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Harold James



Articles by Harold James

Monetary Order and International Security

22 days ago

Historically, there have long been close parallels between the collapse of monetary systems and the fall of global security orders. Hegemony requires a sound financial basis and global credibility – assets that can evaporate much faster than anyone in power cares to admit.

PRINCETON – This year includes big anniversaries in the history of the international monetary order. August 15 marked 50 years since US President Richard Nixon “closed the gold window”; and on September 21, it will have been 90 years since the British government took the pound off the gold standard. Although both episodes belong to the history of money, their implications transcended the financial domain. Each marked the passing of an entire

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A Digital Nixon Shock?

July 30, 2021

US President Richard Nixon’s 1971 decision to end the US dollar’s convertibility into gold had such far-reaching consequences that it took policymakers decades to learn to manage the new system. Now, digital technologies are driving a new monetary revolution that could end the greenback’s global primacy altogether.

PRINCETON – We are approaching the 50th anniversary of the so-called Nixon Shock, one the most decisive ruptures in monetary history. On August 15, 1971, US President Richard Nixon announced in a televised address that he was “closing the gold window.” By ending the dollar’s convertibility into gold (at an official rate of $35 per ounce), Nixon severed the millennia-long link between money and precious

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A Little Geopolitics Is a Dangerous Thing

June 29, 2021

The term geopolitics first came into vogue after Germany’s defeat in World War I and has since come to be used as a rationalization for zero-sum conflicts. But insofar as it represents a false notion of geographical determinism, it is utterly inappropriate for a globalized world.

PRINCETON – Any hope that Donald Trump’s messy departure from the White House would at least restore a modicum of calm to the world must now be discounted. Already, there is a dangerous new international threat: the return of “geopolitics” in shaping international security.
The Death of Free Speech in Hong Kong

Bertha Wang/AFP via Getty Images

Market

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Good Inflation

June 2, 2021

Economic horror stories from the Great Depression and the 1970s can offer useful lessons, but they are no longer appropriate for today’s world. In a world undergoing radical economic, technological, and climatic change, we must recognize that not all price increases are the same, and that some are desirable – and even necessary.

PRINCETON – In response to recent concerns about resurgent inflation, US policymakers deny that there is any threat and insist that expectations are “well anchored.” Any recent price spikes, they argue, will prove temporary, arising from one-off shortages that will be resolved when life returns to normal after the pandemic. Nonetheless, market participants and investors are increasingly obsessed with the

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Machiavelli in the Ruins of Greensill Capital

May 5, 2021

The collapse of Greensill Capital has a strong historical parallel in the decline and fall of the medieval Medici bank after it went too far with the financial innovations of its own day. The lessons from both failures are clear, but most likely will be forgotten until the next financial meltdown.

PRINCETON – The collapse of Greensill Capital, a London-based financial services firm, offers a timely but costly warning about a number of contemporary trends. Clearly, we should be wary of the hype around financial innovation. But we also need to shine a brighter spotlight on the shady world of corporate lobbying, the regulation of risk, and other issues at the intersection of capitalism and government.

Share

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All Apologies for Democracy

March 30, 2021

Recent mistakes by elected governments underscore the unique difficulties that democracies face when dealing with a problem as large and complex as a pandemic. Nonetheless, the COVID-19 crisis has offered clear lessons, validating two classic answers to the question of what role the state should fill.

BERLIN – German Chancellor Angela Merkel’s hasty revocation of a hastily announced Easter lockdown was surprising, even shocking, given her ever-calm demeanor. Even more extraordinary was the apology she issued to parliament: “The mistake is mine and mine alone. Because in the end, I bear responsibility as chancellor. I regret it deeply, and I ask our citizens for forgiveness.”

The End of the Oil Age

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Who’s Right on Inflation?

March 1, 2021

As in the 1970s, a severe economic shock has forced governments to pursue massive fiscal and monetary expansion, thereby sowing fears of future inflation. But not all shocks are the same, and the key question now is whether we can be confident that the current state of exception will end.

PRINCETON/PARIS – The specter of inflation has returned. For two decades, central banks across industrialized economies were confident that they had banished it for good. Then came the 2008 financial crisis, which occasioned a brief return of inflation anxiety on both sides of the Atlantic. In the United States, congressional Republicans ushered in austerity in 2010, and the European Central Bank started tightening its interest-rate

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What’s in a War?

February 4, 2021

Channeling the spirit of America’s entry into World War II, President Joe Biden has promised a mass mobilization of people and resources to tackle the COVID-19 pandemic. But if defeating a virus is like waging a war, several important historical lessons and caveats should be kept in mind.

