GLOBAL MARKETS: WHO’S IN CHARGE HERE?: PANELISTS AGREE ON NEED FOR REGULATION BUT DIFFER ON STRUCTURE

Walter Wriston, who ran Citicorp in its glory days of international investment in the 1980s, is of two minds about money managers.

On the one hand, he excoriates “the 25-year-olds who invested in Mexico because they were getting 14%. Then when the economy crashed, the Mexican standard of living fell 50%, the people who should have been helped took it in the chops and the managers were golden,” because the U.S. government bailed them out.

On the other hand, he sees the 200,000 business computer terminals around the world – many of them staffed by the same managers grown a little older and presumably somewhat wiser – as the chief force for both efficient markets and for global democracy.

too much liberalization

The gold standard has been replaced by one that is “a great deal more draconian: the information standard. The genie is out of the bottle,” he told a Reuters Forum this month at Columbia University’s Graduate School of Journalism in New York. The topic was: Are global institutions a match for global markets?

Mr. Wriston clearly thinks they aren’t.

Presidents and prime ministers used to be able to back out of currency rate deals they didn’t like, but, “No more. There’s no place to hide,” he said. “The information standard rewards the good, open society, and punishes the bad.”

“There is no antidote to the freedom virus, ” he said. “Freedom is a messy thing and it slops over into markets.”

Another panelist, Clyde Preskowitz of the Economic Strategy Institute, while agreeing that Internet technology spreads liberalization globally, isn’t so sure that it’s such a hot idea for everybody’s market – or for democracy, for that matter.

Liberalization contributed to the collapse of the won in Korea, he said, and American investment in China has turned U.S. industry into an effective lobby for Beijing’s oppressive regime.

committed to diversity

“Capitalism is the most revolutionary and most disruptive force ever unleashed on
mankind,” he said, adding a warning: “All markets aren’t the same. There are a lot of markets, each different, each with its own set of rules set by its own government.”

The European Union, he said, is promoting “deep integration,” including social and political values and democracy, to make its economic agreement work: “not like the North American Free Trade Agreement and Mexico.”

The structures of world markets need to be made democratic and the U.S. government must set the pace, he contended.

The third panelist, Columbia economics professor Jagdish Bhagwati, while agreeing that democracy is a good idea, differed with Mr. Preskowitz. “I’m for diversity, with some conditions.”

“Something coming from Washington today is not necessarily best for the rest of the world,” he said.

He sees domestic governance as the most important restraint on an unbridled market economy, but he also believes in the need for agencies such as the World Trade Organization. “Only something like the WTO can restrain the enormous power of the United States and the United Nations,” Mr. Bhagwati said.

“We Americans are throwing stones at other people’s glass houses while building moats around our own.”

The other two panelists agreed with the need for restraint by the United States. “Intervention is always a short-term disaster,” Mr. Wriston said.