America’s Three Worst Strategic Mistakes of the Past 30 Years

From Pearl Harbor in 1941 to the Twin Towers in 2001 to the pandemic today, major events have often caught the U.S. establishment off guard.

Last week, we discussed how these events were part of the long-running “failure of imagination” within U.S. intelligence and policymaking circles.

In the case of Pearl Harbor and the Twin Towers, foreign actors carefully observed the U.S. and her defenses, then came up with unexpected vectors of attack, causing great damage.

But failing to understand outside forces is just one of many chronic government shortcomings that threaten our country today.

There’s also the failure to think through to consequences of internal policies.

Over the past 30 years, our homegrown leadership cadre has made a series of short-sighted decisions that have cost the U.S. dearly.

Three policies in particular have been so bad that there’s no way to “fix” what’s wrong with the U.S. until these mistakes are undone.

It will be tough, however, because fixing what’s wrong can only happen from within the halls of power in Washington, D.C.

And sad to say, Washington is where many bad ideas go to find a home.

Let’s dig into this…

The Naval War College teaches that strategy is a continuing process of pursuing one’s goals within the constraints of one’s means.

At the national level political leadership sets goals, and then lays out policies to apply the country’s resources to pursue those goals. In other words, leaders come up with a strategy.

For example, it’s a “strategic” national decision to have a space program.

But “doing space” requires having a significant group of smart, technically trained people. Skill sets range from technicians, mathematicians, physicists and engineers to astronauts, as well as related industries.

Clearly, “space” is built upon strong research universities, rigorous colleges and excellent high schools — going down to elementary schools — that produce smart, well-educated people.

There’s plenty of government policy involved here. And if a nation loses its education system, the wheels begin to fall off so to speak, from space on down.

Also, any nation with ambitions in space requires a strong industrial economy, from mines and mills to super-advanced manufacturing. For this, one needs a deep skill set of everything that goes into designing, building, launching and placing things (and people) into space.

In other words, a “strategic” program decision requires that a nation muster trained people and support strong industrial efforts.

But just a few short-sighted policies could easily derail those strategic goals.

Say some lawmakers are worried that kids no longer “appreciate art” (whatever that means) and start pulling funding from engineering education to pay for more painting classes.

Or they decide to “protect the environment” by cracking down hard on industry, which makes it uneconomic for people to invest in advanced manufacturing.

The impact of those decisions on space strategy may not be clear for many years.

But when the past decisions finally hit home, hindsight will  show how political leaders made “strategic mistakes.” These past actions slowed, if not prevented the nation from reaching its goals.

Of course, a space program is just one example of national strategy. And it may only directly affect certain subsets of people.

But other strategic mistakes are more dire and wide-ranging.

In fact, over the last three decades, U.S. leadership has made three key decisions that continue to harm the entire nation; our population, industrial base and overall economy.

We’ll look at them one at a time…

Strategic Mistake No. 1: The North American Free Trade Agreement (NAFTA)

NAFTA went into effect in 1994, replacing the 1988 Canada-United States Free Trade Agreement (CUSFTA).

The idea was to reduce trade barriers between the U.S., Canada and Mexico, eliminating almost all tariffs. Then the alleged “free market” would move overall economic activity towards each nation’s inherent strengths.

Adopting NAFTA was a major issue in the 1992 presidential election. Independent candidate H. Ross Perot memorably described “that great sucking sound America would hear” when U.S. factories and jobs fled south to Mexico.

After NAFTA went into effect, Canada and Mexico did eliminate certain up-front tariffs on U.S. goods. But loopholes in the treaty kept many other, behind-the-scenes barriers to trade.

As the 1990s and 2000s unfolded, that “great sucking sound” became deafening. Thousands of U.S. factories closed, and millions of U.S. workers were displaced as companies moved entire industrial sectors to Mexico. (Auto parts and household appliances were big ones.)

Meanwhile, Canada also pulled industry and jobs from the U.S. while opening its ports to foreign imports that quickly trans-shipped into the U.S. as “Canadian”-labeled products.

The NAFTA cheating was out in the open if you knew where to look.

