by Bill O’Grady
As the political nominating season in the U.S. wears on, presidential candidates have been making statements about foreign policy that would signal a significant change in direction. What has been striking about these comments is a seeming ignorance about why current policies are in place and what could occur if these policies are radically changed.
We believe these calls for change are the result of “intergenerational forgetfulness.” When policymakers implement an initial policy regime, they tell their successors why such policies were deployed and guide their “children” to stay on course. The next generation becomes less aware of the benefits of that policy but is acutely cognizant of the costs. Eventually, younger policymakers reverse the policy, only to discover later why the original policy was made in the first place.
A complementary concept that goes along with intergenerational forgetfulness is policy dilemma. Virtually all policies are dilemmas. In logic, a dilemma contains two choices, neither of which is ideal. In other words, both policy choices carry significant costs and whichever one is chosen will create costs for some part of the electorate.
Unfortunately, all policies are “sold” to the public on the positive merits alone. As the costs of the policy become increasingly obvious, the political support for such policies erodes over time. At some point, the costs of the current policy will lead to a new (and in many cases, opposite) policy direction and the cycle repeats itself.
In this report, we will examine the foreign policy predicament leaders faced at the end of WWII, their solution to these issues and the increasing disenchantment with current policy as an example of intergenerational forgetfulness. As always, we will conclude with market ramifications.