Off to Paris and about to Read “A New Era”

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francis fukuyama twn.jpgI’m currently sitting in the United Airlines lounge at Washington Dulles Airport — about to fly to Paris. I will be meeting some TWN readers over there.
Coincidentally, Francis Fukuyama is sitting here too — going to the same conference I am. . .and to punctuate that I plan to read his latest blog post, “A New Era,” which I have not read yet.
Here is an interesting section that caught my eye first:

There are three core Reaganite ideas that need to be reformulated or discarded altogether if the United States is to navigate the current crisis and restore its credibility in the new era.
The first has to do with deregulation and the role of the government in the economy more broadly. The Wall Street collapse and the big recession we are heading into occurred for reasons intrinsic to the Reagan model, that is, because the government had permitted the emergence of an enormous, wholly unregulated shadow finance sector under the belief that this sector would be self-correcting.
Financial market liberalization had proven highly dangerous in any number of earlier cases, most notably the Asian economic crisis of 1997-98 and the Swedish banking collapse of the early 1990s, but these warning signs were not heeded and no one imagined that this could happen to the United States itself. In this the Democrats were fully complicit, not just in their support for loan expansion by Fannie Mae and Freddie Mac, but in Clinton Treasury Secretaries who pushed financial market liberalization on the developing world.
The current crisis of course has many other causes, such as the more than $5 trillion of excess savings pouring into the country from China and other Asian countries after 2002, but the idea that history was on the side of ever-expanding deregulation was ultimately an important cause of the collapse.
The Reagan-era joke, “Hi, I’m from the government and I want to help” doesn’t sound so ironic in light of the Fed and Treasury’s heroic efforts to keep the economy from walking further off a cliff.

More soon.
— Steve Clemons

Comments

12 comments on “Off to Paris and about to Read “A New Era”

  1. readerOfTeaLeaves says:

    “No one” imagined that things could melt down in a financial
    world of international transactions, vast currency markets, and
    ‘teaser’ loans subject to nearly zero oversight?
    Where the US didn’t (and still doesn’t) pay nearly enough for FBI
    or law enforcement to protect a housing ‘market’ where some
    days it sure feels that about 1/5th of the new McMansions in my
    West Coast neighborhood were found by buyers via the Internet,
    several of them purchased as ‘investments’ by buyers who
    neither reside in the US, nor are US citizens?
    Please.
    SOME of us did see this coming.
    It’s simply that we don’t have clout in D.C., and even our local
    government didn’t want to hear out worried questions and
    conversations five years ago.
    Anyone with 20/300 vision could have seen this one coming
    blindfolded.
    But people preferred to live in self-delusion, because so many
    (including friends of mine) were making what would ordinarily
    be called ‘a killing’ off mortgages, home sales, and fee-based
    ‘transactions’.
    Those of us arguing for a more sustainable financial system
    were treated as if we were some kind of wacko whiners, rather
    than the cold-eyed, deeply worried, pragmatic people we
    actually are.
    Please rethink your ‘nobody saw this coming’ because that is
    NOT true.
    What is true is that a whole lot of people refused — like
    petulant, spoiled children — to acknowledge the obvious
    because they preferred their very large paychecks and the perks
    that went along with them.

    Reply

  2. arthurdecco says:

    “A New Era may be possible if the I(sraeli) lobby is cracked or at the very least required to register as agents of influence for Israel and are required to open their records.
    When the same attention is given to the Aipac Rosen Weissman Espionage investigation and 5 time delayed trial as the corruption in Illinois by Governor Blago today by the MSM then we may witness some real changes in this country.
    No one in the MSM or hell the so called “progressive blogosphere” will touch this investigation and delayed trial. Once I heard Chris Matthews whisper that the trial had been delayed again.” posted by K Galt
    What are you talking about, K Galt? There’s no inordinate Jewish influence in America! To think so is to condemn yourself as an anti-Semite! NOT!

