Monetary Supply and Politics: Comparing the US vs. EU
It's very interesting to see how the American political economy stands in comparison with that of other countries and political systems around in the world, especially in the current global context, where the forces of globalization are accelerating faster than ever and presenting new challenges to political leaders about how to balance domestic economic concerns and sovereignty with a desire to remain relevant on the international stage.
More recently, the crisis regarding Greece's status as a member of the EU and its economic concerns highlights the different ways in which integration into international or regional agreements can be potentially disastrous. As we have examined in part 2 of this project, one of the major ways a government can respond or initiate changes in the economic realm is through monetary policy. However, because Greece is a member of the EU, it does not possess the same sovereignty as the US over the monetary supply, and thus is unable to counteract the problems of its recession without consulting with or appealing to the many other member states of the EU (Seyler and Levendis, 2013: 119).
The US political system differs from Greece in that we still maintain complete sovereignty over the direction of our own monetary and fiscal policies, despite also being immersed in the global economy. Far from being overwhelmingly dependent on the economic goodwill and trade relations with other countries, however, the US is unique in that our economic status further empowers our political authority and ambitions due to the fact that there is usually an asymmetric balance of power in most US trade relationships on the US side. Seen through this regard, the US government has a unique position in leveraging so much power not only over its own economy, but over other economies in the world that rely on the stability and relative value of the U.S. dollar. The USD in the contemporary world is the closest thing to the world's currency---given the EU's current dilemma with Greece, the Euro is no longer a competitor.
More recently, the crisis regarding Greece's status as a member of the EU and its economic concerns highlights the different ways in which integration into international or regional agreements can be potentially disastrous. As we have examined in part 2 of this project, one of the major ways a government can respond or initiate changes in the economic realm is through monetary policy. However, because Greece is a member of the EU, it does not possess the same sovereignty as the US over the monetary supply, and thus is unable to counteract the problems of its recession without consulting with or appealing to the many other member states of the EU (Seyler and Levendis, 2013: 119).
The US political system differs from Greece in that we still maintain complete sovereignty over the direction of our own monetary and fiscal policies, despite also being immersed in the global economy. Far from being overwhelmingly dependent on the economic goodwill and trade relations with other countries, however, the US is unique in that our economic status further empowers our political authority and ambitions due to the fact that there is usually an asymmetric balance of power in most US trade relationships on the US side. Seen through this regard, the US government has a unique position in leveraging so much power not only over its own economy, but over other economies in the world that rely on the stability and relative value of the U.S. dollar. The USD in the contemporary world is the closest thing to the world's currency---given the EU's current dilemma with Greece, the Euro is no longer a competitor.
Case Study: Trans-Pacific Partnership
An example of how the changing forces of globalization require controversial new approaches to economic policy can be seen in Obama's effort to embed the United States within the Trans-Pacific Partnership trade agreement, which would allow the US access and increased influence in a region of the world expected to see enormous gains in development, economic growth, and technological innovation in the near future. The ongoing debate surrounding Obama's attempts to gain support for this initiative through Congress and the opposition stance that advocates US exclusion from this agreement serve as a valuable opportunity to see how the American political system often intervenes in the shaping of its economic policies both at home and abroad.
First, it is evident that support for and opposition towards the finalization of US involvement in the Trans-Pacific Partnership is sharply divided along partisan lines. Democrats, who as we have seen often advocate economic policies in the interests of protecting the working class in the prioritization of social welfare over anything else, see US involvement in TPP as a clear detriment as opening the US further to trade would inevitably displace thousands of American workers through increased practices of outsourcing labor abroad. Republicans, who often take a pro-business stance keeping in line with the idea that limited government produces the greatest gains by allowing market forces to operate without inhibitions, see TPP as a great opportunity for accelerating economic growth through increased trade, as strong ties to the Asian region mean not only broader markets for American goods, but also access to valuable supplies and services produced more cheaply abroad.
Arguments supporting US participation in TPP are representative of how economic tools serve as a powerful means for exerting American authority and relevance all over the world. It could be argued, depending on one's political views and interpretations, that implicit within proposals for American involvement in TPP are imperialist undertones, and that talk about economic openness is really just a cover for a hidden political agenda.
