Tim Fernholz discusses Daniel Drezner’s new book, The System Worked: How the World Stopped Another Depression. In it, Drezner posits that the global system of economic governance was to thank for preventing a major catastrophe in 2008. Fernholz:
But wait—wages, growth and jobs are still lagging in the United States and the European Union. That has a lot of those countries’ citizens blaming globalization and the institutions that support it, such as the International Monetary Fund. Don’t blame globalization, Drezner says: Blame your governments.
In the recovery stage of a financial crisis, growth is expected to be slow—clearing debt off balance sheets takes longer than responding to other kinds of shocks. Hastening growth requires policies that were not fully adopted in either the US or Europe, as austerity dominated policy debates. (It’s worth noting that the IMF was long a critic of US fiscal policy, calling for more near-term stimulus and longer-term efforts to deal with debt.) And the EU, with its mixed record of addressing its own debt crisis and recession—Drezner calls it “an unmitigated disaster”—is more of an actor in global governance than an example of it. …
There are good signs that global governance will get stronger. For one, institutions are adapting: the IMF has relaxed some of its traditionally neoliberal arguments and is a more broad-based institution; the G20 provides a platform for the BRICs and the G7 nations to coordinate; Basel III has put a floor on bank regulation. For another, countries are recommitting to the global system with a flurry of bilateral and regional trade deals under discussion, even if Edward Snowden’s revelations have clearly chilled US talks with Europe.
The Dish 