State of the Unions: The EU and the US in the 21st Century

On September 9th, The Chicago Council on Global Affairs and CFA Society Chicago partnered together to welcome Mr. Van Overtveldt, Minister of Finance of Belgium since 2014.  He is an economist, journalist and writer based in Brussels. He has authored several books including, The End of the Euro, Bernanke’s Test and The Chicago School and is a contributor to the Wall Street Journal and other publications.  His presentation revolved around the topic of his new book, A Giant Reborn: Why the US Will Dominate the 21st Century.

Mr. Van Overtveldt began his presentation by referencing literature and writers, who from 1775 through 1965 had predicted the decline of America.  These people had failed to recognize the reasons why America came to dominate and why it will continue to dominate world affairs in the 21st century.  Mr. Van Overtveldt uses an economic based argument of American superiority based on three factors:

  • Human Capital and Knowledge (non-excludable and non-exhaustible)
  • Entrepreneurial Drive (favored in the US economy)
  • Globalization

The above factors have created the environment of what Mr. Van Overtveldt describes as “turbo-change” that thrives in America.  Other countries cannot cope with change the way Americans have demonstrated they can.  Change is part of America’s DNA.

Mr. Van Overtveldt then focused on why Europe and China will not challenge America in the foreseeable future, describing China as having the biggest economic bubble the world has ever seen.  The “Confucian Deal” of the Party guaranteeing jobs and higher wages in exchange for little or no freedom will not work.  In China, debt as a percentage of GDP has doubled since 2008 and overcapacity in real estate is demonstrated by vacant houses and apartments.  China is also surrounded by potential enemies such as Vietnam and Japan.

The European Union has really not achieved a union, since European countries have demonstrated that they will not yield their sovereignty.  Mr. Van Overtveldt argues that the French and German coalition that ran the European Union will no longer work as France’s economy has not been able to keep up with the German economy.

In the Q&A that followed the presentation, Mr. Van Overtveldt stated that the UK has a large influence on the European Union and that its vote to remain in the EU will be closely watched.  The UK’s influence is especially large in Germany.  He also briefly commented on the immigration crisis in Europe, stating that there is no mechanism to arrive at a consensus on this issue.

Mr. Van Overtveldt also demonstrated the effectiveness of the US constitution versus the ineffectiveness of the European Union by comparing the Greek and California bankruptcies. California was able to get money from Washington if it met certain conditions.  The Greeks were given certain conditions; however there was no legal right to enforce these conditions.  The EU had no legal right to dictate reforms as they had to be approved by the Greeks themselves.

Thrown for a Loop Scavenger Hunt

CFA Society Chicago has an established history of working to promote thoughtful analysis and prudent decision making among its members. But how adept would its members be at navigating and scrutinizing the very city they live and work in every day? On August 27th about thirty CFA Society Chicago members sought to prove their analytical skill outside the office at the Thrown for a Loop Scavenger Hunt. The event was organized by the CFA Social Advisory Group and conducted by Watson Adventures, a vendor who specializes in conducting scavenger hunts and has a footprint in several major cities.

Watson Adventures’ hunts are not scavenger hunts in the traditional sense in which participants locate and collect items based on clues, but are instead information-based scavenger hunts. Participants receive lists of hints prompting them to visit certain locations, examine details about those places, and answer cryptically-worded questions. As the name of the event suggests, the location for the CFA Chicago hunt was the entire Chicago Loop and the buildings and landmarks within the area. After assembling at Daley Plaza, participants were divided into teams of four or five by the Watson staff and sent out into the Loop with their question lists to begin hunting. The questions led members through sites such as the Chicago Cultural Center, Millennium Park, and City Hall. Sites that members might pass by on their daily commute became objects of detailed investigation as teams searched for correct answers. Watson Adventures protects the details of its hunts closely, rightly treating them like intellectual property, so we’re not at liberty to provide too many details here. But just to give a sense of the detail involved: how familiar are you with the gargoyles on the facade of the University Club?

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Winning Team!

The Watson Adventures staff had also prepared some bonus tasks specifically for CFA Society Chicago that gave participants extra points for their scavenger hunt team score. In one task, participants got extra points for taking a photo of their team acting out “Community,” one of the five CFA Society Chicago organizational pillars. In another task, teams had to take a picture of themselves standing in front of a financial institution’s signage while pretending to flash trading pit signals. Scores between the participating teams were incredibly close, so bashful teams ignored these optional tasks at their own peril.

After an hour and a half of hunting, teams reassembled at Daley Plaza where Watson Adventures staff collected answer sheets and added up the scores. The winning team consisting of Mark Cichra, Caroline Frensko, Casey Hatch, and April Heitz, won by only a single point. CFA Society Chicago members thanked the Watson staff and expressed gratitude to each other for the team-building and camaraderie. Afterwards, participants gathered at nearby Randolph Tavern for drinks and conversation.

For more information about upcoming events organized by the CFA Social Advisory Group, check the Events page on the CFA Society Chicago website.

CFA Society Chicago Book Club:

SUPERPOWER: Three Choices for America’s Role in the World by Ian Bremmer

In a recent talk Ian Bremmer explained why he wrote this book now, an endeavor he had not contemplated in prior years stating “I think it is extremely important for all Americans to discuss our country’s role in the world, its choices, and make it a large part of the upcoming election.”    Bremmer feels that the United States is at a crossroads in its foreign policy, wandering between multiple ideologies which has weakened its position and left our allies and foes wondering what, if any commitments the USA is prepared to support.  As a guide Bremmer offers our future President three choices: Indispensable America, Money America and Independent America.  Each is expanded upon and discussed in the main body of the book after a brief synopsis of the current and recent history of the world’s foreign relations and America’s involvement.

