The early news from the G20 in Europe is a supposed standoff between Obama and the continental conservatives, Angela Merkel of Germany and Nicolas Sarkozy of France.
I have trouble finding a political home in the American political spectrum, but connect well with European conservatives. European conservatives support national health insurance, oppose the death penalty, and support basic social welfare programs. They tend to be pro-life, but without the vitriol or accusations of murder that Americans often engage in. They appear principled rather than fanatical.
European conservatives avoid the free market extremism of some American conservatives, as well as the religious fundamentalism that has defined conservatism in the US. To a West European conservative the kind of rhetoric that Sean Hannity engages in (‘the US is the greatest country God has ever given man’) would sound fascistic and bizarre. In other words, European conservatives generally avoid the things I dislike about American conservatism.
On the positive side, they avoid the kind of ideological anti-market thinking of some on the left, and they recognize the importance of community and tradition. Where American conservatives are often hyper-individualist, European conservatives still have their roots in the notion of the importance of society. That makes them less ideological, and more pragmatic.
Merkel and Sarkozy disagree with Obama’s call for increased deficit spending in Europe to stimulate the economy. A physicist by training, Merkel finds it irrational to think the cure for a debt induced bubble is more debt. Along with Sarkozy she is calling for a new regulatory regime to make sure that global finance is held accountable to rule of law. Globalization, they believe, created a situation outside the scope of the regulatory regimes of the states. States had developed sound policies for domestic regulation, but once capital was freed from having to stay within national borders, it found loopholes and opportunities to exploit.
This isn’t a new argument. The famous political scientist Susan Strange, writing back in 1999 before her death, talked about the demise of the Westphalian state system in an article “The Westfailure system.” Of the three crises she saw threatening the system, the most dangerous was the possibility of a global credit crisis due to how ineffective international regulations had become in an era of globalization. With the US gripped by an ideological free market mindset, people didn’t see the need to develop a transnational regulatory scheme, thus allowing predatory practices to grow.
Germany and France are also signalling the US that just as they did not automatically support the 2003 Iraq war, which they saw as foolhardy and dangerous, they won’t buy in to a massive stimulus which they fear will cause inflation and/or stagflation. They are worried that this spending will cause a collapse in value of the dollar, and potentially make world recovery more difficult.
These arguments are compelling. I still think the stimulus is probably worth the gamble, but it will be meaningless without an overhaul of global regulation on finance capital. The belief that the market can self-regulate has been proven false; those on the inside are privvy to information and abilities to act that allow them to manipulate markets for excessive profit. That has to be stopped, and can only be stopped with a coordinated international regulatory regime. This needs to be as profound a change as the Bretton Woods system provided after World War II.
And, though I’ve accepted Obama’s argument that a stimulus is needed and worth the risk, pressure has to be put on the US not to simply try to get out of this on the cheap, expecting the rest of the world to absorb the cost of our higher debt by maintaining an inflated value for the dollar. This means renewed pressure for the US to cut its budget where possible (especially in areas that do not support the creation of jobs, infrastructure, and economic growth) and recognize that without fiscal discipline, economic recovery could be very short lived.
Sarkozy especially has made it clear he blames the “Anglos” — the British and Americans — for this mess. Their penchant for debt, deregulation and speculation pushed the world into the abyss; many of Europe’s problems are contagion from the US. Obama should acknowledge as much, and make clear that we understand that our laissez faire approach to global capital and our penchant for debt (without savings) were causal factors in creating this crisis. In so doing, we have to avoid the same kind of borrow and spend policies Reagan used to get us out of the last recession — this time, we’re in too deep, such policies won’t work.
Moreover, Merkel and Sarkozy can set the tone for a strong European voice in world politics, filling a gap that the US is leaving as US power and moral authority remains discredited due to both Iraq and the global economic crisis. Unlike the Bush Administration, which bristled at the threat (Rumsfeld ridiculing France and Germany as “old Europe”), Obama has to recognize that this isn’t the late 20th century, and the US isn’t the ‘unipolar power.’ We need partnerships, and we need to listen.
Merkel and Sarkozy’s conservatism is a good balance to Obama’s aggressive interventionism. I find myself in the middle, glad that the continental Europeans are working to make sure that the US approach is not uncritically accepted. The US must think hard about the consequences of increased debt, and accept the need for a new regulatory regime for global capital.
Many people ridicule meetings like that of G20 as just for show and unproductive — more to allow leaders to get to know each other than to really achieve results. This time, however, this meeting could be very important as the start towards figuring out a way to deal with the worst global economic crisis in over 70 years.