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Anthony Citrano Headshot

Sunshine, Recessions, and Imperialism

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The Milken Institute's 2009 Global Conference has again assembled an impressive group of business and political heavyweights. It's clear that Wall Street has descended on these generally laid-back hills; the last time the Beverly Hilton saw this many wingtip loafers was surely during a movie filming.

Milken's ambitious agenda spans from civil rights to sports philanthropy, and guests range from Arnold Schwarzenegger to Deepak Chopra. But there's no mistaking that this is a gathering of financiers; Fox Business News has set up a remote, a sea of plasma screens scream the latest Wall Street news, and companies selling trading software and jet leasing are handing out tchotchkes. And there's a rushed, dog-eat-dog vibe amongst conferencegoers that feels a little discordant under the warm and mellow California sun.

Over lunch today, Milken - a skilled but stiff moderator - hosted a panel with Nobel Laureate economists Gary Becker, Roger Myerson and Myron Scholes. Milken asked his guests about the uniqueness of our current economic moment.

Becker said he sees "no comparison" to the Great Depression, when unemployment went from 3% to 25% in just four years. We are, he said, in a "serious recession" but - in the absence of "foolish policies" - he doesn't see unemployment exceeding 12%.

A highlight today was game theorist Myerson - who cautioned of dark dangers with regard to human suffering, human behavior, national imperialism, and aggression. In times of crisis, he said, populations historically line up behind leaders who exercise "aggressive" military power - yet it is that aggression that often poses the most serious threat to a nation's economic survival.

Myerson described the global goodwill America enjoyed after World War II. We were a clear military superpower, yet (most of) the rest of the world trusted that we would be restrained in the application of that power, and that U.S. dominance was not a threat to their sovereignty and way of life. During the decades of detente with the Soviet Union, this was an important position for us to be in - we needed the world to see us as the good guys. Yet now, almost twenty years after the breakup of the Soviet Union, the U.S. still spends more on the military than the next fifteen countries combined. That largesse now looks much more ominous to the rest of the world because - over the past several years - we have demonstrated that we will apply that power preemptively against nations who do not threaten us. This, Myerson feels, has shaken past global confidence in U.S. military restraint. He concluded that this is an extraordinary moment in history - when a new President must rebuild confidence in U.S. financial institutions while also restoring confidence in our military restraint.

I can't help but wonder if, perversely, economic reality will force that restraint upon us - whether we consciously choose to heed Myerson's advice or not.

One thing that has really stood out at the event is the predominant phraseology surrounding the idea of a global economic "recovery." For most of the people I've talked with, "recovery" seems to mean a return to the ever-expanding financial fauxconomy of yesteryear. For the most part, I've heard plenty of quibbling about how soon it will return, and what, precisely, its return will look like - but I've heard no doubt expressed that it will be back. In this crowd, I suspect asking "if" would be a bit loutish. And I (for once) am not going to be the rude guy.