# Politics, ‘hypocrisy’ cost US global economic leadership: ex-Treasury chief



## LastOutlaw (Jun 1, 2013)

http://rt.com/usa/247229-summers-world-economy-us/

Politics, 'hypocrisy' cost US global economic leadership: ex-Treasury chief

The US may no longer be in control of the global economy, warned former Treasury Secretary Lawrence Summers, urging Washington to regain dominance by honoring commitments and stopping its own hypocrisy.

China's establishment of the Asian Infrastructure Investment Bank (AIIB), and Washington's failure to stop its traditional allies from joining, was a development without precedent since the 1944 Bretton Woods conference established the current international financial order, Summers wrote in an op-ed published by the Financial Times and Washington Post, among others.

*"This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system," he wrote on twitter. 
*
Summers explained that a combination of internal politics, hypocrisy in applying rules, and disregard for the middle class in global policies combined to isolate the US and open the way for alternate financial architecture such as the AIIB to arise.

It was Washington that proposed governance reforms for the International Monetary Fund (IMF) in 2009, Summers noted, only to see them stall in Congress due to "resistance from the right." However, he also blamed "pressures from the left" for restricting infrastructure investments through the existing financial institutions, at the time when most developing countries need them the most.

"With US commitments unhonored [sic] and US-backed policies blocking the kinds of finance other countries want to provide or receive through the existing institutions," the way was clear for the AIIB, Summers wrote.

To repair the US position in the financial world before it becomes irreversible, Summers suggests a three-point strategy. Firstly, the US should adopt a bipartisan approach, free from "gross hypocrisy" and "restrained in the pursuit of self-interest."

Read More: China-led infrastructure bank - 'indication of de-dollarization that makes US unhappy'

"As long as one of our major parties is opposed to essentially all trade agreements, and the other is resistant to funding international organizations, the US will not be in a position to shape the global economic system," he wrote.

Just as importantly, the "legitimacy of US leadership depends on our resisting the temptation to abuse it," Summers argued, pointing out that allies and partners found it aggravating when US lawmakers insisted that international laws and treaties did not apply to American companies or government.

Summers also advocated policymakers not to neglect the middle class, warning that the present global politics do just that, catering primarily to the rich elites and to some extent to the poor. Lastly, he cautioned against imposing austerity, arguing that "we may be headed into a world where capital is abundant and deflationary pressures are substantial," so the emphasis ought to be on promoting investments.

Formerly the Chief Economist at the World Bank (1991-1993), Summers served as Treasury Secretary under Bill Clinton (1993-2001), President of Harvard University (2001-2006) and director of the National Economic Council under Barack Obama (2009-2010).


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## RevWC (Mar 28, 2011)

> Just as importantly, the "legitimacy of US leadership depends on our resisting the temptation to abuse it," Summers argued, pointing out that allies and partners found it aggravating when US lawmakers insisted that international laws and treaties did not apply to American companies or government.


International laws not so much. Treaties are another story. International Laws by executive order not at all!


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## Woody (Nov 11, 2008)

Don't worry, the new and improved Trans-Pacific trade partnership will take care of all that. And as soon as they pass it, we can find out what is in it!!!


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## bigg777 (Mar 18, 2013)

Now if we can only lose our position as the world's police force, we'll be doing just fine!


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## BillS (May 30, 2011)

The real problem is that the world is about to stop selling us their stuff in exchange for useless paper.


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## LastOutlaw (Jun 1, 2013)

BillS said:


> The real problem is that the world is about to stop selling us their stuff in exchange for useless paper.


The real problem is that every dollar you own will be worth .25 cents or even less.


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## BillS (May 30, 2011)

LastOutlaw said:


> The real problem is that every dollar you own will be worth .25 cents or even less.


That's coming. Jim Willie said that there would be two dollar devaluations. I think he said 35% for each one. Eventually when the whole world starts dumping all their dollars we're going to see 1920's-Germany-style hyperinflation.


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