Collections: Global Trade and United States Navy

This week we’re doing another one of our series of military theory primers, this time focusing on a fairly simple contention: that the United States Navy is a load-bearing component of the global economy. I considered attempting to work in A.T. Mahan and the concept of command of the seas in here but simply outlining the basic argument about the navy’s role in sustaining global standards of living has run out more than 10,000 words, so a primer on Mahan will have to wait for another day.1 The argument here is actually quite easy to state as a series of propositions: global trade is an important part of the global economy, necessary to maintain our standards of living (and in many cases, essential for the survival of people in poorer countries) and seaborne trade makes up the overwhelmingly vast majority of all trade. Moreover, in history to this point it has been a relative constant that in the absence of major naval powers committed to freedom of navigation, pirates and states at maritime choke-points tend to emerge and seriously disrupt maritime trade. Finally, at current, only the United States maintains the kind of navy that traditionally has been necessary to keep sea lanes open, thus making the US Navy at present a ‘load bearing’ component of the global economy. Consequently, this makes the United States’ apparent turn away from freedom of navigation troubling – a move likely to be bad for Americans but also bad for everyone else. If you nodded your head through all of those points, you are good to go. Hit the tip jar on the way out. But I find that many folks want to contest at least one of those points – they don’t think trade is important (or that it only enriches ‘big corporations’) or don’t realize how substantial sea trade is, or don’t expect sea commerce to break down in the absence of naval power, or don’t understand the kind of navy necessary to provide that sort of power. So the rest of this far-too-many-words-long post (it turned out to be 10,430) is going to belabor each point, one by one, in order to explain why the United States Navy – which I should stress is very much an imperfect institution; we are not here to uncritically glaze the USN, just to describe its function – is configured the way it is and why there is not currently a replacement for it on offer. Also, let me note at the beginning: if you want regular updates on global shipping as well as good explainers about how global shipping works, I cannot recommend Sal Mercogliano’s What’s Going On With Shipping channel enough. But first, as always, building navies is expensive. Really expensive. Absurdly expensive. If you want to help keep this ship afloat, you can help by spreading the word to new readers and by supporting this project over at Patreon. If you want updates whenever a new post appears or want to hear my more bite-sized musings on history, security affairs and current events, you can follow me on Bluesky (@bretdevereaux.bsky.social). I am also active on Threads (bretdevereaux) and maintain a de minimis presence on Twitter (@bretdevereaux). A World With Trade Now I want to start by talking about what global trade really is and its role in the global economy, because in many cases before I can get to anything about shipping lanes and choke points and pirates and so on, I find many regular folks have already immediately objected that they do not care about global trade. They think of global trade as a thing which mostly benefits big corporations or ‘cosmopolitan globalist’ elites. But, you must pardon me, they are wrong: they do not yet know that they care about global trade. When global trade is disrupted – even just a relatively little bit! – and the price of a barrel of oil nearly doubles, leading to a one-third surge in the price of gasoline and a 50% jump in the price of diesel, it turns out they care a great deal. They often just don’t think about that in terms of global trade, because global trade is one of the key things that makes modern prosperity possible, mostly invisibly. That very invisibility, as we’ll see in the end, is part of what poses real political problems, but let us first make trade a bit more visible. The first mistake that folks make here is to assume that trade is a relatively small part of the global economy. It is an easier mistake to make in a place like the USA, which is very big and thus trades with itself more than most, but globally trade makes up between a quarter to a third of all economy activity.2 That is, it turns out, quite a lot. If your household income fell by a third, that would be very difficult for you. If every household’s income fell by a third, the resulting economic contraction would be double the size of the Great Depression (which reduced global GDP by roughly 15%) and have all sorts of knock-on effects as those households themselves had to cut back on other, non-imported goods and services.3 The second potential mistake here is to assume that all of this trade is mostly a luxury: that it just accrues to the rich or to rich countries or to big corporations. We may remove the ‘rich countries’ here right off: a lot of the countries with very high trade-to-gdp ratios (imports+exports, thus the ability to exceed 100%) are poor countries (the other big group are small, rich countries): countries like Vietnam (190%), Djibouti (206%), Namibia (108%), Somalia (128%), Libya (137%), Guinea (103%) and so on. We’ll come back to this in a moment, but a breakdown in global trade is actually especially bad for poorer, developing countries. Likewise, while big corporations surely profit off of trade – no poor man ever owned a freighter – they’re not the only ones. We can think about this by thinking about the most staple of all bulk staples: food. In the developing world, access to global food markets is an essential lifeline. Most developing countries, especially across Africa, are net-food importers, some quite substantially so. Moreover, whereas food imports in developed countries are often ‘exotic’ foods that grow in other climates (think bananas away from the equator), for developing countries, these are often bulk staples. As we saw in 2008-2010 and again in 2022 and may grimly see again soon, increases in the price of bulk stable foods are associated with political instability and suffering in the developing world. Because if the price of bread goes up by 25% in the United States, for most Americans that is annoying, but in many developing countries it means people go hungry because they cannot afford food. Developing countries are also more likely to have agricultural systems that are exposed to more variability (drought, pests, blight, etc.) as compared to developed countries. And fundamentally everyone relies on trade to insure against famine in the event of a local failure in food production. Trade is what allows us to even out a freak drought in one country or a flood in the other to keep everyone fed. That trade may be in the form of market interactions or it may arrive as foreign aid or disaster relief, but it is still the movement of goods from one place, from one country, to another. Trade is also important for the developing part of developing countries. Doing the industrial revolution from scratch – designing and building better steam engines, creating factories, developing precision tools, steadily expanding production as all of that industrial capital accrues – took Great Britain something like a century and a half (roughly 1750 to 1900 – we’re being quite approximate here) to hit an economic standard we might define as ‘middle income’ today.4 But developing countries today that have access to trade – and here we mean not just the movement of goods (but also that) but also people – can go through that transformation much faster. The classic interaction is that developing countries sell raw materials5 to import the machinery and experts to build basic manufacturing industries (think steel, concrete, agricultural goods processing and so on) and then sell those goods to be able to afford to important the experts (including educators) and advanced equipment to make more complex finished goods. Because manufacturing, say, a car requires not just raw materials, but the ability to craft high quality materials (like very precise steel alloys) as well as very complex components and very precise parts within low tolerances and that both requires really fancy manufacturing equipment (which also requires those same high quality materials, complexity and low tolerance components to build) and very skilled workers, designers and engineers. Trade allows developing countries to jump-start progress on each rung of that ladder, importing the experts who already know how to do these things (and can teach more) and importing the machines that can do these things (with which more may be built), ideally resulting in a high-income, more self-sufficient economy achieved in decades rather than centuries. And you can see any number of countries that either have accomplished this (China, Japan and South Korea, for instance) or are now accomplishing it (India, Vietnam), often from very low initial industrial ‘baselines’ (frequently as a result of tremendous neglect or malice at the hands of European imperial masters). As those developing countries work their way up the value chain from raw materials to basic goods (often textiles) to low-cost, low-complexity consumer goods (e.g. plastic toys) to higher complexity consumer goods (cars, washing machines) to the very top of the value chain (software, aircraft, etc.), their standard of living improves, but equally because the cost of labor in those countries is lower, they provide much cheaper goods to developed countries. Those cheaper goods in turn lower the cost of living in developed countries, making the sort of ‘American Dream’ middle-class lifestyle available to more people. Of course even among developed countries, trade does not lose its