While the technical details can be debated, the current financial crisis has also exposed an interesting sidelight: the double standards many prominent economists and international financial institutions used in dealing with the United States. The blunt truth is that all the indignation that so many economists heaped on so many hapless Asian countries during the Asian financial crisis seems overblown in comparison to the muted and almost academically detached treatment the American crisis is receiving. When the other parts of the world produced a crisis they were declared fundamentally irrational, incompetent and corrupt and subject to all kinds of worries about moral hazard. A crisis in the US, by contrast, is seen fundamentally as a question of credit instruments becoming more complicated, a product of a kind of over-competence rather than incompetence, incentive structures being out of line, and all worries about moral hazard being put aside for the public interest. But there is little doubt that this crisis will, in the long run, damage the authority of American policy-makers; and worry is beginning to surface.

If delegitimisation of the regulatory state was one prong of the self-identity of American politics, globalisation was the second. While many in the rest of the world think of globalisation as being driven by American interests, there is now a subterranean current that is beginning to argue that globalisation in its current form may not exactly be in America’s own interests. Perhaps the most dramatic illustration of this is the worries expressed by as ardent a proponent of globalisation as Lawrence Summers. In a column in Financial Times, he argues that there is some reason to think that “economic success abroad will be more problematic for American workers in the future.” Why? Because developing countries are now genuine competitors and put pressure on wages in America. Because the success of India and China is raising the costs of energy, and the price of “gas” is one of the hottest issues in American politics. But more surprisingly, “growth in the global economy encourages the development of stateless elites whose allegiance is to global economic success and their own prosperity rather than the interests of the nation where they were headquartered.”

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