Throughout the twentieth century, the U.S. government willingly deployed power, hard and soft, to protect American investments all around the globe. Why did the United States get into the business of defending its citizens’ property rights abroad?
In The Empire Trap, Noel Maurer assesses how modern US involvement in the “empire business” began – that is, how American foreign policy became increasingly tied to the influence, whims and even manipulation of private economic interests, and how postwar administrations eventually extricated the country from economic interventionism. For the main, this is a very good book – cogently argued, detailed, and well-written (if a little dense and tautologous at times). There was, however, one major flaw, which I will touch upon below.
Maurer spends most of the book examining the ways that American economic interests influenced Washington to intercede to protect their investments in locations such as Central America and the Caribbean. Much of their success was based on the fact that costs were relatively small to begin with. As American policy became increasingly entangled with the goals of these monied interests, disengagement became ever-more difficult. Maurer convincingly describes how, through to the 1970s, the United States government failed to resist pressures to defend American investments, and was also unsuccessful at convincing other countries to make property rights more secure in the absence of active American involvement.
“Political scientists have long recognized that the U.S. government went to bat for American investors in conflicts with foreign states… What these authors have not fully recognized, however, is the success the government achieved in obtaining compensation for U.S. investors that equaled or exceeded the value of their investments as going concerns.”
In the instances when American investments and property were expropriated by foreign nations, the US government’s intervention (mostly covert) invariably led to an increase in market value, despite the growing strategic risks they faced in intervening. Indeed, as Maurer writes, “American government intervention on behalf of U.S. foreign investors was astoundingly successful at extracting compensation…” Over and over, “American domestic interests trumped strategic concerns… for small economic gains relative to the U.S. economy and potential strategic losses.” Washington was “consistently willing to run large geopolitical risks” to protect the interests of domestic economic interests.
It was only after the creation of international arbitration bodies (for example, the WTO, the UN, etc.) that the US government was able to excuse itself from action. In this case, however, Maurer warns that these mechanisms are starting to feel pressure and be undermined, too.
Despite agreeing with Maurer’s thesis, and believing he has done an excellent job, I was nevertheless left somewhat confused by one thing: the lack of discussion about US intervention in China – and especially given the timeframe he has identified. After all, from 1890-1910, the United States was heavily involved in the situation in China, almost purely for the purposes of protecting its economic interests in the country and region. In many ways, it would have been a perfect case study – instead, the coverage of China that Maurer provides was sadly wanting, even when they would suggest the possibility of expansion and use as further evidence and support for Maurer’s thesis – for example, his too-brief mention of President’s Wilson disbanding of the international consortium for Chinese investment and currency stabilization. Expanding on how and why this consortium had been established would have been beneficial and interesting. This China-oversight is the only real blemish on an otherwise very good and interesting book.*
* I will accept that my own passion for and interest in US-China relations does make me more critical of others’ work not as focused on this relationship, especially when the relationship offers so much for their arguments, as it does in this instance.