A stressful world

Pundits and other policy sophisticates in Washington love to lampoon Americans who worry about preserving national sovereignty. Although there are extremists whose paranoid fantasies are absurd, we do live in a world in which nation states often seem overwhelmed by new global linkages and by problems that transcend geographic frontiers. In addition, powerful forces-particularly transnational businesses and the elitist “progressives” dominating the foundation world-have powerful (if not always identical) interests in weakening the only remaining political unit that can still frustrate their economic and technocratic designs. Periodically, one of the pundits, who are often lavishly funded by these very interests, will produce a policy or a speech or a study that reveals a lack of genuine commitment to maintaining America’s great national experiment in independence and self-government. Global Public Policy by Wolfgang H. Reinecke is an excellent example.

At first glance, sounding alarm bells about this technical, densely written, heavily footnoted volume seems like an exercise in sovereignty paranoia itself. All the more so because the author emphatically dismisses as utopian and even undesirable not only the traditional world government schemes that were so popular in World War II’s aftermath, but also the expectation that today’s thickening web of international organizations will gradually evolve into a de facto, informal, functional equivalent.

Reinecke outlines a third way of dealing more effectively with global challenges, such as the Asian financial crisis, that simply cannot be left to the market. He portrays this global public policy-ostensibly a set of subtler, more flexible arrangements-as the only hope of people and governments around the world to preserve meaningful control over their destinies and ensure that public policy decisions are made democratically.

Yet Reinecke’s case for this truncated, kinder, gentler version of global governance is consistently underpinned by the very same arguments used by more heavy-handed globalists to demoralize their opposition, mainly by creating an aura of inevitability about the shiny, borderless, but unmistakably Darwinian future they are working so hard and spending so much to create. The author just as consistently ignores many of the most obvious counterarguments. Finally, Reinecke makes clear that his goal is less to discover the optimal system for managing global affairs than it is to defend the current global economic system, which with its wide-open economic flows and international organizations is vastly more responsive to corporate than to popular agendas. These, of course, are exactly the ideas and views that Reinecke’s employers at the corporate-funded Brookings Institution and the World Bank desperately need to have injected into a globalization debate that is steadily slipping beyond their control. They’re also sure to please his patrons at the MacArthur Foundation, which never met a global regime it didn’t like as long as it helped prevent unilateral U.S. actions.

In one respect, Reinecke is his own worst enemy. Unlike most globalization enthusiasts, he frankly acknowledges that today’s international economic casino could be shut down if nation states (mainly industrialized countries) keep pretending that through their own devices they can still meet their peoples’ expectations for high living standards, clean air and water, and the like. He warns that unless national governments start promoting wholly new policymaking structures that are as globe-girdling, decentralized, and dynamic as the activities they’re trying to oversee, angry, frightened publics will force a return to protectionism. Even if voters remain quiescent, Reinecke predicts, an effectively unregulated international economy will eventually be destroyed by its inevitable excesses and imbalances. Unfortunately, even granting Reinecke’s rose-colored view of today’s world economy and the breadth of its benefits, his book never makes a convincing case that global public policy can or should be the solution to these dilemmas, or even that it hangs together as a concept at all.

Although Reinecke’s global public policy can take many different forms, its essence involves a qualitatively new pooling of national sovereignties as well as outsourcing to a welter of national and global institutions in both the public and private spheres of much responsibility for setting, monitoring, and even enforcing standards of behavior. After all, he observes, only the private interests that so easily circumvent conventional regulation know enough about their constantly changing activities to exercise meaningful control.

Public authorities would remain prominent in global policymaking, but individual national governments would not be the only actors entrusted with safeguarding public interests. Joining them would be regional and international organizations such as the International Monetary Fund and the European Union, as well as worldwide networks of nongovernmental organizations and other members of civil society, such as labor unions and consumer groups. These proposals follow logically from a key Reinecke assumption: that individual nation states and even groups of states are steadily becoming helpless to guarantee their citizens’ security and welfare. Only by combining their resources and working with nongovernmental forces, he insists, can they hope to carry out such previously defining responsibilities constructively.

Reinecke uses three case studies to show that global public policy is not only realistic but already visible in some areas, and they make unexpectedly absorbing reading, especially the story of evolving financial regulation. Yet it doesn’t take a policy wonk to see the holes and internal contradictions.

Take the author’s discussion of finance. This industry arguably poses the most immediate major challenge to effective national governance today, because of its explosive growth, the speed of transactions, and the matchless ingenuity of investors. But Reinecke does more to undercut than to prove his arguments about global public policy’s inroads and relevance. Specifically, his mini-history of the Basle Accord demonstrates clearly that this agreement on adequate capital standards for banks resulted mainly from some classic power-politicking by a single nation state-the United States. Nor can the success achieved in developing an international consensus on these banking issues be divorced from power considerations. The nature of that consensus was vitally important, and it was significantly influenced by the unilateral use of U.S. international economic clout.

Like too many other students of international relations, Reinecke overlooks a fundamental truth: International cooperative efforts do not remove the need to think about or possess national power. Until governments (and more important, peoples) feel ready to yield ultimate decisionmaking to overarching authorities whose natures (not surprisingly) are rarely specified, cooperative efforts make thinking about and possessing power more important than ever.

