missing hegemon at the CFR
I was at one of those Council on Foreign Relations public events this
morning - Larry Summers and Paul Volcker on a successor to the
Bretton Woods system, moderated by James Grant. Coupla things:
1) Summers pronounced himself a “chastened prophet” for saying that
the U.S. current account deficit was unsustainable since it has gone
on for so long. Volcker agreed. Summers added that it’s interesting
that there were more people worried about the U.S. stock market when
the Nasdaq was at 2500 than there were at 3500, and quoted his “good
friend” Rudi Dornbusch as saying things always go on longer than you
expect, and then when they go bad, it all happens much more quickly
than you’d expect.
2) From the questions, the CFR audience was seriously concerned about
the c/a deficit and the weakening of U.S. power in the world. They’re
all very polite, but it sounded like they don’t think Bush has been
good for the imperium. One questioner noted that today’s world looks
like one without a hegemon, and when that’s happened in the past, bad
things ensued (e.g., Depression and world war). He noted that since
both Summers and Volcker occupied seats of power when the U.S. was an
unchallenged hegemon, how different do they think things would be now
were there some sort of financial crisis, esp one featuring the U.S.
Both Summers and Volcker looked stunned into silence for a while, and
then Summers said that that was a “powerful” observation couched as a
question. And Volcker expressed concern that managing a crisis would
be much more difficult now with the U.S. “politically weakened” and
the target of so much “antagonism” around the world. He worried that
Europe and the Asia might go off on their own. Someone else asked who
out there might “lend a hand” if the U.S. hit a wall. Another long
pause, and then Volcker doubted anyone would raise his hand as
volunteer, which prompted nervous chuckles.
Doug
May 24th, 2007 at 2:26 pm
Origins of WWI: First, in the nineteenth century, Bismark made life’s work out of keeping the military and foreign affairs of Germany exclusively in the hands of the king: weak democracy; war on tap at the unchecked whim of possibly impulsive, over-aggressive males.
The second, is explained by Barbara Tuchman in her book The Guns of August. Germany’s sole mobilization plan happened to be an attack on France through the Benelux countries. As Tuchman pointed out, in a day when mobilization depended on railroad time tables, once a mobilization plan was initiated, there was no way to stop in the middle without throwing the whole thing into permanent disarray.
When caught up in the round of mobilizations after the assassination of the Arch Duke, the Kaiser faced the choice of not mobilizing as treaty required (if I remember correctly after 40 years) or attacking France — so what the hell. A fully functional democracy may have been much more reluctant to go to war under the same circumstances.
May 24th, 2007 at 3:57 pm
This is really a thought provoking point, about the lack of a possible hegemon in the world and its likely repercussions. But I am thinking, even if America was still the financial hegemon of the world would the present administration act on it, given its ideology for not getting involved and helping out in a crisis. For instance, the ideologues of this administration definitely thought the Clinton administration was wrong to bail out Mexico - it should have been left to dangle in the wind. Moreover, for argument’s sake, if it’s still was a homogeny would this administration have the wherewithal and the competence to act as one in a crises?
Perhaps the next administration will return the U.S. to it hegemon status, at least in the financial sense.
May 25th, 2007 at 10:15 pm
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