WALTER RUSSELL MEAD recently offered his top ten lessons on the global economic meltdown. No. 1:
1. The American century isn't over. For more than 350 years, the big story of world history has been the rise and development of a global economic and political system based on liberal capitalism resting on the power first of Great Britain and now of the United States.
2. Liberal capitalism works. [And, of course, Mr. Mead is using liberal in its classic sense, not the modern political sense.] The overwhelming lesson of the crash for Europeans is that they need to accelerate Europe's slow and painful shift toward a more liberal form of capitalism. Europe's socialist parties in Spain and Greece are introducing hated liberal reforms because, as Margaret Thatcher put it long ago, "there is no alternative."
3. The rogue states are parasites. [The] pathethic pretensions of regimes like the ones in Iran and Venezuela to some kind of world leadership have been cruelly exposed.
4. The old left is dead. [There] is not a single free country in the world where serious political parties argue that socialist transformation will cure the economy's ills. [DDH: Mr. Mead is wrong. The president of the United States argues exactly that.]
5. Nobody really understands the world economy. Just as all the computer models in the world can't tell you what the stock market will do tomorrow, all the world's economists together can't tell you when the next crisis will come -- or what you can do to avoid it.
6. That goes double for financial markets. Starting with the Dutch Tulip Bubble we've had about 350 years of financial crashes and panics. They are unlikely to stop anytime soon . . . .
7. The battle of financial markets is over; the battle of state finance has begun. [It] is now clear that governments do not have an unlimited power to bail out private firms or to stimulate the conomy through deficit spending. This is not only true of smaller governments like that of Greece; it may be true even of the United States.
8. The demographic crunch time is here.
9. Culture matters. The economic crisis has further dispelled the illusion that the post-World War Two western world had achieved a permanently prosperous, permanently stable democratic wonderland.
10. The politicization of economic governance is dangerous business. To take one important example, when government workers make up a substantial portion of the electorate, they can influence their own wages and pensions by voting as a bloc. They can -- and they do. California, Illinois and Greece have a lot in common.
Yet it is clear that the mix of democracy and capitalism is a dangerous if necessary brew; after decades in which we failed to think the costs and risks through, we are now suffering the consequences of policies that create dangerously perverse incentives in both political and economic spheres.
(Walter Russell Mead, "The Top Ten Lessons of the Global Economic Meltdown," blogs.the-american-interest.com, May 24, 2010)
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