By now, readers have a pretty good idea of the thesis of my latest book topic: Contra the arguments of many, the system of global economic governance worked pretty well during the 2008 financial crisis, and it's continued to work "well enough" since 2008. 

Furthermore, American leadership is at least partly rsponsible for the system working. Despite bouts of partisan gridlock, the United States government still enacted a plethora of emergency rescue packages (via the 2008 Troubled Assets Relief Program), expansionary fiscal policies (via the 2009 American Recovery and Reinvestment Act, the payroll tax cut, and the extension of the Bush tax cuts), stress tests of large financial institutions, expansionary monetary policy (via interest rate cuts, three rounds of quantitative easing and Operation Twist), and financial regulatory reform (via Dodd-Frank). 

Another area where the U.S. has led the way is reforming IMF governance. Since 2006, the IMF has engaged in two rounds of quota reform so the distribution of power within the institution better reflects the actual distribution of power. A third round is planned for completion in 2014. As Ted Truman explains in this Peterson Institute of International Economics policy brief, U.S. leadership played a crucial role in these negotiations. 

So far, so good for my hypothesis. There's just one problem -- Congress has yet to ratify the last round of quota revisions. Since the reforms can't be enacted without U.S. approvial, this is a thing. According to Truman:

The United States bears substantial responsibility for the current situation. After 15 years in which US administrations of both political parties have pushed aggressively and imaginatively for governance changes in the IMF culminating with the central
US role in shaping the 2010 Seoul package, the United States has failed to implement that package. The rest of the world has been remarkably tolerant of the US delay in acting on the 2010 Seoul IMF reform package, but that patience is running out. US leadership and influence in the IMF is weakening, and thereby the influence of the institution itself. This is the principal reason why it is urgent to enact the pending IMF legislation.

From a US and global perspective there is only downside and no upside in further delay. Doing so would support the IMF as the central institution promoting global economic growth and financial stability, involve no true financial cost to the US taxpayer, and reinforce US leadership and influence in this crucial institution, positioning the United States to continue to lead in negotiating further IMF governance reforms.

Don't take Truman's word on this alone, however. As the Financial Times' Robin Harding reports, a lot of experts are starting to get antsy about the lack of congressional action: 

Almost 100 policy makers and academics have written to the US Congress urging the ratification of crucial reforms of the International Monetary Fund that international leaders agreed more than two years ago.

The signatories argue in an open letter, sent to House of Representatives and Senate leaders on Monday and seen by the Financial Times, that if the US does not sign up it will undermine its authority in negotiations at the G20 and other institutions that govern the world economy.

“Failure to act would diminish the role of the United States in international economic policy making and undermine US efforts to promote growth and financial stability,” the letter says.

Signatories include holders of the top international economic job at the US Treasury under Republican and Democratic administrations. They include Tim Adams, who worked for former president George W. Bush, and Jeffrey Shafer, who was part of the Clinton administration.

I'd say that it's a cruel irony that the United States is the brake on reforms spearheaded by ... the United States, except that by now, savvy readers know that this sort of thing is disturbingly common. 

Does it matter? Well, as much as I love to pooh-pooh the BRICS, they do share one genuine area of consensus -- they want more influence over global governance structures. If they don't get it, there will come a time when they will be both willing and able to set up institutions on their own -- like this one. Which would be a shame for two reasons. First, as a general rule of global economic governance, it's better to have great powers on the inside pissing out rather than the reverse. Second, the IMF has had some good mojo as of late, demonstrating renewed independence from Eurocrats and proposing some nifty policy ideas. 

If Congress stalls this quota reform measure that the executive branches from both parties have negotiated , they will be weakening a U.S.-friendly international institution and inviting potential rivals to set up or bolster alternatives. Which, if you think about, is a really stupid way to run U.S. foreign economic policy. 

More importantly to me, however, it would really f**k up one of my book's hypotheses. Congressional gridlock hasn't sabotaged too much in the way of American global leadership for the past give years. Blocking quota reform would be a pretty big deal, though. It would force me to revise a book chapter, and I really don't want to do that. 

So, in the name of political science, I humbly beseech Congress to pass the damn quota reform bill. 

[Uh, you really think that an appeal to political sciece is gonna work with this crew?!--ed.]  Uh ... in the name of preventing China and its allies from creating a New Anti-American World Order and threatening a global governance gap, I humbly beseech Congress to pass the damn quota reform bill.  [Much better!!--ed.]

Well, this sounds like very bad news for the global financial system: 

A plan to rescue the tiny European country of Cyprus, assembled overnight in Brussels, has left financial regulators, German politicians, panicked Cypriot leaders and a disgruntled Kremlin with a bailout package that has outraged virtually all the parties.

In the end, a bailout deal that was supposed to calm a financial crisis in an economically insignificant Mediterranean nation spread it wider. Word of the plan unnerved markets across Europe, raised fears of bank instability in Spain and Italy and sent pensioners into the streets of the island’s capital, Nicosia, in protest.

As markets tumbled and the Cypriot Parliament fell into turmoil, salvos of blame were hurled back and forth across the Continent.

Officials scrambled to explain what went wrong and how best to control the damage of what Philip Whyte, a senior research fellow at the Center for European Reform, called a “completely irrational decision” to make bank depositors liable for part of the bailout. The deal flopped so badly that finance ministers who came up with it shortly before dawn on Saturday were on the phone to each other Monday night talking about ways to revise it.

Now, on the one hand, you would be hard-pressed to find anyone who will defend the Cypriot deal as it was announced on Saturday -- but it's pretty easy to find critics of the proposed deal across the political spectrum. So this seems like yet another data point confirming the truly mind-boggling stupidity of European governments and regulators. It's particularly galling that they did this during a time when global capital markets are still fragile from the 2008 financial crisis.

Oh, except, wait a minute, it turns out that those markets aren't as fragile as the perception suggests. If you burrow into the McKinsey Global Institute's latest report on global asset markets, it turns out that, excepting Europe, the rest of global finance has experienced a decent recovery from the 2008 crash. According to MGI: 

With the pullback in cross-border lending, foreign direct investment from the world’s multinational companies and sovereign investors has increased to roughly 40 percent of global capital flows. This may bring greater stability, since foreign direct investment has proved to be the least volatile type of capital flow, despite a drop in 2012.

Of course, this was written before the Cypriot stupidity, so now markets are really roiled, right? Well... here's Business Insider's Joe Weisenthal's take early this a.m.:

Markets are down a bit in Europe although not dramatically so yet.

US futures were flat, and Asia was actually up nicely, with Japan gaining 2%.

