January 28, 2010 10:31AM

Is Money Fungible?

Recently I spent some time redecorating my office to create room such that there was space for me to work that was physically apart from my computer, because I've come to view the internet as a huge time sink.

Apparently this endeavor of mine has failed miserably, however, because here I am blogging about something I saw on Bloggingheads TV:

In the clip above, Heather Hurlburt and Daniel Drezner discuss arguments that involve posing tradeoffs between domestic spending and foreign policy spending.  Drezner sketches out an argument he ties to Obama's Afghanistan speech: we're in a big hole at home and we just can't afford running around throwing hundreds of billions of dollars into places like Afghanistan and Iraq, so part of what we're trying to do is cash out of those endeavors and keep the money we could spend there at home instead.  Hurlburt describes this as part of the argument Cato's foreign policy team--Chris Preble in particular--has been making, but that says that this approach is "not going to happen because it would seem like a public admission that there are constraints on what we can do, even though we would agree that there are massive constraints on what we can do."

Hurlburt goes on to say that "our economy can't recover unless the global economy recovers" and that "a big part of how quickly and in what directions our economy recovers" has to do with the U.S.-China relationship and the development of green jobs.  Therefore, the "classic isolationist trope" of what Drezner described--doing less abroad so we can do more at home--doesn't work.

I'm completely lost here.  (If the kind people at BH.tv would invite me on, I could explain in vivid and expressive detail!)

First, let me register at least my dissent from the view that we can't maintain an expansionist foreign policy.  I have been a convert for some time to the view of Stephen Brooks and William Wohlforth that there is nothing in the foreseeable future that will force the abandonment of a primacy grand strategy.  In fact, I would make this point forcefully, not just that we could maintain an expansionist foreign policy, but that we probably could do so even assuming a costly invasion of Iraq every so often and still manage to skirt any powerful constraint.  Despite the declinism that has come into fashion of late, my view is that we're still in uncharted waters, still in an international system that is obviously unipolar, and consequently still capable of adopting all sorts of wild and crazy foreign policies.

But the bigger point that's confusing me is Hurlburt's argument that something about the economic ties between China and the United States or the alleged need to shift to green jobs necessitates an interventionist foreign policy.  Unless I'm misconstruing her remarks, which is possible, I'm not understanding this argument at all.  We spend lots of money--hundreds of billions per year--on things we call "defense" or "homeland security" that have little to do with defending the United States.  I think what we at Cato have argued is that we should stop spending so much money on these things, and that instead we should dramatically scale back our commitments, cut military spending dramatically, and willfully give up our aggressive grand strategy.  Money is fungible and this isn't the best use for this money.

To draw what is maybe a poor analogy, Robin Hanson has argued not just that overall spending on health is a poor predictor of aggregate health, but that in fact you could probably cut overall spending on health in half without a significant negative effect on aggregate health.  I'm making a similar argument about defense, with the implicit claim that the excess funds we spend on defense could be better spent elsewhere.

It seems like Hurlburt is disagreeing with this view, but I'm not sure.  I'm emailing her to see whether she cares to expand on this, so perhaps there'll be more to come.  Until then, it's time for me to push back from the internet again.