It was also gutsy, at the time of a still jobless recovery, for the administration to warn that outsourcing was on balance a benefit for the American economy. Outsourcing is a two-way street. Prevent American firms from outsourcing factories to other countries when market conditions warrant it, and other countries will prevent their firms from outsourcing to the United States. More than six million jobs from such outsourcing by foreign companies (or from the U.S. perspective, insourcing) in the United States would be lost.

Nevertheless, conservatives get little credit for free trade. Why is that? Part of the answer is that conservatives do it largely for security reasons, and trade initiatives such as the Doha Round get lost in the controversy over security issues. A second reason is that some conservatives are not free traders. Jacksonian (in contrast to Jeffersonian) nationalists care more about protecting American workers and limiting immigration than opening foreign markets. They fear foreign competition from low wages and resent multinational corporations and banks that finance foreign investments.

This protectionist element in the conservative camp becomes particularly strong in bad economic times, such as the recession of 1990-91. Just as security nationalists resist neocon adventures to intervene in too many places, economic nationalists check attempts to open markets in too many places too quickly. The division is not devastating but actually results in a more measured conservative policy toward liberalization, albeit always in the direction of freer trade.

Conservatives are more reluctant to coordinate international economic policies beyond trade (monetary and exchange-rate policies), especially with Europe. They blame the more centralized domestic and international institutions of Europe for the chronically lower rate of growth (about half the level in the United States) and higher level of unemployment (roughly twice the level in the United States) and for dragging down global growth and deflecting current account deficits onto the United States.

Moreover, attempts at coordinated stimulus among G-7 countries in both the late 1970s and late 1980s had bad consequences. The first fueled stagflation, and the second contributed to a U.S. recession and a Japanese bubble. Conservatives prefer to let national policies compete in an open marketplace. The EU's experiment with the euro, which locks everyone into a one-size-fits-all monetary policy, is exactly what conservatives seek to avoid in the G-7.

Accordingly, conservatives are not as concerned as others about U.S. current account and fiscal imbalances. What is important is growth. The world economy experienced a synchronized recession in 2001-02. To revive growth, economic policies, especially fiscal policies, were stimulative, not only in the United States, but in Europe and Asia as well. Such policies were appropriate and succeeded. The global economy is now recovering. The IMF recently forecast world growth of 5 percent in 2004, well above the annual average of the past two decades. Before the United States applies the brakes by raising taxes or interest rates (as the IMF calls for), Europe and Japan need to accelerate domestic demand through long-delayed structural reforms (more flexible labor and capital markets). China also plays a key role and needs to reform its banking sector and gradually revalue its currency to avoid a financial crisis such as that endured by other Asian tigers in the late 1990s.

Thus, a conservative economic strategy embraces globalization and does not concede ground to domestic labor and environmental groups. Ultimately, global markets are the best way to spread economic growth, finance environmental improvements, and inspire political freedom around the world. Thus, a conservative grand strategy supports the integration of China, Russia and India into the world economy. It builds on the unprecedented success of Asian and now Latin American "tigers" (such as Mexico) and holds out the prospect that Middle Eastern and South Asian "tigers" (such as Egypt, Saudi Arabia and Pakistan) may follow in the future. Pie in the sky? They said the same about Asia after World War II. Yes, it is long term and uncertain--but it is possible.

Diplomacy: Flexible Not Formal

A conservative grand strategy does not eschew diplomacy, but advocates a highly flexible diplomacy that puts more emphasis on voluntary cooperation (such as coalitions of the willing) and mutual interests (for example, the 2002 strategic arms agreement with Russia) than compulsory international laws, treaties, institutions, norms and courts.

Conservatives suspect international law that is administered by international institutions in which a majority of members are non-democratic. Law has to be subject to democratic political accountability. None of the institutions that liberals support to deal with international crime (International Criminal Court), the environment (Kyoto Protocol) and arms control (Comprehensive Test Ban Treaty) operates on the basis of democratic majorities or is accountable to democratic institutions and constituencies. Global initiatives are not absent from a conservative grand strategy, but they often take the form of missions, such as the Proliferation Security Initiative, rather than institutions.

