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September 19, 2008
I watched a bit of Q+A on ABC last night on the global financial crisis. Robert Manne reckoned it signified the end of neo-liberalism, Tony Abbott said Manne's talk of the end of capitalism was silly since capitalism would survive as it was a resilient beast, whilst Maxine McKew dismissed all apocalyptic talk as unwarranted given the weathering of the Credit and Loan's collapse in the US in the 1980s and the Asian crisis in the 1990s.
At no point did Manne say anything like 'capitalism will not survive these financial shocks.' (He reckoned that global warming was a far bigger issue that the global financial crisis). Neither Abbott and McKew were willing to pick up and explore Manne's point about the limits of neo-liberalism, or even mention the ways to deal with or manage the crisis.
Ingram Pinn
What the politicians did say was to highlight the interconnectedness of the global economy. What they didn't say is that there is a growing tension between global integration and a shortage of credible international governance and that governments of nation-states have been left with responsibility without power.
The significance of this is that politicians are on the sidelines watching like the rest of us despite their claim to inside information from those who really know what's going on. They really don't know what is happening or what to do about it. Abbott actually implied that it was all a bit of a glitch and was not market failure.
Given their insider information---which McKew made so much of --- they could have made reference to the transformation of the USA into a country where there is socialism for the rich, the well connected and Wall Street (i.e. where profits are privatized and losses are socialized) with the nationalization of AIG. Or they could have mentioned the need for greater international governance beyond the G7 central banks--(where's China?); or the need to quarantine the toxic bad debts; or the need to recapitalize the remaining investment banks.
Or the politicians could ghave mentioned how this financial crisis was different from the previous ones. The previous ones started on fringes of the global financial system-- in the developing or emerging economies in Latin America, Asia or Russia--- and the West (G7) worried about the contagion. This crisis was made in the US--the heart of the global financial system--- and it is the emerging powers of the east that fear contagion. Doesn't that highlight the big shift in economic power in the world?
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I've been looking at the impact this may have on McCain's credibility. McCain's sky hasn't fallen just yet. His economic plan has been endorsed by the usual suspects - advisors to George W, and other republican presidents.