Reinecke’s discussion of policy outsourcing, meanwhile, shows just as clearly the excessive risks of a system of quasi-self-regulation. As he observes, Washington has long relied on the National Association of Securities Dealers (NASD) to help prevent stock market fraud. But Reinecke himself acknowledges that this system’s recent history “highlights some of the dangers inherent in relying on public-private partnerships for global public policy.” More specifically, in 1996, the NASD narrowly escaped criminal price-fixing charges after Justice Department and Securities and Exchange Commission investigations, and the former now resorts to highly intrusive law enforcement measures, such as forcing Wall Street firms to secretly tape traders under suspicion. In other words, although policy innovation should be encouraged, for the foreseeable future the decisive regulatory power will need to remain with a national government.

Reinecke typically deals with such objections by observing that, for all the power sometimes displayed by national governments, transnational actors much more often defy them with impunity, and transnational problems continue to mushroom. This point seems quite reasonable, but under closer analysis it becomes clear that crucial, and even central, political points are overlooked.

No one can doubt, for example, that all nation states face towering economic, environmental, and security challenges. But not all states are created equal, and in particular not all states are mid-sized powers (like those a German national such as Reinecke would know best) or struggling developing countries (like those he works with most frequently in his World Bank position). At least one country-the United States-approaches the world and even the new global economy with advantages not enjoyed by many others. It is not only militarily preeminent, it represents fully one fourth of the globe’s economic output, it is the largest single national market for many major trading countries, and it is a leading provider of capital (though not on a net basis) and cutting-edge technology to much of the world. Thus, the United States has considerable potential to secure favorable or at least acceptable terms of engagement with global economic and security systems.

It is true that despite this power and despite endless references by U.S. officials to world leadership, the United States often hesitates to use its leverage. Many political scientists attribute this reticence to the unavoidable realities of international interdependence, which they believe has created too many beneficial linkages among states to risk disruption by muscle-flexing. Yet in fields such as finance and international commerce, Reinecke and others consistently ignore the degree to which U.S. policy is explicable not by any inherent new U.S. vulnerabilities or relative weakness, but by the simple capture of Washington by interests that profit enormously from arrangements that give financiers a practically free hand or that prevent the management of globalization for broader popular benefit.

Reinecke does refer to the power of business lobbies, but his interpretation of this phenomenon is at best tendentious. He describes it as confirmation that nation states have forever lost much of their “internal sovereignty”: their monopoly on meaningful policymaking within their own borders. Yet his clear concern about the public backlash in the United States and elsewhere against current globalization policies, which is apparent most clearly from Congress’s defeat of fast-track trade legislation, implicitly acknowledges that the policy tide can be turned. More specifically, the U.S. government at the least can be forced to reassert its considerable power over worldwide economic activity.

Similar conclusions are plausible in connection with export controls. Why isn’t Washington working more effectively for tighter global limits on trade in sensitive technologies? Maybe largely because its business paymasters are determined to prevent government from harnessing America’s enormous market power to promote national security through policies that might threaten some short-term profits. If U.S. troops or diplomats stationed overseas begin suffering heavy casualties from European- or Japanese-supplied weapons, a public outcry could well harden current nonproliferation policies as well.

Finally, thinking realistically about politics casts doubt on Reinecke’s contention that democratic values and practices can be preserved in a world of global decisionmaking bodies-however numerous and decentralized. In theory, if popular forces can recapture national governments from corporate lobbies, as recent U.S. developments suggest, they should be able to capture global public policy arrangements as well. In actuality, however, two big and related obstacles bar the way.

First, organizing lobbying campaigns and overcoming corporate money on a national level has been difficult enough. On a worldwide stage, the multinationals’ financial advantages will be that much greater and harder to negate. Second, as indicated by the growing frequency with which they merge and ally with each other, international business interests will probably find it relatively easy to reach consensus on many policy questions. Various kinds of citizens’ groups around the world, divided by geography, history, and culture, as well as by the intense competition for investment and jobs, will probably find achieving consensus much harder. The nation state (or at least some of them) still seems to be the only political unit big enough and cohesive enough to level the political playing field for public interests.

And even if, as Reinecke and others have suggested, strong international alliances of existing citizens’ groups could be formed, difficult questions would still loom about organizations purporting to represent the popular will. Do U.S. labor unions, for example, really speak for most U.S. workers today? And who besides their own limited memberships elected the leaders of environmental organizations? No less than the world government designs Reinecke properly criticizes, global public policy seems destined to founder on the question of where, if not with national electorates or governments, ultimate decisionmaking authority will lie.

Reinecke and the institutions sponsoring him seem to think that if they pronounce the nation state, and especially the U.S. state, doomed to irrelevance often enough, the American people will eventually believe them. Much of the national media and many political leaders are already convinced. But as recent U.S. developments indicate, the public is steadily moving the other way. They seem to be realizing that their best guarantors of continued security and prosperity are the constitutional system that has served them so well and the material power it has helped them develop, not the kindness of financiers, international bureaucrats, and other strangers. Their great challenge in the years ahead will be keeping sight of these truths and bringing their government to heel. If they succeed, they won’t have to grasp at straws like global public policy.