Women in Charge

 

Many of today’s most vexing problems seem to rest on the shoulders of women leaders. Displaying varying degrees of success, but also some tragic failures, women in power are showing that leadership in the twenty-first century is not for the faint of heart.

Last week, in a series of tweets, US President Donald Trump accused Carmen Yulín Cruz, the mayor of San Juan, Puerto Rico, of “poor leadership,” after she dared to criticize the US federal government’s response to Hurricane Maria. Trump’s Twitter tantrum was, of course, ironic: never before has an American president’s election occasioned such a desperate search for alternative leaders at home and abroad.

But Trump’s attack also raised the question of what political leadership means in this age of populist bombast. Thomas Jefferson once warned of petty leaders who, like Trump, allow “their bad passions” to render them “incapable of doing the business of their country.” A corollary to Jefferson’s observation might be that, in a pluralist society, leadership requires a willingness to confront difficult circumstances, and sometimes impossible choices, on behalf of the public good.

Cruz is not the only female public official facing – and in her case, passing – a difficult test of leadership these days. In Japan, Yuriko Koike, the Governor of Tokyo and an aspirant to the premiership, has had to respond quickly after Prime Minister Shinzo Abe, despite facing Japan’s most severe foreign policy crises in decades, called a snap election to entrench his parliamentary majority. Abe, fearing Koike’s rising popularity in the wake of her overwhelming victory in the Tokyo assembly elections last summer, hoped to catch her off guard. But Koike has now announced the formation of a new political party, which she intends to lead into the election while remaining in her current office. If she wins, she will confront the most unenviable leadership dilemma of all: responding to the North Korean regime’s nuclear threat.

Meanwhile, in Germany, Chancellor Angela Merkel, a beacon of liberalism in an illiberal age, must govern after an election in which the far right made unprecedented gains. And in the United States, Federal Reserve Chair Janet Yellen is, in some ways, bearing the weight of the US economy on her shoulders, as she tries to steer monetary policy back to “normal” under domestic and external conditions that remain highly uncertain.

And in Southeast Asia, the Nobel Peace Prize laureate Aung San Suu Kyi has tested – and many would say exceeded – the limits of moral compromise. As the de factoleader of Myanmar’s civilian government, Suu Kyi has responded to the humanitarian catastrophe afflicting her country’s Muslim minority in a way that has made her complicit in it, much to the despair of her erstwhile admirers.

With women leaders dominating the headlines, Project Syndicate commentators have been providing deeper analyses of their respective challenges. If there is one lesson to be learned from their experiences, it is that the most effective leaders are those who manage to transcend the “bad passions” and blinkered politics of their societies – and often of their own parties.

MERKEL BETWEEN A ROCK…

After Germany’s federal election on September 24, Merkel’s most immediate task, notes former German Foreign Minister Joschka Fischer, is to “form a stable majority government.” A failure to do so, he warns, “would probably spell the end of her chancellorship,” which “could usher in a new period of political chaos.” But, Fischer adds, Merkel is also “lucky,” insofar as her party, the Christian Democratic Union (CDU), has no “credible or equally popular alternative” leader on hand to replace her.

Lucky or not, notes Daniela Schwarzer of the German Council on Foreign Relations, Merkel’s new government will “be considerably weaker than the three that preceded it.” The CDU will still have the “most seats in parliament,” but it took just 33% of the vote, “its worst result since 1949.” Meanwhile, its former coalition partner, the center-left Social Democrats (SPD), “also hit a post-war low, receiving just 20.5% of the vote.” For the past four years, the SPD and the CDU, along with its Bavarian sister party, the Christian Social Union (CSU), have governed as a “grand coalition.” But they lost ground, most notably, to “the anti-euro, pro-Russia, and staunchly xenophobic” Alternative für Deutschland (AfD).

As the first far-right party to enter the Bundestag in 60 years, the AfD’s success is, as Fischer puts it, “a disgrace for Germany.” Still, the AfD probably owes its strong showing more to circumstance than to its program.

Fischer, for example, describes the election result as largely “a protest vote against Merkel herself.” And, as Princeton University’s Harold James reminds us, “[t]he AfD vote, at 13%, is almost the same share that the populist Geert Wilders won in the Netherlands in April, in an election that was widely seen as a defeat for radical populism.” James, a specialist in German economic history, does not expect the AfD to sustain its success. And he foresaw “a probable split in its leadership” before AfD co-leader Frauke Petry, who tried to rein in the party’s most extreme positions, announced that she would serve as an independent member of the Bundestag.

