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Bankers Beware?

A poll by Worldpublicopinion.org finds that people across the world are eager for more robust responses to the economic crisis than offered them thus far by their governments. Publics in 19 countries that comprise 62 percent of the world’s population were polled: China, India, the United States, Indonesia, Nigeria, Pakistan, Russia, Mexico, Hong Kong, Germany, Great Britain, France, Poland, Ukraine, Taiwan, Kenya, Egypt, Turkey, Iraq, Palestine, South Korea, and Macau.

With the exceptions of the Chinese and Indian publics—two of the few economies slated for vigorous growth in 2009–a majority or plurality of the public in nearly every country polled faults their government for not doing enough to remedy the economic crisis. Across the sample, an average of 56 percent say their “government’s efforts to address the current economic crisis” “do not go far enough;” 25 percent say they “are about right”; and only 15 percent say these efforts “go too far.”

Government action to provide support for troubled industries is broadly popular. Respondents were asked to choose between two positions, one arguing in favor and one against government support for goods firms in distress. Majorities in 16 nations and a plurality in another endorse the view in favor of governments using “public funds to help large manufacturing companies in trouble because if they fail it damages the general economy and too many people lose their jobs.” On average, 58 percent favor their government providing public funds to failing companies.

The American public, alone among nations polled, opposes government support for these companies by a strong 70 percent (28% favor government financial aid). This ought not to raise eyebrows given the messy Bush and Obama “rescues” of banks and auto firms. The banks in question are now reeling in huge profits, and again paying giant bonuses. TARP fund recipients have generally failed to share the largesse with their retail customers. Who wants to go through or pay for such weak-kneed policies again? Too bad that the pollsters did not ask about nationalization.

Publics are conflicted as to whether their own national economic regulatory structures are up to snuff. When asked whether “to prevent international economic instability, there should be a global regulating body that monitors big financial institutions” or whether such a body “is a bad idea because it would interfere in our economy and could make it less productive,” 17 of 19 nations favor a regulatory body. Only Americans oppose the idea (52% to 44%) and Russia is divided (39% favor, 36% oppose). On average 57 percent favor the argument for international regulation and 32 percent are opposed.

Free traders fear that protectionism will increase in response to the economic crisis. Unsurprisingly, the pollsters found that 11 nations favor the view that to help domestic firms during the current economic crisis, governments should make it “harder for foreign companies to sell products here.” Seven publics most favored the counter-argument that this “would be a bad idea because other countries will then do the same thing to our companies.”

The 11 nations in favor of “protectionism” were Nigeria (70%), Egypt (69%), Turkey (67%), Mexico (61%), Kenya (59%), Russia (55%), Indonesia (55%), Ukraine (53%), India (49%), the Palestinian territories (48%), and Iraq (47%).

Majorities in nations that make and export stuff think, however, it would be a bad idea: Germany (68%), Great Britain (68%), France (57%), and Poland (53%)–as well as South Korea (68%), China (63%) and the US (55%). The German and Chinese numbers here are unsurprising given those countries’ heavy reliance on exports. But a (slight) majority of American respondents still supportive of ‘free trade’?! Give ‘free market’ ideology and propaganda its due credit for keeping a majority of us bamboozled even now.

Elites worried that support for “globalization” might be waning can rest easy for now. In 16 of 19 publics most still feel that “globalization, especially the increasing connections of our economy with others around the world, is mostly good” including seven of the 11 nations that endorse “protectionism.” There has been some decline in the numbers endorsing globalization primarily in Egypt, the Palestinian territories, Kenya, Indonesia, and Russia. All of these nations also favor “protectionism.”

Who to blame for the global mess? Mostly the US, with some other factors also at work.

The “economic policies of the US” is the factor with the largest percentage saying that it has contributed “a lot” to their nation’s economic downturn. On average, 49 percent of the public across nations attributed a lot of the blame to US policies.

Domestic economic policies were not held blameless. They are seen as the second biggest contributor, with an average of 42 percent saying that their nation’s policies contributed a lot.

Fewer than 30 percent of the people believe that domestic economic policy was “not at all” a factor in the mess. Only four percent of the public in the US say that federal economic policy was not a factor. Elsewhere, the majorities that consider their own nation’s economic policies contributed “a lot” are all in developing or middle-tier nations: Ukraine (68%), Pakistan (58%), Kenya (56%), Nigeria (54%), the Palestinian territories (53%), Iraq (53%), and Mexico (52%).

Debt taken on by consumers is also seen as part of the problem. A majority of respondents in Great Britain (83%), the US (74%), Mexico (64%), and South Korea (62%) identify too much consumer debt as contributing a lot to the economic downturn in their country. Only 13 percent of Chinese saw this factor as contributing a lot, the lowest of any country (unsurprising given that the Chinese have perhaps the highest savings rate on the planet).

Wildly risky behavior by bankers, both domestic and international, is seen as another cause for the meltdown. On average, similar numbers of the public say domestic bankers gone off the rails contributed a lot (42%) to their country’s economic downturn as say that risks taken by international bankers contributed a lot (42%).

Five nations’ publics blame their domestic bankers “a lot”: Great Britain (89%), Germany (78%), the US (77%), France (64%), and Mexico (58%). A majority in the same nations blame risk taking by international bankers a lot: Germany (88%), Great Britain (79%), France (77%), the US (57%) and Mexico (55%); and they were joined by South Korea, where 61 say “excessive risk taking” by international bankers contributed a lot to their country’s economic difficulties.

The Chinese leadership, unlike the American, was let off the hook. The publics polled see the economic policies of China—resulting in enormous trade surpluses and gargantuan dollar holdings–to be a relatively small contributor to the economic downturn, the smallest of the six factors evaluated. Overall, only 26 percent of those polled say that the economic policies of China contributed a lot. No public’s majority saw Chinese policies as contributing a lot.

What to make of all this? The main point is that were leaders bold enough to genuinely reform their runaway banks (especially in the US)— to restrain, restrict, downsize, perhaps even (re)nationalize them—they’d have public support. The world’s publics would likely favor strong measures to force banks to loan to needy customers, restrict fees (now the source of about half a bank’s profit), lower interest rates on loans and credit cards, restructure mortgages, and otherwise serve ordinary folks. For the time being, however, given the prevailing regulatory squeamishness and passivity in Washington, bankers have little to worry about.

STEVE BREYMAN teaches at Rensselaer Polytechnic Institute. Reach him at breyms@rpi.edu.

 

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Steve Breyman was a William C. Foster Visiting Scholar Fellow in the Clinton State Department, and serves as an advisor to Jill Stein, candidate for the Green Party presidential nomination. Reach him at breyms@rpi.edu

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