When George Soros invests $50 million to revolutionize the way Americans think about a certain issue, it would normally be deemed newsworthy. Not so with the formation of the Institute for New Economic Thinking (INET). Three months after a summit in New York state last July, Soros pledged $50 million to INET, which promises “to promote changes in economic theory and practice” by “providing the proper guidance” to “the next generation.”
Despite its name, its philosophy is nearly a century old. The group blames the economic crisis on free market capitalism and promotes a return to the theories of John Maynard Keynes. INET hosted its inaugural conference April 8-10 at King’s College, Keynes’ school, and called on economists to “apply the same Keynesian courage and innovation” to ending the worldwide recession.
That conference’s proceedings reveal INET is applying its talent to “contracting” the U.S. economy, redistributing its wealth, and creating a new world body to “supervise” global financial transactions – a body its elite membership intends to influence.
One of the conference attendees essentially spelled out its agenda in print. Andre Wilkens, who represented the prestigious German foundation Siftung Mercator at INET’s conference, was formerly “director of the Open Society Institute Brussels (OSI-Brussels) and a founding member of the European Council on Foreign Relations (ECFR).” Wilkens wrote just after the election of Barack Obama:
The challenge ahead is to manage a peaceful decline of the west while rescuing as many of the west’s liberal political and economic values as possible…We need new global governance which can both manage the ascent of China, India, Russia, Brazil as well as the relative decline of the United States and Europe. Europe and the US must concentrate on shaping this new global governance and enshrine its progressive values within it, while they still have some power to do so.
He suggested the world’s elites create piecemeal “global governance based on global financial governance and then move ahead in ways that echo the EU’s evolution” from the European Economic Community (EEC) to a full political union with a centralized parliament, open borders, and a common currency. He concluded by echoing Rahm Emanuel: “The importance is to understand the crisis as an opportunity which should not be wasted.”
The speakers at INET’s inaugural conference wasted no time fleshing out each of these themes into a program for action.
The Decline of the West
Kate Pickett, a professor of epidemiology at the University of York, who once equated the American desire for good service in restaurants with “servitude,” spent her talk arguing for a socialist West. Reviewing data drawn from her book The Spirit Level: Why More Equal Societies Almost Always Do Better, she assessed neither life expectancy nor “happiness” could be improved through increased wealth creation, and that “greater equality” (e.g., reduced purchasing power) “may be leverage” to “rein in carbon emissions.” She expounded:
In terms of global wealth, those who look at the need to change the economic structure of the world to cope with climate change talk about contraction and conver[gence], that we must raise the standards of living and the wealth of the developing world while sort of contracting the consumption and wealth of the developed world…The optimistic message from our work is that that will not compromise our health or happiness. And so, contraction and convergence for climate change reasons is actually likely to bring us social benefits, and we can have a high quality of life and sacrifice.
This sacrifice would be borne only by “the rich, developed economies,” where “a bit more poverty for those who have far too much I think would be a very good thing.”
Pickett suggested “three things” to equalize wealth inside the UK: “a land value tax,” “a massively increased inheritance tax,” and “the abolition of private education.”
The Dragon Ascends
Other speakers planned the displacement of American hegemony by other nations. Franklin Allen of the University of Pennsylvania wrote that Chinese “proposals for a global currency to replace the dollar” have a “great long run advantage.” However, this entails the “need for an institution to implement the currency.” Luckily, there is a second choice. “A more likely medium term scenario is that the Chinese Rmb becomes fully convertible and joins the U.S. dollar and the euro as the third major reserve currency.” That “solution” would result in drastically higher interest rates and massive devaluation of our currency.
