Small is beautiful, but also dangerous. That is the central insight in Darius Ornston’s 2018 book. Even good governance can go bad. Consensus makes it easier for a society to work together in facing the challenges presented by world markets. Backed by powerful social groups, political leaders can fend off adversity, compensate losers, agree on how to organize or reorganize machines and labor, and invest in the physical and human capital necessary for future prosperity. This insight will be obvious to anyone familiar with Peter Katzenstein’s classic works. What Ornston adds to Katzenstein’s argument is a cautionary note. The same consensus Katzenstein celebrated in his analysis of small states and world markets also makes it easier for political leaders to misallocate scarce resources and delude themselves and their followers into feeling safe when they are not. Finland’s embrace of Nokia and Iceland’s addiction to banking are good illustrations. Unfortunately, in both cases, the social requirement for conformism can drown out even the most constructive criticism or warning. Success and failure arise from the same dense networks that facilitate deliberation and reinforce trust.
Author / Erik Jones
Sovereign Debt Restructuring and Debt Mutualisation in the Euro Area
The euro area lacks a framework for sovereign debt restructuring and it lacks a common risk-free asset. Both issues are important in looking ahead to the prospect of any future crisis. Of the two, however, the creation of some kind of sovereign debt restructuring mechanism appears to attract the most political attention. This briefing note outlines the issues that would need to be addressed to bring greater stability to the euro area.
Europe’s Complicated Democracy
Europeans are heading to the polls now in one of the world’s largest and most complicated democratic experiments. Moreover, these European elections are probably the most consequential we have seen since Europeans started voting directly for members of the European Parliament in 1979. This is a good opportunity to think hard about how Europeans are represented, how they make their decisions about voting, and what kind of Europe is on offer. Three recent books suggest new and important lines of argument. Christina Schneider shows that much of the responsiveness of Europe to the voters actually takes place through the Council of the European Union; Jennifer Fitzgerald reveals how votes on the extremes are more likely to be local than national, even if they have an anti-European tinge to them; and Sergio Fabbrini argues that many of the tensions we see surrounding the European project could be resolved if we just changed the way we think about constitutional federalism. These arguments are challenging and sophisticated in ways that much of the commentary that surrounds the European elections tends not to be; they are also counterintuitive. Now that everyone is focused on Europe, it is a good time for some well-grounded, lateral thinking.
The Forces Behind the New Europe
The European Parliament that will be elected in 2019 will be different from the one it replaces. The two main political groups, the European People’s Party (EPP) and the Socialists and Democrats (S&D) will both lose seats. For the first time since the parliament began direct elections in 1979, those two groups will be unable to form a parliamentary majority together. They will have to enlist the support of the liberal democrats (ALDE) to control the legislature, perhaps with the support of Emmanuel Macron’s movement, but that grand coalition will leave significant representative gaps.
The Meaning of Brexit (a collection)
As we look ahead to the culmination of Britain’s efforts to leave the European Union, it is also worth looking back on the process that brought us to this moment. This collection offers a series of short essays that were written as events unfolded alongside a clutch of articles that try to put Britain’s departure from the European Union in a wider theoretical and historical context.
The Dangers of Extending Brexit
Extending the Brexit process would create difficulties for the rest of Europe that have not received sufficient attention. The EU might seek to resolve these difficulties in ways that create further problems for the UK.
Re-framing Brexit in Terms of Discrimination
The debate about whether Britain should remain a member of the European Union has taken place within a number of different rhetorical frames. Of these, ‘taking back control’ has been the most powerful. Anyone could understand what was at stake and take a position in the debate. As the debate about membership became a process of leaving, however, ‘taking back control’ became more confusing as a frame for the conversation. Over the past two years it has been hard to determine who is taking back control, how much control can be repatriated, and how much – under any circumstances – the British people will remain constrained and perhaps even powerless to shape their own destiny.
Avoiding another Twenty Years’ Crisis
On 4 December 2018, United States (U.S.) Secretary of State Michael R. Pompeo gave a speech at the German Marshall Fund in Brussels about ‘restoring the role of the nation-state in the liberal international order.’ At the core of that speech, he posed a fundamental challenge to world order: ‘Every nation – every nation – must honestly acknowledge its responsibilities to its citizens and ask if the current international order serves the good of its people as well as it could. And if not, we must ask how we can right it.’ He insisted that: ‘nothing can replace the nation-state as the guarantor of democratic freedoms and national interests.’ And he went on to explain: ‘Our mission is to reassert our sovereignty, reform the liberal international order, and we want our friends to help us and to exert their sovereignty as well. We aspire to make the international order serve our citizens – not to control them.’ In the language of the most recent U.S. national security strategy, this perspective on world affairs is characterized as ‘principled realism’. Pompeo describes it more simply as ‘common sense’. While Pompeo is right that his view is common, he is wrong to believe in its realism or even that it makes sense.
Trouble at the Fed (and Elsewhere)
As U.S. President Donald Trump starts asking about whether he can fire the Chairman of the Federal Reserve, it is time to start asking how strong the protections are for politically independent central banks. The answers are alarming: Trump is not the only one challenging central bank independence; he is also not the most successful. Indeed, the challeges are widespread and they have been growing for some time. That is reason enough to pick up Paul Tucker’s book Unelected Power — which was recently named by Foreign Affairs as one of the top books published in 2018. If you want a taster, my review of Tucker’s book from Survival is below. The punchline is that while people are right to be concerned that Trump would violate the independence of the Fed, that does not mean either the Fed or any central bank should be left entirely to its own devices.
Five Quick Thoughts about Global Trade
The Aspen Institute Italia held its first-ever US-Italy dialog in Rome on 3 December 2018. As part of that conversation, the director of Aspenia, Marta Dassù, asked me to make a few remarks on global trade. Here are five quick thoughts.