The System Worked_How the World Stopped Another Great Depression

by Daniel W. Drezner

  99. Tom Mitchell and Lucy Hornby, “China’s Pledge of Big Reforms Cements Era of Market Forces,” Financial Times, November 12, 2013; Carlos Tejada, “China Endorses ‘Decisive Role’ for Markets as Plenum Concludes,” Wall Street Journal, November 12, 2013.

  100. Christian Murck, “The Third Plenum: Prospects for Reform in China,” National Bureau of Asian Research Commentary, December 4, 2013, http://www.nbr.org/research/activity.aspx?id=376#.UtBEovRDtw4.

  101. Steinfeld 2010.

  102. Roach 2009; Woetzel et al. 2009.

  103. On prior third plenum promises coming to naught, see Keith Bradsher, “China’s Leaders Confront Economic Fissures,” New York Times, November 6, 2013. On state-owned enterprises, see Bob Davis and Brian Spegele, “State Companies Emerge as Winners Following Top China Meeting,” Wall Street Journal, November 13, 2013.

  104. See, for example, Jamil Anderlini, “How Long Can the Communist Party Survive in China?” Financial Times, September 20, 2013; Simon Denyer, “China’s Leader, Xi Jinping, Consolidates Power with Crackdowns on Corruption, Internet,” Washington Post, October 3, 2013.

  105. Chris Buckley, “China Takes Aim at Western Ideas,” New York Times, August 19, 2013.

  106. Li Keqiang, “China Will Stay the Course on Sustainable Growth,” op-ed, Financial Times, September 8, 2013.

  107. Williamson 1990; Quiggin 2010.

  108. Quiggin 2010; Irwin 2013, chapter 8.

  109. Farrell and Quiggin 2013, pp. 19–20.

  110. Kotios and Galamos 2012, p. 870.

  111. Farrell and Quiggin 2013, p. 20.

  112. Lawrence Summers, “The $700bn Bail-Out and the Budget,” Financial Times, September 28, 2008.

  113. Martin Feldstein, “The Stimulus Plan We Need Now,” Washington Post, October 30, 2008. Rogoff, quoted in Rich Miller and Matt Benjamin, “Calls for $1 Trillion Stimulus Package Grow as Economy Tumbles,” Bloomberg, December 4, 2008, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afWnxP9Dzv0M. For Lindsey, see Jim Kuhnhenn, “Obama Looking at $850 Billion Jolt to the Economy,” Associated Press, December 17, 2008, http://www.foxnews.com/printer_friendly_wires/2008Dec17/0,4675,ObamaStimulus,00.html.

  114. Robert Lucas, “Bernanke Is the Best Stimulus Right Now,” Wall Street Journal, December 23, 2008.

  115. See, for example, Baldwin and Eichengreen 2008; or Paul Krugman, “The Keynesian moment,” The Conscience of a Liberal (blog), New York Times, November 29, 2008, http://krugman.blogs.nytimes.com/2008/11/29/the-keynesian-moment/.

  116. N. Gregory Mankiw, “What Would Keynes Have Done?” New York Times, November 28, 2008.

  117. “Transcript of a Press Briefing by Dominique Strauss-Kahn,” IMF, Washington DC, November 15, 2008, https://www.imf.org/external/np/tr/2008/tr081115.htm.

  118. On the US dominance in the economics profession, see Fourcade 2006; Chwieroth 2009; and Farrell and Quiggin 2013, pp. 15–17.

  119. Darling 2011, p. 177.

  120. Bertrand Benoit, “Berlin’s Next Stimulus Awaits Obama,” Financial Times, December 14, 2008.

  121. Steinbrück, interview with Stefan Theil, Newsweek, December 15, 2008.

  122. Bertrand Benoit, “Woman in the News: Angela Merkel,” Financial Times, January 16, 2009.

  123. Jean-Claude Trichet interview with the Financial Times, December 15, 2008.

  124. Farrell and Quiggin 2013, pp. 24–25; Irwin 2013, pp. 157–60.

  125. Schieritz 2013.

  126. Benoit, “Angela Merkel.”

  127. Prasad and Sorkin 2009.

  128. Bruce Stokes, “Europe: Go Ahead and Spend, Please,” National Journal, January 31, 2009.

  129. Brian Parkin and Rainer Burgin, “Merkel’s Coalition Forges Extra $66 Billion Stimulus,” Bloomberg, January 13, 2009.