On the other hand, arguments against US participation in TPP are representative of how the US democratic system often incentivizes policymaking that caters more to popular opinion than to the best interests of the country as a whole. There is a great deal of empirical evidence pointing to how alleviating trade barriers benefits the overall economies on both sides as a whole, and that these benefits significantly outweigh the costs incurred by a small minority. However, when that small minority rallies together to form a cohesive voice to pressure Congress members in a specific direction, it becomes much more difficult to come to a consensus and to acquire benefits for the much larger, but also much more impassive general public.
The fact that so much of US economic policy is contingent on the democratic process is in stark contrast to other countries' political systems like China, in which the direction of policymaking is much more influenced by other factors, such as rivalry within the domestic political climate or the level of political tension within the East Asia region. When it came to China's chance to take a formal stance towards deciding on whether or not they wanted participation in the Trans-Pacific Partnership, Chinese leadership is speculated to have opted out of the agreement because it was interpreted as a move by the US to dampen China's gradual effort to supplant the US as regional hegemon of East Asia. Despite the fact that TPP would have offered China and the US valuable opportunities to collaborate, communicate, and perhaps ease some of the geopolitical tensions that have gradually been accumulating since the takeoff of China's economic descent in the 1980s, the Chinese government chose to opt out of the agreement, most likely due to more politically conservative and nationalist leaders in central government gaining momentum in the domestic political climate at the time. There was very minimal engagement with the Chinese general public or any interest groups and organizations not affiliated with the government in the determination of this decision.
First, it is evident that support for and opposition towards the finalization of US involvement in the Trans-Pacific Partnership is sharply divided along partisan lines. Democrats, who as we have seen often advocate economic policies in the interests of protecting the working class in the prioritization of social welfare over anything else, see US involvement in TPP as a clear detriment as opening the US further to trade would inevitably displace thousands of American workers through increased practices of outsourcing labor abroad. Republicans, who often take a pro-business stance keeping in line with the idea that limited government produces the greatest gains by allowing market forces to operate without inhibitions, see TPP as a great opportunity for accelerating economic growth through increased trade, as strong ties to the Asian region mean not only broader markets for American goods, but also access to valuable supplies and services produced more cheaply abroad.
Arguments supporting US participation in TPP are representative of how economic tools serve as a powerful means for exerting American authority and relevance all over the world. It could be argued, depending on one's political views and interpretations, that implicit within proposals for American involvement in TPP are imperialist undertones, and that talk about economic openness is really just a cover for a hidden political agenda.
On the other hand, arguments against US participation in TPP are representative of how the US democratic system often incentivizes policymaking that caters more to popular opinion than to the best interests of the country as a whole. There is a great deal of empirical evidence pointing to how alleviating trade barriers benefits the overall economies on both sides as a whole, and that these benefits significantly outweigh the costs incurred by a small minority. However, when that small minority rallies together to form a cohesive voice to pressure Congress members in a specific direction, it becomes much more difficult to come to a consensus and to acquire benefits for the much larger, but also much more impassive general public.
The fact that so much of US economic policy is contingent on the democratic process is in stark contrast to other countries' political systems like China, in which the direction of policymaking is much more influenced by other factors, such as rivalry within the domestic political climate or the level of political tension within the East Asia region. When it came to China's chance to take a formal stance towards deciding on whether or not they wanted participation in the Trans-Pacific Partnership, Chinese leadership is speculated to have opted out of the agreement because it was interpreted as a move by the US to dampen China's gradual effort to supplant the US as regional hegemon of East Asia. Despite the fact that TPP would have offered China and the US valuable opportunities to collaborate, communicate, and perhaps ease some of the geopolitical tensions that have gradually been accumulating since the takeoff of China's economic descent in the 1980s, the Chinese government chose to opt out of the agreement, most likely due to more politically conservative and nationalist leaders in central government gaining momentum in the domestic political climate at the time. There was very minimal engagement with the Chinese general public or any interest groups and organizations not affiliated with the government in the determination of this decision.