Letter: States need social contract for a new Bretton Woods

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Rana Foroohar (Opinion, April 18) echoes US Treasury secretary Janet Yellen’s call for a new Bretton Woods framework based on shared values. The call comes as the west has shown incredible unity trying to help Ukraine defend its sovereignty and, by extension, the democratic values the west holds dear. The call to base international, economic and financial relations on shared values is laudable. But the enormity of the task should not be underestimated. The nation states in the Bretton Woods system clearly do not see eye to eye on the key issues that a new framework would need to address. How to expand cross-border trading opportunities in ways that raise global and inclusive prosperity is but one example where progress has been slow. The design of cross-border financial relationships also shows deep divisions between those who favour a laissez-faire regime and those who believe countries should retain policy levers to stabilise their economies against volatile capital flows and to pursue national social objectives.

More fundamentally, when we speak of shared values, one must remember that, even within a nation state, what constitutes shared values is also not clear-cut. How much weight to put on economic growth, sustainability and equality are but three examples where deep divisions within societies need to be overcome. Establishing national social contracts with genuinely shared values within countries would seem to be a sine qua non for an effective successor Bretton Woods framework for the world as a whole.

Jonathan D Ostry
Georgetown University
Washington, DC, US

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