Lance Knobel meets Martin Wolf returning, unshod, from Mt. Sinai:
Davos Newbies : Davos Newbies Home: "Martin Wolf has a new book out, Why Globalization Works. The Financial Times is serialising parts (and as is its wont, hiding the material behind a subscription firewall -- a great way to encourage book purchases, not). Today's instalment includes his ten commandments of globalisation. They aren't as pithy as the original ten, but as always with Wolf, they make great good sense:
1. The market economy is the only arrangement capable of generating sustained increases in prosperity, providing the underpinnings of liberal democracy and giving individual human beings the opportunity to strive for what they desire in life.
2. Individual states remain the locus of political debate and legitimacy. Supranational institutions gain their legitimacy and authority from the states that belong to them.
3. It is in the interest of both states and their citizens to participate in international treaty- based regimes and institutions that deliver global public goods, including open markets, environmental protection, health and international security.
4. Such regimes need to be specific and focused. But they also need means of enforcement.
5. The World Trade Organisation has been enormously successful. But it has already strayed too far from its primary function of promoting trade liberalisation. The arguments for a single undertaking binding all members also need to be reconsidered, since that brings into the negotiations a large number of small countries with negligible impact on world trade.
6. The case for regimes covering investment and global competition is strong. But such regimes do not need to be imposed on all the world’s countries. It would be better to create regimes that include fewer countries, but contain higher standards.
7. It is in the long-term interest of countries to integrate into global financial markets. But they need to understand the need for an appropriate exchange rate regime, often a floating rate, and a sound and well-regulated financial system.
8. In the absence of a global lender of last resort, it is necessary to accept standstills and renegotiation of sovereign debt. A particularly strong case can be made for developing ways to write off ‘odious debt’ – debt contracted by politically illegitimate regimes.
9. Official development assistance is very far indeed from a guarantee of successful development. But the sums now provided are so small, a mere 0.22 per cent of the gross domestic product of the donor countries in 2001, that more should help, if used wisely. Aid should go to countries with sound policy regimes, but it should never be large enough to free a government from the need to raise most of its money from its own people.
10. Countries should normally be allowed to learn from their own mistakes, even if that means that some make no progress. But the global community also needs the capacity and will to intervene effectively where states fail altogether.
I do think that Wolf needs to talk more about the necessity of getting the Bush administration out of the White House. Remember, we have people in the Bush administration--Aaron Friedberg, for example--who believe that world trade weakens the United States (by creating domestic lobbies opposed to things like "getting tough" with China). The future that Wolf imagines cannot come to pass if the U.S. is ruled by administrations that think that international relations is a negative-sum game. And lots of thought is necessary. Thought about how to keep anything like the incompetent and blinkered Bush administration from ever happening again.
I'm beginning to think that we need a quiet constitutional revolution. If the Republican Party keeps selecting presidential candidates who are perhaps well-qualified to be Head of State but manifestly unqualified to be Head of Government, then cabinet members need to be appointed and dismissed by the White House Chief of Staff, and the White House Chief of Staff needs to have the confidence of the Senate.
Posted by DeLong at May 11, 2004 11:44 AM | TrackBack | | Other weblogs commenting on this postThereby making the Chief of Staff a kind of head cabinet member--or "Prime Minister" as we shall call him.
Posted by: Paul on May 11, 2004 11:53 AM1. Please define market economy wrt regulation.
Posted by: Eli Rabett on May 11, 2004 12:13 PMWill you please stop spamming the comments with full quotes of articles?
Posted by: Yah on May 11, 2004 12:33 PMNo, we need to fix gerrymandering so that voters' preferences are more accurately represented in Congress (and statehouses). Plus if you are a real small-d democrat, get rid of the imbalance in the electoral college that favors small states. (Bonus points for anything that makes the Senate less unbalanced in terms of representation...)
Posted by: Michael Froomkin on May 11, 2004 12:46 PMIt's funny to read this post minutes after having officially assigned Wolf's new book to master students in my Fall 04' International Finance class... The book I assigned to my undergraduates is The Man Who Saw the Future by Andrew Forester, Thomson. Comments welcome via email.
