Bergsten, C. Fred
January 1972
Foreign Affairs;Jan1972, Vol. 50 Issue 2, p199
This article critiques the U.S. foreign economic policy crafted by President Richard Nixon in the summer of 1971. In the summer of 1971, President Nixon and Secretary Connally revolutionized U.S. foreign economic policy. In so doing, they promoted a protectionist trend which raises questions about the future of the U.S. economy at least as fundamental as those raised by the abrupt adoption of wage-price controls. In so doing, they have also encouraged a disastrous isolationist trend which raises questions about the future of U.S. foreign policy at least as fundamental as those raised by the President's essentially positive and decidedly non-isolationist China initiative, Vietnam policy and negotiations with the Soviet Union. Both the U.S. economy and U.S. foreign policy for the relevant future hang in the balance. The New Economic Policy could produce dramatic improvements in the international monetary and trading systems, and deserves unstinting support toward those ends. But it is an extremely high-risk strategy, and could lead instead to extremely damaging effects on national economies around the globe. The policy could easily lead to the first real international trade war since the 1930s. The surcharge and discrimination of the Job Development Credit are already having an addictive effect domestically, and will be increasingly difficult to lift as individual industries become accustomed to their protection.


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