Big, Shining Bars of Gold

Only the most foolhardy and short-sighted analysts would state that matters of policy and matters of economics are not deeply intertwined. As security is a facet of policy, yes, the current global financial crisis is a security issue.

A nation’s economy is, in fact, an extremely important part of a nation’s security. From a purely rationalist perspective, if a nation does not have a strong economy, it cannot tax it’s populace to fill it’s treasury with big, shining bars of gold. The cost of a jet fighter is, say, one big, shining bar of gold. If a nation has no BSBGs (Big, Shining Bars of Gold), they cannot buy any jet fighters – nor, for that matter, can they buy any Big Artillery, Big Bombers, or Big Nuclear Devices. If a nation has no Big Artillery Divisions, Big Bomber Divisions, or Big Nuclear Devices pointed at our foes, they cannot defend their borders or their ideologies from rival nations.

From a purely liberal perspective, this crisis is a threat to security. To quote John F Kennedy, a rising tide lifts all boats. The converse of that aphorism: a falling tide lowers all boats. If the global economy is suffering, each component nation of that global economy also suffers. As individual nations are impoverished, their people become unhappy. As people become unhappy, they become angry. As people become angry, the nation eventually becomes unstable, and thus conflict emerges from this tragic loss of BSBGs. And let us not forget that conflict often reaches across borders: an instable nation will negatively impact surrounding nations, etc. Like the Domino Effect, but it actually exists?

So, let us consider Iceland. http://www.businessweek.com/the_thread/economicsunbound/archives/2008/10/iceland_goes_ba.html

As stated in the article, Iceland has recently gone bankrupt. The Icelandic currency is now completely worthless on the global markets, and so no one would be willing (or financially able) to import goods into Iceland. If international organizations / strong nations do not act to save Iceland, it will struggle to recover. The same could hold true for the U.K., which holds (as Iceland held) large external debts. With each bankrupt nation, all other nations suffer, in the long run. Short term: doesn’t it benefit the U.K. more to sue Iceland for its losses? Long term: no, it benefits the U.K. more to have a financially thriving neighbor.

Ergo, be nice to your neighbors!
Q.E.D.