That seems like a thoroughly appropriate reaction. And over at the New York Times, Andrew Ross Sorkin explains why that's the rational and appropriate reaction:

While the bailout of Cyprus is a fascinating case study and raises interesting theoretical questions about moral hazard for policy wonks and talking heads, here is the reality: It is largely irrelevant to the global economy. Cyprus is tiny; its economy is smaller than Vermont’s. And the bailout is worth a paltry $13 billion, the equivalent of pocket lint for those in the bailout game.

Even the larger issue about bailing out a country by taking money from depositors — which quickly created outrage around the world — seems overblown....

[I]n truth, the smart money knows that the bailout of Cyprus says very little about future actions.

“I would assume that anyone in Spain, Portugal or elsewhere who knows about the taxation of Cypriot depositors also would know that the Cypriot banking system is a very different animal than anywhere else in the euro zone,” Erik Nielsen, chief economist at UniCredit, wrote in a note to clients.

Mr. O’Neill of Goldman also acknowledged: “I am sure it will not set a precedent.”

Cyprus is unique. Besides being tiny, its banking system looks different from those in most other countries. Much of the big money deposited in its banks is from foreign investors, including Russians who have long been suspected of money laundering. Those investors had fair warning that Cypriot banks were troubled. The issue has been simmering for six months. But those investors left their money in the bank, in part because they were gambling that the banks would be bailed out at no cost to them. If the current plan is approved, depositors will have lost that bet.

Now this is a perfectly rational analysis. What's significant is that it seems like markets are making the same calculation. When financial markets are fragile, when there's a fear of financial contagion, they don't make the rational calculation -- they freak out. That hasn't happened with Cyprus.

I know I'm at the risk of pulling a Donald Luskin here, but what's happening in Cyprus right now primarily affects Cypriots, with a small concern about regional effects. It doesn't look like it's triggering the same kind of concerns of either the Lehman collapse or the Greek sovereign debt crisis. And anytime the abject stupidity of European financial statecraft can be confined to Europe, that's a very, very good thing indeed for the global financial system.

Am I missing anything? 

The Washington Post's Howard Schneider and Danielle Douglas have a story detailing the ways in which post-crisis global financial reform has allegedly ground to a halt:

Five years after the collapse of Lehman Brothers, a global push to tighten financial regulation around the world has slowed in the face of a tepid recovery and a tough industry lobbying effort....

the post-Lehman goal — of a global scheme that would immunize the financial system from another large-scale shock — remains incomplete. Big banks, insurers and other financial giants remain intact and arguably “too big too fail.” Tools to guard against dangerous bubbles in the value of property or other assets are not yet in place. There is no agreement on how countries should coordinate the failure of a globally important financial company. Implementation of basic banking rules in major nations has fallen behind schedule.

Finishing the job “is going to take many years,” International Monetary Fund chief economist Olivier Blanchard said last week. “It is conceptually very difficult, politically very difficult.”

In their effort to overhaul the global system, regulators have been confronted by a number of head winds. The world’s economy has been unexpectedly slow to recover, making governments leery of doing anything that might make banks cautious to loan and invest. The financial industry has pushed back hard, warning that aggressive regulation might undermine growth. And regulators are simply limited in their understanding of how modern finance can be made safe while still supporting economic activity.

The result: Some of the proposals once considered core to a safe, post-Lehman system have been delayed and weakened, and others have been played down, at least for now, as too politically complex.

Well, this sounds like a blow against my theory of "pretty good" or "good enough" global governance that I've been yammering about on the blog.... that is, until one starts reading the rest of the Post's story.

First of all, with the exception of one Jamie Dimon quote, there's not any real evidence in the story that industry lobbying is to blame. I'm not saying that this means that there was no industry lobbying, or that it was inconsequential -- merely that there's no evidence in the story to support the lede.

What there is evidence of, however, are two things that seem pretty consistent with "good enough" global governance. The first is that even in areas where there's been minimal global agreement, there have beern "patchwork" arrangements that look like they will work. For example:

There also is no comprehensive global approach for addressing bank failures. Individual members of the Basel committee, including the United States, have established resolution plans in case their own lenders become insolvent. And the United States and Britain in December released a set of guidelines to handle a major insolvency — a potentially important agreement between two world financial centers.

But determining how to coordinate the collapse of a major multinational bank is an area where the IMF and others have had limited success in pushing for a broader global agreement. The issue is important because a method to share the fallout of a bank failure across national borders would probably make countries more willing to let institutions go out of business, rather than propping them up with taxpayers’ money.

Again, in a perfect world one would like to see a comprehensive agreement. Given the center of gravity for the financial sector, however, an Anglo-American arrangement is actually pretty powerful and covers the biggest concerns.

Then we get to the implementation of the Basel III accords, designed to insure that banks have sufficient reserves of safe and liquid assets on hand to prevent a panic. As Schneider and Douglas note, the Financial Stability Board reports that only 8 of 27 nations are on track to implement these reforms on schedule.

Why is that the case? Here we find that interest group lobbying seems to matter less than... a recognition by regulators that life is not so simple:

[O]ther Basel proposals have been revised as regulators, bankers and officials have better understood how some of their major assumptions about finance and risk had been upended by events.

In Basel this month, regulators scaled back one key set of provisions that would force banks to keep the equivalent of larger levels of cash on hand to guard against a run on deposits or another fast-moving crisis.

Such highly liquid assets had been defined to include government bonds — which traditionally can be sold quickly and at close to their face value — and to exclude securities backed by residential mortgages, the bundled, complex assets that had triggered the financial crisis in 2007 when they proved difficult to sell other than at a steep loss.

The financial crisis in the euro zone showed a flaw in the approach when Greek, Portuguese and other government bonds plummeted in value. Smaller U.S. banks, meanwhile, argued that to completely exclude mortgages from the new “liquidity coverage ratio” would reduce their ability to make home loans.

When the final Basel rules on the issue were released this month, the required liquidity levels were reduced, mortgages were included in the tally and banks were given extra time to comply.

“Nobody set out to make it stronger or weaker as a standard but to make it more realistic... to make sure there was no impediment to financing recovery,” said Bank of England Governor Mervyn King, who chairs a Basel committee of central bankers and regulatory chiefs.

So, to sum up: after an initial burst of regulatory arrangements, progress has slowed down in some areas, and in other areas relies on a more patchwork arrangement. That said, there appear to be intrisically good reasons for the slowdown, and the patchwork covers the major financial centers.

Yeah, this is "good enough" global governance.

One of the points I was trying to make in my CFR working paper on global economic governance is that the system, while far from perfect, did in fact prevent the worst from happening.  That might sound like lowered expectations, but anyone who knows anything about the history of global governance would appreciate that this would represent a significant upgrading from past centuries. 

