Conservativism Economics Financial Crisis Political Philosophy Politics The Opinionsphere

The Only Credible Response to Globalization

Niall Ferguson in The Telegraph:

Underlying this tremendous growth in financial markets was a fourfold liberalisation of international markets for goods, services, capital and labour. This was not, of course, peculiar to the English-speaking world: globalisation, as its name suggests, is ubiquitous. But its implications for those on the Anglophone Right were distinctive. Unremarked by conservatives in Britain, America and even Australia, these great shifts created a new and much greater trilemma.

Suppose that a government can have any two of the following things, but not all three: globalisation, in the sense of openness to international flows of goods, services, capital and labour; social stability; and a small state. Or, to put it differently, conservatives can pick any two from an open economy, a stable society and political power – but not all three.

Ferguson is extremely articulate (and credible) in his explanation of why conservatives have no “articulate” answers to globalization. He believes that conservatism will be able to once again thrive once it chooses to sacrifice social stability, which he links to social mobility. Although the two concepts certainly are related, it’s hard for me to accept the re-branding of one as the other – and it seems a bit too pat on Ferguson’s part. On the other hand, Ferguson describes the other side of the argument:

Only the Left appears to have a credible response [so far]: globalisation, plus social stability, plus a strong, interventionist state.

The set-up Ferguson proposes then would be:

The Left

In favor of:

  • Globalization
  • Social stability
  • Strong, interventionist state

Accepting as necessary evils:

  • Government interference
  • Less social mobility


In favor of:

  • Globalization
  • Social mobility
  • Small (but “smart”) state

Accepting as necessary evils:

  • Inequality
  • Booms and busts of the financial cycle
  • Social disorder

Ferguson avoids all the tough questions – such as what “smart” means – and how this would relate to regulation – and just presumes that governmental actions, inequality and social mobility are directly related – and that somehow, more inequality leads to more social mobility. I think perhaps Ferguson is attempting to create a scenario when he can plausibly oppose the man he describes as “the most Left-wing Democrat ever elected to be President of the United States.” This seems to me to be a rather implausible description of the pragmatist that Obama is. But this points to what is distorting Ferguson’s extremely interesting and insightful view of political ideologies and the current world trends. 

Let me propose an alternate party – one that it seems Barack Obama is already leading:


In favor of:

  • Globalization
  • A strong, interventionist state to aid in the creation of and to police the market
  • A state that balances the need for a social safety net and individual incentives
  • A balance between social stability and social mobility

Accepting as necessary evils:

  • Inequality (but not extreme inequality)
  • Government interference
  • A level of social disorder
  • The boom-and-bust financial cycle (but mitigated)

The idea is to maximize certain goods while balancing against the evils that are their side effects. Extreme inequality can decrease social mobility at least as much as government distortions. A social safety net of the right type can act both a great equalizer and as an incentive for individuals to pursue their entrepreneurial ambitions. 

My problem with Ferguson’s critique is that he seems to view the debate between the Left and conservatives as an either/or proposition – which it often is – but given the situation he describes, it’s more an argument of degree rather than kind. The Left that Ferguson is arguing against may favor social equality over social mobility but both sides agree that both goals are worthy. It’s a question of what the right balance is.

Economics Financial Crisis Politics The Opinionsphere

The Highlights From Davos

[digg-reddit-me]Now that the World Economic Forum 2009 meeting in Davos, Switzerland has concluded, let me present some highlights.

The number one highlight, of course, is the Turkish Prime Minister, Tayyip Erdogan, storming off the stage after not being allowed to finish addressing Israeli Prime Minister Shimon Peres on the issue of Gaza:

Keep in mind that the “spirit of Davos” is supposed to be international cooperation and civil discussion between the business and political elites and the journalists who so eagerly report on them- and that Turkey and Israel are allies rather than enemies. Dr. George Friedman of the Stratfor Institute saw this as the clearest demonstration yet of Turkey’s increasingly prominent role as the leader of the Muslim world – and certainly Erdogan is being lionized for standing up to the Western media and the Israeli prime minister.

But the immediate buzz in the hall wasn’t about the global significance of this fit, but about breakdown of the spirit of Davos. For journalists, Davos is a kind of ideal as William Lewis of London’s the Telegraph described it:

The beauty of Davos is that one can meet large numbers of the world’s most important/interesting/powerful/egotistical people in the space of four days. Interviews that would otherwise take months to arrange, and hours to travel to, take place in a small Swiss ski resort. It’s a journalist’s dream…

More significantly, Lewis noted that this year, for the first time in many years, Americans did not dominate. Barack Obama only sent his advisor Valerie Jarrett. The most prominent American present was Bill Clinton. More on him later. Instead, Davos was dominated by the Chinese premier and Russian prime minister, each of whom confronted America and blamed it for the crises in their countries in a different manner. Joe Conanson of Salon described the mood:

Accustomed to flattering themselves and each other as benevolent masters of the globalizing world, they now confront an unprecedented crisis – actually a conglomeration of crises – that has diminished their financial worth and moral credibility.

What roused the global elitists from their glum torpor was the opportunity to lay blame for the economic catastrophe that has befallen the world. There was one obvious target: the United States of America, whose stupid and criminal bankers have inflicted so much harm on the whole of humanity. It is an undeniable fact that the Russian and Chinese leaders explored with great relish at every opportunity.

The Chinese premier, Wen Jiabao, in a characteristic manner, did not directly name America as the cause of the financial crisis, but elliptically described it as “attributable to inappropriate macroeconomic policies of some economies and their unsustainable model of development characterized by prolonged low savings and high consumption; excessive expansion of financial institutions in blind pursuit of profit,” etcetera. It was clear to everyone who he was talking about. Wen’s speech was warmly received – but his private remarks to a meeting of Western business leaders demonstrated his real political skill – as he charmed the gathered free market capitalists by referencing such touchstones as the work of Adam Smith (which he had recently re-read.)

Then, there were Vladimir Putin’s remarks on the “perfect storm” that is the current financial crisis. The theory of the perfect storm – “the simultaneous occurrence of weather events which, taken individually, would be far less powerful than the storm resulting of their chance combination” – seems to be a rather apt metaphor for the confluence of events shaking the global system. Putin placed the blame directly on America though, in part no doubt due to his honest assessment, and in part to deflect responsibility. While he was giving this speech, violent protests calling on him to step down were being put down back in Russia as many blamed his financial mismanagement as he bet Russia’s economy on strong commodities prices.

Finally, there was former president Bill Clinton. Clinton addressed the assembled world political and economic leaders:

This is not a time for denial or delay. Do something. Give people confidence by showing confidence. Don’t give up. Don’t bet against yourself. Don’t bet against your country. This is still a good time to be alive.

Described as “the lone American to whom anyone at Davos might actually listen as he attempted to uphold the name of his country,” Clinton not only tried to rally the world leaders from their sour mood, but also responded more specifically to Putin in response to a question:

Later, Clinton met with Putin privately for an hour and a half, seemingly with the consent of the State Department and White House.

The overall lesson of this year’s Davos seems to be a reinforcement of the consensus view of the foreign policy establishment: We are now living in a nonpolar world in which, though America retains great power and is the most powerful single force, it will not hold the same leverage that it once did. We can no longer act as the world’s only superpower – but instead can take our place as the first among equals.