Coordinating global policy
Apropos of the column “The trouble with global policy coordination” (FE, December 2), the author’s observation that if all countries depreciate their currency to gain export competitiveness and boost their economies, all will fail, is correct. However, despite the fact that international coordination of macroeconomic policy seems to be back on policy-makers’ agendas, the reasons why coordination fell into abeyance during the 1970s and 1980s are still with us. Consider the G7 summit in Bonn (1978) or the Plaza Accord (1985). The Germans regretted having agreed to joint fiscal expansion at the Bonn summit, because reflation turned out to be the wrong objective in the inflation-plagued late 1970s. Similarly, the Japanese came to regret the appreciated yen after the Plaza Accord succeeded in bringing down an overvalued dollar. If today international policy coordination has started to happen again, one of the primary reasons is the 2008 global financial crisis. So that policy coordination doesn’t fail this time around, some steps need to be taken. For example, regular meetings of officials can be useful, as exchanges of views might help narrow differences in perceptions. Such meetings can also lead to officials improving their own policies before they tell others what to do.
Lobbying and crony capitalism
Apropos of the edit “Strategic Relationships”, let it be known that the crony capitalism birthed by the Licence Raj has been nurtured and shaped into a hydra-headed monster by the neoliberal policies after 1991. Everybody and their mother know that corporate are just as slimy and ill-deserving of trust as the politicians. Only, in the case of the latter, in electoral democracies, the people have the option of firing corrupt and self-serving politicians/parties in fixed intervals. In absolutist states, like China or Cuba, this option is absent but everything is owned in the name of the people. If you look at these states, there is better public service delivery even though the population may not have the same access to consumerables or may not enjoy the same level of personal freedom as citizens of liberal democracies do. There is one thing to learn in this: Trust poorly the politician, don’t trust at all the businessman. For while you can hold one accountable, the other will have drained your blood dry before you even realise it.
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