Edited by Peter L. McGuire
Global Elections in the US
Published in El Espectador
(Colombia) on 3 November 2012
by Joseph E. Stiglitz (link to original)
(Colombia) on 3 November 2012
by Joseph E. Stiglitz (link to original)
Translated from
by Sara Hunter.
Edited by .
In economic terms, the effects of Romney’s policies, which would create a more unequal and divided society, would not be directly felt outside the United States. But in the past, for better or for worse, other countries have often followed the United State’s example. Many governments quickly adopted Ronald Reagan’s mantra about unregulated markets; they were policies that eventually resulted in the worst global recession since the 1930s. Other countries that followed American leadership have experienced growing inequalities: more money for the rich, less for the poor and the weakening of the middle class.
The contradictory policies proposed by Romney (with a premature intent to reduce the deficit while the American economy is still fragile) almost certainly would hurt the already slow economic growth in the United States. If the crisis in Europe worsens, it could produce another recession. At that point, with a reduction in American demand, the rest of the world would feel fairly direct consequences resulting from the Romney policies.
That brings up the question of globalization, which includes a concerted effort in many areas by the international community. But there is no progress on what is needed for commerce, finance, climate change and a variety of other areas. There are many who partially attribute these failures to a lack of American leadership. But, while Romney could bluster and show strong rhetoric, it is unlikely that other world leaders would follow, because they think that (and I think they are correct) he would be driving the United States (and them) in the wrong direction.
“American Exceptionalism” sells well at home but poorly abroad. George W. Bush’s Iraq War (possibly a violation of international law) demonstrated that, even though U.S. military spending equals that of almost all of the rest of the world combined, the United States has failed to pacify a country that has less than 10 percent of the U.S. population and 1 percent of its GDP.
Moreover, it turned out that American-style capitalism was neither efficient nor stable. When the income of the majority of Americans stagnated for a decade and a half, it was clear that the American economic model was not delivering to the majority of the citizens as shown by official GDP data. In fact, the model failed even before Bush left office. Together with the human rights violations under his administration, the Great Recession – the predictable (and predicted) result of his economic policies – weakened American soft power as much as the wars in Iraq and Afghanistan weakened American military power.
In terms of values, those of Romney and his running mate Paul Ryan do not paint a better picture. For example, all other advanced countries recognize the right to affordable healthcare and the Affordable Health Care Act proposed by Obama represented a significant step in the right direction. But Romney has criticized this effort and has not offered an alternative.
Among the world’s most advanced countries, the United States is distinguished by its inequality of opportunity for its citizens. The dramatic budget cuts proposed by Romney, targeting the poor and the middle class, would limit social mobility still more. At the same time, they would broaden the military, giving more money for weapons that do not work against enemies that do not exist, enriching military contractors like Halliburton at the cost of the much needed investment in infrastructure and education.
While Bush is not running, Romney has not truly distanced himself from the policies of his presidency. On the contrary, his campaign has included the same advisors, the same devotion to high military spending, the same belief that tax cuts for the rich are the solution to all economic problems and the same fuzzy budget mathematics.
Consider, for example, the three central questions on the global agenda that were mentioned before: climate change, financial regulation and trade. Romney has remained silent on the first, and much of his party is composed of “climate change deniers.” The world cannot hope for genuine leadership from Romney in this area.
With respect to financial regulation, even though the recent crisis has shown the necessity for stricter rules, it has been difficult to reach agreements over many items, especially because the Obama administration is too close to the financial sector. If Romney were to win, there is no doubt that he would not really distance himself from the financial sector: speaking metaphorically, he is the financial sector.
One financial problem on which is there is global agreement is the need to close tax havens that exist mainly to elude and evade taxes, launder money and facilitate corruption. Money does not travel to the Cayman Islands because the sun makes it grow faster; this money thrives in the shadows. But without remorse on the part of Romney for his own use of the banks in the Cayman Islands, there is little probability that we would see progress in this area.
On trade, Romney promises to launch a trade war with China and to declare the country a currency manipulator on his first day in office, a promise that leaves little wiggle room. He refuses to note the significant appreciation of the yuan in real terms in the recent years or to accept that, while variations in China’s exchange rate can affect the bilateral trade deficit, the multilateral commercial deficit is more important. A stronger yuan would simply mean that the U.S. would trade China for other new producers of textiles, clothing and other goods at lower costs.
