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Framing the Global Economic Downturn

Framing the Global Economic Downturn: Crisis rhetoric and the politics of recessions

Paul’t Hart
Karen Tindall
Copyright Date: 2009
Published by: ANU Press
https://www.jstor.org/stable/j.ctt24hf3m
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  • Book Info
    Framing the Global Economic Downturn
    Book Description:

    The global economic downturn that followed the collapse of major US financial institutions is no doubt the most significant crisis of our times. Its effects on corporate and governmental balance sheets have been devastating, as have been its impacts on the employment and well being of tens of millions of citizens. It continues to pose major challenges to national policymakers and institutions around the world. Managing public uncertainty and anxiety is vital in coping with financial crises. This requires not just prompt action but, most of all, persuasive communication by government leaders. At the same time, the very occurrence of such crises raises acute questions about the effectiveness and robustness of current government policies and institutions. With the stakes being so high, defining and interpreting what is going on, how and why it happened, and what ought to be done now become key questions in the political and policy struggles that crises invariably unleash. In this volume, we study how heads of government, finance ministers and national bank governors in eight countries as well as the EU engage in such 'framing contests', and how their attempts to interpret the cascading events of the economic downturn were publicly received. Using systematic content analysis of speeches and media coverage, this volume offers a unique comparative assessment of public leadership in times of crisis.

    eISBN: 978-1-921666-05-6
    Subjects: Political Science

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. The contributors
    (pp. ix-x)
  4. Part I. Setting the stage

    • 1. From ʹmarket correctionʹ to ʹglobal catastropheʹ: framing the economic downturn
      (pp. 3-20)
      Paul ʹt Hart and Karen Tindall

      The global downturn that followed the collapse of major US financial institutions is no doubt the most significant economic crisis of our times. Its effects on corporate and governmental balance sheets have been devastating. It destroyed the employment and compromised the wellbeing of tens of millions of people. At the time of writing, it continues to pose major challenges to public policymakers and economic actors around the world.

      Although it had been bubbling away for more than a year in the form of a US-based ʹcredit crunchʹ, the crisis deepened and widened to a truly global and whole-of-economy phenomenon during...

    • 2. Understanding crisis exploitation: leadership, rhetoric and framing contests in response to the economic meltdown
      (pp. 21-40)
      Paul ʹt Hart and Karen Tindall

      Dramatic episodes in the life of a polity such as financial crises and major recessions can cast long shadows on the polities in which they occur (Birkland 1997, 2006; Baumgartner and Jones 1993, 2002; Lomborg 2004; Posner 2004).¹ The sense of threat and uncertainty they induce can profoundly impact peopleʹs understanding of the world around them. The occurrence of a large-scale emergency or the widespread use of the emotive labels such as ʹcrisisʹ, ʹscandalʹ or ʹfiascoʹ to denote a particular state of affairs or trend in the public domain implies a ʹdislocationʹ of hitherto dominant social, political or administrative discourses...

  5. Part II. One crisis, different worlds:: the United States and Canada

    • 3. The United States: crisis leadership in times of transition
      (pp. 43-68)
      Isaac Ijjo Donato

      The US financial crisis, which has since become global, originated in 2007 when the US mortgage industry began to perform poorly (Kregel 2008). For the past decade, the United States has pursued aggressive supply-side economic policymaking, emphasising low interest rates, low taxes and highly deregulated financial markets (Uchitelle 2008). This created a boom in which money became cheap, and positive forecasts on the housing market encouraged financial institutions and prospective homeowners, respectively, to lend and borrow exceedingly (Obama 2009b). Altogether, this gave rise to sub-prime lending, whereby banks lent money to even those with poor credit histories (Chomsisengphet and Pennington-Cross...

    • 4. Canada: the politics of optimism
      (pp. 69-96)
      Anastasia Glushko

      In late 2008, billionaire investor Warren Buffet called the financial crisis a ʹfinancial Pearl Harborʹ (Clark 2008) and former US Federal Reserve Chairman Alan Greenspan described it as a ʹonce-in-a-century eventʹ (Stein 2008). Like the problem itself, however, Canadaʹs experience of, and its governmentʹs response to, the financial meltdown have been more ambiguous. Canada entered the economic turbulence from a position of relative strength and suffered far less than would be expected of a country whose economy was so dependent on its southern neighbour. At the time of writing, Canadaʹs financial system has been less affected by the global financial...

  6. Part III. Dark clouds and turbulence in Europe

    • 5. United Kingdom: the politics of government survival
      (pp. 99-126)
      Justin Pritchard

      For the United Kingdom in early 2007, the US credit crisis seemed to be a foreign concern. By August, however, the French bank BNP Paribas, one of the largest banks in the eurozone, announced to investors that they would be unable to withdraw funds from two of the bankʹs hedge funds; and by September 2007, when British bank Northern Rock requested emergency financial support from the Bank of England, the credit crisis had hit home. The significance of this development was magnified by the fact that Northern Rockʹs troubles were first brought to public attention not by the government, but...