But James also sees disquieting parallels between Germany’s current political scene and that of the ill-fated interwar Weimar Republic. In particular, the SPD’s decision to exile itself in opposition, he argues, is similar to the “flight from power” that characterized the Weimar era, during which “parties were punished by voters when they participated in government, and rewarded when they styled themselves as alternative or protest parties.” Today, James suspects that the decline in support for the CDU/CSU-SPD coalition reflected “widespread frustration with leaders who have nothing new to offer.”

But while Merkel is on track to match Helmut Kohl as the second-longest-serving chancellor since Otto von Bismarck, her government’s problem is not merely one of political exhaustion. Helmut K. Anheier, the president of the Hertie School of Governance, points out that Merkel has always preferred “modest policy initiatives and incrementalism,” rather than ambitious reforms. Yet, according to Clemens Fuest, the president of the Munich-based Ifo Institute, there are at least five emerging areas where the next German government will need to take bold action: “digitalization and automation, demographic change, globalization, climate change, and European integration.” Some of these challenges are strictly domestic; for example, Fuest urges policymakers to raise the retirement age to shore up the pension system. But others, not least EU and eurozone reform, will require deeper international cooperation.

 … AND A HARD PLACE

Unfortunately, finding credible solutions to EU-level problems will likely be much trickier for Merkel under the next government. With the SPD refusing to revive the grand coalition with the CDU, her only remaining option seems to be a “Jamaica” alliance comprising what the Brookings Institution’s Kemal Derviş describes as “the Euroskeptic Free Democrats and the pro-integration Greens, with her own Christian Democrats in between.”

Within this probable coalition (named for the colors of Jamaica’s flag, which correspond to those of the three parties), Hans-Helmut Kotz, a former executive board member of the Deutsche Bundesbank, who is currently a fellow at Harvard, expects the integrationists to be outnumbered. The FDP’s position regarding the eurozone, in particular, is not very different from that of many CDU/CSU deputies. It opposes “any arrangement that transfers German money underperforming member states,” Kotz notes, and it has suggested “temporary withdrawal from the common currency for over-indebted member states.”

That is not the type of eurozone reform envisaged by European Commission President Jean-Claude Juncker in his State of the Union address on September 13, or by French President Emmanuel Macron in a wide-ranging speech at the Sorbonne on September 26. Macron’s vision, Derviş observes, “echoes many of Juncker’s proposals, but seems to allow for more differentiation within the EU, at least in the medium term.” But while both speeches, Kotz points out, “were clearly intended to frame the political debate that is now underway in Germany,” the country’s “political center has been shifting, and it is heading in a different direction than Juncker and Macron.

Likewise, Philippe Legrain of the London School of Economics’ European Institute worries that even Macron’s more flexible eurozone-reform proposals will be a serious “bone of contention” in Germany. For example, Macron’s call for “a eurozone budget, funded by corporate-tax revenues” and authorized to “make investments and provide a cushion during economic downturns” could be seen as precisely the kind of “transfer union” that the FDP and many in the CDU/CSU oppose. Then again, Anatole Kaletsky of Gavekal Dragonomics suspects that Macron has tried to head off such concerns by calling not just for a “separate budget,” but also for “separate political institutions,” including a eurozone finance ministry and parliament.

Merkel does not oppose a shared budget, or even the establishment of a fiscal authority, in principle. But to agree to Macron’s proposals, she will have to convince German voters and her future coalition partners that there are ample mechanisms to prevent wasteful spending, and to hold the new finance ministry accountable. Kotz, for his part, doubts that Merkel is capable of demonstrating the “political entrepreneurship” needed to forge such a creative compromise. Yet, even barring a grand bargain between those for and against deeper centralization, Barry Eichengreen of the University of California, Berkeley, believes that there may still be a “narrow path forward that should be acceptable to both sides.”

First, Eichengreen argues, the EU needs to complete its banking union and eliminate the possibility that “fees levied on German banks will be used to pay off depositors in other countries.” It then “needs to transform the European Stability Mechanism, its proto-rescue fund, into a true European Monetary Fund (EMF),” which would replace the European Commission and the European Central Bank as the overseer of eurozone financing programs. And, finally, the European Commission should back away from its role as a fiscal rule-maker. Member-state governments should be allowed to manage their own affairs, Eichengreen says. And “if they make bad decisions, they will have to restructure their debts.”