PRINCETON – US President Joe Biden started his term with a beautifully crafted speech that caught the spirit of a country exhausted by Trumpism and COVID-19. Biden has promised a “full-scale, wartime effort” against the pandemic. But hasn’t our tired world already been in the trenches for a year now?

Multilateral Cooperation for Global Recovery

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The Pandemic’s Big Sort

January 4, 2021

As with every global crisis, the race is on to determine which political systems will emerge stronger from the pandemic, and which will be discredited by their response to it. But if the past is any guide, it is too early to make such judgements, because the real test for competing systems is yet to come.

PRINCETON – Political systems live on competition. Political incumbents and aspirants are constantly claiming that they can manage problems better than their rivals can. Modern wars of ideas, political projects, and systems of organization are merely updated versions of older forms of combat.

How Might COVID-19 Change the World?

PS OnPoint

STR/AFP via Getty Images

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The Financial Equivalent of a Vaccine

December 1, 2020

While the advanced economies can rely on their central banks to support massive fiscal stimulus in response to the COVID-19 crisis, many developing countries’ hands are tied by higher borrowing costs. This is both unfair and unsustainable, pointing to the need for a new, truly global monetary mechanism.

PRINCETON – COVID-19 is dramatically widening a global divide that was evident long before the current crisis. Only some countries have been able to cover the costs of the pandemic and lockdowns with large fiscal measures, owing to support from central banks that are buying up large quantities of government debt. Most other countries are facing rising borrowing costs and thus cannot afford a robust fiscal response. Indeed,

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Capitalists and Socialists of the World, Unite!

October 1, 2020

Although it can be politically expedient to draw a thick line between capitalist decentralization and socialist central planning, the truth is that these two systems have converged on many occasions. Moreover, each was conceived for the same purpose, and elements of both could be realized in today’s digital economy.

PRINCETON – The world’s most dynamic economy is governed by a communist party, whereas its previous capitalist stronghold is under the misrule of a man whose companies have gone bankrupt six times. With leading political ideologies becoming increasingly incoherent, labels seem to mean little anymore.

The Way We Could Live Now

PS OnPoint

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What Next for Great Cities?

September 1, 2020

In the era of COVID-19, megacities that lack competent management are bound to share the same fate as the great cities of the past. But competent management means addressing not just the virus but also deeper sources of malaise such as poverty and unaffordable housing.

PRINCETON – Has COVID-19 killed the megacity? The pandemic certainly is reshaping globalization, turning the hubs of the pre-2020 global economy into epicenters of contagion and leaving their future hanging in the balance. But the crisis also has simply highlighted megacities’ existing vulnerabilities and accelerated processes that were already underway.

The Post-Pandemic Economy’s Barriers to Growth

PS OnPoint

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No Europe Without the Rule of Law

July 30, 2020

In typical fashion, the European Union has once again taken a step toward deeper integration in response to a catastrophic crisis. And, once again, "ever-closer union" is being embraced in the absence of effective mechanisms to enforce fundamental principles, setting the stage for more internal disputes to come.

PRINCETON – The European Council’s five-day meeting to hash out a 2021-2027 budget and a COVID-19 emergency spending package had all the hallmarks of Euro-summitry: long nighttime discussions; threats by some leaders to leave without an agreement; and a Franco-German push for a deal. Naturally, it all concluded with an unsatisfactory compromise.

From American to European

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Late Soviet America

July 1, 2020

Like the Soviet Union in its final years, the United States is reeling from catastrophic failures of leadership and long-suppressed socioeconomic tensions that have finally boiled over. For the rest of the world, the most important development is that the hegemony of the US dollar may finally be coming to an end.

PRINCETON – The Soviet Union was fertile ground for political jokes, which featured as prominently in the culture as late-night comedy does in the United States. According to one popular story, a young man who shouted in Red Square that the decrepit Soviet leader Leonid Brezhnev was an idiot ended up being sentenced to 25.5 years in prison – six months for insulting the Chairman of the Presidium of the

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The Prehistory of Merkel’s Latest Coup

June 1, 2020

German Chancellor Angela Merkel seems to see the historical writing on the wall. Her agreement to a €500 billion European recovery fund suggests that the COVID-19 pandemic has done what recent debt, refugee, and foreign-policy crises could not: inaugurate a new phase of the European project.

PRINCETON – Throughout her long chancellorship in Germany, Angela Merkel has repeatedly shown that she is good for a surprise. Now, she’s outdone herself.

