Project Syndicate: Explaining Global Recovery Amid Political Recession

A disconnect between political dysfunction and strong economies is disconcerting. Michael Spence, Nobel laureate in economics, suggests the global economy may not be reaching its full potential. “Leaders in Europe, as well as in a number of emerging economies, have now concluded that both the UK and the US are unpredictable and unreliable allies and trading partners,” explains Spence. “Asia, with China in the lead, has decided to go its own way. International cooperation on economic and security matters – never easy – seems to be unraveling.” Politicians cannot reverse or constrain globalization without great economic damage to their economies. Spencer regards the resilient global economy as remarkable and credits strong institutions that minimize risks of bungling leaders. The outcome, according to Spence, could be risks swelling faster with more consequences than many realize or, more optimistically, widespread discontent directing more attention on inequality. Restoring trust in government, the ability to debate with mutual respect and build policies based on sound values and principles, requires time. Spence concludes that investors depend on strong institutions to constrain leaders’ worst impulses. – YaleGlobal

Project Syndicate: Explaining Global Recovery Amid Political Recession

Economies are flourishing despite political dysfunction, and investors may be counting on strong institutions to restrain leaders’ impulses
Michael Spence
Friday, August 4, 2017

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Michael Spence, a Nobel laureate in economics, is professor of economics at NYU’s Stern School of Business, distinguished visiting fellow at the Council on Foreign Relations, senior fellow at the Hoover Institution at Stanford University, advisory board co-chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

© 1995 – 2017 Project Syndicate

Comments

There is plenty of evidence that, in the West, particularly in the USA, risks are swelling faster than they can even be measured and evaluated. That is a very systemic problem, that comes from persistent and repeated attempts to resolve economic problems by recourse to historic habits, given new intensity. The global climate of steadily growing "widespread discontent directing more attention on inequality" is also clearly evident, and it only becomes worse when the United States attempts to counter it with their historic, traditional, and systemically narrow, mechanisms. That is taking the entire matter toward a very real globalized crisis, that will, in all probability, create a "no win" situation for the United States, which has long suffered an ever greater leadership challenge. That challenge comes, in part, from its Cold War victory, combined with its failure to show promised and demanded results on a globalized level. Something China is striving to accomplish, in its belief in materialist and exemplary Marxist conduct. It clearly wants to show the world that "Leninist Marxist Socialism" is the entire future, much to what it hopes will be America's ever greater globalized embarrassment. Russia is likely to join in, even if more cautiously. The EU is likely to adapt. Africa, Southeast Asia, much of the Mideast, Central Asia and Latin America are likely to show considerable enthusiasm, as if the new game plan is in fact a form of liberation. In some ways America's post WWII "counter revolutionary" fervor, ideologically and in terms of actions abroad, characterizing its historic and current foreign policy has defined its character and that has served as a catalyst to a steady growth in globalized resentment, and even hate. As to "restoring trust in government", China has again been exemplary in battling corruption, within China, as it sees is. Whether it will prove capable of leading the battle against corruption, beyond its own borders, is the question of whether it can eliminate one of its Achilles' heels. It has long sought to utilize corruption, abroad, as a political tool. That would have to change or it risks losing influence, under criticism. The USA can only gain ground by showing that it can battle, and defeat, its own internal corruption, and it is a very, very, long way from that. In that sense it remains extremely vulnerable and can only lose influence in consequence. The current administration is doing all the wrong things, including cost cutting programs that help the most vulnerable, while failing to come to grips with government and private sector corruption that is costing the country not only vast sums, and increasing an impossible to carry debt load, but is also steadily reducing global influence. When you cut "meals on wheels", and carve back on Medicare and Food Stamps, in a country where nearly half the population needs some help and some are life and death dependent on help, you give birth to millions of new socialists, at home and abroad. Trump is the best thing Socialism could ever hope for, but he does not even begin to understand that. That is indicative of America in the eyes of the world, where it is increasingly seen as entirely blind to its own, immense, problems, while unjustly intent on continuing its historic wars against the left. That will not prevail, because the global community is no longer willing to allow it to do so. In that sense America risks being exposed as what it really is, and if its own journalists are too beaten and cowardly, then foreign journalists will sink their teeth into it and they will have a big feast.

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