Strategic vision needed for top challenges

ME.  Last week retired General Wesley Clark spoke on the Iowa State campus.  No, he is not running for President this go-around.  On this election cycle eve, Clark posed the policy question, “How should the U.S. organize itself for the next War?” 

BF.  Well, the General served in the U.S. Army for 38 years, including a tour in Vietnam.  He became a four-star general and the NATO Supreme Allied Commander in Europe.  He led allied forces in the Kosovo conflict.  He serves as a senior fellow at UCLA Burkle Center for International Relations. And, he provides interesting commentary on public affairs and diplomacy.  He currently spends time in Arkansas where he grew up.  I was privileged to share a podium with him at a grains conference in Wisconsin. 

ME.  Yes, plus he was an investment banker in New York after he retired from the military and he is connected to agriculture in serving as co-chairman of Growth Energy.  He knows the strategic importance of biofuels.  Anyway, the first portion of his remarks focused on how well the nation responded to an external foe during the “Cold War.”  His thesis was that since then the United States global leadership seemed to have floundered and lost its way.  The threats we face today are diverse and different. There is no singular external national security challenge.  We lack strategic vision for our new role in global affairs.

ME. In Clark’s view, the top global challenges faced today by the U.S. are: terrorism, cyber security, financial system vulnerabilities, the rise of China, and accelerating climate change.  He suggests these challenges require longer-term strategic responses that are not and cannot be limited solely to military responses.  There is a need for strategic planning and intricate interdependence between government and the private sector to address what he considers to be this new class of national security challenges.

BF.  Given wall to wall political attack advertisements, it is hard to envision any longer term strategic planning on the part of Congress for intricate interdependence between the private sector and a divided government.  I am surprised that he didn’t mention global food challenges and the projected population growth of 9 billion people by 2050.  So did he have any ideas for addressing the challenges?

ME. Clark suggested that his list was only a starting point.  The challenges are interrelated and that our political leaders should be asked to articulate common ground on the challenges, so the people of the nation know how to meet the challenges.  He said when leaders articulate the mission, the nation responds.  Under President Wilson, we prepared for World War I in 18 months.  Clark suggested that our society may struggle with sustaining common ground when half of a percent of the population annually accounts for half of the annual U.S. income.  On the climate change challenge, I was a little amazed there was not a peep voiced from the crowd of 600 gathered in the Great Hall when Clark suggested a carbon tax as part of the solution. 

BF.  Well a carbon tax could raise revenue in sufficient amounts that could contribute to addressing the deficit and strategic national security challenges. A carbon tax could provide a revenue source for supporting incentives for innovative R&D companies to commercialize new technologies to reduce or sequester greenhouse gas emissions.  A carbon tax could encourage large greenhouse gas emitters to shift to other technologies to lower emissions.  Even Exxon-Mobil executives favored the carbon tax during the Cap and Trade debate a few years ago.

ME.  Clark also said there is little reason for the U.S. to be importing oil.  Between the new oil and gas reserves from shale “fracking” technologies and the growth of biofuels, the U.S. should think strategically about becoming the world’s largest reliable supplier of liquid transportation fuels.  Perhaps now is the time to be thinking about removing the oil export ban with the economy perking up and the lowest prices for gasoline at the pump that have been seen domestically since 2010.

BF.  Gasoline prices below $3 per gallon is due partly to OPEC squabbling.  Cartels are difficult to maintain longer term and we will wait to see if they re-establish their “market discipline.”  It also demonstrates that declining oil prices may have more stimulus impact on the general economy than does the Fed attempts to sustain lower interest rates.  The drop in prices from last year’s $3.51 per gallon saves the average family $50 per month.

ME.  In partial response, we have seen new highs in the stock market, and growth rates in the Gross Domestic Product (GDP) of 4.6% and 3.5% respectively, the last two quarters.  Perhaps now, previous Office of Management and Budget concerns may have evaporated regarding their incorrect notion about the RFS causing gasoline prices to rise.  Will the White House re-think its economic rationale for the EPA proposal and re-assert Congressional intent? 

BF.  That may depend more on politics than economics.  We shall see.  Only a year late, the RFS announcement for the 2014 requirements is expected soon after the election.  Accidental timing of course and with a straight face. 

*  Edelman is a professor of Economics at Iowa State University and Flinchbaugh is emeritus professor of Agricultural Economics at Kansas State University.