The world of Crashed, crashed

If you read this I promised you a review of Adam Tooze’s Crashed. I didn’t write the review, but a major theme of the book seems enormously important now. Here’s the FT‘s Edward Luce, with a magisterial piece on Trump responding to a real crisis in the way it was obvious he would.

It was Trump who chose Robert Redfield to head the CDC in spite of widespread warnings about the former military officer’s controversial record. Redfield led the Pentagon’s response to HIV-Aids in the 1980s. It involved isolating suspected soldiers in so-called HIV Hotels. Many who tested positive were dishonourably discharged. Some committed suicide.

A devout catholic, Redfield saw Aids as the product of an immoral society. For many years, he championed a much-hyped remedy that was discredited in tests. That debacle led to his removal from the job in 1994.

An extremist, a bigot, and a quack. It goes on. The very idea of American leadership or responsibility is, as Michael Herr said about LBJ’s Vietnam War briefings, a psychotic vaudeville. My old Fistful of Euros coblogger Nicholas Whyte says that, in diplomacy, the US State Department and the UK Foreign Office are drained bureaucratically and the EU External Action Service is still yet to finish staffing up, to say nothing of displaying any authority. He’s responding to this Pol piece, which lauds the Irish foreign service among others.

Well. A crucial theme in Crashed is that the White House didn’t want to address the Great Financial Crisis, having prepared for a campaign of austerity to reduce government debt, and the US Congress was barely capable of doing so. The European institutions were even less capable, with a twist that they were openly rooting for a US sovereign debt crisis because it might support longstanding French foreign policy ideas. Both the US and China tried to dodge the responsibility until the last terrible moment, and then they responded in startlingly similar ways, targeting railways and hospitals but not enough while looking after property developers and the banks who loved them.

In Tooze’s telling, the people who really stepped up were the central banks, specifically the US Federal Reserve, and the new democracies of Asia – South Korea, Taiwan, Indonesia, Malaysia – who really did go with the full bore Keynesian impulse that was wanted, and importantly, were willing to own it as policy rather than outsourcing to the central bank or running away as soon as it became clear nobody important would die. Although the crisis demonstrated more than ever the imperial nature of the dollar-denominated financial system, it also showed there was much truth to its claim to legitimacy. Nobody else wanted to shoulder the burden of responsibility. A major change in its basic architecture, though, was that central banks like that of Korea or Indonesia became first-class partners in the system, granted the right to swap their own currency for US dollars, and therefore, almost to issue them.

This seems familiar. China coughed out a massive horse dose of its internal chaos, and followed up with a succession of exercises in brutish cynicism. Political America has been running from the responsibility since the word go, when it wasn’t trying to buy Lisa Simpson’s rock for itself. The hopes for an alliance of the middle powers…well. The EU doesn’t have public health responsibilities and it’s not obvious that it would be any better if it did. But it wasn’t much more use on the economic front.

Instead, the central banks stepped up in their new mission of doing the necessary and indeed popular things that the political system cannot. The horizontal divide that characterises Crashed is visible everywhere – central banks and finance ministries are functional and effective, while the core political institutions are hopeless. You might think this implies technocratic agencies in general are stronger, but the once proud CDC is a laughing stock and our equivalent not much better. People tend to look with envy across borders, but if you read the German media, there are plenty of people pouring scorn on the Robert Koch Institute.

And which countries can say they have done anywhere near as well as the new democracies of developed Asia? Everyone wants to be like South Korea, even if getting your outbreak in an identifiable religious cult with a list of members, early enough that everything you might need was still in unlimited supply, was sheer luck.

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