I bring this up because of this maddeningly-short-on-detail New York Times front-pager by Eric Shmitt and David Sanger on what went down when the Syrian government inched closer to using its chemical weapons stockpile: 

In the last days of November, Israel’s top military commanders called the Pentagon to discuss troubling intelligence that was showing up on satellite imagery: Syrian troops appeared to be mixing chemicals at two storage sites, probably the deadly nerve gas sarin, and filling dozens of 500-pounds bombs that could be loaded on airplanes.

Within hours President Obama was notified, and the alarm grew over the weekend, as the munitions were loaded onto vehicles near Syrian air bases. In briefings, administration officials were told that if Syria's increasingly desperate president, Bashar Al-Assad, ordered the weapons to be used, they could be airborne in less than two hours — too fast for the United States to act, in all likelihood.

What followed next, officials said, was a remarkable show of international cooperation over a civil war in which the United States, Arab states, Russia and China have almost never agreed on a common course of action.

The combination of a public warning by Mr. Obama and more sharply worded private messages sent to the Syrian leader and his military commanders through Russia and others, including Iraq, Turkey and possibly Jordan, stopped the chemical mixing and the bomb preparation. A week later Defense Secretary Leon E. Panetta said the worst fears were over — for the time being.

Now if you read the whole thing, it's entirely unclear exactly who communicated to whom and whether these messages were planned and coordinated in advance -- though it reads like it was. 

But this episode, again, seems like an example of the great powers making sure that the worst-case scenario -- for them, at least -- did not transpire.  Now this might seem like small beer compared to the appalling loss of life in Syria and the discomfiting tolerance the Obama admiinistration has with the status quo.  Still, compared to, say, the interwar period of 1919-1939, or the Cold War deadlock from 1945-1990, it's not nothing either.  Clearly, the great powers do seem pretty invested in the idea of keeping the Syrian civil war limited to Syria and not allowing it to consume the entire region. 

In no way should this be taken as a shining moment for global governance, but it does suggest that there is some governing and policing going on, no matter how suboptimal the level.  In much of the social sciences, there's a focus on constrained optimization and maximization.  What's going on in global governance right now highlights the "constrained" part of that equation more than anything else.  Still, compared to some who argue that we operate in a world where no one is powerful enough, perhaps it would be more accurate to phrase it differently.  Formal and informal global governance structures still perform some important tasks at preventing worst-case scenarios from metastasizing, be it in security or economics.  Call it "'good enough' global governance" -- it's not a new world order or anything, but it's also not as chaotic or dysfunctional as many pundits proclaim.

What do you think? 

I've blogged on occasion about the development of a sovereigntist lobby that reflexively opposes all treaties because they erode U.S. sovereignty.  For these people, any infringement on American sovereignty is a death blow to freedom, regardless of the benefits from joining.  This kind of reflexive opposition has caused even stalwart groups on the right to cringe in embarrassment. 

This hasn't slowed down the sovereigntists a bit, which led to a somewhat awkward day in the U.S. Senate: 

Former Senator Bob Dole of Kansas sat slightly slumped in his wheelchair on the Senate floor on Tuesday, staring intently as Senator John Kerry gave his most impassioned speech all year, in defense of a United Nations treaty that would ban discrimination against people with disabilities.

Senators from both parties went to greet Mr. Dole, leaning in to hear his wispy reply, as he sat in support of the treaty, which would require that people with disabilities have the same general rights as those without disabilities. Several members took the unusual step of voting aye while seated at their desks, out of respect for Mr. Dole, 89, a Republican who was the majority leader.

Then, after Mr. Dole’s wife, Elizabeth, rolled him off the floor, Republicans quietly voted down the treaty that the ailing Mr. Dole, recently released from Walter Reed National Military Medical Center, so longed to see passed.

A majority of Republicans who voted against the treaty, which was modeled on the Americans With Disabilities Act, said they feared that it would infringe on American sovereignty.

The Cable's Josh Rogin has more on today's vote. 

Now to be fair to the Republicans who voted "nay," you don't approve a treaty just because Bob Dole favors it.   And to be more than fair, it's true that the United States has comparatively robust legislation in the form of the ADA and IDEA. 

On the other hand, the point of this convention is to ensure that other countries start embracing the rules and standards codified by the U.S. Americans with Disabilities Act -- you'd think most Republicans would be super-keen on other countries embracing principles of U.S. law.  Furthermore,  the U.S. Chamber of Commerce also supports the treaty, and I hear that Republicans are pro-business, so that is a bit confusing.  I also read that "the treaty was negotiated by the George W. Bush administration," so, again, you can understand my confusion. 

If you want to see the arguments against the UN Convention on the Rights of People with Disabilities, click here, here, here, here, and here.  As near as I can determine, critics don't like the treaty because... it's a treaty.  Most of the objections are either bogus or unsubstantiated by practice.  As Joshua Keating notes, "a perfectly reasonable treaty was just rejected based on a complete misreading of it."

Or, as Tim Fernholz explains: 

The treaty’s critics, like the conservative Heritage Foundation, were left arguing that the treaty shouldn’t be ratified if the US already complied with its intent, since endorsing the treaty could lead to problems down the road by unspecified means. That dismayed the treaty’s advocates, who see the treaty’s value in the message it sends to other countries about the importance of protecting disabled people. “It’s a treaty to change the world to be more like America,” protested John Kerry, the Democratic Chairman of the Senate Foreign Relations Committee, before the failed vote.

Dana Milbank notes that sometimes the treaty's opponents contradicted their own arguments: 

[O]pponents couldn’t agree on how this box would be opened. “Do I believe that states will pass laws or have to pass laws in conformity with the U.N. edict?” [Rick] Santorum asked himself. “Do we have to amend IDEA?” the Individuals with Disabilities Education Act. “I don’t have any fear anytime soon that IDEA will be amended. But I do have concerns that people will go to courts and they will use this standard in this convention.”

This was contradicted by the next man at the microphone, home-schooling advocate Mike Farris, who pointed out that the document has a provision stating that “you can’t go to court automatically. You must have implementing legislation first” — the very thing Santorum says he does not expect to happen.

Still, their spurious theory of a U.N. takeover of parenting was enough to lead Lee and Santorum to oppose a treaty that would extend American values worldwide and guarantee disabled people equal treatment, and freedom from torture and exploitation.

Now I'm honestly pretty dubious about whether U.S. ratification of the treaty would accomplish all that.  Unlike Law of the Sea, not ratifying this treaty doesn't appreciably harm U.S. interests.  It does, however, make the United States look pretty dysfunctional.  In essence, the U.S. Senate just rejected a treaty on protecting the disabled that would have globalized the status quo in U.S. law on this issue.  To use the parlance of international relations scholars, this is dumber than a bag of hammers. 

