Alan Beattie’s new booklet “Who’s in Charge Here” (Amazon) is an amusing, accurate, accessible account of the current mess in global financial and trade “governance.” Well worth the $3 price. But he draws a “lesson” from his little history of the crises of 2008-2011 that I find un-satisfying.
Who’s in Charge Here is a valuable retelling — if, like me, you find some details are starting already to blur — of a tale that, had this not been journalism, might have been Evelyn Waugh fiction.
Beattie’s solid skills as an analyst and as the FT’s international economics editor equip him to craft a coherent account of a series of often inept policy lurches and frequently overblown — sometimes directly misleading — rhetoric from both western and “emerging” governments in response to the economic management challenges of the past four years.
Along the way, he gives us an excellent, pithy history of global economic governance since the mid-20th century. I’ve set the third Chapter (“How many divisions has the Pope got?”) on the impotence of the former Bretton Woods institutions for my Masters’ students in Trade Policy.
But I found his final chapter less compelling. What is to be done begins with an hilarious mock press-release that Beattie drafted in 2008, possibly while he waited for yet another dribble of information from exhausted, anxious and dispirited negotiators behind the dark oak doors of the WTO’s General Council room in Geneva.
An ineffectual international organization yesterday issued a stark warning about a situation it has absolutely no power to change, the latest in a series of self-serving interventions by toothless intergovernmental bodies…
Beattie correctly blames Member governments for the hapless, inconclusive, mealy-mouthed efforts of organisations such as WTO to open global markets to greater competition or to ensure necessary market regulation is effective, fair and transparent. They have not been willing to step-up when the time came to put their own market regulations to the test, or to accept the burdens of collaboration in the interests of a good global outcome were at stake.
But Beattie does not, at least in this book, attempt to explain why governments appear to have shirked their collective responsibility. Although that, surely, is the nub of the matter. His analysis at this point is brief and, I think, a bit under-cooked:
The primary lesson of the global financial crisis since 2008 is not that the political structures are wrong or the global monetary or trading systems need fundamental change. It is that through political weakness and misguided economic analysis, countries both individually and collectively are making the wrong decisions and are lacking in political will.
“Individually and collectively… wrong decisions?” I’m always glad when an analyst is forthright. But I think AB needs to mount a stronger case than he does in this book to win that case. In what sense was the USA “wrong” to pass-up the over-complicated final deal in the Doha round (see Paul Blustein’s skeptical but accurate account in The Misadventures of the Most Favored Nations (Amazon); especially the chapter entitled “Losing it”) when China declined to pull its weight and India simply walked away? China never gave the Doha objectives much support. But Beijing would not have been “wrong” to assess that its current level of market openness was already about average (even good) for a developing economy. Nor would I like to argue that Chinese leaders were “wrong” to judge that opening their food markets in line with Doha ambitions would, for now at least, be a step too far given a widening spread in rural-urban incomes.
Or, to step out of the international trade arena; why was it “wrong” of China to reject allegations of “currency manipulation” and to choose it’s own schedule for hardening of the Renminbi exchange rate? And in what sense were China, India, the USA, Canada and a host of others “wrong” to decline the half-baked ambitions of the UN at the Copenhagen Climate Conference in 2009?
As for Beattie’s claim that the present doldrums in global “governance” are due to a lack of “political will”… I don’t know what that means. “Gutless”? Or merely, “Not what I would do if in charge”? Isn’t it possible that indirection and lack of collective purpose reflects not some sort of moral failing on the part of governments — as AB implies — but some real dilemmas posed by presently misaligned (but real) economic incentives? Isn’t it possible that governments are not simply feckless or ill-advised but are making rational — always constrained — choices that don’t favour extending collaboration on “global governance”, but that avoid actual defection from the current norms of global institutions such as the WTO and IMF?
It seems to me that there might be more plausible, interesting explanations in that direction rather than in allegations about a deficit of “political will”. Furthermore, if such misalignments do suggest rationality on the part of Western and Emerging governments then I think I’d have to disagree, too, with the fist part of Beattie’s “primary lesson” (above). It may be a very good idea to revise the structures and scope of the “governance” organisations with a view to accommodating the misalignments before the habits of global collaboration deteriorate.
I, for one, would like to see AB have another go at answering these questions. Perhaps in a sequel?