  130. Farrell and Quiggin 2013, p. 33. See also Schieritz 2013.

  131. Farrell and Quiggin 2013.

  132. Ibid., p. 31.

  133. Quoted in Bruce Stokes, “Berlin-Washington Tensions,” National Journal, April 11, 2009.

  134. See Hurd 1999; Johnston 2001.

  135. See, for example, Krugman 2013, and Blyth 2013, pp. 62–64.

  136. Irwin 2013, chapter 13; Farrell and Quiggin 2013; Blyth 2013.

  137. Alan Greenspan, “U.S. Debt and the Greece Analogy,” Wall Street Journal, June 18, 2010.

  138. Alesina and Ardagna 2009, p. 2.

  139. Reinhart and Rogoff 2010, p. 2.

  140. “Not So Risk Free,” Economist, February 11, 2010.

  141. Alesina 2010, pp. 1 and 3.

  142. Islam and Choudhury 2012.

  143. International Monetary Fund 2010, p. 94.

  144. A fact they themselves documented at http://www.reinhartandrogoff.com/related-research/growth-in-a-time-of-debt-featured-in.

  145. Walter Alarkon, “U.S. Debt Reaches Level at Which Economic Growth Begins to Slow,” The Hill, May 26, 2010.

  146. For a plethora of examples of Reinhart and Rogoff’s influence, see Tim Fernholz, “How Influential Was the Rogoff-Reinhart Study Warning That High Debt Kills Growth?” Quartz, April 16, 2013.

  147. Krugman 2013.

  148. Alesina quoted in Peter Coy, “Keynes vs. Alesina. Alesina Who?” Business Week, June 29, 2010.

  149. See, for example, David Ignatius, “How Debt Imperils National Security,” Washington Post, May 23, 2010.

  150. Ferguson 2010, p. 27.

  151. See, for example, Altman and Haass 2010; Roya Wolverson interview with Sebastian Mallaby, “The Sovereign Debt Dilemma,” February 5, 2010, http://www.cfr.org/economics/sovereign-debt-dilemma/p21381; Benn Steil and Paul Swartz, “Dangers of U.S. Debt in Foreign Hands,” Financial News, June 14, 2010.

  152. Steil 2010.

  153. Irwin 2013, pp. 208–9.

  154. Wolfgang Scháuble, “Maligned Germany Is Right to Cut Spending,” Financial Times, June 23, 2010.

  155. Jackie Calmes and Sewell Chan, “Leaders at Summit Turn Their Attention to Deficit Cuts,” New York Times, June 26, 2010.

  156. Jean-Claude Trichet, “Stimulate No More—It Is Now Time for All to Tighten,” Financial Times, July 22, 2010.

  157. Blyth 2013.

  158. Paul Krugman, “Debt and Denial,” New York Times, February 13, 2006. See also Krugman, “Another Bogus Budget,” New York Times, February 3, 2004.

  159. Skidelsky 2009.

  160. Krugman 2013. For another example, see Whitehead 2008.

  161. Blyth 2013; Farrell and Quiggin 2013; Krugman 2013.

  162. De Grauwe and Li 2013. Se also Martin Wolf, “The Sad Record of Fiscal Austerity,” Financial Times, February 26, 2013; John Quiggin, “Austerity Has Been Tested, and It Failed,” Chronicle of Higher Education, May 20, 2013.

