Opinion Looking for leaders

Let’s start with Europe. Greece,Italy,Spain and Portugal all enjoyed a “German dividend.” That is,they enjoyed German-level interest rates as members of the eurozone,even though they were not as productive or disciplined as German savers and workers. Instead of using that dividend to modernise their economies and make themselves more competitive and productive,they went on real estate or consumption binges that have badly weakened either their banks or national balance sheets. Now there is no more escaping the bill. Chancellor Angela Merkel of Germany decried this “missed opportunity” to overhaul their economies in a speech.

The Arab world had 50 years of autocratic rule in which leaders from Libya to Tunisia to Egypt to Syria to Yemen could have gradually ordered reforms from the top down. The military dictators in South Korea and Taiwan used their power surpluses to build export-led economies and educate all their people,creating huge middle classes that gradually took power democratically. But the Arab leaders used their surpluses of power and wealth to ignore the UN’s Arab Human Development Report in 2002,which said they urgently needed to overcome their deficits of freedom,knowledge and women’s empowerment. Instead,they enriched a small slice of their populations and distracted the rest with shiny objects. Now the Arabs have to dig out of this deep hole with fractured political systems and huge youth populations. Who will tell their people that building competitive economies with modern schools will be a huge challenge?

To its credit,China used its huge export dividend to build 21st-century infrastructure and to educate its people,creating a giant middle class. But the current Chinese leadership has not used this surging economic growth to also introduce gradual political reform. Corruption is as bad as ever,institutionalised transparency and rule of law remain weak and consensual politics nonexistent. If growth slows and incomes widen further,more steam will build up in that system with no outlet.

As for America,in the 1990s we enjoyed a peace dividend,a dot-com dividend and a low-oil-price dividend,which combined to sharply reduce the federal deficit. But 9/11,two wars accompanied by tax cuts,not tax increases,a Medicare prescription drug plan and a necessary bailout to prevent a potential depression put us more in debt than ever.

So for Europe,the Arabs,China and America,in different ways,these have been the years the locusts ate. Getting healthy again will be wrenching for all of us. If I were President Obama,I’d focus my entire campaign now on an effort to reforge a “grand bargain” with Republicans based on a near-term infrastructure stimulus tied with a Simpson-Bowles long-term fiscal rebalancing. At a minimum,it would show that Obama has a sensible plan to fix the economy — which is what people want most from the president — and many in business would surely support it. We cannot wait until January to do serious policymaking again. We,and the world,need America to be a rock of stability — now.