Your editor recalls visiting a Canadian seaport and watching steel coils come fresh off the ship from China, with Mandarin lettering spray painted on them. Immediately, these rolls of Chinese steel were loaded onto trucks headed for U.S. markets, entirely untaxed. The NAFTA-mandated “Canadian content” consisted of a just few moments of work by a crane operator.

Within a few years of enacting NAFTA, the balance of payments deficit between the U.S. and Mexico/Canada soared. And millions of Americans lost their jobs.

NAFTA also opened Mexican markets to U.S. corn and wheat. This might seem like a “good” idea for U.S. farmers. The problem is that cheap American goods wrecked large swaths of Mexican agriculture, leaving many Mexicans jobless and destined to immigrate into the U.S.

In other words, NAFTA contributed to the U.S. immigration issue of the past 25 years.

In short, NAFTA eroded the very foundations of the U.S. industrial economy. The policymakers who adopted it essentially began the process of losing factories and jobs, and deindustrializing.

In fact, NAFTA was ruinous to America because, as we’ve discussed, real economies make real things.

And while it was replaced with the United States–Mexico–Canada Agreement (USMCA) this year, the ramifications of NAFTA will linger for many years.

But that’s not the only far-reaching economic mistake we’ve endured these past few decades.

Strategic Mistake No. 2: Allowing China into the World Trade Organization (WTO)

China entered the WTO on Dec. 11, 2001. It was years in the making, and certainly enabled by China’s checkbook-politicking through the 1990s.

In the 1990s and early 2000s, China was a relative newcomer to the world economy, with an overall economy of modest size. Opening global markets to China seemed like no big deal.

Indeed, no less than then-Senator Joe Biden welcomed China into the WTO in 2001, noting that China would not be a long-term threat to U.S. interests because it was “a nation with the impact on the world economy about the size of the Netherlands.”1

But China rapidly broke out of its “Netherlands”-sized constraints and began growing on a massive scale, using every tool at its disposal to buy and build productive capacity, and then flood the world with cheap goods.

It launched a widely recognized program of currency manipulation that permitted China’s exports to benefit from a discount in the range of 30%.

China’s industry became (and still is) well known — notorious, actually — for exploitative labor practices that often shock Western visitors. Those practices undercut Western wages, which helped China sell its exports for much lower prices.

The country also has poor environmental controls to protect its air, water and land. Bad for its people, certainly, but great for keeping manufacturing costs down.

Then there’s the long-term, still ongoing Chinese rip-off of Western intellectual property — a scandalous matter that is nothing short of legendary.

Yet for all these continuing issues, U.S. politicians and policymakers remained asleep at the switch when it came to protecting U.S. workers and jobs.

Just as with NAFTA, China’s entry into WTO led many more thousands of U.S. businesses and factories to decamp to China, leaving additional millions of unemployed U.S. workers in the wake.

Indeed, entire U.S. industrial sectors vanished against wide open Chinese competition.

For example, the last U.S. penicillin plant closed just three years after China entered the WTO, as I’ve discussed before.

When U.S. factories close and U.S. workers lose jobs, it’s not as if American life somehow becomes better via so called “free trade” under WTO rules.

This recalls more of the stupid clichés about how America’s national economic well-being is somehow improved because people can buy cheap imported shampoo, tennis shoes and car floor mats on sale at Target and Walmart.

As America deindustrialized, entire towns and regions across the nation fell into economic and social crisis. Think of decaying neighborhoods, devastated tax bases, broken homes, alcoholism, opioid addiction, failing schools and more…

This all settled like a foul dust over the landscape that once was home to a global industrial power.

Again, China’s entry into the WTO ranks as one of the worst U.S. strategic mistakes of the past 30 years. It was a mistake by U.S. politicians to allow China in. It was a mistake for U.S. politicians to allow China to remain.

Then there are the policy mistakes that aren’t purely economic,  yet still diminish the nation in profound ways…

Strategic Mistake No. 3: The “Long War” in the Middle East

The past 30 years have seen an endless series of major U.S. military deployments and combat operations across the Middle East, including North Africa (MENA).

Desert Shield/Storm. Operation “Deny Flight” over Iraq. Bombs and cruise missiles against Iraq, Sudan and other nations. Continuous saber rattling towards Iran. Afghanistan post-9/11 (ongoing for 19 years). The 2003 invasion of Iraq (ongoing 17 years and counting). Plus operations in Yemen, Libya, Syria. Not to neglect Somalia, in East Africa…  And all manner of naval operations in adjacent oceans and seas.