The irony – that Romney fails to notice – is that other countries accuse the U.S. of currency manipulation. After all, one of the main benefits of the policy of “quantitative easing” used by the Federal Reserve (perhaps the only channel with a significant effect on the real economy) is the depreciation of the U.S. dollar.
There is much at stake for the world in the election. Unfortunately, the majority of those affected, nearly the entire world, cannot influence the results.
The contradictory policies proposed by Romney (with a premature intent to reduce the deficit while the American economy is still fragile) almost certainly would hurt the already slow economic growth in the United States. If the crisis in Europe worsens, it could produce another recession. At that point, with a reduction in American demand, the rest of the world would feel fairly direct consequences resulting from the Romney policies.
That brings up the question of globalization, which includes a concerted effort in many areas by the international community. But there is no progress on what is needed for commerce, finance, climate change and a variety of other areas. There are many who partially attribute these failures to a lack of American leadership. But, while Romney could bluster and show strong rhetoric, it is unlikely that other world leaders would follow, because they think that (and I think they are correct) he would be driving the United States (and them) in the wrong direction.
“American Exceptionalism” sells well at home but poorly abroad. George W. Bush’s Iraq War (possibly a violation of international law) demonstrated that, even though U.S. military spending equals that of almost all of the rest of the world combined, the United States has failed to pacify a country that has less than 10 percent of the U.S. population and 1 percent of its GDP.
Moreover, it turned out that American-style capitalism was neither efficient nor stable. When the income of the majority of Americans stagnated for a decade and a half, it was clear that the American economic model was not delivering to the majority of the citizens as shown by official GDP data. In fact, the model failed even before Bush left office. Together with the human rights violations under his administration, the Great Recession – the predictable (and predicted) result of his economic policies – weakened American soft power as much as the wars in Iraq and Afghanistan weakened American military power.
In terms of values, those of Romney and his running mate Paul Ryan do not paint a better picture. For example, all other advanced countries recognize the right to affordable healthcare and the Affordable Health Care Act proposed by Obama represented a significant step in the right direction. But Romney has criticized this effort and has not offered an alternative.
Among the world’s most advanced countries, the United States is distinguished by its inequality of opportunity for its citizens. The dramatic budget cuts proposed by Romney, targeting the poor and the middle class, would limit social mobility still more. At the same time, they would broaden the military, giving more money for weapons that do not work against enemies that do not exist, enriching military contractors like Halliburton at the cost of the much needed investment in infrastructure and education.
While Bush is not running, Romney has not truly distanced himself from the policies of his presidency. On the contrary, his campaign has included the same advisors, the same devotion to high military spending, the same belief that tax cuts for the rich are the solution to all economic problems and the same fuzzy budget mathematics.
Consider, for example, the three central questions on the global agenda that were mentioned before: climate change, financial regulation and trade. Romney has remained silent on the first, and much of his party is composed of “climate change deniers.” The world cannot hope for genuine leadership from Romney in this area.
With respect to financial regulation, even though the recent crisis has shown the necessity for stricter rules, it has been difficult to reach agreements over many items, especially because the Obama administration is too close to the financial sector. If Romney were to win, there is no doubt that he would not really distance himself from the financial sector: speaking metaphorically, he is the financial sector.
One financial problem on which is there is global agreement is the need to close tax havens that exist mainly to elude and evade taxes, launder money and facilitate corruption. Money does not travel to the Cayman Islands because the sun makes it grow faster; this money thrives in the shadows. But without remorse on the part of Romney for his own use of the banks in the Cayman Islands, there is little probability that we would see progress in this area.
On trade, Romney promises to launch a trade war with China and to declare the country a currency manipulator on his first day in office, a promise that leaves little wiggle room. He refuses to note the significant appreciation of the yuan in real terms in the recent years or to accept that, while variations in China’s exchange rate can affect the bilateral trade deficit, the multilateral commercial deficit is more important. A stronger yuan would simply mean that the U.S. would trade China for other new producers of textiles, clothing and other goods at lower costs.
The irony – that Romney fails to notice – is that other countries accuse the U.S. of currency manipulation. After all, one of the main benefits of the policy of “quantitative easing” used by the Federal Reserve (perhaps the only channel with a significant effect on the real economy) is the depreciation of the U.S. dollar.
There is much at stake for the world in the election. Unfortunately, the majority of those affected, nearly the entire world, cannot influence the results.
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