Former Secretary of Defense Donald Rumsfeld has quite the provocative op-ed in today's Wall Street Journal.  He argues that even though "every living former secretary of State" endorses it, the United States should withdraw from the World Trade Organization. 

Why?

The [WTO] proposes to create a new global governance institution that would regulate American citizens and businesses without being accountable politically to the American people. Some [WTO] proponents pay little attention to constitutional concerns about democratic legislative processes and principles of self-government, but I believe the American people take seriously such threats to the foundations of our nation.

The [WTO] creates a United Nations-style body called the "Dispute Settlement Mechanism." "The Mechanism," as U.N. bureaucrats call it in Orwellian shorthand, would be involved in all commercial activity...

Disagreements among [WTO] signatories are to be decided through mandatory dispute-resolution processes of uncertain integrity. Americans should be uncomfortable with unelected and unaccountable tribunals... serving as the final arbiter of such disagreements.

Oh, wait... you know what I did?  I misread Rumsfeld's op-ed.  Replace "WTO" with "Law of the Sea Treaty" and "Dispute Settlement Mechanism" with "International Seabed Authority."  That's what Rumsfeld is arguing against. 

But, hey, that totally innocent mistake on my part does a lovely job of demonstrating the hollowness of the best of a bad set of arguments.  [What are Rumsfeld's other bad arguments?--ed.  I believe, in order, 1) I worked with Reagan; 2)  Authoritarian states would also benefit; and 3) I smell socialism, no matter what the U.S. Navy says.]  The United States surrenders small parts of its sovereignty on a fairly regular basis.  America does this because the massive gains that come from every other country surrendering their sovereignty outweigh those costs and constraints.  Rumsfeld's argument, however, simply asserts that no sovereignty loss is tolerable -- which is gonna be news to our WTO and NATO partners, for starters.

What's especially impressive is that the former Secretary of Defense managed to write a whole op-ed weighing the costs and benefits of this treaty without ever once mentioning either "China" or "South China Sea."  By ratifying this treaty, the United States and its Pacific allies would put China into a corner on that and other disputes. 

Instead, Rumsfeld ignores that particular argument.  So, let's just come out and say it:  Former Secretary of Defense Donald Rumfeld is soft on China. 

Am I missing anything? 

Annie Lowrey ably summarizes the outcomes of spring meetings of the IMF and World Bank for the New York Times. Here are her first two paragraphs:

Meetings of finance ministers and central bankers here over the weekend started with a pledge by wealthy nations to significantly increase the lending capacity of the International Monetary Fund to defend against the possibility of worsening economic conditions in the debt-laden euro zone.

But they ended on Sunday without a consensus on just how to speed up the economic recovery, stamp out the European debt crisis or lower unemployment around the world, officials said.

Now, I would say how you interpret this outcome is an excellent indicator of your overall opinion of post-crisis global economic governance. On the one hand, if you're Alan Beattie, Edward Luce, Ian Bremmer, Charles Kupchan, or Ted Truman, well, this outcome is a sign of chronic dysfunction. If the world's great powers can't agree on what to do with the specter of a double-dip global recession looming over them, there's little reason to hope. The glass is half-empty.

On the other hand, if you're John Ikenberry, Robert Kagan, Bruce Jones, or Alan Alexandroff, the glass looks half-full. Boosting the IMF's reserves by more than $400 billion ain't nothing, and it's faintly absurd to believe that any global governance structure will ever be able to "speed up the economic recovery, stamp out the European debt crisis or lower unemployment around the world."

I'll be tipping my hand as to which way I'm leaning in the coming months, but for now, I'm curious about my readers. What do you think? Is global economic governance a mess or doing reasonably well in trying circumstances?

I was on the road when President Obama announced his preferred choice of Dartmouth president Jim Yong Kim to be the next World Bank president. Since then, both the Economist and Financial Times have endorsed Nigerian Finance Minister Ngozi Okonjo-Iweala instead. I didn't pay it much mind, because, frankly, if the U.S. could get Paul Wolfowitz through the nomination process, Kim wasn't gonna be a problem.

Over the weekend, however, things jumped up a notch on the rhetorical front. I confess to being a bit puzzled by it all.

First, Bill Easterly suggested in the Guardian that the vote be delayed because Kim hadn't addressed a public forum on his development views... because he was too busy meeting with the member governments who have actual, like, real votes on this selection.

Then Chris Blattman came out against Kim, concluding grumpily that "identity has crowded out substance." He then adds the following:

Kim is smart and qualified, and there are many good reasons not to have a business-as-usual Bank President, even one in health. But if you find yourself supporting his candidacy on such substantive grounds: congratulations, you have successfully succumbed to Obama’s strategy for maintaining imperial control of one the world’s most influential institutions.

Yeah! How dare the perfidious Americans extend their control over the World Bank presidency by.... selecting someone who substantively addresses the issues of developing country governments!! That's like, totally unrepresentative. Or to put it more bluntly, I don't think "identity" means what Blattman thinks it means.

Finally, I've seen a bunch o' tweets to myriad articles suggesting that Kim's selection could be in doubt. Actually, that's not entirely accurate. It's more like the headline/lead paragraphs scream "Whoa! Non-American could actually win!" until we get to the text of the articles, which then observe thing like, "most analysts believe there is little doubt that Kim will secure the presidency" or that Kim would lose if "the US signals willingness to accept defeat."

Look, let's get a few things straight:

1) I'm very sympathetic to the notion that non-Europeans should head the IMF and non-Americans should head the World Bank. This is an entirely fair and appropriate issue to raise.

2) For that to happen, it will require the United States and Europe to jointly renounce their informal cartel on the leadership posts and that they will not suggest any candidates. No way one side moves without the other, and no way this happens now after the Europeans managed to install Christine Lagarde as IMF head only last year.

3) Barack Obama is up for re-election and his chief opponent has been accusing him on going on non-existent apology tours across the world. There is no way -- no way -- he is going to compromise on Kim's selection. I can see a second-term shift towards what everyone wants, but the only way the World Bank becomes an election issue is if Kim loses.

4) Even with the current arrangements, the selection process has been more... let's say polyarchical than even a decade ago. Lagarde had to woo China and other key voters at the IMF, and Kim has been busy doing the same thing now. Deputy selections have been used to win favor from key voting constituencies. Blattman's complaint that Kim represents a gesture towards exactly the issues that a lot of development activists care about shows that the US and EU are recognizing the rising political constraints at the IFIs.

5) For reasons 2 - 4, I think that what's happened over the weekend is mostly a lot of stuff and nonsense. If development activists are smart, they will initiate a major push after November 2012 to get the Americans and Europeans to gracefully and jointly commit not to nominate anyone for the next go-around of IFI leaders.