In short, the past 30 years in MENA have been a “long war,” involving legions of U.S. military, contractors, and allies in each locale, either military or civilian.

Each military operation has its own story, justification, and merits… or not.

But whatever the rationale for any single movement, 30 years of expensive expeditionary warfare has cumulatively cost America trillions of dollars, not to mention the grievous costs in lives and limbs. It has given the U.S. a global reputation as a militaristic nation that shoots first, often as not with drones.

This high-tempo of operations has created a Washington-based war-planning industry of its own, over and above the basics of simply defending the country.

Worst of all, this dragged-out war footing focused on MENA has been a strategic distraction from other important events in the world… such as dealing appropriately with the economic and military rise of China.

So here we are… The U.S. now faces a rising and powerful China, which clearly intends and is prepared to replace the U.S. as the dominant military power in the Western Pacific Ocean.

Yet based on spending and procurement decisions made many years ago, there’s little that the U.S. can do in the short or medium-term, after misallocating so many resources—– money, people, equipment, credibility — across MENA.

The U.S. can’t quickly build up, let alone rebuild its Navy, for example. Heck, we can barely maintain the one we have.

Fixing this strategic mistake will take more than just a few new spending initiatives. It will require rethinking the entire way things are done.

But that’s true about all of the situations we’ve looked at today…

Consider this…   Absent NAFTA, China in WTO and the 30 Years’ War in MENA, the U.S. would be an entirely different country today. Far wealthier, less indebted, more in control of its destiny.

Instead, America is deindustrialized, deeply indebted and militarily overstretched.

It’s a national tragedy.

And worse, many of the same people who made such awful strategic decisions over many decades remain in power in Washington.

They seldom depart and truly are much like what Talleyrand said of the Bourbon kings of France after the Napoleonic wars: “They had learned nothing and forgotten nothing.”

In 2016, Donald Trump ran for president on a platform criticizing these past mistakes. He railed against NAFTA, and to his credit recently replaced it with a new trade “deal,” although the jury is out on that one, too.

Trump also campaigned against China and its “cheating” under WTO, as well as promising to “end the wars.”

Obviously, Trump touched a public nerve because he won the election.

Yet China still remains in WTO and U.S. troops and equipment are scattered across MENA, awaiting the next provocation against which to fire cruise missiles or drop bombs.

We see in all of this the political inertia of Washington… How deeply rooted bad ideas can become, even strategic mistakes of the first order.

From the outside looking in, it’ll take a lot of informed citizens voting to replace bad politicians with better ones.

The only way out of this mess is with new and different people in politics, who recognize that horrible mistakes have been made… and who have the courage to make the necessary corrections.

They’ll have to be willing to unleash short-term pain to achieve a long-term good.

More importantly, they’ll have to convince their constituents that these changes must happen — a Herculean task against the sense of complacency, entitlement and instant gratification that plagues much of the populace these days.

But that is what must happen. Our nation’s future depends on it.

On that note, I rest my case.

That’s all for now… Thank you for subscribing and reading.

Best wishes,

Byron King

Byron King
Managing Editor, Whiskey & Gunpowder

P.S. – Feel free to forward Whiskey & Gunpowder to friends, family and colleagues. If you received this article from someone and would like to subscribe, click here. Thank you.

1 Ref: Biden Is Weak on China, The National Interest

You May Also Be Interested In:

Don’t Gamble on Your Next Trade…

When I was younger, I used to make the pilgrimage to Las Vegas the first week of March Madness. I had a good analytical system to help place my bets — and it was quite a rush watching dozens of games simultaneously at the sportsbook. However, the silliness of seeing a meaningless basket blow up the spread at the end of the game was an all-too-often reminder that even with a good system — this was strictly gambling.

Byron King

A Harvard-trained geologist and former aide to the United States Chief of Naval Operations, Byron King is our resident gold and mining expert, and we are proud to have him on board as the managing editor of Whiskey & Gunpowder.

This “old rock hound” uses his expertise and connections in global resource industries to bring...

View More By Byron King