    Reply

  3. K Galt says:

    John H “A New Era” may be possible if the I lobby is cracked or at the very least required to register as agents of influence for Israel and are required to open their records.
    When the same attention is given to the Aipac Rosen Weissman Espionage investigation and 5 time delayed trial as the corruption in Illinois by Governor Blago today by the MSM then we may witness some real changes in this country
    No one in the MSM or hell the so called “progressive blogosphere” will touch this investigation and delayed trial. Once I heard Chris Matthews whisper that the trial had been delayed again.

    Reply

  4. JohnH says:

    “Adelson opposed both Olmert and the peace conference, which was held in Annapolis in late November. The Zionist Organization of America, to which Adelson is a major contributor, ran a full-page ad in the Times, headlined, “SECRETARY RICE: DON’T PROMOTE A STATE FOR PALESTINIANS WHILE THEIR 10 COMMANDMENTS PROMOTE TERRORISM AND ISRAEL’S DESTRUCTION.”
    “Bush put one arm around his shoulder and another around that of his wife, Miriam, who was born in Israel, and said to her, “You tell your Prime Minister that I need to know what’s right for your people—because at the end of the day it’s going to be my policy, not Condi’s. But I can’t be more Catholic than the Pope.” (The White House denies this account.)”
    Adelson, Israel and the L[ik]udites: “However much influence Adelson’s wealth has brought him in this country in the last few years, it is modest compared with his sway in Israel.”
    http://www.newyorker.com/reporting/2008/06/30/080630fa_fact_bruck?currentPage=all

    Reply

  5. JohnH says:

    Bad economy claims one of AIPAC’s deepest pockets:
    http://rawstory.com/news/2008/With_casino_suffering_group_backing_War_1209.html
    If the economy whacks a few more “generous supporters,” the Obama administration might have a rare window of opportunity to resolve some conflicts in the Middle East.
    [I’d post the link to a New Yorker article about Adelson’s involvement with the White House on behalf of Israel, but this site’s software won’t let me plug in multiple links.]

    Reply

  6. Susan Mitchell says:

    I’ve just started reading this blog, but I gotta tell ya, it is going to be difficult for me to tune in on a regular basis when I see this quote
    “I’m currently sitting in the United Airlines lounge at Washington Dulles Airport — about to fly to Paris. I will be meeting some TWN readers over there,”
    positioned right next to a box requesting support donations. Honestly…

    Reply

  7. K Galt (kathleen) says:

    “deregulation” gone wild. Can’t understand why Senator Dodd asked one of the Auto Ceo’s to step down? And why the Ceo’s of the auto industry are being asked to give up their private plans and “restructure” the auto industry and the same demands were not made by our Reps of the CEO’s on Wall Street involved with asking for the 700 billion.
    I want all corporate welfare kings to be treated equally when they are stealing from the American taxpayers.
    Why is is if you are poor, black, a woman and in need of help you are referred to as a “welfare queen”.
    But when you are white, male, and rich and you ask for help it is referred to as a “bailout, rescue, investment, recovery, restructuring” plan?
    What do folks think about Ralph Nader for Auto Czar?
    Ralph Nader and Medea Benjaman were visiting with Amy Goodman last Friday discussing the bailouts and Obama’s cabinet.
    Bailout
    http://www.democracynow.org/2008/12/5/ceos_of_big_three_automakers_return
    Cabinet Picks
    http://www.democracynow.org/2008/12/5/ralph_nader_and_medea_benjamin_on

    Reply

  8. Kathleen says:

    Ask Frances why he helped raise money for Libby? Ask him why he chose to be on the board of fund raisers for the Libby Trial Fund? Why obstruct Justice by supporting those who outed Plame?
    Pathetic and creepy

    Reply

  9. JohnH says:

    Great stuff (Fukuyam, post and comments)! Heresy is becoming mainstream.
    I hope Fukuyama does a sequel on the Clinton era’s contribution. In particular, the role of the Clinton/Rubin/Gramm policies which put in place much of the reckless financial deregulation that triggered the economic meltdown. Their regime also instituted the reign of a long overvalued dollar, which played a part in hollowing out the American economic base and exacerbating massive financial and trade imbalances.
    From the policy makers’ viewpoint, however, the strong dollar must have been nice while it lasted, since it could have enabled Washington to make friends and influence people on the cheap. Unfortunately, Bush simply couldn’t understand the value of buying people out instead of killing them. (Iraq’s GDP in 2003 was only $67 Billion, which meant that the whole place could theoretically have been bought for less than $100 Billion, saving us a few $Trillion and lots of human lives.)

