The forum that I found most interesting in the monetary policy conference was the opening dinner led by Jeffrey Frieden, who spoke on macroeconomic international cooperation between states. During the forum I was pleased to note just how much I understood about what he was describing from what I’ve been learning in my classes. In his opening remarks on the status quo of international political economic politics, for example, he alluded to the two prevailing theories of the modern age, one of which is too cynical, the other too utopian. It was exciting to catch the reference to the international relations theory which I’m learning about in one class, and how that pertains to real-world dynamics in IPE of which I’m learning in another. To hear him explain how multilateral liberalization and exchange rates lead to lower consumer prices domestically, was sometime I (who until this semester has zero knowledge of economics) had just learned a couple weeks prior in the case of China artificially undervaluing their currency for the benefit of both Chinese industries and American consumers. The brief discussion he gave on Great Britain as being the only historical example of unilateral liberalization was something I was vaguely aware of from Britain’s hegemonic precedent but hadn’t fully considered until then. The phenomenon of large consumer benefit and great industrial cost (which ultimately affects policy-making more drastically) poses an interesting question for me as to why multilateral liberalization in two different markets can offset the relative harms. Surely Chinese consumers must be hard-pressed with the rise of American partnership in business just as American businesses struggle to compete with foreign prices of labor and manufacturing. What makes multilateral liberalization and cooperation fundamentally different or less harmful than a purely domestic market policy, where in Frieden’s terms there “are more winners than losers?”
In addition to the references I have been currently learning about, there were a lot of points that I haven’t yet covered at all in my classes and was therefore grateful to consider for the first time. The 2008 economic crisis is something I’ve heard about ad nauseam, but the ramifications of the crisis amongst international players was something I hadn’t considered. Frieden explained how the crisis set a precedent that led to greater cooperation between principal central banks, and how emerging markets from developing countries were soon flooded with capital that led to borrowing in their own currencies. This, in turn, led to a skyrocketing of currency values that invited relatively cheap foreign borrowing, inevitably leading to speculative fear and total collapse. To see how the boom-and-bust effect of larger richer countries facilitated the untimely demise of developing countries was extremely interesting and novel to me. Another such extrapolation that I found interesting was a comment almost made in passing in which he mentioned the circulation of a new “unholy trinity” in IPE, consisting of state sovereignty, democracy, and global economic governance. Not even weeks prior, I had just been tested on the definition and application of the conventional “unholy trinity” of exchange rates; noting the evolution of such concepts and the most-current ideas of renown economists such as Frieden was a cool way to go beyond the classroom for the newest developments in economic theory.
The most provocative section of Frieden’s discussion however, was his speculation towards the end on how this should impact policy –in effect his argument. From what I understood, he made the claim that since leading banks don’t factor domestic economic impact into their behavior they should not be expected to contribute in any significant way to domestic policy. The nature of a bank, as with any corporation, is to maximize the profits of today in order to stay afloat in the economy. The lack of foresight therefore is not irresponsible so much as it reflects the prioritization of survival. Thus the burden of national, long term best interest, he argued, should fall on politicians who are more equipped to consider bigger-picture impacts of economic policies. The idea of international macroeconomic cooperation comes into play when politicians could be influenced by the approval of their congregation from said collaboration. I believe the term he used was “public attractiveness;” though, I’d be curious to know how much of politician’s constant striving for re-election that Frieden considered in making this theory. His argument that banks are not fit to make long-term decisions because of the competitive nature of their environment and their constant plight for self-preservation seems to hold especially too in the political arena as well. In terms of the broader analysis of international relations I must admit that I am encouraged to see him taking a stance in favor of being “too utopian” than “too cynical.” From what little I’ve learned about international relations liberalism seems to be the laughing stock of the majority of experts, and, perhaps in the naivety of youth, I would like to maybe enter the arena one day with the hope of making international interdependence more feasible than the pipe-dream that it is largely perceived as at present. Without a doubt there were a lot of points to Frieden’s argument that I didn’t understand fully or that just passed me by, but in the bigger picture I have to agree with the merits of his proposal more so than the downsides, and I’m very appreciative of the opportunity to hear his thoughts at the forum.