By Michael R. Czinkota
President-elect Obama will set a new pace for the United States and for people around the world. In light of the many expectations tied to the campaign, it helps to think about competing values when it comes to their implementation.
The economic problems confronting the global economy will not disappear for the new administration. However, there will be a sense of change. Having a new team in place, with new policies yet to be formulated, is like scratching off the barnacles from the hull of a ship.
Movement will likely be faster, more flexible, and easier. There will, however, also be unexpected and unintended consequences that increase the risk of running up on the shoals.
It will be crucial to reconcile the apparent conflict between the responsible economic behavior of citizens and the responsible leadership of the economy. The message of `save more', for example, was always helpful for economic stability.
Yet, for the sake of economic growth, the necessarily complementary message of `spend less' was unacceptable in the past. With new excitement about social obligation, now may be the right time to offer and implement opportunities for sacrifice.
There is need for a national agreement that excessive expenditure, wars, and high commodity prices must result in dialing back expectations, expenditures, and excess. Active consumer expenditures will be important to keep the economy going.
The recent steep decline in vehicle sales demonstrates the disadvantages of too much consumer caution. One needs to prevent individuals and society from becoming cheap. Greater selectivity based on quality should be a key focus of enlightened self-interest.
There will be less reliance on market forces. But if one does not use market signals, there needs to be the development of secondary indicators.
Accepting new and different non-market criteria will encourage the productivity of think tanks, government offices and universities and provide for greater flexibility. At the same time, there will be an increase in policy errors, performance uncertainty and outcome disputes.
Less faith in free markets will affect currency values and exchange rates. Government will intervene more quickly and perhaps more severely to reach desired currency values. Such extraterritorial application of policy goals will be a new drawback for foreign trading partners.
The business orientation of politics will not have the same high priority as in the recent past. A reduced linkage between policy and trade will provide allies with less preferential treatment and less market access.
Domestic change will affect international perspectives. Consider traditional core dimensions of American capitalism, such as risk, competition, profit and property. For example, the risk/reward relationship is likely to become less central to decision-making, resulting in new goals and narrower ranges of outcomes.
A reduction in incentives for competition may lead to more harmony, but perhaps also reduce the speed of innovation. More creative thinking about property rights will provide for more flexibility in the development of medications, but may precipitate the global migration of pharmaceutical firms.
Think of it in terms of a traditional pinball machine: Currently, when a player achieves a high score in competition, the machine issues an extra ball ― which allows the winner to further extend his lead.
Now consider what would happen if the player who falls behind, receives the extra ball in order to catch up with the leader. Such a shift would not necessarily be uninteresting, but would produce very different rules of the game.
Then there is the key issue of paying for all the desired changes. Past decades of government policy have focused on reducing inflation. The new focus on employment generation will require a neglect of inflation concerns in favor of stimulative expenditures.
Over time, the budget implications of such a shift will require to substantially broaden public income. Doing so will be difficult, given the key commitments already made in the area of tax policy.
In addition, such measures are likely to further affect the value of the U.S. brand, leading to more reticence of foreign direct investment.
There are also new expectations for higher standards of virtue, vision and veracity by individuals, corporations and government in order to restore faith and confidence. Yet, both domestically and internationally such values cannot be created overnight, but rather require gradual shifts in perspectives and cultures.
Regardless of the desire for quick action, an era of globalization demands the harmonization of approaches in order to eliminate the jockeying for local advantage.
The times are new, but the inspiration for how to shoulder leadership is not. Two millennia ago St. Paul, also called the 13th Apostle, provided a good example. Saul, as he was also known, was a Jew who converted to Christianity. He was born in Tarsus, and therefore a Roman citizen.
He was an indefatigable traveler, an early globalist who wrote many letters. During his life and travels, he often confronted objections, even hostility and persecution. Whenever the odiousness became too intense ― his claim to Roman citizenship gave his message power and saved his life more than once.
The new administration faces competing goals domestically and internationally. Many people in this world want to like America. Global leadership has too often been sidetracked by narrow concerns.
Inner strength, skills, and morality are essential for long-term leadership for the common good. Paul's message appears to have had staying power. May the years to come provide us all with social progress and reward.
Michael Czinkota conducts research in international business and marketing at Georgetown University and the University of Birmingham in the United Kingdom. He served in trade policy positions in the Reagan and Bush administrations. He can be reached at czinkotm@georgetown.edu.