    Reply

  10. Josh Meah says:

    It’s easy to argue that an almost “free-market fundamentalism” is what derailed the American economy, but that is only a partial, and more importantly, incomplete perspective.
    American economic success was always linked to favorable trade policies and what-not and a bubble here and there, but it also had to do with an advantage in education and broad-based technical training that once equipped America with the best high-skilled labor in the world. WHERE IS THE HUMAN CAPITAL INVESTMENT??!!
    Moreover, at some point, we stopped questioning our incentive structures. Mr. Fukuyama is correct in lauding our lack of a carbon-tax to incentivize a more efficient, competitive, and non-oil based economy. But the freedom of our economic system as a whole and the lack of government regulation is more tenable of a position when American culture isn’t full of a deep-seated anti-intellectualism.
    It is not necessarily a bad thing to be smart, skilled, educated, and interested in issues, a fact only now partially recalled with the election of a once Constitutional law professor Barack Obama.
    I’m as angry as anyone else at the mismanagement of our financial system, but the deeper crisis is a human one. China, India, Brazil, and other rising economic powers grow successfully, because they provide competitive goods in areas in which the market is disrupted or simply not providing a product. As billions more around the world come closer to achieving the level of education of the average American, demographics, in terms of pure numbers will determine where the economic center-of-gravity travels (although resource wealth, geopolitics, and ecological viability will continue to have immense impact).
    A new “social contract” with America is important and perhaps necessary, but so is an honest dialogue with the American people that explains clearly and perhaps bluntly that we need to stop being satisfied with being stupid or barely satisfactory.
    And here is where the real crisis is: a collapse of our political-economy long preceded a collapse of our real economy. As public discourse led by our leaders must fit within the confines of a pleased constituency, no one is capable of saying to the American people that we need to grow up.
    This means accepting that the future is not a guarantee, it is a potential outcome of our available options. What we have before us is as much a democratic crisis and collective action problem as it is a financial crisis. Like the Romans before us, the idea of America can fail physically even if it lives on in history books existentially. The sole real, sustainable, and morally right answer to our economic crisis lay within a formula that leads Americans to again be stakeholders with heartfelt corresponding obligations to pursue America’s future prosperity.

    Reply

  11. daCascadian says:

    Any policy that fights the movement of power (shared) away from the current nation-state (a relic of the past) towards other levels of organization (global, regional, watershed, local, bioregional etc) is doomed to failure & will been a road block to success.
    Time to leave the 19th Century behind.
    “…it’s the end of the world as we know it and I feel fine…” – REM

    Reply

  12. Dan Kervick says:

    The part of Fukuyama’s post that jumps out at me, and of which I heartily approve, is this:
    “In addition, modern American conservatism is built around a prickly defense of sovereignty and distrust of international institutions. Only a country that thinks it is hegemonic can try to get away with this. But that hegemony was always an illusion—witness our inability to pacify Afghanistan without help from allies—and in non-security spheres was nonsense from the start. We have created a globalized world that produces a huge demand for global public goods like macroeconomic coordination, security, dealing with failed states, health and safety standards, disease control, carbon abatement, and the like. But far from investing in institutions to manage these problems, the United States has been busy eroding existing international structures for its own short-term foreign policy goals, from the undermining of the ABM treaty to the nuclear deal with India to foot-dragging on global warming.”
    Yea, and Amen!
    Yet addressing the need for global public goods and organs of global governance is going to be the biggest challenge of all, because so many in the US on the right, AND the left in recent years, have been trained in intensely nationalistic systems for cognitively organizing their thinking about global aims. Even some on the left appear not to want the US to submit to systems of practical global governance that are good for all, because they are secular liberal evangelists and romantics, and their fondest desire is to see the United Sates as a hero on horseback riding to save the world.

    Reply

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