Am I missing anything? UPDATE: Nope, I wasn't.

I'm in Shanghai to discuss how the G-20 has been doing as the world's "premier economic forum." As fate would have it, the G-20 actually opened its collective mouth in response to the market convulsions of this week:

The Group of 20 leading economies pledged a “strong and co-ordinated” effort to stabilise the global economy in an attempt to calm tumbling equities markets spooked by fears of recession in the eurozone and a gloomy economic outlook in the US.

Bowing to pressure from investors to take action, finance ministers from the G20 economies said in a communiqué issued late on Thursday that they would stop the European debt crisis from deluging banks and financial markets, and take the necessary steps to bolster the eurozone’s rescue fund and assist banks to boost capital reserves in line with new global regulations. The statement followed a day in which the equity markets suffered some of the biggest falls since the collapse of Lehman Brothers in 2008, as investors rushed to safety in a widespread sell-off.

“We commit to take all necessary actions to preserve the stability of banking systems and financial markets as required,” the group said in a statement. “We will ensure that banks are adequately capitalised and have sufficient access to funding to deal with current risks and that they fully implement Basel III along the agreed timelines.”

The G-20's near-total muteness in the face of European sovereign debt convulsions had begun to raise some eyebrows -- particularly as it was the G-7 economies rather than the G-20 that pledged to provide dollar liquidity to European financial institutions.

Unfortunately, if you read the actual communique, you discover... well.... let's describe the statement as very optimistic about what the G-20 countries have done to promote both growth and fiscal rectitude.

One of the takeaways from my conversations so far in Shanghai has been a sense of disappointment about what the next G-20 summit in Cannes will accomplish. The Financial Times' Chris Giles provides some background on the demise of the France's grand ambitious for that summit:

In mid-February, G20 finance ministers gathered in Paris for what turned out to be a harbinger of the challenges that have beset the French G20 presidency ever since. The meeting was supposed to be routine, with finance ministers agreeing a set of indicators that might be used to assess whether their economies and policies fostered balanced global economic growth.

Far from France undermining the meeting with excessive ambitions, countries struggled to agree even the most basic steps to a more stable world economy.

A country’s current account surplus or deficit is the accepted measure of balance in its relations with other countries, but the Chinese arrived in Paris in intransigent mood. Their negotiators refused to let the G20 use the current account as an indicator of balance. After an all-night session, the absurd compromise China accepted was that countries were allowed to assess every component part of a country’s current account, but the term “current account” was banned.

That ended the French presidency’s lofty plans. From then on, limited goals became the order of the day, a shift that has been reinforced as the year has progressed.

I'd quibble a bit with Giles -- any meeting that details indicative guidelines on macroeconomic imbalances is not gonna be a routine meeting. [Um...could you translate that last sentence out of bureaucratese, please?--ed.] Sorry, to rephrase -- any meeting in which the G-20 points out that China's trade surplus is part of the problem in the global economy is not going to be a smooth meeting.

Your humble blogger went to see Contagion over the weekend for two reasons.  First, Slate movie critic Forrest Wickman concluded his review by calling it, "the most believable zombie movie ever made." He's not the only one to make the zombie connection, and well, now I've got some skin in that game.  Second, the FP editors have asked me to review other disaster scenarios, so I figured I'd just pre-empt their request and join the legions of moviegoers who get their ya-yas seeing Gwyneth Paltrow die on film be entertained. 

So, let me provide the MASSIVE SPOILER ALERT klaxon here and get to the assessment.  How well did Steven Soderbergh and company portray what would happen if a lethal pandemic were to break out? 

OK, good news first:  in terms of both accuracy and suspense, Contagion is a far, far better film than, say, either Outbreak or The Andromeda Strain.  The first reason is that Soderbergh does not bother with the anti-government paranoia that those earlier films possessed in their DNA.  Instead, the treatment of the Centers for Disease Control, Department of Homeland Security, and World Health Organization officials is fair.  They are depicted as flawed but well-meaning bureaucrats, getting some decisions right and some wrong.  They also speak in jargon, a surprising amount of which makes its way into the film.  I fully expect to see the term "R-0" bandied about by news anchors the next time a flu bug breaks out.  A CDC official utters the two most chilling words in the entire movie -- "social distancing" -- to describe the necessary freak-out by citizens to avoid human contact with other humans as a way of slowing the spread of the virus.  That's the perfect dash of bureaucratese. 

The second reason is that Soderbergh almost perfectly nails the first stage of the pandemic.  Unlike, say, most zombie or other apocalyptic films, Soderbergh doesn't get to the breakdown of social order in the first reel.  He takes his time, which helps to amp up the pressure and make it seem all the scarier when things do seem to break down (Matt Damon's character is the perfect vessel here; Damon's best work is in his reaction shots to other people behaving badly).  He also deftly demonstrates in the first ten minutes how globalization would abet the spread of any kind of superbug. 

Despite this slow ratcheting up, I haven't seen a director kill off so many Hollywood starlets since Joss Whedon. 

The third reason is that the movie, intriguingly enough, does not end in a post-apocalyptic wasteland.  Consistent with the arguments I made in Theories of International Politics and Zombies, humans prove to be just as adaptable as the biological threats to humans. 

That said, here are my beefs: 

1)  Really, the blogger is the Big Bad in the movie?  Really?  The villian of the piece is Jude Law's crudely-named Alan Krumwiede, who detects the spread of the virus early but hawks a homeopathic remedy to enrich himself.  Exactly how he gets rich doing this is not entirely clear -- he has some shady meetings with a hedge fund manager, but it's not entirely clear why, after gaining fame and fortune, he doesn't start acting differently as more attention gets paid to him.  It's also presumed that Krumwiede has the monopoly of blogging on the issue -- I'm pretty sure that as he gained popularity, a few other health bloggers would try to cut him down to size. 

Neither Soderbergh nor his screenwriter Scott Z. Burns like bloggers, like, at all.  At one point the virologist played by Elliott Gould tells Krumwiede, "Blogging is not writing.  It's graffiti with punctuation."  Hah!  That shows what Soderbregh knows -- us bloggers are lucky if we remember to use commas, much less semicolons.  

Look, as a founding member of the International Brotherhood of Policy Bloggers, I can't claim that actors like Krumwiede don't exist.  My skepticism is over whether they'd really wreak as much havoc as Soderbergh thinks.  Myths and rumors can spread on the Internet, but so can the corrections of those myths.  In the end, someone like Krumwiede would affect a very narrow, already paranoid subculture -- the larger effect would be minimal. 

