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.
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.
On 28 September 2018, Lorenzo Forni of Prometeia invited me to give a short comment on the relationship between ‘populism’ and economic policy-making. Although, I hadn’t thought about that relationship before, I came up with four things I think we might want to consider (in addition to what we might useful think of as ‘populism’ in the context of the question Lorenzo asked). My argument was that populists bring new people into the policy-making process. They also bring a healthy dose of unpredictability. Their messaging on policy issues is not great, which causes problems in a world defined by rational expectations, and they tend to be skeptical toward independent agencies like central banks. Finally, populists are disinclined to international policy coordination. The combination is not wholly bad — sometimes change is for the good! — but the results are often below the promises that populists make to the electorate. The text of the presentation follows.
On Tuesday, 6 November, Americans went to the polls to elect members of the House of Representatives, one-third of the membership of the Senate, a handful of state governors, a host of politicians at the state and local level, and a series of ballot propositions concerning local rules and finances (like bond issues for school maintenance) across the country. These elections are called mid-term because they are held midway through the four-year term of office of the sitting national president.
The name ‘midterm’ is misleading, however, because it makes these elections sound like a national contest. They are not. Although the election results will have a strong impact on the performance of the national government, the mid-term elections are primarily local contests. Moreover, despite and perhaps even because of the very prominent role played by President Donald Trump in the campaign, these mid-term elections were even more local than most.
Steve Bannon is coming to Brussels to repeat the success he had during the Trump campaign in the upcoming elections to the European Parliament. He has held high profile encounters with Matteo Salvini, Marine Le Pen, and even Boris Johnson. He has talked to the press, toured the capitals, and now set up his own office, called ‘The Movement’. As he has done all this, Bannon has raised awareness that there are a lot of people in many different European countries who are fearful about migration and fed up with their ruling elites. On the surface, that picture does look a little like the discontent Bannon tapped in the United States. But if Bannon is hoping to use the same arguments and tactics, what will matter more is how Europe is different.
As the Trump Administration prepares for the G7 meeting in Canada, the bulk of commentary in the press is focusing on how isolated the United States has become. The aluminium and steel tariffs, the renegotiation of the North Atlantic Free Trade Agreement (NAFTA), the withdrawal from the joint comprehensive plan of action (JCPOA) with respect to Iran, and the repudiation of the Paris accords all combine to create tension between the Trump Administration and its G7 partners. At the same time, the Trump Administration seems more interested in courting China, Russia, and North Korea than its traditional allies. Hence the question is not just what the Trump Administration hopes to achieve but also why it is bothering to attend at all. The answer is revealing both for what it says about the Trump Administration’s approach to global governance and what it reveals about the enduring legacies of U.S. leadership during the post-Second World War era.