Stitch,
From today's IHT:
Rubin Lectures the World
Nations Must Look to the Long Term, He Says
NEW HAVEN, Connecticut - Governments around the world must make tough economic decisions, often at odds with their short-term political interests, to protect the increasingly interdependent global economy, Treasury Secretary Robert Rubin said Saturday.
''The world is now experiencing the most serious financial crisis, in many respects, of the last 50 years,'' Mr. Rubin said in a speech Saturday at Yale Law School, where he received his law degree in 1964. ''One of the great political challenges in the decades ahead is for democracies to be able to make the unpopular economic decisions requisite for success in a transnational, interdependent global economy.''
At the heart of the challenge is bridging the gap between the sovereignty of national governments and the demands of the global economy, Mr. Rubin said, blaming the current crisis on ''excesses in investment and credit extension from developed nations into developing nations without adequate weighting of risk.''
That requires building political support for unpopular reforms, Mr. Rubin said, citing the efforts of President Kim Dae Jung of South Korea to bring together businesses and labor and stabilize his country's currency crisis. ''A similar process occurred in Thailand, though in both cases great challenges remain ahead,'' Mr. Rubin said.
That has not been the case in Russia and Indonesia, however, Mr. Rubin
said. In those countries, ''the political systems never took ownership of reform, the economic policy decisions in the proposed reform programs consequently became irrelevant, and the economies are in dire straits.''
In a global market, problems can arise when some countries' legal systems are inadequate or undisciplined, and capital flows into the country without regard to risk, Mr. Rubin said.
Am I reading this wrong, or does he seem to be saying that the responsibility for weighing and assigning risk lies with the legal system of the borrower's country? Are the sources of the capital not in some way responsible?
I also note that there is no discussion of why these politically unpopular decisions are politically unpopular. Possibly because they impose real hardships on ordinary people? Always a hard thing for a democracy to get away with. I wonder if we'll start hearing the old refrain about the need for authoritarian governments again...
Steve |