Bremmer begins by giving a general outline of questions for the reader to consider as one weighs the three options and includes the topics: Freedom is? America is? China is? America’s biggest problem in the Middle East is? What are the USA’s spy capabilities? What are the risks? What is the primary responsibility of the president? What should America look like in 2050?  He uses this outline to help readers shape their own views and then benchmark those views against his three options described below:

  • Indispensable America: “Argues that only America can define the values on which global stability increasingly depends.  In today’s interdependent, hyperconnected world, a turn inward would undermine America’s own security and prosperity.  We will never live in a stable world while others are denied their most basic freedoms – from China to Russia to the Middle East and beyond.”  Since America is the only country that is capable of utilizing its vast resources to underwrite global security and support a general prosperity, it is our duty to help all democratic minded people who support human rights through military campaigns globally.  It is through our defense of our values that we can accomplish a peaceful world, and any retreat would subject millions (if not billions) of individuals to pain and suffering under the hands of maniacal dictators and cultures bent on domination and control.  It is America’s duty to free the world, and we as a nation must not only project strength but use our strength as needed.  This option calls for an expansion of military and economic aid throughout the world.  Pulling back fails to recognize the interconnectedness of the world, and America’s need for a stable world for economic growth.
  • Moneyball America:  This option “acknowledges that Washington cannot meet every international challenge.  With clear-eyed assessment of USA strengths and limitations, we must look beyond empty arguments over exceptionalism and American values.  The priorities must be to focus on opportunities and to defend U.S. interests where they are threatened.”  This option states that the U.S cannot be everywhere and do everything globally.  The next president will have to weigh each challenge, doing a cost benefit analysis on America’s role and decide which areas are worth America’s involvement and which are situations where the U.S. is simply overspending for the return received by both America and the world.  In order to do this correctly, a well thought out and consistent message and action plan must be accomplished.  If the U.S. is not clear when it will get involved and when it will not, the world will be left in confusion as to our intentions and commitments.
  • Independent America: This option “asserts that it is time for America to declare independence from the responsibility to solve other people’s problems.  Instead, Americans should lead by example – in part by investing in the country’s vast untapped potential.”  This argument is based on the belief that America’s history of foreign involvement recently has not benefited the world, and has left our own country in decay.  This option allows for a massive decrease in military and foreign aid that should be invested in America through: rebuilding our public infrastructure, investing in American education, increasing our care to our brave veterans, decreasing taxes, and getting our own financial position under control.  Bremmer recognizes this cannot be done immediately, but should be done gradually so as our allies can prepare their own defenses to face future challenges.  The next president should send a clear message that we are going independent and that the world will need to take a much bigger role in helping the oppressed and realize the U.S. is not going to be the policeman of the world into the future.

Bremmer leads the reader through the three choices, and offers a fourth which is “Question Mark America” which he totally dismisses.  This is the America which we are, going back and forth between the three options mattering on political polls and global sentiment.  He openly criticizes our current and near history policies, and calls for a clear solution and hopes that all Americans will force the presidential candidates to be coherent and specific on their foreign policy in the upcoming election.

The author does choose an option and defends his position – we will not disclose the final chapters so as not to spoil the ending.  However the strength of the book is not Bremmer’s own conclusion but that it is well constructed for all readers to really contemplate the current policy, the options and reach one’s own conclusion.  Many members began with one view but were slowly swayed one way or the other as they read this thoughtful treatise, remarking that the book contained many compelling and thought provoking ideas.

As a group we felt the book was an accurate snapshot of world events, and provided an excellent event synthesis on recent historical events.   Although a few indicated they began as a supporter of Indispensable America, after reading the arguments however, the group mainly felt the rest of the world needed to provide further global support and the U.S. was carrying too much of the burden.  In general it was felt that the world needed to step up their involvement in global policies and they needed to be more independent in their own defense structures.  We discussed in detail what we felt were the three major “hotspots” of the world namely the Middle East, Korean Peninsular and Eastern Europe.  Although we concluded it was impossible to serve as policeman to the entire world, the group in general thought it would be too dangerous to completely remove our commitments to these three areas.  Thus, the group in general thought Moneyball was the ultimate solution, although many agreed that the U.S. was not very good at deciding on the fly which was the best time and place for engagement.  In order for Moneyball to work a deep discussion is needed by our political structure to set up clear and decisive guidelines so our allies are fully aware of our intentions.  We also recognized the limitations to this strategy given the changing and dysfunctional environment in Washington at the present time.

There was also support for Independent America, given a long lead time for our Allies to “step up” their capabilities, but most thought the world would become too dangerous if we pulled back entirely and the ultimate result would provide a greater instability to world economic and political order.  We also discussed the fact that there may be alternatives to these three options including the idea presented to pull back but give implicit assumption guarantees to several of our allies in the crossfire such as South Korea, Baltic States and Israel.  Many also felt that pulling back was a hard decision when so many are suffering; can America sit by while many die to ruthless, uncivilized factions?  Simply withdrawing may be too repugnant for many, but who is willing to send their sons and daughters to sacrifice for these countries?  The question is difficult and the answer more so, but these are the thoughts of the reader who chooses to engage in Ian Bremmer’s world.

Lastly, it was noted that one entity was glaringly omitted from the book (although one brief mention did occur but was minor) – the United Nations.

 

Upcoming Schedule:

 

September 15, 2015: The New Cold War? Religious Nationalism Confronts the Secular State by Mark Juergensmeyer

October 20, 2015: The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee

November 17, 2015: No Ordinary Disruption: The Four Global Forces Breaking All the Trends by Richard Dobbs, James Manyika, Jonathan Woetzel

December 15, 2015: TBD

 

 

To sign up for a future book club event, please click here:

http://www.cfachicago.org/apps/eve_events.asp