Nixon, Peterson & Anderson on Geopolitics and International Trade

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We have Japan, now the third power in the world economically, and actually China.

So you've got five, five great economic powers.

Now let's, let me put it, go back to 1953 and compare it to 1971 in terms of the political military situation, politically and culturally.

We had no relations with mainland China, no expectations.

We had a situation where as far as the Soviet Union was concerned, there was...

Relatively little negotiation and very little prospect that we were building up our power and they were building up their power.

The Marshall Plan, NATO, etc.

were absolute dissensions for us as long as they were taking correct and aggressive monitoring orders from Western Europe.

Situation today has not changed perhaps as much as those who tend to be euphoric in times like this, not nearly as much as would appear by some cosmetics, but nevertheless significantly changed.

What we find is that we not only have the identity of Western Europe, which is an economic

giant, militarily modest in its power.

Politically, it would be radical.

We have the Soviet Union, and that's looking at the difference between the United States and the Soviet Union, our relations now and then.

Moving from a period of outright confrontation to a period of negotiation, not meaning that the situation has changed insofar as the kind of a world they want and the kind of a world we want.

They still are, as they would be the first to admit, they are still the protagonists of a communist world.

They have given up, certainly at least publicly, the idea of exchange through military adventures, where those military adventures might involve them in any kind of confrontation with the United States.

But nevertheless, here we find that the Soviet Union, we are moving into negotiation on arms control with some prospect for success at the beginning of this year.

Some prospect for success, nothing is sure, but it's moving along.

We are negotiating on Berlin, which was a very great problem in 1953, and has had been the source of a crisis a half a dozen times since 1953.

Some major, some, and many more small ones.

We have the prospect of negotiation further down the road on mutual balance force reduction between the NATO and the Warsaw Pact.

And then, of course, we are talking to the Soviet about an area like the Mideast, where we do not directly confront each other, but where our peripheral interests are so substantial that if we rub against each other, it could bust and burst into flames.

So we see the United States moving toward a more outgoing policy toward the Soviet Union and toward Eastern Europe.

small, not small, but some trade beginning with certain countries in Eastern Europe, and they did not war, it will mean that not only Yugoslavia, but like Romania and Hungary, etc., etc., will move into a situation where there will be more trade with the United States, more competition, and of course the Soviet Union.

as well moves at that point.

And that point is coming very, very rapidly as we know.

What I'm suggesting here, just parenthetically, is that as the Vietnam War ends, the restrictions that necessarily must be imposed on certain items because the war can then be relaxed

that we can see the possibilities of more contact, of more trade, and more competition.

Japan we've already talked about.

Everybody knows how it's moving along economically, and people will recover that substantial in the future times.

Then we look at the Chinese situation.

On the one side,

And very properly, so it's a hopeful thing.

Hopeful in the sense that really it's getting unenated.

Let's put it this way.

The Chinese are a power, a communist power like the Soviet Union, very different ideas about the world than we have.

On the other hand, as we look down the road, not one year, three, four, five years from now, but fifteen or twenty years from now, you're going to see an economic giant, and of course with 800 million people, and 900 million, and 900 million, and a billion people, a great military power in the world.

Under those circumstances, to have that nation outside of the world community, without contact with the world community, would be a danger, it would be unacceptable to us, and I may suggest unacceptable to the Soviet Union.

And the irony is that the United States is the nation, and this is one that must approve, that is destined to play the role to begin

bring that nation into the world community.

It doesn't mean it's going to happen fast.

It doesn't mean there's going to be a great deal of problems, and that's what we hope for tonight.

Especially beyond the extent to say that what we have done here is, I think, well understood in that respect.

Because if you look down the road for 20 years, we could have an airtight arms control agreement with the Soviet Union.

And we can even not only limit arms, we might even move toward reducing arms, and reducing forces through movement.

You can balance forces in Europe and the rest of the world.

We can have all that, and 20 years from now, the Soviet Union, the United States, Europe, Japan, all agree.

What difference does it make?

It's one nation, outside the club.

That shows you, and demonstrates to us, of course,

why this is an issue.

Therefore, while it leads to no euphoria, it is a necessary step in our view that needs to be taken for the reasons I mentioned in my brief announcement last week.

Now, so, many can look at this and say how hopeful the world really is for reducing tensions with Eastern Europe and for negotiating the Soviet Union.

where we'll have more contact, no question about it, there's going to be a world which will be more contact.

And looking at Asia over a period of time, there will be some reduction of tension, and there will begin to be the contact with this great mass of people who live on mainland China.

And so, in a sense, the military danger in the world, the military challenge in the world, let's not call it a danger,

that becomes perhaps in the future not as alarming as it would be at the present time if these initiatives had not been undertaken, or at least were not in the wings.

But for the same token, ironically, as the world, as we begin to reduce, and we all would welcome it,

To the extent we are successful, and we trust we will be successful, not only this administration, but whoever succeeds in this place, in reducing these military areas of confrontation, reducing them only as our increases will allow them to be, as we are successful in having more communication, more contact, the genomic challenge enormously escalates.

That's just the tool for it.

Now, Pete will not, of course, cover what the world is going to be for five years from now.

Nobody knows.

But what we are trying to do, what we are trying to do through meetings with various elected leaders of the Senate and some in the House, is to present to you on a bipartisan basis,

challenge economically that the United States faces in the period of the 70s.

How many jobs we have to have and where we're going to get them.

How we're going to compete in the world.

How we're going to be more productive in the world.

And I would simply close my opening remarks by saying this.

Actually, as I sit here, just as President Eisenhower sat here, and I'm sure Wilson was behind the screen,

Teddy Roosevelt many years before every president who sits here.

Our first concern needs to be, and must necessarily be, creating the structure of peace which will either end war or avoid it.