Beyond eurozone reforms, Schwarzer anticipates that it will “be easier for Germany’s coalition parties – not to mention the French and German governments – to forge a new framework for bilateral and European security cooperation.” And, as Guy Verhofstadt of the Alliance of Liberals and Democrats for Europe Group (ALDE) in the European Parliament suggests, Merkel could offer a sign of good faith. Specifically, she could throw her support behind various democracy initiatives that Macron has proposed, given that the FDP “supports transnational candidate lists for EU-level elections,” and “wants to bring European citizens closer together with democratic conventions in member states.”

Many observers expect Merkel’s fourth term to be her last. But the more important question for Europe is whether she will use the next four years to take bold action, or instead hold back for fear of stoking further anti-EU sentiment at home.

THE CATCH-22S OF MONETARY POLICY

Yellen, too, is sailing between the Scylla of doing too little and the Charybdis of doing too much. In late 2015, the Fed began to normalize its policy interest rate; and, this year, it started unburdening its balance sheet of assets purchased as part of the quantitative easing (QE) policy launched after the 2008 financial crisis. The Fed’s benchmark rate is currently at 1-1.25%, and the Federal Open Market Committee could decide on another modest hike when it meets in December. Then, in February 2018, Yellen’s first term will be up, and whether she serves another one will be for Trump to decide.

The dilemma for Yellen and her colleagues on the FOMC has been that if they raise rates too fast, they could hamper economic growth; but, as Harvard University’s Kenneth Rogoff notes, if they raise them too slowly, “there will be very little room to cut if a recession hits.” Complicating matters further, says Nouriel Roubini of New York University, “core inflation has fallen in the US this year,” despite a “recent growth acceleration” and low unemployment. This has added another dimension to Yellen’s predicament, because the conventional impetus for raising the benchmark rate – above-target inflation – is missing.

“One possible explanation for the mysterious combination of stronger growth and low inflation,” Roubini believes, “is that, in addition to stronger aggregate demand, developed economies have been experiencing positive supply shocks.” For example, globalization, falling commodity prices, and “technological innovations, starting with a new Internet revolution, are reducing the costs of goods and services.”

Technology is also a prime culprit behind today’s “surprisingly low wage growth,” observes Adair Turner of the Institute for New Economic Thinking. “In a fully flexible labor market with, as it were, a reserve army of robots,” Turner writes, “the potential for pervasive automation can depress real wage growth even with full employment.” For Turner, low wage growth, along with a massive “overhang of unresolved debt,” goes a long way toward explaining today’s “deficient nominal demand” – and thus deficient inflation.

Moreover, J. Bradford DeLong of the University of California, Berkeley, suggests that inflation remains weak because “the Fed’s monetary policies, in combination with fiscal policies, are not providing sufficient stimulus for the US economy.” DeLong worries that the Fed, having “overestimated the strength of the US economy for 11 consecutive years,” may be doing so yet again, and that “the current system is creating irresistible incentives for Fed technocrats to highball their inflation forecasts.”

But Yale University’s Stephen S. Roach argues that more monetary stimulus is the last thing the economy needs. Indeed, he worries that today’s normalization may already “be too little too late.” In his view, the current “generation of central bankers” has an unhealthy, near-religious obsession with “inflation targeting,” which they have used to justify the continuation of unconventional monetary policies for far too long. Roach points out that while “central banks’ combined asset holdings in the major advanced economies (the US, the eurozone, and Japan) expanded by $8.3 trillion” between 2008 and early 2017, “nominal GDP in these economies increased by just $2.1 trillion.” The implication is that $6.2 trillion “was not absorbed by the real economy and has, instead, been sloshing around in global financial markets, distorting asset prices across the risk spectrum.”

Similarly, Harvard University’s Carmen Reinhart worries about the continuing risk of “excessive leverage,” which she regards as a fundamental problem that has yet to be resolved since the financial crisis. So far, she explains, ultra-low interest rates in advanced economies “have eased the burden” of “significant legacy debts (public and private).” But now, “rates are on the rise.” This adds yet another layer to the dilemma facing Yellen and other monetary authorities: if excessive leverage threatens to bring about another financial crisis, central banks will need to cut rates; but by raising rates to create room for future cuts, they could increase the burden of existing debt.

