“With great power comes great responsibility.”
Latitude News begins this week’s review of international headlines with that famous quote — attributed these days to Stan Lee’s comic book character Ben Parker (uncle of Peter Parker, a.k.a. Spider Man) but derived originally from French philosopher Voltaire — because it aptly describes a theme we’ve identified in recent news stories.
The United States, obviously, has great power. The concomitant great responsibility isn’t always so clear to those around us, as we see in stories from Canada, Korea and Africa.
Writing in The Globe & Mail, Canadian economist Mike Moffatt argues the United States Federal Reserve should abandon its dual mandate of keeping inflation and unemployment low and instead focus solely on controlling inflation, like the Bank of Canada and the European Central bank.
As a citizen of the country whose economy is more intertwined with the U.S. than any other, Moffatt surely has a stake in this debate. Echoing conservatives — though Moffatt doesn’t appear to be a right-winger — he suggests that narrowing the Fed’s remit would engender more certainty in the economy, as at present the Fed has come under fire for keeping U.S. inflation low while unemployment lingers above 8 percent:
Trying to target two variables at once is difficult since it is not clear what the trade-off should be between the two targets. Suppose the unemployment rate was at 10 per cent. Would a high inflation rate of, say, 7 per cent be appropriate in order to bring down unemployment? If not, then, how high? There is no obvious way to trade off the two objectives.
When the modern Fed was established in 1913, price stability was its only job. In 1977, Congress added maximizing employment to the mix. Here’s a good link that explains the issue.
One could say the 1977 move made the Fed’s job trickier. Given how the financial system has behaved in recent years, however, that might be okay. Remember that bit about responsibility?
Mo’ better missiles
The U.S. and South Korea are close military allies, having fought a war against communist North Korea (and China) in the 1950s. In the Cold War peace after that conflict, which continues today on the Korean peninsula, the U.S. apparently requested that South Korea not develop missiles that could strike China or Japan.
But now that North Korea has nuclear weapons, South Korean leaders want longer-range missiles that could strike the North in case their capital, Seoul — just 35 miles from the North Korean border — disappears in a mushroom cloud.
The English-language Chosun Ilbo explains why in an editorial:
South Korea, moreover, is armed only with conventional weapons. It would only raise suspicions if Washington continues to pressure Seoul with a bilateral agreement struck before the North Korean nuclear threat existed, even though it is evident how vulnerable South Korea now is. Why does the U.S. want to shackle South Korea when it is aware that North Korea could launch a preemptive attack at any time? These suspicions will only strain the Seoul-Washington alliance.
One can imagine the White House and U.S. State Department officials reading this editorial, which notes that the U.S. is reluctant to sanction long-range missiles because other countries might then seek to amend other international agreements limiting their missiles.
This is what Uncle Ben meant about great power and responsibility.
Rags can be riches
Let’s replace monetary policy and missiles for T-shirts.
The Kenya-based Integrated Regional Information Networks, or IRIN — a news service connected to the UN Office for the Coordination of Humanitarian Affairs — reports that a special provision of American legislation that is set to expire in September could spell economic catastrophe for a host of African countries.
The Third Country Fabric Provision of the 2000 African Growth and Opportunities Act gives preferential treatment to African textile firms seeking to sell in U.S. markets even if they import fabric and other materials from third countries like China and India. Since its enactment, the provision has helped spark $800 million worth of investment and 300,000 new jobs in Africa — especially Lesotho, Swaziland, Kenya and Mauritius. “Without it, fledgling textile industries all over Africa are likely to flounder,” IRIN writes.
Already, the possibility of the provision lapsing has hurt: American buyers have reduced clothing orders from Africa by 30 percent since January.
IRIN quotes Swaziland citizen Cynthia Lushaba on how she’ll cope if she loses her textile job: “I saved no money,” she said. “We were paid only enough for my children and me to have two meals a day and pay our rent.”
The news service also quotes U.S. Trade Representative Ron Kirk, who reportedly spoke on the Third Country Fabric in Washington last month: “We are regrettably in an election year and I think some people think partisan politics trump common sense.”
In other words, sometimes, in order to acquire great power, one needs to be responsible to voters.