Ever y now and then, something happens to shine a light on one of the big, subterranean forces in world affairs. When "sovereign wealth funds" from China and other parts of the developing world start to buy big stakes in the most prestigious—if temporarily troubled—western banks, like Citigroup, you can see the balance of global power shifting a notch or two from west to east. But this, of course, is merely the illumination of a conventional wisdom. With the US economy weakened by financial turmoil, and perhaps even recession, it is also a good time to be reminded by Michael Lind of the underlying robustness of American society. In this month's cover story, Lind challenges three myths about the medium-term future of the US: that it will be torn apart by ethnic rivalries as it becomes increasingly non-white; that its politics will be dominated by religious fundamentalists; and that its social security system will bankrupt the country. Even the conservative cultural pessimists at Commentary magazine are noting improvement in America's social pathologies, so perhaps it is time to look beyond the short-term economic (and foreign policy) gloom. As Lind concludes: "The US will remain first among equals for generations to come, even in a multipolar world with several great powers."
Closer to home, the economic slowdown has focused attention not so much on global power shifts as on the excesses of financial capitalism—partly because of the prominence of the Northern Rock bailout (see our special report). When Martin Wolf of the Financial Times recommends regulation of City bonuses, something is up. But while a more constrained financial sector might be popular and even economically beneficial, such is the dependence of Britain's economy on the City of London that it may no longer be possible (it is one of the puzzles of British public life how this came about with so little debate). The issue of bonuses is real—vast bonuses both promote reckless behaviour and generate resentment—yet in many cases the bonuses arise from employee profit-sharing schemes; the bigger question is why City firms are so profitable. Other, more clear-cut failings thrown up by the recent turmoil include the uselessness of company accounts in the financial sector and the sluggishness of some regulators—on the latter point, we surely need more "poachers turned gamekeepers." If we do end up in a recession that can be partly blamed on high-finance excess, it may mark a watershed in political and popular attitudes. It would be a start if it prompted the political class to become more financially literate; when, for example, did a big think tank last produce any interesting work on the rise and influence of the financial sector?
