Global Meltdown? Every Nation for Itself.

Coffee Brown, University of New Mexico, for Talk Radio News

“Rethinking Global Institutions: Do We Have the International Tools to Fight the Global Economic Crisis?” Well … no.
The American Enterprise Institute’s discussion panel included Brink Lindsey, of the Cato Institute, Marc Busch, a professor in the government department at Georgetown University, and T. N. Srinivasan, from Yale University.
Lindsey said that the global problem is unique within each country, that cultural and political differences would undermine any effort to coordinate monetary strategy, and that this could be a good thing. Allowing each nation to try to muddle though in its own way would reveal which of the competing strategies worked and which did not. If no theory is strong, then Lindsey recommends testing them all empirically. The EuropeanUnion, for example, is testing right now whether a coordinated international economy can weather such a crisis, he said.
All of the board members agreed strongly that no economist understands the complex interplay between parts of the economic system, globally or nationally, even when the individual parts are more or less understood.
Srinivasan opened with an excerpt from John Keynes on the Great Depression, to the effect that we don’t really understand all the mechanisms that led to it. Srinivasan pointed out that the proliferation of new financial instruments in the ’80s greatly increased the problem. “We don’t don’t know how it worked when it worked,” he said. But, he added, the key to a coordinated effort lies in the common goals; health, education, poverty, and the economy; among nations that differ on almost every other point.
Busch made the case that the present financial institutions, the World Trade Organization, the International Monetary Fund, the United Nations Conference on Trade and Development (UNCTAD), the United Nations Development Programme (UNDP), the International Trade Commission (ITC), and most especially the World bank, have been effective at stabilizing economies, but only at the margins. He took the mediating position that international tools can help, at least a little.