Paul Craig Roberts – This is an important interview.
Francis Fukuyama – I have two points to make about the relationship between economics and foreign policy. The first is to distinguish between the domestic economic and domestic political constraints on power; and the second is to argue for a new conceptual approach to the integration of politics and economics.
Political Constraints on American Power
Let’s begin with the first issue, the distinction between domestic economic constraints and domestic political constraints. The first has to do with the economic resources available to the U.S. government relative to those of other political units, economic growth rates, and the fiscal sustainability of the underlying growth models. The second has to do with the degree to which the political system can translate those resources into effective foreign and security policies. The latter might be thought of as a kind of discount rate applied to the former, and that discount rate varies for different political entities. Many of the discussions of American “decline” (or lack thereof) have failed to distinguish between the underlying economic base and the political discount rate. I believe that American society is not in decline because the overall situation of the economy is relatively strong, but that the political system has been subject to considerable decay.