What does it say when an America that once saved the world is now turning cap-in- hand to a collection of anti-democratic regimes from Dubai to China?
Already, foreign funds, mainly controlled by nations and regimes that hold democracy suspect, to say the least, have pumped nearly $20 billion into Citigroup and Merrill Lynch as a result of the credit debacle that has them floating in a self-created sea of write-downs and losses. Billions more are being funneled into Morgan Stanley and Bear Stearns from the same offshore sources. So it is that American capitalism has lost its primacy to such an extent that it must now turn to lands far away for its salvation. The distance is more than geographical. It is deeply ideological.
Throughout the 20th century, much of the world was accustomed to seeing an America that frequently came to the rescue of the global economy. The showcase of this effort was the Marshall Plan, which saw Europe and Japan rebuilt in the aftermath of the Second World War. Americans themselves supported this role because they understood that great power carried with it great responsibility. For many, it represented an affirmation that democracy and economic success went hand in hand, and that freedom was the virtue that most embodied America and permitted it to thrive, innovate and serve as an example of leadership to the world.
But what does it say when an America that once saved the world is now turning cap-in-hand to a collection of anti-democratic regimes from Dubai to China? And what does it say about the leaders on Wall Street and in Washington that permitted such a slide to occur? To a very real extent, the failures that have roiled the stock markets and are hurtling the economy toward recession are also failures in corporate governance and in the vigilance of the guardians and watchdogs that were supposed to be protecting against the unwise exercise of risk in the post-Enron era. Wasn’t the Sarbanes-Oxley Act of 2002 –the same legislation many in business and in the Bush administration, including Treasury secretary Henry Paulson, have been attempting to ease– created to instill a culture on the part of boards of directors specifically to protect against this kind of sudden blindsiding of disaster? In this sad spectacle, the sentries were clearly asleep, while the fee-greedy bankers and lenders ran amok. And, as in the Enron-era scandals, several of the CEOs who also chaired the boards while presiding over these calamities have made off with a bundle.
The subprime debacle is about more than multi-billion dollar losses and a shift on balance sheets of stock ownership. It is about a sea change in values and realities that does not bode well for America, for capitalism or for democracy and the implications of which are yet to be fully appreciated and debated. It is also about the decline –some might suggest betrayal– in the stewardship of the American economy that was once a beacon to the world. At the very least, it is a worthy subject of discussion in boardrooms, among presidential candidates and among the people of America who will be most affected.
America does not look good when it is engaged in a Marshall Plan – – in reverse.