From the Pew Global Attitudes Project:
“Trickle-Down Global Economics: World Already Saw U.S. Influence as Negative
Around the globe, people are anxiously following the U.S. financial crisis as it evolves into a worldwide meltdown.
People nearly everywhere realize that what happens in the American economy can have a big impact on them.
But even before this fall's financial crisis, a 24-nation Pew Global Attitudes survey conducted in March-April 2008 found that many in other countries already felt the U.S. economy was having a negative impact on their own country's economy.
The survey also found that publics around the world were giving their national economies increasingly negative ratings.
With the U.S. receiving at least some of the blame for the world's increasingly dour economic outlook, this adds yet another challenge for America's global image…”
What are the experts saying about the impact of the financial crisis on the U.S. image? The Council on Foreign Relations’ new blog, the CFR Forum has been discussing this very issue. On the blog there is a thriving conversation among some of the most preeminent thinkers in the US. Here's a few entries:
From CFR Fellow Adam Posen:
“I side with those (from Nye to Setser) who say this is not the end of US relative power, and that fiscal constraints will not be hugely binding.
Regarding the latter, what Japan's actions in the 1990s show us is that fiscal policy when properly used can be effective, that running up debt in what is clearly a temporary situation is not automatically inflationary (note that yen also had a sustained major depreciation and Japan had neither rising interest rate nor inflation), and that it is net debt, not gross public debt that matters (see the work of Broda and Weinstein).
What I am much more concerned about is the US having lost the intellectual or "model setting" leadership in the global economic community. This is in large part deserved because we did get sloppy with our regulation and supervision, we were too arrogant to others, and we did too little to submit our own policies to international institutions (even under Clinton, though obviously much worse under Bush)….”
From Heidi Crebo-Rediker, Co-Director GSFI, New America Foundation:
“To Sebastian's original forum question: is there a relationship between the financial turmoil and US power. The answer has to be yes , for both internal and external reasons.
The internal reasons are more obvious: a strong economy is critical to the ability of the US to lead, to fund national security needs, and to generate public support for any truly necessary engagement abroad to protect national security interests. This crisis has a ways to play out with consequences to the US economy ranging from bad to catastrophic (with other countries now facing similar prophesies).
A home-first bias will temper foreign aid programs, just at a time when a cash rich beneficiaries of this decade's wealth transfer out of the US are able to use financial clout for foreign aid programs or even as outright foreign policy tools. Heading deeper into debt (increasing dependence on Chinese, Japanese, Russian reserves) could potentially limit our foreign objectives as well (see Brad's excellent Sovereign Wealth piece).
The external impact of this crisis on US power has yet to play out, but early warning signals are not good. Over the past few years, one could count on Putin to rave about revising the world's financial architecture (US at the center) to benefit the emerging world economic powers. We counted on a rising China buying into a legacy system it benefited from and not rocking the boat. Now we hear from friends and foes that the time to rebuild the entire financial and monetary system of the world has come.
Today we focus on saving the global banking system, but after the dust settles, real questions will emerge about free-market capitalism and the role of the state (not least of which will be because the UST will rival ADIA in assets under management). It would be naïve to write this one off as a bubble born of a perfectly fine free market system , back to business as usual in a year – in the eyes of the rest of the world…”
There is much more to read on this subject in the Forum. I recommend taking a look.
