THE FRENCH MODEL LIES SMOKING ON A BRAZILIAN RUNWAY:

The meaning of EADS: In the end, it was a fight between globalisation and nationalism—and globalisation won (The Economist, 7/19/07)

A MEETING at the Airbus head office between Angela Merkel and Nicolas Sarkozy on July 16th was due to bring the drama of EADS to a climax. But the expected face-off in the battle for control of European Aeronautic Defence and Space, the parent company of Airbus and Eurocopter, never happened. For even before the German chancellor and the French president sat down together, the company announced that the dispute had been satisfactorily resolved.

In some ways the story of EADS has been a one-off. No firm has ever been so bitterly fought over by two governments. No company has ever been saddled with such a daft management structure in consequence. No corporate saga has ever demonstrated quite so conclusively that politics and business don't mix. But the tale illustrates a general point too: that even the maddest manifestations of economic nationalism give way in the end to the pressure of globalisation.

Bridging the globalism-nationalism gap (Max Fraad Wolff, 7/20/07, Asia Times)

The United States is fundamentally dependent on the rest of the world and the present financial and trade architecture. The US imports 64% of the world's savings and increasing portions of its food, energy, appliances, clothing, toys, vehicles and inputs to production. Foreign nationals, funds, firms and governments have been literally supporting US households, firms and the government with credit.

At present 52% of marketable US Treasury debt obligations are foreign-owned. More than $1 of every $3 lent to Uncle Sam is lent by a foreign government, and 35% of marketable US Treasuries are owned by foreign government institutions. Foreign entities own 20% of US corporate bonds and 14% of US equities.

You would never know it from the political rhetoric and debate in the US. The Securities and Exchange Commission (SEC) is currently terror-baiting numerous firms - disproportionately foreign - on its official website. The United States is fast becoming the worst offender in terms of political policy, statements and actions that ignore interdependence and offer nasty hyperbole. Real tensions with Russia are seen in a mini-cold war light as US pundits and politicians just cannot seem to fathom divergent opinion.

Blocking deals with Middle Eastern and East Asian firms proliferates as US private-equity firms, hedge funds and investment advisers look offshore for growth opportunities. Massive tariffs against Chinese goods are regularly debated in Congress. Some are beginning to refer to rumblings and restrictions with China as a trade war.

A rapidly growing portion of America's goods and services are imported. A rising percentage of American workers are employed in foreign enterprises or in export industries. More than 5% of US private employment is in foreign multinational affiliates operating in the United States. Investment flows into foreign mutual funds have topped the charts for the past several years. Leading US firms operate in more and more foreign lands and are growing and shifting operations offshore.

US multinational enterprises and their affiliates employed more than 31 million offshore workers in 2004. The foreign component of reported corporate earnings has been rising more rapidly than gross domestic product. US corporations earned a reported US$292 billion from offshore activities during the first quarter of 2007. Leading American politicians, pundits and business leaders preach to the world about free trade and unfettered market efficiency.

Nationalists, nativists, isolationists, statists, etc., can win an occassional holding action, but they're continually losing ground overall and the only question is the pace at which they lose the war.

MORE:
The cross of gold: The Democratic candidates have veered to the left (The Economist, 7/19/07)

AT LEAST no one will be able to say that they were not given a clear choice. It is 15 months to election day, and the identity of the nominee on each side remains shrouded in uncertainty. But it is already pretty clear that whoever the two candidates are, the Democrat will run well to the left of the Republican. The 2008 presidential election is shaping up to be a battle over nothing less than America's attitude to globalisation. [...]

The Democrats who, in the 1990s, gave America the Uruguay round, the North American Free-Trade Agreement (NAFTA) and permanent most-favoured-nation trading status for China have changed. Alas, none of the leading candidates, and precious few Democrats of any stripe, would now call themselves free-traders.

Even Hillary Clinton, the most centrist of the leading Democratic contenders, whose husband signed all three of those big trade deals, has found it politic to project herself as a trade sceptic. She opposes a free-trade deal with South Korea, America's seventh-biggest trading partner, and voted against the Central American Free-Trade Agreement. She has said that America needs a “little time out” before making any further trade deals. The two leading candidates to her left have gone further. John Edwards and Barack Obama have both denounced NAFTA and called for its renegotiation. None of the three supported moves to extend the president's “fast-track” trade negotiation authority, which expired last month.

The Economist, naturally, does not take this view. It would be naive not to recognise that many middle-class Americans feel that the huge burst of globalisation since the 1990s has not benefited them much: real average wages have been flat and perceived job insecurity has increased. But globalisation is a scapegoat; many economists argue that rising inequality has far more to do with technology (which Mrs Clinton, strangely enough, is not condemning) than with trade. And what happens to American jobs when foreigners start retaliating with trade barriers of their own?