America’s Mis-Police State

Stephen Maturen/Getty Images

The Lonesome Death of Hong Kong

PS OnPoint

Isaac

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The Day After Tomorrow

May 5, 2020

As in the interwar period, the COVID-19 pandemic will confront policymakers with the unenviable task of deciding when to declare the emergency over, and how to distribute the costs. The lesson from history is that the longer this debate is avoided, the worse the outcome will be for everyone.

PRINCETON – When (and how) to end the COVID-19 lockdown has become the leading political question in every afflicted country. German Chancellor Angela Merkel has gone so far as to describe the increasingly intense debate as a collection of “discussion orgies.”

How Will the Great Cessation End?

PS OnPoint

Olivier Douliery/AFP via Getty Images

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A Pandemic of Deglobalization?

February 28, 2020

At this stage, there is no telling how bad the COVID-19 epidemic will become before the contagion subsides or an effective, widely available vaccine is rolled out. In any case, we should not be surprised if the crisis leads to far-reaching, historically significant global change.

PRINCETON – The outbreak of the new coronavirus, COVID-19, that began in Wuhan, China, may well turn into a global pandemic. Nearly 50 countries have confirmed cases of the virus, with the precise nature of the transmission mechanism remaining unclear.
Solidarity Now

PS OnPoint

Spencer Platt/Getty Images

When China Sneezes

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Money and Empire

February 14, 2020

Although British imperialists often told themselves that by taking over the public administration of China and the Indian subcontinent, they would bring those civilizations into the modern age, the reality was altogether different. Two histories of Pax Britannica make clear that economic exploitation was always the top priority.

PRINCETON – Centuries are usually analyzed with reference to the great powers that dominated them. The nineteenth century was the era of Pax Britannica, although most people now realize that the “pax” in that case was not particularly peaceful. The twentieth century became the American Century, as heralded in Henry Luce’s February 1941 editorial in Life magazine. And the current century, one often hears,

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The United Kingdom’s Paradise Lost

January 31, 2020

In imagining a post-Brexit future, UK Prime Minister Boris Johnson’s government is acting as if it is entering a world of new, attractive alternatives from which to choose. But today’s Conservatives seem to have forgotten what their forebear, Margaret Thatcher, always understood: there will be tradeoffs.

PRINCETON – Goodbye, Britain. Brexit is done. It’s over. Some Britons are waving Union Jacks, and public buildings are illuminated in red, white, and blue. Having dramatically opened up a new space for political maneuver, the country is now celebrating its achievement.
Can Sanders Do it?

PS OnPoint

Ralph Freso/Getty Images

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Loser Teens

December 27, 2019

In keeping with the adage that history does not repeat but rhymes, the decade from 2010 to 2020 ushered in a new age of disorder and distrust, just as the 1810s and 1910s did. Each era shows how unmet promises and unrealized hopes inevitably lead to disillusion and cynicism.

PRINCETON – We are at the end of a decade that has no name. The 2010s cannot really talk about itself, and this confusion is only partly born of semantics. While the term “noughties” was applied to the first decade of the twenty-first century, few would be comfortable calling this past decade the “teenies.” A century ago, there was no need to worry about such categorization: the 1910s were simply the era of the Great War.
How Truth

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What’s Behind the Crisis of Democracy?

December 4, 2019

In democracies around the world, voters increasingly feel as though most of the major choices affecting their lives have already been decided through existing legal and international frameworks. But while rules-based technocracy – and corporatism before it – may have been well-suited to monolithic forms of identity, it no longer suffices.

PRINCETON – There is no longer any denying that democracy is at risk worldwide. Many people doubt that democracy is working for them, or that it is working properly at all. Elections don’t seem to yield real-world results, other than to deepen existing political and social fissures. The crisis of democracy is largely a crisis of representation – or, to be more precise, an absence of

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The New Anti-Capitalism

November 6, 2019

It should not be surprising that our era of rapid technological change has coincided with renewed skepticism of capitalism across Western countries. Yet this time is different, not least because of the rise of winner-take-all markets and a shift in the geographic center of the global economy.

PRINCETON – We are currently living through the most dramatic technological and economic transformation in the history of mankind. We are also witnessing declining support for capitalism around the world. Are these two trends connected, and if so, how?
The End of Neoliberalism and the Rebirth of History

DNY59/Getty Images

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The Death of Anglo-American Conservatism

September 27, 2019

The conservatism of Edmund Burke has long served as a source of frustration for radicals, and as a necessary restraint against destructive root-and-branch reforms. But now the top elected representatives of conservatism in the United States and the United Kingdom have embraced radicalism themselves.

