Friday, March 06, 2009

Letter to WSJ: Protectionism, Globalization, and the Recession

To Whom It May Concern:

New economic realities demand new agreements and regulatory regimes and Jeffrey E. Garten (“The Dangers of Turning Inward, 3/1/09) is correct to identify the source of our current economic woes in an unbalanced global financial system that included an Asian savings glut, distorted currency exchange rates and, consequently, as we know well, inflated asset prices in developed countries.

Professor Garten proposes some lucid solutions to these problems but cannot do much to identify the political force that will call for careful international regulation and social investment. This is no fault of his own. Republican nativist and Democratic labor protectionist sentiment are well-entrenched and a sufficient reorganization of international institutions would necessitate compromises in national sovereignty that neither political party could support.

Garten hopes that “short-lived recession” would teach the body politic enough about the new global order to make possible needed reforms. Count me among those who think that the learning curve will be too steep for that.

Barak Epstein