  163. International Federation of the Red Cross and Red Crescent 2013.

  164. Congressional Budget Office 2013.

  165. International Monetary Fund 2010, chapter 3.

  166. See, for example, “Cutting Edge,” Economist, September 30, 2010.

  167. Herndon, Ash, and Pollin 2013.

  168. See, for example, Brenda Cronin, “Seminal Economic Paper on Debt Draws Criticism,” Wall Street Journal, April 16, 2013.

  169. Lagarde, quoted in “Ease Off Spending Cuts to Boost U.S. Recovery,” IMF Survey, Magazine, June 14, 2013, http://www.imf.org/external/pubs/ft/survey/so/2013/car061413a.htm.

  170. Pew Research Global Attitudes Project, “The New Sick Man of Europe: the European Union,” May 13, 2013, http://www.pewglobal.org/2013/05/13/the-new-sick-man-of-europe-the-european-union/.

  171. Clifford Marks, “In Media Coverage, Deficit Eclipses Unemployment,” National Journal, May 16, 2011; Dylan Byers, “Epic Media Fail, Deficit Edition,” Politico, February 27, 2013, http://www.politico.com/blogs/media/2013/02/epic-media-fail-deficit-edition-158044.html.

  172. Dana Blanton, “Fox News Poll: Voters Back Spending Cuts to Boost Economy by Huge Margins,” Fox News, http://www.foxnews.com/politics/2013/02/08/voters-say-government-should-cut-spendi
ng-rather-than-increase-it-as-way-to/.

  173. Michael Steen and Ralph Atkins, “Draghi’s ‘Dirty Harry’ Act Keeps Euro Crisis at Bay,” Financial Times, July 22, 2013.

  174. Peter Spiegel and Peter Ehrlich, “Eurozone Anti-Austerity Camp on the Rise,” Financial Times, April 21, 2013.

  175. Alison Smale, “A Fiscal Scold, Merkel, Softens Tone at Home,” New York Times, November 1, 2013.

  176. Ben White and Tarini Parti, “Democrats Ask: What Debt Crisis?” Politico, April 28, 2013, http://www.politico.com/story/2013/04/democrats-debt-crisis-90717.html.

  177. For the contours of this debate, see Charles Krauthammer, “Obama Unbound,” Washington Post, January 24, 2013; Joe Scarborough, “Paul Krugman vs. the World,” Politico, January 28, 2013, http://www.politico.com/story/2013/01/paul-krugman-vs-the-world-86822.html; and Haass 2013, pp. 123–28.

  178. Andrew Higgins, “Europe Facing More Pressure to Reconsider Cuts as a Cure,” New York Times, April 26, 2013; Jackie Calmes, “Lines Blur in U.S.-Europe Debate on Austerity,” New York Times, June 16, 2013.

  179. Bank for International Settlements 2012, 2013.

  180. Bank for International Settlements 2013, p. 5.

  181. James 2001.

  182. Gordon and Dahl 2013.

  183. On the development and spread of these ideas, see Yergin and Stanislaw 1997; Frieden 2006; Burgin 2012.

  184. Burgin 2012, p. 216. See also Babb 2013, p. 286.

  Chapter 7

  1. Data in this paragraph comes from Sorkin 2009, chapter 19.

  2. See Mishkin 2010, pp. 6–12.

  3. Bowman and Rugg 2010.

  4. Mishkin 2010; Aït-Sahalia et al. 2012.

  5. Blinder and Zandi 2010.

  6. See “Bailouts: Banks and Automakers,” Chicago Booth School of Business IGM Survey, November 13, 2012, http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_0qeKwxLWkDyiwjX.

  7. Rich Miller, “Wall Street Fix Seen Ineffectual by Four of Five in U.S.” Bloomberg, July 13, 2010; “Possible Negatives for Candidates: Vote for Bank Bailout, Palin Support,” Pew Research Center, October 6, 2010, http://www.people-press.org/2010/10/06/possible-negatives-for-candidates-vote-for-bank-bailout-palin-support/.

  8. Ben Smith, “TARP: A Success None Dare Mention,” Politico, September 14, 2010, http://www.politico.com/news/stories/0910/42135.html.