Sweating in Sarkoland: Coping with the irksome notion of hard work (The Economist, 7/19/07)

A DISTURBING thought is gently dawning on the French. What if President Nicolas Sarkozy really means it about working hard in the new France? How, but how, in the land of the 35-hour week, are the French to cope?

Worrying signs that he may be serious abound. At a time when the French usually head off on their long summer break, the president has ordered deputies to attend a special session of parliament until August 3rd. The “hyper-president” is setting the pace with his own whirlwind schedule. At his White House-style briefing last week, his spokesman, David Martinon, had already lost his voice.

Christine Lagarde, the finance minister, has unveiled a new “law in favour of work”. “France is a country that thinks,” she declared. “But enough thinking now! It's time to roll up our sleeves.” Mr Sarkozy campaigned on the slogan “working more to earn more”, lauding “the France that gets up early”. Ms Lagarde intends to put this into action. It was time, she said, to break with a French “tradition of contempt” for work “that reaches back to the ancien régime.”

The culture shock promises to be brutal.

End of Dreams, Return of History (Robert Kagan, 7/19/07, Real Clear Politics)

The world has become normal again. The years immediately following the end of the Cold War offered a tantalizing glimpse at a new kind of international order, with nations growing together or disappearing altogether, ideological conflicts melting away, cultures intermingling through increasingly free commerce and communications. But that was a mirage, the hopeful anticipation of a liberal, democratic world that wanted to believe the end of the Cold War did not end just one strategic and ideological conflict but all strategic and ideological conflict. People and their leaders longed for "a world transformed." Today the nations of the West still cling to that vision. Evidence to the contrary -- the turn toward autocracy in Russia or the growing military ambitions of China -- is either dismissed as a temporary aberration or denied entirely. [...]

When the Cold War ended, it was possible to imagine that the world had been utterly changed: the end of international competition, the end of geopolitics, the end of history. When in the first decade after the Cold War people began describing the new era of "globalization," the common expectation was that the phenomenon of instantaneous global communications, the free flow of goods and services, the rapid transmission of ideas and information, and the intermingling and blending of cultures would further knit together a world that had already just patched up the great ideological and geopolitical tears of the previous century. "Globalization" was to the late twentieth century what "sweet commerce" was to the late eighteenth -- an anticipated balm for a war-weary world.

In the 1990s serious thinkers predicted the end of wars and military confrontations among great powers. European "postmodernism" seemed to be the future: the abandonment of power politics in favor of international institutions capable of managing the disagreements among nations. Even today, there are those who believe the world is moving along the same path as the European Union. John Ikenberry recently described the post-Cold War era, the decade of the 1990s, as a liberal paradise:

NAFTA, APEC, and the WTO signaled a strengthening of the rules and institutions of the world economy. NATO was expanded and the U.S.-Japan alliance was renewed. Russia became a quasi-member of the West and China was a "strategic partner" with Washington. Clinton's grand strategy of building post-Cold War order around expanding markets, democracy, and institutions was the triumphant embodiment of the liberal vision of international order. 22

Perhaps it was these grand expectations of a new era for humankind that helped spur the anger and outrage at American policies of the past decade. It is not that those policies are in themselves so different, or in any way out of character for the United States. It is that to many people in Europe and even in the United States, they have seemed jarringly out of place in a world that was supposed to have moved on.

As we now know, however, both nationalism and ideology were already making their comeback in the 1990s. Russia had ceased to be and no longer desired to be a "quasi-member" of the West, and partly because of NATO enlargement. China was already on its present trajectory and had already determined that American hegemony was a threat to its ambitions. The forces of radical Islam had already begun their jihad, globalization had already caused a backlash around the world, and the juggernaut of democracy had already stalled and begun to tip precariously.

After the Second World War, another moment in history when hopes for a new kind of international order were rampant, Hans Morgenthau warned idealists against imagining that at some point "the final curtain would fall and the game of power politics would no longer be played. " But the world struggle continued then, and it continues today. Six decades ago American leaders believed the United States had the unique ability and the unique responsibility to use its power to prevent a slide back to the circumstances that produced two world wars and innumerable national calamities. Although much has changed since then, America 's responsibility has not.

Perhaps missing the point that China and Russia--nevermind al Qaeda--offer no alternative to the Western (Anglo-American) model and are trivial military challengers. Folks seem awfully bothered that the End of History didn't happen with a snap of the fingers. You'd think some patience might be warranted.

Posted by Orrin Judd at July 19, 2007 7:12 PM