Even if Krumwiede is an absurd villain, I also didn't buy it when the DHS official let him go free once he made bail.  At a minimum, they'd hold this guy for 48 hours without charging.  I'd also wager that they'd try to deport him too. 

One final note:  I'd love to see Lee Siegel hire Sodebergh to direct and Aaron Sorkin to write a movie about the Internet, just to see the final dystopic product. 

2)  Where the hell is the Chinese central government?  The most absurd subplot is when a WHO official gets abducted by her translator as collateral to protect his infected village.  She's held hostage for at least six months -- during which time she goes native -- until the WHO barters some (fake) vaccine for her life. 

Apparently during this entire time, the Chinese central government does not bother to intervene to try to rescue her.  This seems juuuuuuust a bit implausible.  It also leads to the next problem....

3)  Where the hell is the rest of the WHO?  Beyond Marion Cotillard's character, the WHO does not really appear in the film.  It's the CDC's show, and only their show .  They act in Contagion pretty much how they promised they would act if the zombies arrive.  Maybe that's how things would play out, but I suspect other governments and IGOs would still matter more than this film suggests.  Given that the movie virus started in China, and that the head of the WHO is also from China, they might be useful in this kind of situation. 

4)  Few second-order effects.  The virus leads to looting, crime, and other social ills, but I wish they had said something about the total economic devastation that would have occurred.  At one point after a vaccine has been developed, Matt Damon's character walks through a mall to buy his daughter a prom dress -- and 80% of the mall looks to be closed.  Soderbergh suggests a bunch of unions going on strike because they don't want to ge sick.  I'm curious what happens once they find themselves unemployed as well.   

Forget the domestic discord however, there's also...

5)  No international conflict whatsoever.  After the first 15 minutes, almost all of the action takes place in the USA.  Once a vaccine is discovered, there is no discussion of the international wrangling that would take place over scarce supplies.  No diversionary wars happen.  And so forth.  Soderbergh doesn't really address possible problems in world politics.  Because of this, the film implicitly assumes a liberal institutionalis kind of a world.  I hope he's right, but I'm not so sure myself.   

To be fair to Soderbergh and his collaborators, I'm not sure it's possible to get everything right in such a film.  Unless it's a television series I'm not sure it's possible to get all the nuances and complexities right.  Given these limitations, Contagion is a movie worth seeing.  Just bring your own Purell. 

There's been some interesting blog commentary on my debate with Anne-Marie Slaughter, and I encourage international relations theory geeks to check it out.  Over at the Monkey Cage, Henry Farrell makes an interesting intervention.  You should read the whole thing, but here's the part I found particularly provocative: 

Rather than seeing the international sphere as a space for inter-state power politics, or as a space for networked common action, we can think of it as a space for contagion.That is, think of it as a space where ever-multiplying and ever-ramifying sets of networked relationships across border serve not to enable problem-solving DIY diplomatists, but instead to transmit social influences in ways that are difficult to predict ex ante. This would mean taking seriously the kinds of complexity theory and network theory arguments that Anne-Marie mentions, but following them to a quite different set of conclusions than she does. 

The world that complexity theory and network theory depicts is one where actions have highly unpredictable consequences. This follows both from theoretical arguments about processes of contagion across large scale networks, and from empirical research conducted via e.g. experiments....

Just because the world has become more networked, it does not mean that states can either (a) easily use networks to pursue their policy goals, or (b) turn over responsibilities to networks that will self-organize around socially useful tasks and responsibilities. To the extent that networks’ politics are predictable, they will conform to the same kinds of (frequently unpleasant) politics as do states. That is, they will be characterized by power inequalities (sometimes gross), actors pursuing their self-interest while entirely blind to the needs of others, and the rest of the shebang. To the extent that networks’ politics unpredictable, they will be unlikely to be useful tools of policy.

This is a story with far fewer helpful policy lessons than either Dan’s or Anne-Marie’s. It points to plausible developments in world politics, without providing any very obvious tools to deal with them.

I need to process Henry's arguments more before making a fully thought-out response.  This is a blog, a two half-assed thoughts should suffice for now.  First, Henry gets at something that was implicit in the exchange between Anne-Marie and myself:  the notion that powerful actors possess considerable agency in world politics.  Slaughter and I might disagree about who those actors are, but we assumed that power = agency.  Farrell's point about contagion is that this presumption does not necessarily hold.  And the policy implications of that suggestion are rather jarring, to say the least. 

Second, however, my own theoretical predilections lead me to wonder whether powerful agents can halt/regulate/control the spread of contagion more .  The Arab Spring suggests such possibilities.  So far, the general unrest in the region has toppled a regime in Tunisia, partially toppled regimes in Egypt and Yemen, led to a civil war in Libya, and led to... something in Syria. 

This is not insignificant, but it's worth remembering that the wave of unrest was much larger than those countries.  Early protests in Iran went nowhere -- in no small part because the Iraniann state has gotten very, very good at cracking down.  Led by Saudi Arabia, the Gulf monarchies have by and large kept populist demands at bay, going so far as to invite Jordan and Morocco to join the Gulf Cooperation Council. 

I'm not trying to pull a Kevin Bacon here; the Arab Spring is Big Earthshaking Stuff.  My point, rather, is that not every contagion proceeds unimpeded -- there are counter-contagions as well.  When and how those counterwaves happen is worthy of consideration. 

 What do you think? 

This past week Anne-Marie Slaughter launched a new foreign policy blog over at The Atlantic entitled "Notes from the Foreign Policy Frontier."  This was greeted with general huzzahs across the foreign policy community, as Slaughter is a universally-acknowledged smart person.  She is an exemplar of someone who can effortlessly transition from the scholarly to the policymaking world and back again.  Her facility with new media is so good that her own bio undercounts her Twitter followers by 50%.

Slaughter's first post suggests the themes of her new blog -- let's take a look and see what she's up to, shall we?  Here are the opening paragraphs: 

The frontier of foreign policy in the 21st century is social, developmental, digital, and global. Along this frontier, different groups of actors in society -- corporations, foundations, NGOs, universities, think tanks, churches, civic groups, political activists, Facebook groups, and others -- are mobilizing to address issues that begin as domestic social problems but that have now gone global. It is the world of the Land Mines Treaty and the International Criminal Court; global criminal and terrorist networks; vast flows of remittances that dwarf development assistance; micro-finance and serial entrepreneurship; the Gates Foundation; the Arab spring; climate change; global pandemics; Twitter; mobile technology to monitor elections, fight corruption, and improve maternal health; a new global women's movement; and the demography of a vast youth bulge in the Middle East, Africa, and parts of Asia.

