Independence Day

Six years ago, Ito and I celebrated the 4th of July at the American Ambassador’s residence in Rome as the guest of our friend David Zimov (Economic Councilor at the American Embassy in Rome). It was a very fun event with lots of hamburgers and hot dogs, beer, and a concert by the US Marine Band. The cost of this extravaganza to us taxpayers was truly trivial compared to the cost of one day of our many wars (or our “special military operations” as Russia likes to call its wars). And the benefit to America in the form of international good will, far exceeds any American benefit from our wars, if there is any.

Janet Yellen’s upcoming trip to China will also cost a small drop in the bucket compared to sending the Sixth Fleet with a benefit for American security and wellbeing many times greater. At the same time, the US Senate continues to stall the confirmation of nominees to critical diplomatic positions. Go figure.

We seem to favor military spending over diplomacy to the detriment of our security and to our wellbeing more generally. In testimony before the UN Security Council Max Blumenthal recently stated that “The Biden Administration knows that ‘it is escalating a proxy war against the world’s largest nuclear Power. Why are we tempting nuclear annihilation by flooding Ukraine with advanced weapons and sabotaging negotiations at every turn?’  For those US officials who personally benefit financially, ‘a negotiated settlement to this territorial dispute means an end to the cash cow of close to $150 billion in US aid to Ukraine.’”  https://expose-news.com/2023/07/03/us-officials-benefitting-from-ukraine-war/  

When I noticed that the small handheld American flags we were all given at the Embassy’s 4th of July party was made in China (they had a very conspicuous “made in China” tag on the handle) the person sitting next to us was appalled. I explained to him why he should celebrate a feature of American life that has helped make us freer and more prosperous: 1. Our tax dollars were prudently spent in buying the cheapest flags; 2. The money the government saved could be spent on other government priorities (or—God forgive—returned to us taxpayers); 3. The American workers who otherwise would have been diverted to make these flags at higher cost; would remain in their current more productive activities raising our standard of living; 4. The larger volume of world trade strengthened America’s standing in the world. Though I don’t know how the American Embassy was able to avoid the shortsighted “Buy American” requirement, I was glad that it had.

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Author: Warren Coats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon. I live in National Landing Va 22202

One thought on “Independence Day”

  1. Happy Independence Day, Warren. What a lovely event you were able to attend. My family lived in Rome 1977-80 when my parents were at the Embassy – a fond period to look back on – but I don’t recall going to the residence. I did get to the Ambassador’s residence while working in Moscow. Interesting points you make. No fight from me on the imported American flags. Ironic it seems today when relations are among the worst we’ve had with China. The argument that military industrial complex always benefits from wars is not lost on me. As someone who stomached only one year total in ROTC my freshman college year and who never had to fight, I have nothing meaningful to say about when or how long wars should be fought. I do believe history shows appeasement has negative consequences. History will show whether the west’s arming of Ukraine will lead to armageddon. My personal belief is that Putin and his misadventure in re-establishing the USSR needs to be checked. His ongoing slaughter of civilians is unacceptable. Ukraine, with the West’s conditional backing, has shown great restraint in limiting its response to military targets. I am extremely grateful to be an American living a good life at, for now at least, a very long distance from the war. Enjoy the fireworks tonight from your beautiful new penthouse. Hugs to you and Ito.

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