Hence, for most conservatives, diplomacy starts with domestic values and accountability, and builds up toward regional and perhaps international institutions. The legitimacy behind all diplomacy is not military power or multilateral institutions. It is the moral convictions that motivate and discipline the use of power and institutions. In this sense American diplomacy is legitimated by the nature and appeal of democracy. Conservatives at the more nationalist end of the spectrum believe that American democracy is unique and not applicable to many other societies. They are not eager to engage in nation-building. Conservatives at the other, primacist end of the spectrum believe that democracy is universal. They consider nation-building a moral obligation. Interestingly, President Bush seems to have migrated from the former to the latter end of the spectrum. Skeptical of nation-building and calling for a more humble policy before 9/11, he now advocates freedom for all, especially Muslim, societies. Whether this is a matter of conviction or a consequence of war and the need to reconstruct defeated societies can be debated. Most likely, Bush is making the best of a war that ended quickly and victoriously.

Normally, however, most conservatives are skeptical about direct nation-building and democracy-promotion. They expect freedom to emerge from indigenous struggle and competitive markets. Traditional conservatives (realists) are satisfied with political stability. In the wake of war, however, conservatives of all stripes have made common cause historically with liberal internationalists to rebuild defeated powers in America's image. The commitment is logical. What else is one to do after victory? Snatch defeat from the jaws of victory by withdrawing quickly and permitting old adversaries to return?

Whether nation-building is appropriate in the Islamic world and the Middle East is much debated, even among conservatives. And well it should be. Iraq is not Germany, which had a democratic tradition, or Japan, which was a highly modernized society. If it took fifty years to develop democracy in those countries, it might take one hundred in Iraq. Nevertheless, the objective of democracy, however distant, is important. One cannot base a policy of reconstructing defeated adversaries on cynicism, especially if one expects the effort to take one hundred years. A stable, more open and tolerant Iraq, like Afghanistan, may be enough. In the meantime, all conservatives share a commitment to freedom with Israel and thus resist European pressure to negotiate with and reward Palestinian extremism.

The Way Ahead

Conservatives have too much in common to wage war over foreign policy and cripple the Bush Administration's second term. All conservatives understand that the War on Terror is a major one. None see it, as Clinton liberals did in the 1990s and Kerry Democrats more recently, as largely a criminal activity to be dealt with by international consensus and law. Neocons want to fight the war aggressively, that is, as far away from America's shores as possible. Nationalists want to fight it defensively, that is, as close to home as possible. The two groups ultimately temper one another and generate a conservative engagement strategy that is more selective. This strategy combines geopolitics and support for democracy, advocating U.S. intervention when the situation is strategic and when a change in the political direction of a state or region toward democracy might be decisive.

Still, realists are not thereby the winners. While they have always argued that American foreign policy should be grounded in survival or vital national interests, that stance can only take you so far. As Charles Krauthammer writes,

"Realists are right that to protect your interests you often have to go around the world bashing bad guys over the head. But that technique . . . has its limits. At some point, you have to implant something, something organic and self-developing. And that something is democracy, . . . The spread of democracy is . . . an indispensable means for securing American interests. The reason is simple. Democracies are inherently more friendly to the United States, less belligerent to their neighbors, and generally more inclined to peace."

So realists need neocons. The impulse to drive neocons out of the conservative camp is ill advised. Ronald Reagan, a neocon par excellence (and hence initially alien to realists such as Richard Nixon and Henry Kissinger), transformed conservatism from a "remnant" into a majority by insisting that foreign policy was more than geopolitics or stability. Modern conservatism is about the future of freedom enriched but not eclipsed by the treasure of tradition. The surest way for conservatives to become a minority again is to forget this Reagan legacy.

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