A Strategy for Global Prosperity

The incoming US administration has a stated goal of seeking peace through strength. To succeed, each part of strength is necessary, including a fast-growing economy that is secure from other nations, military strength, and vibrant soft power—the ability to actively protect US national interests through allies, friends, international organizations, and global respect for the US.

To move in this direction will require a complete upheaval of US policies, many of which have been aimed at expanding the federal government, reducing US military strength, and surrendering US influence to global institutions.

The failure of US leadership on climate and energy issues has resulted in hundreds of expensive conferences, agreements, and government subsidies that give lopsided benefits to elites at global organizations and China without reducing greenhouse gas emissions or increasing the energy availability vital to development.

This erosion of US strength has had a devastating effect on the people in developing nations. As the US transferred power, leadership, and responsibility to global organizations including the G20, IMF, WTO, UN, and WHO, the direction of global development shifted from a foundation of markets and rule of law to one of governance by global elites and socialism through state-owned enterprises and public-private partnerships.

Deference to China and its ruling Communist Party now dominates development. China leads the Global South in political matters, as shown by the repeated UN votes against US interests. Chinese businesses operate without the constraint of the Foreign Corrupt Practices Act, which severely limits US engagement abroad.

To expand commercially, China operates through opaque debt contracts often collateralized by the borrower’s national resources and used to benefit and maintain the governing elite and China’s growth.

With hundreds of billions of dollars in loans, earnings, and contracts at stake, China’s interests dominate the G20’s Common Framework for debt restructuring. Each restructuring—Chad, Zambia, Suriname, Sri Lanka, Ghana, Ethiopia—works to China’s advantage.

Similarly, the failure of US leadership on climate and energy issues has resulted in hundreds of expensive conferences, agreements, and government subsidies that give lopsided benefits to elites at global organizations and China without reducing greenhouse gas emissions or increasing the energy availability vital to development.

This surrendering of US interests repeats the pattern set during the evolution of the global trading system to the WTO and China’s trading dominance. The risk is that the evolution of the global payments system will cause the US to also lose legal and regulatory control of dollar stability and reserve currency dominance. Accelerating this payments system evolution away from the US is the overuse of US sanctions to compensate for diminished soft power and military effectiveness.

The resulting system of global growth is the opposite of the beneficial relationships, systems, and principles that would support US national interests and the interests of non-elites worldwide.  Europe’s economies and investments have slowed precipitously, especially if US tourism is excluded. Russia’s fossil fuels are influential in new ways, funding Russia’s leadership in the BRICS and the growing commercial interdependence of Russia, China, India, and Iran.

The new US administration has the opportunity to build a faster-growing, freer global economy as part of peace through strength.

The effect of US weakness on development has been even more devastating. Large swaths of Africa are now controlled by Chinese and Russian surrogates. Global growth, excluding the US and China, has stagnated. In many countries, poverty rates are rising sharply while literacy and health have declined. Hunger and malnutrition are rapidly worsening for hundreds of millions of people. Africa has the fastest population growth but the slowest growth in fixed investment, energy, fertilizer, and productive capacity. The decade-long dependence on artificially low floating interest rate debt created huge setbacks when interest rates normalized.

These losses and the vacuum from US weakness have left the whole concept of developing nations operating in reverse—rather than living standards and median per capita income catching up to developed nations, many are falling further behind as inequality deepens. The concentration of global wealth into a narrow group is equally limiting.

For the US, growth is valuable by itself, and it enables military strength and soft power. China has shown this dramatically since its central bank stabilization in 1993, by using its rapid rise in GDP and per capita income to balloon its military and dominate foreign relations and international organizations.

The new US administration also has the opportunity to build a faster-growing, freer global economy as part of peace through strength. The US is still much stronger than China, and its freedoms are compelling to billions of people worldwide.

US leadership will be vital in building new systems that further US national interests while adding to global prosperity. Growth in median income and wealth depends on decentralized private sector ownership and expansion. This in turn depends on rule-of-law frameworks that allow small business growth rather than perpetuating one-party, militaristic, and elite-driven systems. Small businesses are vital for job training and equity capital formation, yet dynamism is singularly missing in much of today’s global economic system of currency instability and government influence.

As we use our history, people, and wealth to rebuild and implement our national interests and freedoms, a desired collateral benefit is for people around the world to be freer, healthier, and more prosperous.

David Malpass is an American economic analyst and former government official, known for his expertise in international finance. He served as President of the World Bank Group (2019-2023), where he focused on development policy and global economic challenges. Previously, Malpass held key roles, including Under Secretary of the Treasury for International Affairs under Donald Trump, and advisory positions in the Reagan and George H. W. Bush administrations. A former chief economist at Bear Stearns, he is recognized for his insights into global markets. He is a distinguished fellow of international finance at Purdue University.

Cover photo: US flag on the mast of cargo ship berthed in the container terminal in Newark. Mariusz Bugno/Shutterstock.