It is increasingly debated that the current generation of politicians, notably in the two Anglo-Saxon countries, are markedly inferior to those of prior generations – intellectually, morally and in their commitment to public service. Rory Stewart’s new book (Politics on the Edge) highlights a number of examples.
This is a view I have some sympathy for and a more compelling argument, supported by most politicians I have met, is that social media has debased politics and political debate, to the extent that the untrue and absurd garner greater attention from potential voters. Speeches at the Tory party conference last week (e.g. Penny Mordaunt) and the toppling of Kevin McCarthy by Matt Gaetz, are instances.
One of many litmus tests of this hypothesis is that the quality and quantity of pithy, quotable remarks by political leaders and policymakers appears to have diminished. Outside of set-piece speeches there seems to be far fewer impressively intelligent public utterances from those in public life. As a result, essay writers are left digging for lesser used quotes from Churchill with which to start their notes. This is a pity, not just for essay writers, but for the public at large.
Speeches
Often, when those essay writers have exhausted the reservoir of Churchill quotes, they dip into Keynes. I recently happened upon a deep pool of quips from Keynes in Benn Steil’s ‘The Battle of Bretton Woods’, which is a superb account of the tussle between Britain and America to shape the new world financial order and with it, bodies like the IMF.
Tussle is too generous a word, the meeting effectively formalised the transfer of ‘world power’ from Britain to the US, or as Keynes wrote to his mother ‘ In another year’s time we shall have forfeited the claim we had staked out in the New World and in exchange this country will be mortgaged to America’.
Keynes’ prominent role at Bretton Woods was as foil to the American negotiator Harry Dexter White, and Keynes felt his place was to negotiate a deal for Britain that would rescue it from ‘losing face altogether and appearing to capitulate completely to dollar diplomacy.” For some, Keynes was living proof of Lord Halifax’ view that ‘they have all the money, and we have all the brains’.
End of Eloquence
From this point onwards, American financial dominance grew, manifested in the broad international use of its currency which has risen to a very particular place as the linchpin of the financial system. Indeed, one of the most important tenets of the twentieth-century world order and the rise of globalization has been the position of the dollar as the international reserve currency.
This pre-eminence was christened in another memorable quote as ‘exorbitant privilege’ by Valery Giscard d’Estaing, then French finance minister and later President. When Giscard made this statement, the dollar was tied to gold, and the response from France and a number of other countries was to exchange their holdings of dollars for gold. This set the stage for the subsequent breaking of the dollar’s tie to gold by President Nixon. Since then, the dollar has been first among equals in the currency world, and many developing nations have pegged their currencies to it.
Recently, as we have noted before, this notion of ‘exorbitant privilege’ has come under scrutiny in the sense that there is a long line of commentators predicting the demise of the dollar.
A more interesting line of argument, thanks again to some French wizards (Pierre-Olivier Gourinchas and Hélène Rey) is the notion of ‘exorbitant duty’, which is the role that the dollar and US financial system play in times of crisis as the provider of a safe haven, even when those crises emanate from the US itself. As it stands, the next largest currency bloc to the dollar, the euro doesn’t have capital markets deep enough to become a fully fledged global safe haven. It might be that a group of smaller countries – Switzerland and Australia for instance could also draw in capital in a crisis.
So, the dollar may continue to do its duty, until perhaps it is undermined from within. While few in Washington will feel sorry for Kevin McCarthy, his removal represents another step towards the political unknown in America. Europeans and Asians are starting to worry about the prospect that Donald Trump could become president again and that the US might one day fail to do its ‘duty’.
Congress has got it wrong before. One of the comments in the Steil book recounts how after Bretton Woods ‘Congress was spontaneously more generous toward China than toward England, perhaps because no one envisaged China as a postwar rival for power or commerce.”
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