The INET conference’s session on “Global Governance?” focused on building Wilkens’ world government, beginning with the financial sector – with ample room for special interests to exert their influence. Charles Dallara, head of the Institute of International Finance (IIF), insisted a global crisis required “adaptations of global architecture. I think we are reluctant to do that because we have been captured by the notion of sovereignty.” Dallara wants to implement a “regime” of “global regulation, global supervision, and global risk management.” He emphasized global supervision – allowing a world body to see how each major firm in the world does business – by noting “framework of regulation is one thing, actually engaging in supervising financial institutions and the conduct of their business is another thing.” He suggested “a global treaty for financial services” and “a new global institution to manage the regulatory, supervisory, and risk management framework” as part of a “cross-border resolution regime.” In an accompanying paper Dallara calls for “a Global Macroeconomic Coordinating Council” that encourages “global coordination” of fiscal policy and reports only to the G-20 Summit. Echoing Wilkens, he told his audience, “if we do not embed this in a broader framework of” global government, “then I’m afraid we would have missed a major opportunity.”
These international institutions would embody “progressive” values. Franklin Allen proposed something like Affirmative Action for the IMF. He argued the Fund required harsh measures during the 1997 Asian crisis only “because the Asians are underrepresented in the IMF” and recommended the IMF “reform its governance structure…accompanied by an increase in Asian staff at all levels.”
Kate Pickett gave another view of the progressive values Soros, et. al., wish to implement globally. She rhapsodized about her college days:
When I was here at Cambridge in the 1980s, Kings was known as The People’s Republic of King’s. The student union actually voted that the union leader must change his name from Shaun Waterman to Shaun Waterperson. It was a radical place then. Places can change, societies can change, and thinking can change.
INET’s agenda sounds like that of John Holdren, Obama’s Science Czar and the onetime protégé of Paul and Annie Erhlich. I was the first writer to expose Holdren’s book Ecoscience, in which he called for ending global inequality, reducing Western living standards for environmental reasons, promoting left-wing social policies (in his case, compulsory abortion), and creating “a comprehensive global regime” to monitor all world commerce. Yet even he did not envision a further proposal at INET’s conference: enshrining crony capitalism.
In his paper, Dallara extolled the IIF, which he heads, as “the center of an extensive network of information and well-informed views,” yet he worries “we are not taking full advantage of the potential for public-private sector dialogue.” He points to an IIF organ, the Market Monitoring Group, which “has established a dialogue…with official bodies, including the FSB [Financial Stability Board] and the IMF, and we would like to see the institutionalization of regular, structured exchanges.” He pointed out private-public consultations have not taken place, in part, because of “public suspicion,” but reassured that “my interest in more systematic interaction…[is] not about regulatory capture or revolving doors.”
Yet Dallara is an example of such a revolving door. Before joining the IIF in 1993, “he was managing director at J.P. Morgan & Co…During the 1980s, he served in a variety of senior financial positions in the US government,” including a concurrent stint in the Treasury Department and the IMF during the Reagan administration, then served “as assistant secretary of the US Treasury for International Affairs in 1989–1991.” He has participated in a number of private organizations, such as the Council on Foreign Relations and the Private Export Funding Corporation (PEFCO).
The IIF represents “multinational corporations, trading companies, export credit agencies, and multilateral agencies” based in 70 countries (half of them in Europe) and advocates for its members interests.
Despite the potential for abuse, another presenter, Franklin Allen, proposed creating a Financial Stability Board within the U.S. Federal Reserve System with several votes in Federal Open Market Committee meetings.
This means individuals with longstanding ties to corporate, banking, or financial interests would be in a position to view and grade their longtime competitors’ internal compensation and corporate risk-taking policies – and vote on matters affecting their bottom line.
This brings to mind FDR inviting the titans of industry to write the National Recovery Administration’s business regulations during the Great Depression. They immediately set price, wage, and production standards to their advantage. The potential for corruption in a less accountable global body would be immense. If there is to be a global financial superstructure, this conference demonstrates George Soros is trying to put himself at its center.
Ben Johnson is an Associate Fellow at NLPC. His personal website is TheRightsWriter.com.