Traditional foreign policy continues to assume the world of World War II, the Cuban Missile Crisis, and the first and second Gulf Wars -- an international system in which a limited number of states pursue their largely power-based interests in bargaining situations that are often zero-sum and in which the line between international and domestic politics is still discernible and defensible. Diplomats and statesmen compete with each other in games of global chess, which, during crises, often shift into high-stakes poker. It is the world of high strategy, the world that Henry Kissinger writes about and longs for and that so-called "realist" commentators continually invoke.

Well, this is... this is... I'm sorry, I got lost among the ridiculously tall strawmen populating these paragraphs.   I'll go out on a limb and posit that not even Henry Kissinger thinks of the world the way Slaughter describes it.  Just a quick glance at, say, Hillary Clinton's recent speech in Hong Kong suggests that actual great power foreign policies bear no resemblance whatsoever to that description of "traditional foreign policy." 

Slaughter knows this very well, given that she was Clinton's first director of policy planning.  She also knows this because much of her writing in international relations is about the ways in which traditional governments are becoming more networked and adaptive to emergent foreign policy concerns.  One could quibble about whether this is really a new trend, but Slaughter was correct to point out that states are doing this. 

So, let's get to the main point of her blog post:  what does Slaughter think about this new frontier? 

21st century diplomacy must not only be government to government, but also government to society and society to society, in a process facilitated and legitimated by government. That much broader concept opens the door to a do-it-yourself foreign policy, in which individuals and groups can invent and execute an idea -- for good or ill -- that can affect their own and other countries in ways that once only governments could.

In late June, I spent two days at the Summit Against Violent Extremism (#AVE on Twitter), a conference sponsored by Google Ideas, the Council on Foreign Relations, and the Tribeca Film Festival that brought together more than 80 former gang members, violent religious extremists, violent nationalist extremists, and violent white supremacists from 19 countries across six continents. They came together with 120 academics, NGOs, public sector and private sector partners. The conference grew out of a vision developed by Jared Cohen, the head of Google Ideas, when he served in the U.S. State Department's Office of Policy Planning together with Farah Pandit, who worked on countering violent extremism in the State Department's Bureau of Eurasian Affairs and is the Special Representative to Muslim Communities. But, despite their role, bringing together this range of "formers" is something that Google Ideas and the Council on Foreign Relations can do much more easily than any government could. The range of projects creating networks to help build on effective, early intervention programs already working around the world, such as Singapore's programs to deflect and deprogram Islamic radicals, will also be much easier to develop with a broader range of stakeholders, including some government participation, than they would be through government alone....

Skeptics argue that these kinds of initiatives are doomed to remain perennially peripheral and ineffectual. But, in case anyone hasn't noticed, the traditional tools of fighting, talking, pressuring, and persuading government-to-government really aren't working so well. Thirty years of urging reform produced next to nothing; 6 months of digitally and physically organized social protests and a political earthquake is shaking the broader Middle East. Twenty years of working toward a treaty to govern carbon emissions has barely yielded an informal "accord." Yet measures taken by 40 cities organized by the Bloomberg Foundation and the Clinton Global Initiative will have far more impact.

Outing myself as a skeptic, I'd make two points.  First, Slaughter's weakness as an international relations theorist is to uncritically observe phenomena like the Summit Against Violent Extremism and then inductively generalize from them to extrapolate the future of world politics.  AVE is happening, but I'm gonna want to see a lot more evidence that it's making a difference before calling it a success.  There are a lot of issue areas where this kind of initiative will not substantially alter policy outcomes.  Indeed, one could flip this around, look at new trends like sovereign wealth funds, national oil companies and and state-owned enterprises, and reach the exact opposite conclusions from Slaughter.  I don't, but you see my point -- world politics is about a lot more than a Muslim woman setting up a Twitter account thanks to her microfinance loan.     

Second, Slaughter's climate change example is a great one.  I don't doubt that the initiatives she's blogged about likely have accomplished more than the two decades of UN negotiations.  I also don't doubt, however, that those accomplishments are a drop in the bucket compared to what has needs to be done.  Furthermore, I suspect these groups would strongly prefer joint government action to their own initiatives, as the only viable means to mitigate the effects of increased greenhouse gas emissions.  In which case, they will function like good old fashioned interest groups, which is not all that new.   

Slaughter believes that these "bottom-up" movements represent the future of world politics -- and she may well be right.  My own inclination is that DIY foreign policy represents a poor and underprovided substitute for effective state action global governance.  We'll see what the future holds. 

Concluding her post, Slaughter says that she'll be, "looking at the world through a very different lens -- highlighting features of the foreign policy landscape that simply disappear if we examine only a world of opaque unitary states negotiating, pressuring, fighting, and ignoring each other."  This is good, and highlights the value-added that such an approach can bring to thinking about world politics.  I'll be looking at Slaughter's musings as well through my own lens -- one that is very wary of overhyped initiatives that do not accomplish nearly as much as suggested by their media hype. 

Am I missing anything? 

Step back for a moment and imagine what a "good" international organization should look like.  Presumably, it should be relatively transparent and representative.  It should earn a reputation for competency, efficiency, and an aversion to corruption.  Stakeholders in the organization should feel that they are being consulted and their needs acknowledged if not always perfectly addressed.  When confronted with a challenge or scandal, the organization should respond with alacrity and a respect for due process. 

I bring this up because, right now, FIFA is the exact opposite of this ideal type. 

The Financial Times' Roger Blitz and Stanley Pignal report on the mockery of global governance that is currently known as FIFA: 

Fifa has become “unstable,” Sepp Blatter admitted as the president addressed the governing body’s annual Congress in the teeth of pressure for reform from several fronts and demands that the election to secure his fourth term of office be postponed.

The biggest pressure was brought to bear from the World Cup sponsors. Four of the biggest sponsors – Coca-Cola, Adidas, Visa and Emirates Airlines – have now gone public, calling on Fifa to act swiftly to restore its damaged reputation in the face of the bribery allegations that have sparked an internecine struggle between the governing body’s most powerful figures. 

The European Commission, which has a say in how Fifa’s European TV rights are awarded, also made clear its displeasure in a thinly veiled attack on Mr Blatter.

Androulla Vassiliou, the commissioner responsible for sport, said: “The situation at Fifa is a concern for many of us and I have confidence that the current issues will be thoroughly investigated and resolved as soon as possible.

“Football and sport in general need good leadership and governance, above suspicion and firmly rooted in accountability and transparency.”

Mr Blatter, in a sombre address to the 208-member Congress, said: “”I thought that we were living in a world of fair play, respect and discipline ... I must unfortunately say this is not the case."

Dude, when the European Union is lecturing you on how to govern, you know you're in trouble. 

So, corporate and state sponsors ticked off - check.  Well, surely, FIFA will respond by sacking those responsible and getting off to a fresh start, right?  Hey, what's this ESPN story saying? 

