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For Domestic Revival, Seek Strategic Denial

Why GOP reformers hoping to rebuild domestic industry should support forward defense in the Pacific.


Some reform-oriented Republicans have promoted the idea that the United States can retreat from a forward defense posture—especially in the Pacific—to pursue a contemporary reprisal of the Monroe Doctrine. They aim to restore a late-19th to early-20th century status quo ante in which the United States, protected by robust tariffs and limited defense commitments, became the globe’s most powerful manufacturing power. 

Reformers are correct to chart a new course for the country, both to remedy pressing economic issues and rally the GOP after three disappointing election cycles. But it will be difficult, if not impossible, to accomplish their stated objectives without access to foreign markets, especially those comprising the 21st century’s most critical economic region: Asia. Thus, to preserve American access to these ascendent markets, reformers should support a forward defense posture in the Pacific. 


To better understand why retreat is so risky, it is important to spell out the assumptions pro-autarkic reformers pack into their prescriptions. In counseling forced decoupling, they assume that abandoning Asia would free up resources and attention to re-focus on reviving domestic productive capacity—both to strengthen national supply chain resilience and increase workers’ wages. 

Though there is debate at the margin, these two objectives form the vital core of the GOP reform agenda, intended to at once better insulate the nation from global shocks and address the wage stagnation that has long been a drag on broad-based economic growth—affecting blue-collar workers since the 1970s and, though less discussed, the white-collar workforce since the 2000s.

These are worthy goals, but it is doubtful that they could be achieved solely with a domestic, or even hemispheric market, at least not without unacceptable risks. This is primarily because of the necessity of market scale to justify investment in export capacity—and, it bears noting, even for digital business models reliant upon network effects, including much of the American tech industry. Acknowledging that effective industrial policies must include technocratic adjustments to more effectively lower investor hurdle rates, the core prerequisite for attracting capital to the U.S. export sector requires market access at scale. To oversimplify: the greater the scale, the greater the incentive for investment, and in the 21st century, these markets will be overwhelmingly concentrated in Asia.

While pro-autarky reformers rarely frame it in these terms, there is only one viable policy path around market scale’s natural laws—one that is unlikely to be politically sustainable and, more discouraging still, would involve high risk policy gambles for uncertain gain. This alternative path requires engaging in “hard decoupling” from Asia, adjusting our defense perimeter to pursue an economic bloc in the Americas. This on its own, however, would not alter the basic balance of comparative disadvantage facing current and future U.S. exporters, chiefly because of our strong currency. 

Thus, as some pro-autarky reformers propose, policy tools such as an aggressive capital access charge—effectively a financial tariff—would weaken the dollar to better favor producers over consumers. Simultaneously, a robust tariff regime could be implemented, guaranteeing investors in manufacturing and adjacent sectors a bounded internal market to sell into. By adjusting private investment incentives through political means, these reformers reason, the country can re-shore key sectors (and their attendant wage benefits) by “shocking” the American economy through a “hard reset.”


Practically speaking, this path is likely to fall short for three interlocking reasons: capital flight risk, electoral risk, and human capital risk.

First, if financial tariffs could be strongly enforced (itself far from a given) capital flight would be difficult to control. Knowing allegiance to no flag or value-set, capital would re-position itself to take advantage of more stable and immediate returns—in Asian markets. For the same reason, reformers who place faith in a U.S.-European “condominium of values” as a counter-economic bloc to a Chinese-led Asia might profit from greater skepticism. 

Look no further than the fact that in the past year France and Germany both have sent political-corporate delegations to Beijing (even while criticizing the CCP for its stances over the war in Ukraine), and even planned a joint visit in November 2022. This past week, President Macron (along with France’s finance and foreign ministers, alongside several dozen corporate representatives) joined European Commission President Ursula von der Leyen in Beijing. The implication is clear: should America leave China a free hand to achieve hegemony over Asia, it will likely lose Eurasia in the bargain.

Second, these policies would in the short term translate into greatly diminished U.S. consumer purchasing power and serious stock market volatility, deeply affecting the modes in which most voting Americans, especially older ones, have stored their wealth and rely upon for their pensions. These phenomena would be electorally disastrous in the short term, particularly in swing districts and states, likely throwing reformers out of power before their policies could bear fruit. 

Thus, a reform faction implementing a “hard reset” agenda would be at tremendously high risk of political embarrassment. Current frustrations surrounding recent GOP reversion to its neoconservative agenda would pale in comparison to those felt after the collapse of an approach so extreme as to discredit—or at least severely hamstring—future attempts at reform.

Third, even if the American capital base could be induced (or forced) to stay, U.S. capacity and know-how for reshoring has been greatly diminished over the last several decades. Indeed, recovering or regenerating America’s thinned “tradition of knowledge” for producing even the basic machine tools prerequisite for industrial production would be enormously difficult to re-acquire in a truly decoupled environment. 

This risk is under-appreciated especially by reformers who counsel massive “moonshot” R&D spending as the most effective form of industrial policy. While increased investment is necessary, its returns will be made most efficient by attracting technical expertise from nations where it is most developed—much of which, at present, lies in Asia.

Ultimately, all sides of the decoupling question must agree that should it occur, relative American prosperity will, for at least some lengthy period, be greatly diminished—and with highly uncertain upside. Initially, the United States alone might at best hope to retain its roughly 20 percent share of global GDP—a percentage that would initially contract given that roughly 70 percent of the U.S. economy relies on consumer spending, in turn underwritten by the strong dollar that reformers intend to weaken in a “hard reset” scenario. 

Waiting perhaps interminably for productive capacity to ramp up, a politically induced autarkic period will result in a much more difficult life for Americans, especially those whom reformers most wish to stand up for. The notion that the U.S. can quickly and cleanly retreat behind trade and financial tariff walls to re-industrialize should at least be understood as a highly risky strategy, involving tremendous short-term pain, highly probable medium-term pain, and possible long-term pain.

A time may well come when hard decoupling is the sole option. Until then, reform domestic views and a selectively forward American military posture are not only compatible, but worth much greater consideration as the consensus axis for further policy debates. While it would be a clear overstatement to suggest that pragmatic domestic reformers must believe in a forward posture to retain foreign market access, it is just as extreme to state that they can't. Pro-autarky reformers may insist that the risks are worth running, but those prescribing bitter medicine should also disclose the side effects.

Détente and partial engagement, to include American commercial access to the Asian market, might stand as a more pragmatic baseline for promoting critical re-shoring, supply chain resilience, and American sectoral rebalancing in general. Rather than engage in autarkic shock therapy to generate corporate and capital constituents from scratch, reformers might work within current constraints, pursuing “middle way” reform agenda to split off a critical mass of pre-existing economic actors, generating a new coalition as a beachhead for more ambitious reforms.

Such an agenda would require, however, a forward defense posture in the Pacific theater, in which there is no substitute for hard power. Holding down a security perimeter at the first island chain, especially over Taiwan, will prevent Asian powers from bandwagoning with Beijing. Taking the risks of the alternative path fully into account, denying China hegemony over the region is the enabling precondition for any strategy for domestic economic revival. GOP reformers should—or should at least seriously consider—rallying behind it.