And I think we now are making progress in that direction.

But looking further down the road,

As the world becomes more peaceful from a military standpoint, it will become infinitely more competitive and more challenging from an economic standpoint.

No longer does the United States have its own way.

No longer do we be number one simply because we are the biggest and the strongest and the best.

We are the biggest.

We are the strongest, and we are the best still.

And I don't go for all this small argument, because we've fallen back in this area, or that area, or the other one.

The United States workers, the United States businessmen, and so forth, can't do as well or better than the Japanese, or the Germans, or anybody else.

But on the other hand, I think we have to realize that, if we look at our nation, who are we?

We came from all the nations of the world.

And it's because of our system of government, because of our competitive instincts and everything else that we've done as well as we have.

But as we look at this world in the future, we can see it very clearly now.

Here is the strong Western Europe, built up as a matter of fact through our aid,

We helped our enemies, and here they are, our major competitors, Germany, Europe, Japan, of course, and Asia.

We have Japan, of course, and Asia.

We've got an enemy, the two communist superpowers, the Soviet Union and China, and then, of course, the lesser powers in those areas.

Having mentioned these, of course, I haven't covered them, and there's no need to go into the great potential of Latin America, which is down the road, and Africa, and the Middle East,

and of salvation, because for the next 20 years or so, the thing that came even out from the industrial standpoint will be defined in the present of the invention.

So that, to me, is the world's thing, and that, to me, is one of the reasons that this presentation by Pete Peterson, I think, is the most timely, and perhaps the

The most significant breathing that you may hear around this cabinet table in the many years you've been here.

Because it looks far to the future.

We must plan now for what we do.

Make America competitive.

To keep it competitive.

To make it competitive and keep it competitive, not because we're trying to beat anybody else down or so forth, but because we simply want this nation in this period of time to retain its strength and rest, and not simply just die, as we would very well might, unless we look to all of our sources of strength, to die into a second great position in the world.

We're not there now, we don't intend to be, but we're going to need a lot of things in life, bipartisan support, the best thing that you can possibly provide to avoid that happening.

So now with that, Pete, if you would take over.

It's a mellow howl for Gentry again.

You'll learn something from these guys.

You're devil's experts.

You better be at your best today.

Gentlemen, I look out of the audience and see Carl Curtis there in the notes that

Like he, I guess, I was born in a small town in Nebraska, and when you're introduced by the president in overly gracious ways, you better cut yourself down to size.

There's a story, you know, of the small town hotshot that ends up in the White House, and everybody in this small town is very proud and verbal about this young man's accomplishments, except one old man who perhaps knows him best of all.

And his comment was about this young man.

Well, he may know a lot, but he doesn't realize nothing.

And I'm going to present a lot of facts to you today, and we'll leave it to you to decide what I realize.

Since this is a bipartisan group, you might be interested in what Isaac Stevenson said about foreign economic policy about 20 years ago.

He said at the very least it was a field that needed some new clichés.

And as we hear about protectionism and free trade and things of that sort, I have a feeling that we really need to not only come up with some new language, but some new ideas about what kind of a world we're living in.

Chuck, I have a lot of ambivalence about whether I want this damn thing to work or not.

Let's start by looking at the

over the last 20 years.

We think 50 has a marginal plan beginning.

By 1960, this period is pretty much over.

And for the last 10 years, I think we've been in a reasonably normal period of development.

It's fair that America's position has declined.

We would have expected it in the 50s.

It's declined somewhat more in the 60s.

still obviously the largest power in the world.

One can't help but be impressed by the impressive growth of the community.

If you will now add the United Kingdom to that, and the other countries, it's rapidly approaching 20% of the world's GDP.

We can perhaps also get some lessons by looking at the countries that haven't done so well.

Notice the significant decline in the United Kingdom, in Britain.

In the last 10 years alone, it has hit as well as 25% of its share of GMT.

The less developed part of the world is holding reasonably black, frankly, gentlemen, a lot of that is oil production.

Certainly, one of the major stories here must be the dramatic growth of Japan.

It has doubled its share of the gross national product, its share of the gross national product, over the last ten years, and now accounts for over 6%.

The president was put to refer to China, and I find this a rather interesting comparison.

In 1950, only 20 years ago, China had about three times the share of GNP as Japan did.

Today, only 20 years later, the Japanese, with one-eighth of the people, have a 50% larger share.

What about the Japanese story, about which I'll comment more a little later?

There are two or three facts that I'd like you to keep in mind that I think help explain this phenomenal growth.

The first is, this is an economy that puts a much larger share of its gross national product into investment in plant equipment.

For example, at the present time, it's putting about 39% of its GDP into the investment.

That compares to the United States, about 18%, European countries, about 25%.

About three-fourths of its plant equipment is less than six years old.

It is pending on only 0.8% of the GMT on defense, which certainly has all provided funds for this investment.

Quite remarkably, about 20% of what the consumer's merit is saved, and that provides another source for this great investment in this economic future.

I'm not going to engage in any predictions about Japan in the next 20 years.

We've got a lot of Japanologists around the world these days.

There are some who predict

that Japan will pass the United States as the Captain of the 20 years and the total GSD by the year 2000.

Russia, as you can see, has moved up only marginally during that period of time.

Another way of looking at the changing world for us is money.

And you'll notice that the international reserves have doubled roughly in the last 20 years, but there's been a dramatic shift in the share of this money.

Notice that our share of reserve currency has gone from 50 down to 15% or 16%.

Of course, the dollar does remain the key currency.

Notice the United Kingdom, which has another reserve of currency, and the way that has fallen off is very significant.

Nixon, Peterson & Anderson on Geopolitics and International Trade

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Nixon Library Finding Aid

Also recorded on July 22, 1971

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