Speak Loudly and Carry a Small Stick

At the beginning of the twentieth century, President Teddy Roosevelt’s foreign policy was, “Speak softly and carry a big stick.”  At the beginning of the twenty-first, President Obama’s policy appears to the the opposite: “Speak loudly and carry a small stick.”

President Obama threatened Syria not to step over a “red line” by using chemical weapons or they would face serious repercussions, but they did, without the serious repercussions.  He threatened Iran if they continued their nuclear enrichment programs, but they continue as we ease sanctions on them.  More recently, he warned Putin “there would be costs for any military intervention in Ukraine,” but realistically, what could he do?  Everybody can see it’s big talk with no stick to back it up.

Meanwhile, Putin has indicated a retreat in Ukraine, not because of the big talk from Obama, but because Russia’s hand was slapped by the response of markets.  Russian stocks fell by 12% after Russian military forces moved into the Ukraine, and the ruble took a serious hit as well.  The reaction of the market had a bigger effect on Putin’s aggression than Obama’s small stick.

The discipline of the market in international affairs is not new to Russia.  The Berlin Wall fell, and the Soviet Union dissolved, not because of the military might of the Cold War nations, but because of the economic strength of capitalism compared to socialism.

Because our Cold War adversaries are increasingly a part of the global economy, markets generate repercussions to belligerent actions beyond those of any prudent political responses.

I don’t expect the Russians to pull out of the Ukraine.  They are still occupying a part of the Republic of Georgia after having invaded there in 2008.  What I’m saying is that any moderation of  Russian policy there is more directed by the market’s response rather than any international political response.

I am not too concerned about President Obama’s actual policy responses.  The small stick is OK with me, and we can see in Iraq and Afghanistan what can go wrong when we try to play the role of the world’s policeman.  The problem is the “speaking loudly” part, because it costs our president, and our country, some credibility when people know the president won’t follow through on his big talk.

Randall G. Holcombe is Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America: Building Out of a Crisis (edited with Benjamin Powell); and Writing Off Ideas: Taxation, Foundations, and Philanthropy in America .
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