Posted by: Jean-Philippe Stijns on May 11, 2004 01:30 PMAs sound as they sound, Wolf's commandments, unsurprisingly, are written from a well-developed country's perspective, and that of international investors. If he had considered the limited choices and natural weaknesses of a developing country (and the stiff competition between them), he would perhaps have written codicils to each which say, essentially: any poorer country should recognize that the wealthy countries didn't always get wealthy by following this rule. And that the poorer country should insist onthe right to fudge -- have trade barriers, tight exchange regimes, local rules for foreign investors,and support/subsidies for native industry.
Especially, #6: does the global investment regime offer any kind of protections for a (poor) country's workers? #7: Are poor countries to be informed that no one else got rich by having fully convertible and floating currencies; that most became that way after operating protected financial systems (and trade markets, at that)?
#8: in the abscence of a "politically illegitimate regime", can no debt be written off for a country in difficult straights? In the case of odious debts that come from careless private lenders who depend on the IMF et al to get them their money, is there no case for a system for soveriegn defaults simply based on, essentially, national bankruptcy?
And #9: Who defines "sound policy regimes"? Does that mean these 10 commandments? Why must Aid ne tied to a government's policies only, when people might need it, real people. And, saying that a government must raise most of its money from its people, does that rule out, say, taxing foreign investors? (See #6, and what various international investor groups have proposed in this regard).
Well, I hope the author addresses these. Otherwise, well, it's like the 10 biblical commandments in the hands of GW Bush.
Posted by: paulo on May 11, 2004 02:24 PM"any poorer country should recognize that the wealthy countries didn't always get wealthy by following this rule."
Paulo, did *any* wealthy country get wealthy by following those rules?
Motion seconded: More properly said, the willingness of both parties to use their power to rig the game by gerrymandering is the origin of the mess we're in.
As for Wolf, I guess no one read him yet today...
"I am a huge admirer of the US. Freedom and democracy survived the 20th century only because of American actions and values. Without the US, Hitler or Stalin would have emerged as undisputed winners of the second world war. Thereafter, the US turned defeated enemies into allies and undertook the long - and ultimately successful - task of containing and defeating the Soviet empire.
I am also neither hostile to Republican administrations nor opposed to the use of force. On the contrary, I was heartened by Ronald Reagan›s efforts to liberalise the US economy and oppose the Soviet Union. I preferred Richard Nixon to George McGovern, in 1972, and George H.W. Bush to Michael Dukakis, in 1988. I supported the first Gulf war, though I opposed the one in Vietnam.
This personal history is of no intrinsic importance. But if I find the Bush administration›s foreign policy disturbing, so must the vast majority of humanity. If I feel Tony Blair has allied the UK too closely, then sympathy for this alliance must be perilously low.
___
The US has, rightly or wrongly, staked its prestige not just on getting rid of Saddam Hussein, but on leaving behind a thriving country. If, instead, it leaves behind despotism or chaos, it will be a grievous defeat, with huge long-run consequences. Responsibility for such a failure must rest with the White House. It cannot be blamed on any subordinate department, not even the defence department. This is the president›s policy and responsibility. The buck stops there.
Crafting a foreign policy for a new era is hard. The last time this had to be done was in the time of Franklin Delano Roosevelt and Harry Truman more than half a century ago. The
institutions they established and the values they upheld were the foundation of the successful US foreign policy of the postwar era. Now, a task even more complex has fallen on this
president. He is not up to the job. This is not a moral judgment, but a practical one. The world is too complex and dangerous for the pious simplicities and arrogant unilateralism
of George W. Bush."
I'd bet it's hard to find any rich, poor, OR middle-income countries that followed all of the rules with perfect consistency. Well, such is life.
Anyway, I feel like this list would have been a good list in, oh, 1997. It's a Washington consensus list. It's a Bob Rubin list.
But it isn't 1997. The Washington consensus is probably dying or dead. Bob Rubin has retreat into big bidness, and John Snow occupies his place.
I overall think that the Washington consensus was a good thing, but I think we need to find a new politically feasible, practical list adopted to the world of 2003.
