Ten Economic Paragraphs Worth Reading: December 26, 2009
Ezra Klein's Filibuster Links

Well, This Is Certainly a Surprise!

So on Christmas Day I open a box that I think is some large and unknown present from a relative--and it turns out to be 25 real physical copies of Stephen S. Cohen and J. Bradford DeLong (2010), The End of Influence: What Happens When Other Countries Have the Money (New York: Basic Books: 0465018769).

It is a short attempt to get a fix on three interrelated processes:

  • The increasing public and national indebtedness of the United States.

  • The extraordinary growth elsewhere in the world of asset pools that are under the control not of return-seeking market actors but of national governments.

  • The financial crisis-induced collapse of confidence in the neoliberal order--that is, in the presumption that in general one should try to shrink the state because government failures are more pernicious than market failures.

and what these three ongoing processes mean.

The excerpt I like the most is:

When you have the money--and "you" are a big, economically and culturally vital nation--you get more than just a higher standard of living for your citizens. You get power and influence, and a much-enhanced ability to act out. When the money drains out, you can maintain the edge in living standards of your citizens for a considerable time (as long as others are willing to hold your growing debts and pile interest payments on top). But you lose power, especially the power to ignore others, quite quickly--though, hopefully, in quiet, nonconfrontational ways. An you lose influence--the ability to have your wishes, ideas, and folkways willingly accepted, eagerly copied, and absorbed into daily life by others. As with good parenting, you hope that by the time this happens those ideas and ways have been so thoroughly integrated that they have become part of what is normal and regular abroad as well as at home; sometimes, of course, they don't. In either case, the end is inevitable: you must become, recognize that you have become, and act like a normal country. For America, this will be a shock: American has not been a normal country for a long, long time...

The fact that the last "Christmas present" I opened was the book presents me with a problem. Steve and I agreed that we would try to save the publisher some money by putting the notes up on the web. And then, of course, we did not finalize the notes when we submitted the manuscript. And I, at least, thought we had two more weeks to put the notes up--although Steve, to his credit, has been pestering me for quite a while.

So now I have a bunch of work to do to make http://delong.typepad.com/notes_to_the_end_of_influ/, Notes, etc., to "The End of Influence," fit for human eyes...