Following Paul Johnson, Politics and politicians became important after WW II, because there were important issues to solve peacefully among different partners. The negotiation table was the new scenario, to solve what the battle field left unsolved. These days, the global financial crisis and its impact , is the equivalent to the economic battle field , and also there are important issues unsolved which requires a rather politic approach. Some of these issues are global financial regulation ,CEO compensation payments, Management models concerning risk taking , rating agencies performance and the like. None of these topics, concern to just one economy, it concern to the global economy .
The global economy is more risk averse, than each of the economy it includes. In other words , the real problem concerning global economy performance are not the one related to the real economy (trade), because the current link between consumption and production make unthinkable the option of protectionism , but the current instantaneous financial capital links is what has becomes a more pressing issue. A recent IMF report indicates that the transmission speed of the September 2008 financial crisis, was higher than past experiences because of these links. Therefore the new issue to solve, deals with the kind of financial regulation feasible to apply to a global scale, than what to do about cheaper imports .Why is it so?. Physical Capital mobility make protectionism a short lived option. Governments might set either quotas or taxes, but it can not set physical barriers to new investments coming in . Whereas unregulated financial flows might deteriorate the foundations of consumption and production links when exchange rates react to such a flows. Both Depreciations and appreciations are not risk free for each individual economy. In fact, These flows might be the main source of output variability in the global economy , as long as it might affects strongly the real side of each of the economy it includes .
Thus, while some analysts might have thought that the importance of politicians was decreasing , politicians and politics are back again on the world economic stage. The G-20 is a very good example of this came back .It replaced the traditional G-8, because there is a new world allocation of economic influence. The emerging economies have gotten its place in the global economy , because after all are among the main loser when it comes to capital flows and its effect on the domestic economy.
An interesting point deals with the fact that it is not just any kind of politics. Voters, which after all are the employers of politicians, have already said in some countries which way they prefer to go through in terms of policies focus . It might be strange but in some of these cases (Germany),they have preferred a conservative pragmatic market based approach ,instead of a more liberal stated based approach .How is this possible? . First of all, right and left politics do not mean the same as they did just a few years ago(1990). Services have replaced manufacturing, and the new manufacturing is based on automatic process and robotics, which require more skilled labour force. Low skills workers, do not have chances to support redistribution policies, because they have been replaced by machines and robots. Thus ,the traditional left, has lost its core message. The new workers are more aware about their tax payment, and therefore more conservative with taxes allocations, because they earn higher incomes or expect to get so in the short run. Is this a trend? It might be so, although each economy has its own social and productive structure. However, Brazil and Chile are in Latin America at least, good examples of this change about the new focus concerning political orientation .Pragmatism is the path for this new era of politicians.-