We shouldn’t have a ‘foreign policy’ debate

October 22, 2012

The first presidential debate focused on "domestic policy." Tonight's presidential debate will focus on "foreign policy." I'm going to focus on the fact that this distinction is ridiculous.

A volunteer prepares labels for seats in the debate hall ahead of the presidential debate, Tuesday, Oct. 2, 2012, at the University of Denver. (David Goldman/AP)

Washington's definitions of "domestic policy" and "foreign policy" haven't kept up with the real world. When you hear the term "domestic policy" in the Beltway, it means economic policy, health-care reform, financial regulation, energy. "Foreign policy" means, broadly speaking, our policy towards the countries we are already at war with, or are considered likely to eventually go to war with. But the actual policies don't break down so neatly.

"The domestic/foreign distinction is completely misleading," says Heather Hurlburt, director of the National Security Network. "It keeps you from having intelligent conversations. There’s a whole set of issues that structurally don’t get seen if everything is a domestic or a foreign issue."

At the first debate, the very first question was about "jobs." So jobs are a domestic issue, right? 

"That debate was bizarre," says C. Fred Bergsten, director of the Peterson Institute for International Economics. "There was nary a question about how the world economy affected the U.S. economy. Yet we all know the Euro crisis is the number one threat to the world economy and the U.S. economy."

Or take financial regulation, which also came up in the first debate. The candidates argued over who would do what with the Dodd-Frank financial reforms. Yet if you talk to the people trying to implement those reform – or any reforms – they'll tell you that an enormous amount of their time and energy goes into coordinating with other countries and worrying about foreign firms.

"Capital markets are the most globalized of all," says Bergsten, "so it's folly to think you can truly regulate financial stability unless you do it on a global basis. When Barney Frank was writing Dodd-Frank, he said the reason they were leaving a lot of big issues open was to promote a maximum degree of international compatibility."

In a world where a bank can simply uproot its headquarters and head to London or Hong Kong or Singapore, regulators need to worry about driving banks in unregulated havens where they'll be even more dangerous, and so they need to work with their counterparts in other countries to achieve some minimum standards of regulations. Dealing with the international spillovers of the financial system would be an excellent topic for the foreign-policy debate to cover. But financial regulation is "domestic policy."

You can go down the list. Gas prices are set on a global market. Flu pandemics with the possibility to kill thousands or even millions of Americans begin on farms in Asia. Food safety is no longer a domestic question when you're importing your grapes from Chile. The climate heats whether your greenhouse gases are coming from Minnesota or Malaysia. Interest rates are driven by foreign demand for U.S. debt. "Talking about economic policy and stopping at the borders doesn’t make a lot of sense," says Simon Johnson, an MIT economist who previously served as chief economist at the World Bank.

There was a time, perhaps, when it did. "When we were dominant and the distributional aspects of technology and globalization were benign, we got used to thinking that way because it made sense," says Michael Spence, a Nobel laureate economist at NYU. "But it’s an outdated economic framework." And bad frameworks lead to bad policies.

That's the danger of this distinction: that the campaigns agree to it in the debates because the candidates believe it when they're governing. As hard as it is for us to talk about the global dimension of our problems, it's much, much harder to solve them. Passing Dodd-Frank or a flu-prevention bill through today's polarized Congress isn't easy, but it's at least a well-understood process. Trying to regulate global capital markets or quarantine flu outbreaks a world away isn't. Our tools for global regulatory coordination are very weak. And politicians have a bias towards problems they can solve rather than problems they can't solve. 

That bias will be even easier to hide if politicians don't have to publicly discuss – and publicly promise solutions for – the global dimensions of our problems. Which is why this should be the last presidential election that slices its debates into "domestic policy" and "foreign policy." I'm not saying I have perfect alternatives – perhaps "economic policy" and "security policy," with a third debate on social issues? – but an imperfect description of the topics would be better than a flatly incorrect one.

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Sarah Kliff | October 22, 2012