When a Superpower leads with its chin


The memory-free Australian press likes to couch Donald Trump as a random mad man taking America down untrodden paths to disaster. In truth he is something more complex and less easily judged for the dependent ally. Leaders do not spring from holes in the ground. They are their political culture, parties and people manifest.

Through his work at The National Interest, it was Australia’s Owen Harries who did much to define the dominant and competing traditions of American foreign policy that offer better insights into the Trump phenomenon. Harries and his contributors identified two predominant schools of thought. The first was Wilsonianism, an idealistic ideology derived from President Woodrow Wilson that saw American ideals of democracy and capitalism as the best hope and future for the world. It is internationalist, interventionist and alliance-driven. The second school was Jacksonianism. Derived from President Andrew Jackson, it is a “realist” ideology that saw merit in domestic focus and the celebration of the common man. It is martial, honor-bound and rights-driven but is only dragged kicking and screaming into foreign wars (for more read Walter Russell Mead).

For the past century, Wilsonianism has dominated American foreign policy with only fits and starts of Jacksonian rebellion. Through two world wars and many regional skirmishes, America has remained largely committed to the creation of a global liberal order, (some might say empire), oscillating between bouts of fantastic idealism and realpolitik but by and large shaping the world in its image.

However, today that continuum has been disrupted. America has elected a thoroughly Jacksonian President in Donald Trump with his “America First” doctrine, and the cracks that that creates for the global order are widening fast.


The opening schism played out in the Middle East. There we saw Donald Trump throw aside the liberal order of his predecessor – that was dealing with the rise of Iran – in favour of a simplistic embrace of those nations that were prepared to buy American weapons. Saudi Arabia was first out with the credit card and we saw immediate fallout for US allies in the region as Saudi read the signal as a withdrawal of the US soft and hard power that gives meaning to the global liberal order. Qatar has been on the receiving end of that turn of events and must be wondering what is the upside in hosting a gigantic US base these days!

A second and much bigger crack in the global order is opening around North Korea. It, too, has noted the revival of the Jacksonian order, and has seized the opportunity to press outward its military sphere of influence.

Neither of these in themselves is anything much to worry about for investors. Both are small nations and neither has any great ambition beyond regional self-interests.


However, these are no more than the opening feints within a much larger game that the great powers will also play against a Jacksonian US. On that basis, the North Korean crisis especially has resonance with what is to come.

Donald Trump’s new world order began with classic Jacksonian hostility towards China as a rising commercial power weakening the lot of the US common man. China has played along, opting for dialogue over drama, allowing the US to make the running in whichever direction it sees fit. It has gone some way down the path of Korean de-nuclearisation too, imposing sanctions and pretending to some co-operation with the US as its withdrawal from North Asia throws up its first challenge.

But behind those gestures, the realpolitik of the DPRK as a Chinese strategic proxy remains. South Korea is a US ally and the north is it counterweight for China. So, as Trump’s Jacksonian withdrawal transpires, China is also asserting its power into the region by allowing the DPRK to run roughshod over the liberal order.


This is the key to the period ahead. Trump’s Jacksonian impulse is a paradox. It is not going to result in a smooth world of American first prosperity and power. On the contrary, it is going to egg-on every tin pot dictator and rising power to ever greater transgressions against the Wilsonian liberal order when in their interests to do so.

America First has no military way to counter this on a day-to-day basis. By definition, it aims to retreat from global responsibility even as its unintended consequences grow. This is a stunning and ongoing humiliation for the withdrawing Superpower. In effect, America now leads with its chin wherever it goes.

We can thus expect its rhetoric to mount ever higher to conceal crumbling imperial foundations. This will be amplified by the megaphone diplomacy of a clearly narcissistic president.


Thus for markets it will mean heightened anxiety, oddly amid less actual martial outcomes.

But this conclusion comes with one rather large asterisk. Jacksonian presidents do not willingly fight foreign wars but they do prize and build their militaries and, when finally stoked to action, use them more ruthlessly that other foreign policy schools. That makes flash points like the North Korean conflict deeply asymmetric. If it ultimately comes to blows it will be very ugly indeed.

In the meantime, where the rubber will hit the road for markets is when these issues tip over into more obvious policies of domestic import to the Jacksonian common man. On this front trade looms large, from Politico over the weekend:


President Donald Trump is ready to launch a new trade crackdown on China next week, an administration official confirmed.

Trump on Monday will call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, the official said. While it’s unclear how much detail Trump will get into in the announcement, administration officials expect U.S. Trade Representative Robert Lighthizer to open an investigation against China under Section 301 of the Trade Act of 1974.

The pending announcement comes amid heightened tension between the United States and China, even after the Trump administration scored a victory in persuading Beijing to sign onto new United Nations sanctions on North Korea.

It is not clear whether China has the motivation to close off the spigot entirely with North Korea. China is North Korea’s main trading partner, and it is not interested in seeing the economic collapse of the regime, which could send a flood of refugees into China and destabilize its northern provinces.

The ordering of the investigation will not immediately impose sanctions but could lead to steep tariffs on Chinese goods. Trump has expressed frustration in recent months over what he sees as China’s unfair trade policies.

The closely watched announcement appears to have bipartisan support, although Democrats have accused Trump of not being tough enough on trade.

Trump suggested in comments to reporters on Thursday that he might be more lenient on China if officials take more aggressive action to stop North Korea from developing a nuclear weapon that could strike the United States. But it appears his longstanding frustration with China has remained.

In a world now thoroughly shaped by Wilsonian liberalism, the new Jacksonian order is a paradox. It will increase conflict as it seeks less. It will reduce war as it postures for more. It will shrink prosperity as it seeks to raise it. It will suck the US towards any region it seeks to abandon.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.