Can You Manage A Global Economy One Nation At A Time?
I started this discussion yesterday with my observation that Obama ended his weekly address with the point that "in this nation we rise and fall as one nation, one people." But that doesn't ring true to me. I think we are well past that point. I think we are so intertwined with the rest of the world, that we rise and fall as one world, one people. This picture I posted a month or so ago on this blog tells the story. It's a chart of the dow, ftse, hang seng, and nikkei in sept and oct.
Tom Friedman makes the same point today in his opinion piece in the Times:
a world economy that is so much more intertwined than people realized, which is exemplified by British police departments that are financially strapped today because they put their savings in online Icelandic banks — to get a little better yield — that have gone bust
And yet, our government is fighting the idea of cross border regulatory authority. Today's NY Times has a story about the G20 meeting that took place this weekend in DC. Here's a quote from that article:
There is also a more basic philosophical divide across the Atlantic: Europeans in general favor more state control over markets, even to the point of granting regulators cross-border authority, while the United States stresses the primacy of national regulators.
That's understandable. This country has a long history of not wanting anyone to tell us what to do or how to do it. But I wonder if this position is tenable when it comes to the global economy.
I do not believe we can regulate markets on a nation by nation basis. They are simply too intertwined these days. If we want to figure out how to stabilize the financial markets this time, I think it's going to take a global approach, global coordination, and yes, global regulation.