Globalization and the Election Posted by James Lamond

Pick up any book on the international system written somewhat recently and you are guaranteed to see one overriding paradigm: globalization.  This concept has been researched, questioned, and analyzed by practitioners and academics from all realms- some argue its problems others its benefits and still some questioning if it even is a new shift in the world order.  Well this week we saw a pretty extreme and concrete example of the actual effects of globalization and what this means for our policy makers- and our election.

In recent weeks we have seen just how interconnected the global markets truly are.  The Washington Post reports that,

Policy makers in Europe “discover[ed] that its financial system is so interwoven with that of the United States and the rest of the world -- and so vulnerable to shaky assets -- that the virus in New York swiftly spread through the European banking network. In so doing, it revealed that Europe's leaders face challenges just as difficult as those bedeviling Washington and exposed the limits of the European Union's much-heralded economic integration.”

The effects were not only felt in Europe,

“Fear from Wall Street flooded Asia today, where markets were sharply lower in early trading. Japan's benchmark Nikkei average plunged more than 10 percent in the morning session, while Australian markets slid more than 7 percent and South Korean stocks fell as much as 8 percent.”

This “domino effect”  brought a collapse from Wall Street to financial capitals in Asia and Europe, and demonstrated that a financial crisis in one country will be felt around the world.  When countries initially tried to address the credit crunch individually last week, it resulted in the biggest stock sell-off since 1933.

Then, over the weekend, we saw a number of high level international meetings working to address the crisis.  In Washington, finance ministers met at the IMF, the World Bank, and a special meeting of G7 ministers at the White House.  European Union leaders also met in Paris coming up with a coordinated rescue plan to guarantee inter-bank lending, inject cash into the banking sector and take other measures to beat back the crisis caused by the global financial meltdown. From these meetings a clear signal was sent to investors worldwide- global leaders are working together to address the crisis.

As a result, yesterday and today we saw confidence restored to investors, with Wall Street having its best day in history.  While this is far from a cure all for the economic downturn, it has, for the time being, stabilized the markets. 

This is not to say that America- or any country for that matter- has lost their ability to handle their own affairs, or that they should relinquish economic and regulatory policies to supranational organizations. What it does mean is what Robert Zoellick said in a speech to the Peterson Institute for International Economics said,

"Just as the crisis has been international because of interconnectedness, the reforms will need to be multilateral”. . . The new approach "must build toward a sense of shared responsibility for the health of the global political economy."

As a result of the positive reaction to the international response, European Central Bank President Jean- Claude Trichet called for a continued global approach to solve the financial market crisis, saying,

"We are doing and will continue to do everything that is necessary to supply the requisite liquidity while preserving the solid anchoring of inflation expectations.  It is time for us all to take action -- the private sector as well as public authorities at the global level.''

Greater cooperation is needed for addressing more than the current economic crisis.  There are a number of economic, political, environmental and security problems that must be addressed at a global level.  This bird’s eye view of how crises should be addressed in a globalized world is antithetical to John McCain’s fairytale of a “League of Democracies.”

McCain has made this absurd idea a centerpiece of his foreign policy vision.  McCain describes the league as an “organization where the world's democracies could come together to discuss problems and solutions on the basis of shared principles and a common vision of the future.”  Or as  Andrew Bacevich called the idea "a new NATO without the clout or the cohesion of the old."  The only problem- beside the fact that most democracies are not seeking to join such an organization- is that it would exclude and even insult countries like Russia and China- countries necessary to address any serious global issue.   As Fareed Zakaria says,

“a League of Democracies, which would presumably play the role that the United Nations now does, except that all nondemocracies would be cast outside the pale. The approach lacks any strategic framework. What would be the gain from so alienating two great powers? How would the League of Democracies fight terrorism while excluding countries like Jordan, Morocco, Egypt and Singapore?”

There are also questions of such an organization’s legitimacy, as most of the missions would be in non-member countries.  The whole idea is simply just not practical or possible. 

After World War II there were a number of international organizations established to address the growing need for international cooperation.  In today’s world of interconnected banking, international terrorism, capital flight, loose nuclear weapons and international crime- it is more important than ever for countries to work together.  John McCain refuses to work with some of the most important partners and is simply not the leader that America and the world can afford.

Comments

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