Roach, for his part, concludes that, “[i]n today’s frothy markets,” Yellen and her FOMC colleagues’ willingness to stretch out the normalization process until 2022-2023 is “asking for trouble.” But while Roach is certainly right that “[i]ndependent central banks were not designed to win popularity contests,” one can only wonder if this still holds true under a president who has more experience in beauty pageants than he has in governance.

With the pending departure of Federal Reserve Vice Chairman Stanley Fischer this month, and the end of Yellen’s term in February, Trump will have a chance to change the composition of the FOMC. He has not ruled out reappointing Yellen. But it would not be out of character for him to appoint a loyalist instead, someone like Gary Cohn, the director of the White House National Economic Council. If that happens, a change in Fed policy in 2018 cannot be ruled out.

FROM NOBEL TO IGNOBLE

A far bloodier test of leadership has been playing out in Myanmar, where the military is carrying out an ethnic-cleansing campaign against Rohingya Muslims – the largest group of stateless people in the world – in the western state of Rakhine. Suu Kyi has long faced a difficult choice between living up to the values embodied in her peace prize and maintaining her leadership position in a country with an overwhelming Buddhist majority and a military that is not under civilian control.

Accordingly, since Suu Kyi’s release from house arrest in 2010, she has kept silent about the plight of the Rohingya, and maintained the military’s own custom of not mentioning them by name. As Koike put it in a 2015 commentary, Suu Kyi has demonstrated a “verbal evasiveness that one would expect of an ordinary politician, rather than someone of her courage and standing.”

In just the past few weeks, Suu Kyi seems to have doubled down on obtuseness. According to Ramesh Thakur of Australian National University, she has gone from remaining silent about the violence to sounding more like an “apologist.” French philosopher Bernard-Henri Lévy goes even further, cursing “the naiveté that led many, including me, to sanctify the ‘Lady of Rangoon.’” After she “solemnly assured the world that she had seen nothing in Sittwe, that nothing had happened in the rest of Rakhine State, and that the string of alarming reports to the contrary was just the ‘tip of an iceberg of disinformation,’” Levy concludes, “her Nobel Prize became an alibi.”

One possible explanation for Suu Kyi’s apparent volte-face during the current crisis is that it isn’t really a reversal at all: she may have never held many of the positions that distant observers ascribed to her. As Dominique Moisi of the Institut Montaigne in Paris points out, it is possible that “the fate of a small minority” comprising “just 4% of Myanmar’s population” is simply a matter of indifference. “To her Burman aristocratic sensibility,” Moisi suggests, “their interests barely register.”

The Western narrative may also have a blind spot with respect to rising extremism in the region. The international community, notes Brahma Chellaney of the New Delhi-based Center for Policy Research, “has failed to recognize that Rohingya militants have been waging jihad in the country – a reality that makes it extremely difficult to break the cycle of terror and violence.” According to Chellaney, Rakhine “militants are suspected of having ties with the Islamic State (ISIS), al-Qaeda, and other terrorist organizations.” And, on top of that, “they increasingly receive aid from militant-linked organizations in Saudi Arabia and Pakistan.”

Thakur echoes these points. “Few Westerners,” he laments, “grasp the challenges faced by decision-makers in developing countries confronting extremism from insurgents and terrorists.” And he reminds us that the current military crackdown started “after insurgents staged a series of attacks on police and army posts in August.” To his mind, the crisis in Myanmar is not just national but regional. It will thus take a regional effort – led by the Association of Southeast Asian Nations (ASEAN) and the United Nations – to end the bloodshed, settle or repatriate refugees, and investigate and prosecute atrocities.

As for Suu Kyi, Thakur recommends that she and her government urgently “repeal or amend all discriminatory laws and end official anti-Rohingya discrimination,” in order to avoid fueling further extremism. Of course, doing that would require her to deliver Myanmar from its long history of “bad passions.” So far, she has not proved to be up to the challenge; on the contrary, she may be a prisoner of them.

 

By: October 6, 2017
Source: Project Syndicate
https://www.project-syndicate.org/onpoint/women-in-charge-by-ps-editors-2017-10?a_la=english&a_d=59d728d178b6c7119c59ac21&a_m=&a_a=click&a_s=&a_p=homepage&a_li=women-in-charge-by-ps-editors-2017-10&a_pa=curated&a_ps=main-article

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