PRINCETON – In remarkably similar ways and almost at the exact same time, US President Donald Trump and Brexit have destroyed transatlantic conservatism. Yet while American conservatism has always had rather shallow roots, British conservativism is the product of a long and rich intellectual tradition, which makes its demise all the more astonishing.
The Constitution Won’t Save American Democracy

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Money for Nothing

September 4, 2019

The persistence of low inflation across advanced economies has led central banks into the realm of zero and even negative policy rates, with the result that government borrowing (and thus spending) is now free. Populist politicians find themselves right at home, while those warning that there is no free lunch will be ignored – until it is too late.

MUNICH – A monetary-policy regime centered on quantitative easing (QE) and zero or even negative interest rates has created an extraordinarily permissive environment for politicians of a certain disposition. Those who are willing to exploit current conditions to boost their own popularity can expect clear sailing ahead – at least for now.

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Locating Equality

August 5, 2019

For years, wealth and income inequalities have been rising within industrialized countries, kicking off a broader debate about technology and globalization. But at the heart of the issue is a fundamental good that has been driving social and economic inequality for centuries: real estate.

MUNICH – Inequality is the leading political and economic issue of the current era, yet debates about it have long suffered from a degree of imprecision. For example, the standard measure of inequality, the Gini coefficient, reduces a country’s entire income distribution to a single number between zero and one, and is thus highly abstract. Similarly, while inequality is rising in many parts of the world, there is no

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A Future Without Currency Wars?

July 1, 2019

US President Donald Trump’s protectionist policies and frequent accusations of currency manipulation by other countries speak to the need for a universal monetary system of the type twentieth-century economists such as John Maynard Keynes envisioned. Thanks to digital technologies, the long quest for such a system could be over.

PRINCETON – The terrible experience of the 1930s should remind us that trade and currency wars go together like a horse and carriage. Now that US President Donald Trump’s administration is fully implementing his protectionist “America First” agenda, it is only a matter of time before a currency conflict erupts.
The Roots of Our Discontent

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Game of EU Thrones

May 27, 2019

The European Parliament election was a long and complex story with a surprising and, for many, unsatisfactory outcome. Yet notwithstanding the muddled conclusion, a new European political order seems to be emerging – one that is likely to leave traditional parties of both the left and the right behind.

PRINCETON – The European Parliament elections that concluded on May 26 turned out to be a Game of Thrones replay – a long and complex story with a surprising and, for many, unsatisfactory outcome. As with Game of Thrones, some fans are calling for a different ending. They would like to sack the authors and rewrite the script.
Game of EU Thrones

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Stories That Can’t End Well

May 7, 2019

After almost a century in which economic policymaking was the preserve of technocrats and social scientists, scholars from narrative-based disciplines have begun to feature prominently in policy debates. But by using partial knowledge to advance specific policy prescriptions, they have become even more dangerous than economists.

PRINCETON – In today’s irrational world of fake news and bad-faith politics, a new mantra has emerged: It’s all about narratives. Power today lies in one’s ability to tell a story. As a case in point, consider Ukrainian President-elect Volodymyr Zelensky, a comedian whose only political experience is that he played a president on TV. Zelensky beat the incumbent, Petro Poroshenko, because he

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The New-Old Globalization

April 2, 2019

The European Union is increasingly divided over how best to manage economic relations with an increasingly outward-looking China. On the whole, European governments are probably right to be wary of Chinese investment; but that doesn’t mean they should ignore China’s vision of cross-border development.

PRINCETON – Once upon a time, everyone assumed that there was a single phenomenon called globalization, whereby cross-border flows of financial capital drove innovation, industrialization, development, and trade. But Chinese President Xi Jinping’s Belt and Road Initiative (BRI) advances an alternative vision of globalization, based on an integrated system of physical infrastructure. The material world of ships and trains will

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Brexit Is Hell

March 4, 2019

Over time, public conceptions of hell have migrated from the realm of religious belief to that of literature and political aphorism. And nowhere is the idea of eternal damnation as punishment for one’s own choices more appropriate than in the case of the United Kingdom as it hurdles toward the Brexit abyss.

PRINCETON – European Council President Donald Tusk recently sparked controversy by saying there is a “special place in hell” for those who advocated Brexit “without a plan.” To angry Brexiteers, the statement epitomizes the unfeeling, moralistic attitude of the European Union technocracy in Brussels. British Prime Minister Theresa May duly issued a statement rebuking Tusk for his remark.

Jose Luis

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