Some have reasoned that Michele Bachmann’s coming out party at the New Hampshire Republican debate signaled that Mitt Romney is the only serious candidate for the GOP Presidential nomination. But this may be premature. Bachmann’s surfacing in this early debate—the kind which has been known in the past to propel hopeful candidates from obscurity to popularity— symbolizes the domestic constraints that muddle summitry and global coordination processes.

It is rare to find consensus among policy-makers, and even more so among economists, but many would agree that resolving current account imbalances would be a good thing for the global economy. At some point, however, politicians and technocrats have to sell their policies to constituents.

Let’s take a look at the prospects for selling the policies of the economic wise men:

  • The most systemically important country (SIC) is a good place to start. Bachmann, for one, appears to fancy plucking the United States off of the earth and placing it on the moon because she does not “want the United States to be in a global economy.” The Minnesota Congresswoman is weary of a G20 that is attempting to “bind together the world’s economy.” Whether or not she is personally misinformed is irrelevant. Her comments, which are almost surely designed to cater to voters, reflect public sentiment that poses roadblocks to any elected politician willing to adopt sound coordination policy.

  • Nevermind the fact that a sizeable portion of the American public are unambiguously opposed to tax increases, which are a requisite for the fiscal consolidation needed on the developed states’ end of things, or that conversely, spending cuts are hard to sell. Even as the American greenback continues to depreciate, competitive American exports will not be in the manufacturing sector. A polarized junk-job service sector economy will continue to concentrate earnings in the top percentiles of the population, further aggravating the fiscal problem unless significant and unlikely human capital gains are achieved at the bottom. The steps necessary for adjustment look costly for any politician with an eye on the ballot box (Americans are always two years away from a major election). 

  • The other often-mentioned SIC is China. Its surpluses and funding of American debt are central to the adjustment dialogue. Resolving imbalances entails that the Chinese increase domestic consumption and allow the Yuan to appreciate. Since controlling the value of the Yuan has the undesired effect of inflation, recent protests about high food prices in Guangdong indirectly target the price-elevating-policy. Appreciation in the currency since June 2010 has been permitted by officials as part of their “inflation fighting took kit.” But the entrenched interests of exporters in China are said to carry weight and the Chinese development miracle has been driven by export-oriented growth, so it is unclear how quickly Chinese adjustment will proceed given their tried and true development experience.

In Greece, austerity measures have been put in place despite public opposition, but that was well after the crisis hit. Crises make action easier, as the swift G20 response in 2008 showed. But for a country as important as the US, sound action must occur before crisis ensues (again). There is unfortunately no reason for us to presume that crafting sound policy for the long run will trump the undue salience placed on the short term costs and benefits of today – it hasn’t in the past.

John Zelenbaba is a Research Assistant at The Centre for International Governance Innovation. He is a fourth-year undergraduate student in Political Science and Economics at the University of Waterloo. 

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.