End Military Commitments for Bird Guano and Oil?

“War was God’s way of teaching Americans geography” (Ambrose Bierce)

For debaters researching US military commitments, there’s a big world out there and a couple centuries of US history to explore. Economists have argued that many past and present military commitments turn on misunderstanding economic realities. Plus times change faster than foreign policies. A healthy US economy depends upon importing raw materials, and through history these important resources have shifted as the US economy developed.

Should US military commitments defend bird islands? Banana plantations in Honduras? Access to fisheries off the coasts of Chile and Peru? Medical schools in Granada? Oil production in Libya? Rare earth minerals? Why depend upon the military to secure scarce resources when business can just purchase them, and stockpile them, or, in many cases, produce them in the US (or import them from friendly countries)? (Each to be discussed in future post.)

To enhance energy security, policies were enacted to subsidize expensive and environmentally damaging ethanol (plus mandate mixing ethanol with gasoline) by Congress. The goal was to reduce “dependence” on oil imported from the Middle East. In reality, economists argued, even in the 1980s and 1990s, Middle Eastern countries were more dependent on the US and other developed countries purchasing their oil. And over the last fifteen years, with oil and gas production from hydraulic fracturing (“fracking”), the U.S. has again become a major oil and natural gas producer and exporter and less dependent on imported hydrocarbons.

There are even less energy security reasons now for U.S. military commitments to Middle East North Africa (MENA). There are other rationales for US MENA commitments including promote stability, protecting Israel, supporting Iraq, and countering Iran (and each of these of course are open to debate). But the original national defense claim has run out of gas. Again, economists long argued the U.S. never really “needed” Middle East oil. Instead, Middle East countries like Saudi Arabia, Iraq, Iran, UAE, needed consumers for their oil and benefited as much or more from sales to developed economies. (See: Do We Need to Go to War For Oil? Cato Institute, October 23, 1990, and Energy Independence, Econlib.org, 2008)

Fears of Running out of Fertilizer
Long before fears about imported oil, fears about earlier “needed” resources led to US military commitments. Through history certain natural resources were used to justify military action to secure supplies. That’s how wars start. Through European history, when most were farmers and most wealth came from farmland, wars were fought for farmland.

Gradually, agricultural productivity rose allowing farmers to produce more food on less land, and the industrial revolution in Western Europe increased demand for coal, iron, and later oil. Military minds turned to secure those resources.

Europe’s population expanded (as child mortality fell dramatically), and industrial production increased, leading to huge “exports” of both people (emigration) and goods. Military expansion helped secure natural resource imports and secure captive customers in overseas colonies. England, France, Holland, Spain, Portugal, and later Germany explored, settled, disrupted, and tried to control most of Africa, India, the Middle East, Southeast Asia, and the New World.

This was the era of colonialism and imperialism. Economists argued at the time that military expenses to support colonies was higher than the benefits. But the benefits from colonies went to government-connected elites while the costs fell to taxpayers. From Adam Smith on, economist argued that free trade and international investment were better ways to secure resources and improve the wealth of nations.

The United States long avoided colonial expansion (while expanding across the continental US) and America’s founders wanted to avoid military commitments outside the Western Hemisphere. George Washington’s Farewell Address outlines the reasons for avoiding military entanglements with Europe, as does John Quincy Adams 1821 Fourth of July Address.

The challenges of US military commitments in the Middle East are discussed in an Economic Thinking post, with title and quote from key passage in John Quincy Adams’ Fourth of July address: The “wars of interest and intrigue, of individual avarice, envy, and ambition…”

The United States, gained independence from England, and added a lot more land later purchased from France, Spain, Mexico, and Russia. A high birthrate and growing European immigration peopled westward and southern expansion, cultivating new farmland along rivers and canal transportation networks. As cities industrialized and railroads developed, coal, iron, and later oil were transported at low cost to factories and cities. (Bananas too, which led to U.S. military operations in Honduras and other Central American countries.)

In the early years of the republic, Presidents Jefferson and later Madison sent US military forces to North Africa to protect US shipping from Barbary Pirates (after paying some one-fifth of 1797 federal budget in bribes to protect shipping). See The Shores Of Tripoli (American Heritage, February/March 2002)

Attacks on the United States of America by the pirates of the Barbary Coast commenced almost immediately upon our independence. They would prove to be one of the defining challenges of the Republic, one that would, among other things, give birth to the U.S. Navy and the Marine Corps and raise serious questions about the President’s right to wage undeclared wars, the need to balance defense spending against domestic needs, the use of foreign surrogates to fight our battles, and even whether or not it was a good idea to trade arms and money for the release of hostages.

From Protecting Shipping to Seizing Guano Islands
American and European farmers could grow much more with nitrogen-rich fertilizer, food now in high demand for rapidly growing US and European populations. America’s international trade and later growing demand for fertilizer led to a foreign policy and military commitments that today seem strange.

From protecting international shipping, US military commitments stretched to protecting access to “needed”  resources, beginning with bird or guano islands. American farmers’ desire for cheap fertilizer led Congress to approve US military commitments to secure access to guano-rich islands around the world. The Guano Islands Act of 1856 (National Museum of American History):

The resulting Guano Islands Act stated that any guano islands unclaimed or unoccupied by others could be claimed and mined, and the guano delivered to the United States at a low price for the benefit of its citizens. This act authorized our nation’s earliest significant annexations of lands beyond the continent. Even today, the United States retains ownership of several remote Pacific and Caribbean islands first claimed for their guano.

The Cooperative Advantage: How Innovation Rewrote the Rules of Foreign Policy (Breakthrough Institute, July 7, 2014) offers is also a valuable economics for foreign policy view: other countries gaining wealth is good for the U.S., rather than a challenge. There are few if any important limits on natural resources in the world, so unlike bird guano, when others consumer more that doesn’t leave less for Americans.:

The Guano Islands Act was enacted in 1856 at a time when guano was the world’s best fertilizer and source of saltpeter, a vital ingredient of gunpowder. Around 100 islands were claimed by the United States under the law, including Midway. And it wasn’t just the United States that scrambled for control of guano deposits: Peru, Spain, Bolivia, and Chile fought wars over them.2 …

…the Guano Islands Act remains on the books, representing a way of thinking about international relations that is as anachronistic as it is enduring: the idea that countries must compete for a set amount of resources, land, or wealth. From this zero-sum viewpoint comes the idea that every new manufacturing job in Chongqing means one less in Chattanooga; that every new patent application in Beijing means one less in Boston; and that every increase in Indian GDP is a threat to the economy of the United States. It is a view of power and international relations based on a preindustrial understanding of the world, one in which national power and wellbeing are seen as emerging from a nation’s privileged access to resources that are limited (“rival,” in economic jargon). Think guano: if the United States mined droppings to use on American corn fields, there would be less left for Germany or Japan.

But this is no longer how economic strength works. Today, a wealthier, healthier, better educated, more democratic, and more peaceful developing world is fantastic news for Europe and America. Prosperity for what Fareed Zakaria calls “the rest” does not impoverish or imperil the West.3 Quite the opposite: the increasing success of emerging markets, in part the result of their adopting ideas and institutions pioneered by industrial economies, is binding the world’s countries together into ever closer relationships of mutual benefit.

Better economic understanding should reduce fears that America’s economy will be somehow damaged in the coming years as rapid economic growth and increased prosperity around the world continues. The Fraser Institute’s
Economic Freedom of the World: 2020 Annual Report outlines how economic growth and economic freedom are connected, both for the United States and countries around the world.