Technology and Sovereignty
Wriston, Walter B.
Like all technological advances, the new Information Standard makes the world's power structures very nervous, and with good reason. The rapid dissemination of information has always changed societies and, thus, the way governments operate. In the United States, perhaps the most dramatic example of this dynamic was the civil rights movement. The plight of black people in many sections of the nation went almost unnoticed by many Americans for almost a hundred years. Suddenly the TV cameras brought into our living rooms the image of Bull Connor with his dogs and whips. Americans quickly decided together that this was wrong, and the civil rights movement made a quantum leap forward, drastically changing the country's political landscape.
Even though American politicians have come to accept universal suffrage and the ballot box as arbiter of who holds office and who does not, the similar new global vote on a nation's fiscal and monetary policies is profoundly disturbing to many.
The world's financial marketplace will never recede to its old national borders. Lines on the maps, traditionally the cause of wars, are now porous. Money and ideas move across borders in a manner and at a speed never before seen. Markets are no longer geographical locations, but data on a screen transmitted from anywhere in the world. It is difficult to suddenly accept the judgment of thousands of traders who translate politicians' actions into new monetary values, because this situation has arisen so quickly. Nevertheless, it is about as useful to curse the thermometer for recording a heat wave as it is to rail against the values the global market puts on a nation's currency.
This state of affairs does not sit well with many governments, because they correctly perceive that the new Information Standard is an attack on their sovereign powers. Since global financial markets are a kind of free speech, many complain about what the markets reveal about their country's policies.
In the past, if a country did not like the way a particular financial standard was working, be it the gold standard or the Bretton Woods agreements, the leader of the country could call a press conference and simply opt out of the system. This has happened many times in history. What will eventually harness politicians' attention is that there is no longer any way for a nation to resign from the Information Standard. No matter how a country attempts to escape from the system, the world's trading room screens will continue to light up and the market will continue to make judgments.
Since the underlying technology of the new financial system will not disappear, it is reasonable to assume that the Information Standard will be with us for a long time. The good news is that since it is here to stay, there will be increasing pressure on all governments to implement sound fiscal and monetary policies, which will in turn enhance the chances of international financial cooperation. While each nation will continue to pursue what it perceives to be its national interests, there will be increasing pressure to harmonize various economic policies. Progress is already visible in these areas.