45 



While these brakes on industrial growth and productivity have not 

 yet reached full strength, they have served to warn that these rising 

 long-term and incremental costs in the industrial economy are ap- 

 proaching a serious stage. When such costs were coupled with the im- 

 pact of the petroleum embargo and price increases from 1973 on, the 

 observable result was a mixed situation of recession combined with 

 inflation. The effects of these forces were felt most keenly in areas of 

 largest populations, notably New York City. Escape from this dilemma 

 is vital to the future health of the U.S. diplomatic posture in the 

 world — as indeed also for U.S. domestic economic health — but the 

 escape route remains undefined. The economic surplus needed to fund 

 past levels of global programs may be a product of the U.S. past. U.S. 

 foreign policy may rest more in the future on the skill of its diplomacy 

 than on the weight of its economic programs. 



The Shaky Global Economy 



Economic interdependence has long prevailed in international re- 

 lations. In the 19th century, Central Europe fed on American grain; 

 agricultural nations relied on Chilean nitrates; England supplied 

 capital to develop rail transportation systems in Argentina, India, the 

 United States, and China ; English textile mills wove cloth with United 

 States and Indian cotton; and so on. During the 1920s efforts to restore 

 this global economy conflicted with internal efforts to stabilize na- 

 tional economies and employment; the global monetary system col- 

 lapsed in the face of stiff tariff barriers, competitive devaluations, 

 multiple currency schemes, and quotas. Restoration of the global 

 economy was a high-priority U.S. goal after World War II but, despite 

 real progress, its achievement was obstructed by cold war divisiveness, 

 nationalistic tendencies of former colonial regions, and — ultimately — 

 the inability of the dollar to serve as a global currency in place of the 

 long-defunct gold standard. Achievement of a stable global economy 

 continues to be a U.S. goal. D6tente with the Soviet Union was con- 

 sidered a positive move toward its achievement. But many old and 

 some new forces obstruct progress toward the goal: internal obligations 

 of developed countries to sustain economic growth and high levels of 

 employment; resistance of developing countries to terms of trade 

 which they see as blocking their escape from economic colonialism; 

 and most recently the exploitation by the OPEC countries of a 

 (probably temporary but severely acute) monopoly position in world 

 petroleum supply. Efforts at reaching international agreement on a 

 new world economic structure were underway at the time of this 

 writing but the issue remains in doubt. 



Atomic Energy 



Atomic energy places such extreme demands on technology that 

 its advance in competition with fossil fuels as a source of electrical 

 energy has been slow. However, the manipulated rise in petroleum 

 prices by OPEC and the complex environmental problems in the 

 return to coal as a principal energy source are making atomic energy 

 potentially more attractive for the future. This trend makes more and 

 more difficult the maintenance of control over fuel elements and by- 

 product plutonium to protect the world and its peoples against en- 

 vironmental insults and irresponsible conversion of plutonium into 

 weapons. Since the early 1960s a principal goal of U.S. foreign policy 

 has been prevention of nuclear proliferation. The economics of energy 

 now places that goal in serious jeopardy. Scientific efforts to develop 