  9. Hoffman 2012, p. 3.

  10. Frieden 2006; James 2001.

  11. Ip 2013.

  12. Keohane 2009, pp. 42 and 39.

  13. Rodrik 2011b; Eichengreen, Park, and Shin 2011; Sharma 2012.

  14. Sharma 2012, p. 4. See also Ruchir Sharma, “How Emerging Markets Lost Their Mojo,” Wall Street Journal, June 26, 2013.

  15. Sinead Cruise and Chris Vellacott, “Emerging Markets Mania Was a Costly Mistake: Goldman Executive,” Reuters, July 4, 2013, http://www.reuters.com/article/2013/07/04/goldman-emerging-investment-idUSL5N0F138620130704; Luciana Megalhanes, “China Only BRIC Country Worthy of the Title—O’Neill,” Wall Street Journal, August 23, 2013; Jim O’Neill, “Who You Calling a BRIC?” Bloomberg, November 12, 2013, http://www.bloomberg.com/news/2013-11-12/who-you-calling-a-bric-.html.

  16. Grimes 2009; Sohn 2013.

  17. Ikenberry 2011; Mearsheimer 2010.

  18. See Oatley 2011 and Drezner and McNamara 2013 for fuller critiques.

  19. Strange 1987; Schwartz 2009.

  20. Meunier 2013; Huang 2013.

  21. Zakaria 2008; Mastanduno 2009.

  22. See, for example, Wolfgang Münchau, “Optimism about an End to the Euro Crisis Is Wrong,” Financial Times, October 27, 2013.

  23. Nathaniel Popper, “Global Sell-Off Shows Fed Reach beyond the U.S.” New York Times, June 21, 2013; Alex Frangos and Eric Bellman, “China Slump Ripples Globally,” Wall Street Journal, July 15, 2013.

  24. Drezner 2013b, pp. 73–77.

  25. Patrick 2010.

  26. Clive Crook, “Broken Systems Plus Bad Ideas Equals Lame Recovery,” Bloomberg, July 10, 2013, http://www.bloomberg.com/news/2013-07-10/broken-systems-plus-bad-ideas-equals-lame-recovery.html; George Soros, “The World Economy’s Shifting Challenges,” Project Syndicate, January 2, 2014, http://www.project-syndicate.org/commentary/george-soros-maps-the-terrain-of-a-global-economy-that-is-increasingly-shaped-by-china.

  27. Arvind Subramanian, “Too Much Legitimacy Can Hurt Global Trade,” Financial Times, January 13, 2013.

  28. Hale, Held, and Young 2013.

  29. Drezner 1999.

  30. Ahamed 2009, pp. 43–44.

  31. MacMillan 2013.

  32. Song and Yuan 2012, p. 112.

  33. Sohn 2013; Patrick 2014.

  34. This paragraph draws from Drezner 2013a. See also Patrick 2014.

  35. Bhagwati 2004.

  36. Freeland 2012.

  37. Cowen 2011; Gordon 2012.

  38. Oatley, Winecoff, Pennock, and Danzman 2013.

  39. Beckley 2011/12, p. 78; Kagan 2012, p. 131.

  40. Subramanian 2013, p. 4. For other examples of this genre, see Ian Bremmer and David F. Gordon, “Powers on the Mend,” New York Times, April 10, 2013; Ely Ratner and Thomas Wright, “America’s Not in Decline—It’s on the Rise,” Washington Post, October 18, 2013.

  41. Daniel Yergin, “The Global Impact of US Shale,” Project Syndicate, January 8, 2014, http://www.project-syndicate.org/commentary/daniel-yergin-traces-the-effects-of-america-s-shale-energy-revolution-on-the-balance-of-global-economic-and-political-power.

  42. Song and Yuan 2012.

  43. Johnston and Trebilcock 2013.

  44. Willett 1999; Beeson and Bell 2009.

  45. Reinhart and Rogoff 2009.

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