For instance, for the Washington consensus to work well, you needed 1) an empowered central bank, and 2) a relatively stable exchange rate vis-à-vis the Dollar, so that people are willing to lend money in foreign currencies without thinking they'll lose their money if the currency drops, making their clients unable to repay. This meant that people tended to hoard Dollar. Is that wise with the current U.S. policy, where it look like the Dollar will depreciate significantly?
The gold standard worked fine (at least for the U.S.) in the 1920s. I think it would have been nicer if 1920s-era economic conditions had continued on indefinitely, but they didn't. In the 1930s, a new approach was needed, so gold was mostly dropped.
Perhaps we should try to look for new ideas that will be reasonably good economics, play well with the "masses," and be suitable for the special circumstances of 2004?
Posted by: Julian Elson on May 11, 2004 07:27 PMBrad, I've come to the same conclusion you are thinking of. The problem comes in behind the scenes process. This is fundamentally the same arrangement that all the old kingdoms or empires came to in the end. Cardinal Richeleu and the Immortals anyone? I'm sure GWB would be happy to go back to his Playstation games and leave governing to someone else competent, instead of having to rush back and deal with the crisis that his current defacto substitute head of government Cheney is making.
The process would have to be quietly changed. Right now I can't even begin to imagine Andy Card as de facto Prime Minister. So you see, Brad, the revolution has already happened. It's merely an internal power sturggle issue at this point. Will Cheney continue to act as chief executive or will the power transfer over to Chief of Staff, our putative American chief steward or "Prime Minister".
That is the real question, indeed.
Posted by: oldman on May 11, 2004 09:06 PMIs anyone aware of a reasonably clear summary of the changes to domestic political mechanisms that can be seen to have had an impact on US political outcomes? Certainly, efforts to create secure House seats has had a big effect on polarizing the House. Anyone aware of efforts to contrast such changes to mechanisms to demographic decisions - the tendency, for instance, to migrate toward politically like-minded regions? I wanna know why our representatives don't represent us, and these questions seem like a good starting point.
The confidence of the Senate seems a pretty paltry hurdle when Frist is the replacement for whatsisname, the racist, and most Democrats spoke up in favor of pre-emptive war.
Posted by: K Harris on May 12, 2004 04:34 AMAdios Amigos. Too much censorship here. I'll see you all in heaven someday.
Adrian
Posted by: Adrian Spidle on May 12, 2004 06:43 AM"I do think that Wolf needs to talk more about the necessity of getting the Bush administration out of the White House."
Check out today's FT (05/12/04). Front page top "A president not up to the job." and the commentary by Wolf on page 15.
rt
Posted by: rtalcott on May 12, 2004 06:48 AMBrad is far too sanguine about the radical change to be accomplished by a John Kerry presidency. Kerry is likely to sweep out a lot of the incompetency, but the basic principles and strategies of neoconservatism and American empire will remain. A study of "progressive internationalism" shows as much; check out General Glut's Globblog every day this week! (yes, a shameless advertisement)
Posted by: General Glut on May 12, 2004 06:49 AMyou wrote ...."perhaps well-qualified to be Head of State but manifestly unqualified to be Head of Government" ... what is the case for perhaps well-qualified to be head of state?
Posted by: james on May 12, 2004 06:50 AMyou wrote ...."perhaps well-qualified to be Head of State but manifestly unqualified to be Head of Government" ... what is the case for perhaps well-qualified to be head of state?
Posted by: james on May 12, 2004 06:50 AMDitto on the well qualified bit.
Posted by: tstreet on May 12, 2004 07:24 AMGo check out General Glut's blog. He makes a lot more sense than this DeLong guy (who pretends to be a Dem but is actually a Rep.)
Posted by: Lynne on May 12, 2004 08:04 AMDear Brad,
Hear, hear for censorship--if by censorship I mean your conscientious weeding of your comment boards.
Dear Lynne,
If you think Brad is a Republican, then you must think Clinton was a Nixonite.
Dear K Harris,
Google "slate.com" and congress polarization. They had a nice overview a few years back.
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