Monday, April 06, 2015

Larry Summers on the failure of global American economic leasership

Larry Summers is right to be critical of America's recent economic diplomacy. But since there is no longer consensus in America on basic foreign policy objectives, why would we expect consensus on economic foreign policy? The right distrusts international institutions because of what they perceive as their anti Americanism, while the left oppose all development and trade agreements unless they are environmental ones that destroy wealth (and even these the US won't sign). This is interpreted by less developed countries as an attempt by us to keep them "barefoot and pregnant".

The US has never been a truly effective hegemon for two reasons: first, we are too large and diverse with a Federal governing system that was designed to move slowly and by consensus. Yet we have assigned this modest machine the job of managing in excruciating  bureaucratic detail a 10 million square km, 320 million, 16 trillion dollar domestic empire not to mention the largest network of global economic, social and military commitments known to man.

Second, rather than being a force for stability the US is actually the world's dominant source of Schumpetarian "creative destruction" and therfore instability, from fracking to Walmart to derivatives, gay rights, the internet and religious liberty the US is constantly emitting massive bursts of social, political and economic gamma rays that roil other nations like mutating radiation from a giant, unpredictable star.

In our defence, America's period of dominance has yielded the greatest burst of human progress in world history by at least two full orders of magnitude (100 fold) - never have so many of so many different races and creeds lived so well with so much hope. And in some respects the global confusion we are experiencing is a result of success - things are just too complicated and happening too fast for us to cope. But it would behoove Americans to step back and prioritize roles for our national government. Perhaps we have made a mistake by nationalizing everything from Healthcare to pizza parlor access decisions. Perhaps the 320 million Americans in the richest communities in the world have the capacity to govern more of their domestic affairs locally as we assume other smaller polities do.  Perhaps if we lived up to our constitutional commitment to Federalism we would carry fewer hatreds and and more consensus into our relations with the rest of the world.

Because isn't keeping the most benign and meaningful renaissance in world history going more important than food labeling, common core or insurance exchanges?

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