[Infowarrior] - A Reality Check on Our Fears

[Richard Forno]

A Reality Check on Our Fears

By Jim Hoagland
Sunday, February 18, 2007; B07
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/16/AR2007021601
806_pf.html

NEW YORK -- Global business is burbling while global politics croaks
messages of dread, frustration and hatred. It is supersized Dickens: The
best of times by many economic measures is also the worst of times when we
listen to the pollsters and the politicians.

Why this disjunction of spirits? Or to put it another way: Why not? Selling
fear is the oldest tool of politics. Selling hope and confidence is the
mother's milk of business. The more we get, the more we have to fear having
it taken away by "others" as defined by race, religion, class or rivalrous
sameness.

But there is a different, fragile feel to this particular "golden moment," a
term George Shultz used in a recent Washington talk. As a former secretary
of both Treasury and state, Shultz is credible in warning that the current
public fury with leaders, liberal trade policies and the conduct of nations
does not match -- and eventually can threaten -- the economic openings that
bring billions of new workers into global labor markets and generate huge
profits for the happy few of highest finance. Protectionism is the danger
Shultz has in mind.

The jarring contrast is easy to spot. I went recently from listening in
Washington to a hopeful Eric Schmidt, the chief executive of Google,
describe a world of growing individual empowerment and prosperity as Chinese
and Indian peasants join the Internet era to listening to politicians at the
annual Munich Conference on Security Policy darkly emphasize the threats of
terrorism, failed states, and, yes, American unilateralism and lawlessness.

That point was put most pungently by Russian President Vladimir Putin in a
widely misunderstood presentation. Putin's speech was an intensely personal
mocking of President Bush rather than a policy declaration of hostility
toward the United States. Moreover, it was laboriously calculated for
domestic political effect to bolster the other important Russian in Munich,
Sergei Ivanov.

It was bad cop, good cop. Ivanov talked reassuringly about U.S.-Russian
cooperation. Also a former KGB officer, Ivanov is moving forward now to
succeed Putin. He was portrayed on Moscow television as a statesmanlike
figure -- especially on one program filmed before either spoke in Munich but
shown afterward, one knowledgeable Russian told me. Putin promoted Ivanov to
become first deputy prime minister five days after the president's speech in
Germany.

Putin's political intentions and the mood of his audience reflect how the
national security imperative has displaced pocketbook issues that should
dominate political discourse today. A relatively strong global growth cycle
is continuing longer than experience and experts say is normal. You can
argue economic policies round or flat if you pick your own numbers. In this
confusion, foreign policy and national security issues become more salient
and decisive in campaigns around the world.

Putin's audience included Sen. John McCain, a leading Republican
presidential contender, who took the high road by characterizing Putin's
jabs as "aggressive" but quickly adding that Americans still must work with
Russia. But it did not include Sen. Hillary Clinton, the leading Democratic
contender. Clinton decided to stay away from a meeting she dazzled two years
ago. This time she did not want to be put in the position of criticizing the
Bush administration or Democratic rivals on Iraq from a foreign forum.

Instead she went to New Hampshire to criticize the Bush administration on
Iraq and to eclipse her Democratic rivals. Republican strategists hope she
will now "chase John Edwards to the left" to counter his populist economic
programs and thereby muddy her strong appeal to the electoral center on
national security.

The dynamic is similar in other democracies. French Prime Minister Dominique
de Villepin gets little to no political credit for announcing that
unemployment has declined steadily through his tattered term. Segolene
Royal, the Socialist presidential candidate, has tumbled from front-runner
to second place with foreign policy blunders that make her seem
inexperienced and duplicitous. (The second the French may forgive, but not
the first.) German Chancellor Angela Merkel presides over a stalemated
coalition and a surprisingly robust economy. No need to dwell on Tony
Blair's politically poisoned golden economic chalice in Britain.

Abundant financing in global markets and broad confidence in the ability of
today's central banks to control inflation have created a buoyant
international financial system in which risk premiums scrape historic lows.
Oil price volatility creates enormous psychological strain on Western
consumers -- but has not derailed growth to this point.

There is always cause for concern about markets overshooting, especially
when risk premiums evaporate. But the merchants of political despair are
overdoing it as they manipulate the new instruments of intrusive
round-the-clock communications. Breathe deep, look around at what is really
happening, and spend more time in life than online or in other forms of
virtual reality.

jimhoagland at washpost.com