Sepp Blatter was poised for re-election as FIFA president Wednesday, calling himself the "captain of the ship" and promising to enact "radical" reforms to tackle the corruption scandals that have engulfed soccer's governing body.

Blatter vowed to give more power to the 208 national federations at the expense of the 24-man executive committee by allowing them to pick the host of the World Cup from now on....

Blatter said the worst scandal in the body's history could be solved within FIFA itself and with him in charge.

"Reforms will be made and not just touchups but radical decisions," Blatter said in his speech to the 208 delegations attending the congress....

"We have made mistakes, but we will draw our conclusions," Blatter said.

Blatter was heeding the advice of IOC president Jacques Rogge, who told him on the eve of the election that only drastic measures to improve democracy and transparency had saved the Olympic movement when it faced a similar corruption scandal in the run-up to the 2002 Salt Lake City Winter Games.

Blatter said he would work to make sure the World Cup would in the future be picked in a vote by all federations instead of the two dozen executive committee members, several of whom have been involved in bribery scandals.

A few thoughts.  First, what kind of election process is it when the scandal-beseiged incumbent is the only friggin' candidate?  Bear in mind this is the same Sepp Blatter who declared that FIFA was much more transparent than the IOC -- which is kinda like Frederick's of Hollywood claiming that they're classier than Victoria's Secret. 

Second, widening the vote to all members won't necessarily stop corruption -- if the International Whaling Commission is any guide, it will simply expand the number of actors who could be bribed. 

Third, any anti-corruption campaign depends on Blatter.  As Leander Schaerlaeckens blogs over at ESPN, however, Blatter serms to be doing his best Arab strongman impersonation right now:

Through [the crisis], Blatter has maintained that FIFA isn't in crisis, thus denying that he's pushed the organization over the brink of respectability. Amid the firestorm, the tiny septuagenarian Swiss leader has made it clear that FIFA shouldn't play by ordinary rules or be held accountable to anything or anyone.

This was never more obvious than when Blatter got fed up with questions from a hungry pack of journalists in a press conference Monday. "I will not answer this question," he said in response to a question about [CONCACAF president Jack] Warner. "I am the president of FIFA, you cannot question me." When the assembly was rightly outraged, he admonished it for a lack of respect for him and FIFA. And after taking a few more hard questions, he stormed off the stage, citing a lack of respect once more.

If only Blatter had been caught groping a chambermaid -- then there would be some real reform! 

So, to sum up:  scandal--ridden organization, pissed-off stakeholders, and an out-of-touch megalomaniacal leader who's about to be re-elected. 

Ladies and gentleman, I give you FIFA in 2011 -- the only international organization that can make the Iinternational Olympic Committee and European Union look good. 

Am I missing anything? 

Today was a big American foreign policy news day.  Hamas and Fatah seem to have kissed and made up under the aegis of the Egyptian caretaker government; there's a national defense reshuffle as Leon Panetta is moving from CIA to SecDef and David Petraeus is moving from CENTCOM to the CIA; the FEderal Reserve's Ben Bernanke held the Fed's first-ever press conference. 

These are all big stories, and yet the lead of the day is the fact that Barack Obama showed everyone his long-form birth certificate.  There's something really sad about the fact that this needed to be done, but there it is.  

Today's spectacle prompted Slate's David Weigel, who has followed the varieties of birtherism with an eagle eye, to ask honestly when enough is enough: 

Here's the thing. I've spent a lot of time writing about conspiracy theories. I think they're darkly amusing....And if we're being perfectly honest, conspiracy stories do gangbusters traffic. If I were an advertiser, I wouldn't tell a writer to knock off writing about conspiracy theories.

But this is an honest question: How far can people take this stuff? Is there absolutely no downside to using your celebrity to make the wildest accusation you can and watch reporters fight like the monkeys at the start of 2001: A Space Odyssey for the right to cover them first? In the past, rabbit hole chases for stuff that would blow the lid off some conspiracy or another have backfired, wildly. (Google "Dan Rather" and "National Guard documents.") And in the past, things that have caused a lot of amusement for a lot of people have gotten predictable and boring, pointless. This has to happen at some point. Tell me this happens at some point.

I'm fascinated by conspiracy theories too, and I'm afraid I have some bad news for Weigel.  The truly scary thing is that conspiracy theories do even better gangbuster business outside of the United States.  Hear the one about the Mossad being behind the 9/11 attacks?  How the United States caused the earthquake in Haiti?  It's quick, cheap and easy to create a conspiracy, especially when the truth is usually banal and/or mundane. 

As I wrote in The Spectator last year: 

What is clear is that, thanks to the technological and globalising revolutions of the last two decades, modern life has become infinitely more complex. The world has become far less easy to understand in terms of its economic and social organisation. Yet humans remain hard-wired to look for patterns in a chaotic universe. As David Aaronovitch recently observed in Voodoo Histories, conspiracy theories offer the comfort of a narrative, no matter how crazy it sounds....

Will anger and distrust be a permanent fixture in the politics of affluent countries? A global economic rebound should lead to increased trust in both business and political elites. Beyond trying to revive their economies, however, there must be something that governments can do to earn back the trust of some of their people. The most obvious first response would be to offer more information to persuade angry and distrustful people that their worst fears will not be realised. Unfortunately, such a policy might backfire. Political scientists Brendan Nyhan and Jason Reifler conducted experiments to see whether correct information could erase misperceptions. They discovered that ‘corrections actually strengthened misperceptions among the most strongly committed subjects’. The very attempt to correct erroneous beliefs simply causes the most extreme adherents to put themselves into a cognitive crouch. This might explain why, even though an image of Barack Obama’s Hawaiian birth certificate can be accessed on the web, many ‘birthers’ still believe the President was not born in the USA.

This has nothing to do with intelligence, either -- a few weeks ago I wasted spent 15 minutes explaining to a Fletcher student that, in fact, Julian Assange was not a CIA agent.  This sounds laughable, except that at least one head of government said the same thing.   

As long as trafficking in these questions draws eyeballs, the media will continue to act as an amplifier for these kinds of crazed worldviews. 

There is a downside for those who care about their reputation -- ask Pierre Salinger.  For heads of stare and almost everyone else, however, these costs likely seem negligible compared to the political and psychological gain that comes from belief. 

Think of conspiracy theories like internaional institutions -- they don't actually explain much, but they never go away either.  Even global governance structures that have longed outlived their usefulness do not disappear -- they just persist with fewer adherents.  Popular conspiracy theories work the same way, because there will always be a hard core of believers who can sustain their belief regardless of things like "facts" and evidence."  Indeed, scorn from the mainstream just fuels their conviction that they must be onto something.