2016. While the trend of a falling US deficit has stagnated within the past few years, and therefore the post-pandemic recovery has seen a spike in imports, it’s unlikely that the US will ever revert to the policy of throwing open its markets to strategic allies because it did during the conflict . this may interest countries like India, whose strategic alliance with the US is stronger than ever today.
The United States government has remained unmoved to widespread appeals for reconsidering or maybe recalibrating the withdrawal from Afghanistan. this is often in sharp contrast to the sensitivity the Federal Reserve System , the US financial institution , displays to criticism from financial markets whenever there’s talk about raising interest rates, which are at near zero levels. a coffee rate of interest regime within the US encourages investment in speculative assets like shares both within and out of doors the country. Even a touch talk about raising interest rates within the US, which can cause money flowing back from riskier assets to the low-risk ones, can create an enormous upset in financial markets, as happened during the “taper tantrum” of 2013.
What is also true, however, is that the incontrovertible fact that a protracted cheap money-driven stock exchange book can sow the seeds of monetary sector instability and an economic shock, when a correction finally comes. While it’s always difficult to predict when this moment will come, it’ll not be an exaggeration to mention that by encouraging a coffee interest-driven financial sector boom, the US has become, either by omission or commission, a source of systemic instability instead of being a hegemon which brought stability to the worldwide capitalist system. The chaos in Afghanistan is certainly heart-wrenching but it’s not the last such episode we’ll emerge out of the US’s actions.