    • 6. Republic of Ireland: from Celtic tiger to recession victim
      (pp. 127-156)
      Adam Masters

      Ireland is being battered by international storms the like of which this generation has never seen. But I am saying this to the Irish people—if we work together as a team we can ensure that we have a prosperous future for ourselves, our children and future generations on this island. (Cowen 2009a)

      The case of Ireland presents a distinctive experience of a nationʹs response to the financial crisis. There are, of course, marked similarities with other countries covered in this volume, such as Ireland having a small open economy like New Zealand or membership of the European Union like...

    • 7. France: dominant leadership
      (pp. 157-180)
      Natalie Windle

      The issue of political leadership in France has drawn a great deal of media and public attention since Nicolas Sarkozy was elected President on 6 May 2007—not least during the French Presidency of the European Union during the second half of 2008. This period saw Sarkozy take the reins of European leadership and acquire the moniker ʹSuper-Sarkoʹ. Sarkozyʹs confident and fast-paced leadership not only drove the broad political agenda of the European Union during those six months, it faced the challenge of the heightened severity of the global financial crisis, which initially surfaced in August 2007. Moreover, the catchphrase...

    • 8. The European Union: from impotence to opportunity?
      (pp. 181-200)
      Tully Fletcher

      The European Union is a curious and constantly evolving political institution and the way in which EU leaders have managed their responses to the global financial crisis draws out its unusual and at times opaque approach to crisis management. Economic decision-making power is divided between the leaders and finance ministers of the European member states through the European Council and the Council of Ministers, the European Commission (the central executive bureaucracy), the European Central Bank (ECB, which administers the common monetary policy) and the increasingly powerful European Parliament (McCormick 2005:79–91). It is often impossible to divorce the coordinated crisis-management...

  7. Part IV. No hiding place:: the meltdown and the Asia-Pacific Region

    • 9. Australia: ʹthe lucky countryʹ on a knife edge
      (pp. 203-242)
      Matthew Laing and Karen Tindall

      In October 2008, the All Ordinaries, Australiaʹs oldest share index, having reached an all-time high in late 2007, went into free fall. By March 2009, it had halved in value—a record low. As the other polities studied in this volume fell into recession, the Australian public watched on, increasingly feeling the effects of the downturn. The lack of government debt and the apparent resilience of Australiaʹs economy—tied as it was to the still-booming China—provided reasons for hope. As the crisis hit an increasing number of Australiaʹs trading partners, however, the pinch was increasingly felt. Together, this highlighted...

    • 10. New Zealand: electoral politics in times of crisis
      (pp. 243-266)
      Michael Jones

      For the scholar of crisis leadership, the New Zealand Governmentʹs response to the 2008–09 global financial crisis represents a distinct and interesting case study. The combination of three characteristics in particular renders it unique. First, New Zealandʹs small, open economy is heavily dependent on trade, particularly in agricultural products; consequently, even in the best circumstances, it is hopelessly vulnerable to the vagaries of commodity prices in the international economy. Second, when the crisis hit New Zealand it was already in the grip of a home-grown economic downturn, attributable to a severe drought and a slowing of the housing market....

    • 11. Singapore: staying the course
      (pp. 267-284)
      Faith Benjaathonsirikul

      Singapore has presented itself as a unique and interesting case among nations deeply affected by the global financial crisis. The Lee thesis (after Lee Kuan Yew, who formulated it succinctly) argued in sum that freedoms and rights hampered economic growth and development (Sen 1999). The combination of a moderated democracy with limited governmental transparency and little freedom of the press, free speech or welfare rights has seen Singapore controversially typecast as a soft authoritarian and anti-democratic state. Singapore, however, has found its niche in its ability to foster liberal enterprise based on manufacturing, service and speculative investment. Singapore presents itself...

  8. Part V. Comparisons and reflections

    • 12. Contesting the frame: opposition leadership and the global financial crisis
      (pp. 287-308)
      Brendan McCaffrie

      The global financial crisis has dominated inter-party political contests in almost all major democracies, presenting challenges and opportunities to executive government leaders and opposition party leaders alike. In their public responses to crises, opposition leaders complete many comparable framing tasks to those of executive leaders. Opposition leaders, however, typically have lesser resources, fewer political weapons and limited responsibility for the real crisis response. These differences create a distinct and difficult challenge for opposition leaders in crises. Despite these restricted opportunities, opposition leaders can exploit crises for political gain. This chapter demonstrates how opposition leaders in three different political systems utilised...

    • 13. Crisis leadership in terra incognita: why meaning making is not enough
      (pp. 309-314)
      Arjen Boin

      The global financial crisis that started some time in 2007 and continues to unfold is a pure example of a trans-boundary crisis: it washes over geographical boundaries and leaves no sector of economic and social life untouched. It is hideously complex and thus hard to map and comprehend; it escalates through ʹtipping pointsʹ and rides reversed feedback loops. The damage is staggeringly high and mounting. The ʹnew normalʹ that will emerge after this crisis will likely look very different from the one we had before.

      Comparisons with the depression years of the 1930s often suggest the current crisis is not...

    • 14. Framing dilemmas in the quest for successful crisis management
      (pp. 315-322)
      Allan McConnell

      Many science fiction films feature a scene where an alien lands on Earth and is puzzled by the bizarre antics of human beings performing even the simplest of tasks. