Voice

Regarding "global leadership"

It would be an understatement to say that recent economic news across the globe has been...  unsettling.  With that in mind, Floyd Norris had a front-page essay in yesterday's New York Times on the failure of global policy coordination:

[T]here seems to be little willingness — or perhaps lit-tle ability — for the major countries to act together again. Squabbles have grown, some countries are in fiscal distress, and others face daunting domestic problems. The European situation is the most pressing. Banks are under pressure in many countries, for a combination of reasons. They did not raise as much capital as they might have when markets were more buoyant last year. In some cases, they appear to have been slow to recognize their real estate loan losses.

But the most important factor may be that national governments are weak — in every way possible. 

This prompted FP head honcho David Rothkopf to tweet, "Current global economic leadership void likely to be seen by history as worst since that preceding Great Depression." 

To which I have to say... bulls**t. 

Bemoaning the lack of "global leadership" is the international relations equivalent of bemoaning the failure of a national leaders to possess the political will to Do The Right Thing or  make the Really Big Speech that will change everything.  Most of the time, "global leadership" doesn't change a thing. 

For an example, in a follow-up tweet, Rothkopf provides a useful list of what ails the current global economy: 

Euromess, rest of developed world spluttering, faltering EMs, bldg risk in global financial system, currency, trade issues

An excellent list -- and yet it's not at all clear whether global leadership would solve any of these problems.  The Euromess a Europroblem.  Weakening growth in the developed and developing world is a problem, but largely a function of domestic policies rather than global ones.  The "currency war" meme has largely played out -- don't tell anyone, but the RMB is appreciating quite nicely right now.  As for trade, Doha might be dead, but trade growth is still outstripping output growth.  Protectionist actions have not matched protectionist sentiment -- indeed, the past few years might be definitive falsification of the "bicycle theory" of trade. 

In fact, in some instances, global leadership might have exacerbated these problems.  For example, one of the areas where there has been leadership is in the creation of the new Basel III core banking standards.  And, hey, guess what's contributing to a drying up of cross-border credit?

Lending to banks in the eurozone fell $364bn or 5.9pc, with drastic reductions of 9.8pc in Italy and 8.7pc in Spain.

The BIS's quarterly report said the decline in lending was "largely driven by banks headquatered in the euro area facing pressures to reduce their leverage".

Banks must raise their core tier one capital ratios to 9pc by the end of this month or face the risk of partial nationalisation. The global Basel III rules are also pressuring banks to retrench.

So what, exactly, is "global leadership" supposed to do at this point?  As I read it, those who complain about poor leadership want one of two things.  First, they would like national leaders to excercise their "political will," defy domestic constraints, and push for greater economic growth.  Fine, but remember -- asking politicians to exercise political will means asking them not to behave like politicians.  As a rule, politicians don't do this. 

Second, I think there is a desire for one leader to knock some global skulls together and get Germany to start consuming more and the ECB to print more money and China to stop saving and any other action that would jumpstart the global economy.  Again, fine, but in the history of the global economy there has only been one instance in which one country had sufficient economic power to exercise this kind of leadership -- the United States of the late 1940s.  Truman's leadership was important -- but the U.S. being responsible for close to half of the world's economic output was even more important.  Even if Barack Obama had an iron grip over all of America's policy levers, he couldn't do what Truman did with the Marshall Plan and the Dodge Line.  Leadership without power is simply someone ranting on a street corner. 

Look, I don't like defending Angela Merkel or Barack Obama or the Standing Committee of the CCP Politburo.  I do agree with my fellow wonks that they've made some mistakes.  All I'm saying is that the notion that some kind of global policy coordination will lift the global economy out of its doldrums is a chimera.  The biggest problems with the global economy are almost exclusively domestic in origin at this point.  The big global steps, such as boosting IMF reserves, have already been taken.  Greater trade liberalization might help a little, but it's not a panacea.  Greater capital account liberalization might make things worse.  Stronger global regulation  might be the prudent long-term policy but it's causing havoc right now.  Convincing Germany that a higher inflation rate might be a good idea would be wonderful, but anyone who suceeds at that would be pushing  against 90 years of economic history.   

So please, I beg my fellow wonks -- when you ask for more "global leadership," be specific -- what exactly do you want to see happen?  Cause I don't think there's much at the global level that would really help right now. 

Am I missing anything? 

Daniel W. Drezner

The Top Ten signs that you are conferenced out

Very attentive readers -- hi, Mom!! -- are likely aware that your humble blogger has been doing a hell of a lot of conferencing recently. Now, each of these conferences, on their own, has been invaluable . They are a way to gain exposure to new people, ideas and perspectives, get feedback on one's own ideas and perspectives, and pick up useful bits of information.

Combined, however, these conferences have taken their toll. As a public service message and a cautionary warning to other aspiring wonks, I'd like to offer the following top ten list:

TOP TEN SIGNS YOU ARE CONFERENCED OUT

10) The very first thing you do when you enter a conference venue is to scope out the seat that a) is closest to an electrical outlet; b) has a decent view of the podium; and c) is closest to the exit for discrete bathroom breaks. You will switch placards in order to get that seat.

9) The second thing you do when you enter a conferene venue is ask someone about the available wifi.

8) You find yourself bringing your own laminated name tag, placard, and extra-large coffee mug wherever you go.

7) You have filled out your reimbursement forms before the first coffee break.

6) It takes forever to get into your hotel room because you have at least five different key cards in your pocket.

5) You cannot go 24 hours without getting into an extended conversation with a colleague about your grand strategy for deploying frequent flier miles. BONUS SIGN: you secretly think the George Clooney character from Up In The Air was kind of a wuss.

4) The phrase "capacity building" triggers an instant desire to take a baseball bat to whomever just uttered the phrase.

3) You develop the capacity to lightly doze through a presentation but still ask a pertinent question during the Q&A. Then you black out.

2) At the bar after a long dar of conferencing, it only takes one drink for a colleague to say, "you know, you're allowed to bring more than one suit to these shindigs."

1) The hotel staff has to break down your door at 3 AM because you were shouting the word "modalities" during your fitful, jet-lagged sleep.

If you find yourself nodding along to at least seven of the following ten signs, please consult your doctor/department head as soon as possible.

Readers are strongly encouraged to proffer their own warning signs/symptoms in the comments.