E.T.’s Guide to the Global Economy

Attention, extraterrestrials studying political economy and writing about humans on Earth for your doctoral dissertations: you could do a lot worse than starting your research by reading Alan Beattie’s new book, “Who’s in Charge Here?”

If you thought that the North-South politics of the United States, the struggles of the European financial stabilization mechanism, and the dithering of the World Trade Organization were unrelated, think again.

Oh, and it’s good for humans, too.

Some human readers may know a lot about American politics already, and others may know quite a bit about the arcane structures of the euro zone. But few will know as much about both of these topics, plus others, and how they all fit together, as Beattie, a longtime correspondent of the Financial Times. In this short eBook, he offers a master class in the political forces that have driven, worsened, and may someday solve our biggest problems of economic policy.

It’s a boon for alien PhD students, but Beattie paints a rather depressing picture for the rest of us who actually have to live on Earth.  Our political leaders, many of them with a faint understanding of economics, failed miserably to perceive and deal with the risks signaled by the global financial crisis.  Sometimes their errors were deliberate, the result of political expediency; other times, they were just incompetence.

Beattie also points out that Western leaders – he doesn’t let the Western heads of the top international organizations off easily, either – were not the only culprits.  He faults the leaders of the biggest emerging economies for wanting it both ways, that is, seeking influence without being willing to shoulder the costly burdens of maintaining global economic stability.  And he even calls out his own journalistic colleagues by reprinting his deliciously tart parody of a phoned-in release from the world’s army of lazy, pampered correspondents.

There’s one more target that could have gotten a bit more blame, at least for my taste. Our political systems, as I wrote in my most recent book, just aren’t up to the job of addressing the global economy’s biggest challenges.  They are weak at forming coalitions, and they rarely make the big upfront sacrifices that pay off later in reduced risks.  But, Beattie writes, “The primary lesson of the global financial crisis since 2008 is not that the political structures are wrong or the global monetary or trading systems need fundamental change.  It is that through political weakness and misguided economic analysis, countries both individually and collectively are making the wrong decisions and are lacking in political will.”

It’s a nice sentiment, but I think Beattie misses the point. Why have our leaders made so many errors in economic policy?  Because our political systems emphasize pandering and quick wins over long-term planning.  Why have international institutions failed in their most pivotal decisions? Because their leaders have been picked through political expediency, and their staffs have been corrupted by patronage, nepotism, and a general lack of accountability.  If these aren’t arguments for a change in structures, I don’t know what would be.

We’ve seen a lot of incisive blow-by-blow retellings of the global financial crisis.  To Beattie’s great credit, this short read takes a much more intellectual and systemic view of the problem.  Where others have been content to analyze the problems of a single economy, such as the United States or the euro zone, Beattie connects all the dots.  By doing so, he recognizes the simple fact that underpinned my own second book: there is only one global economy.

Any extraterrestrial student of political economy, looking at Earth from afar, would agree.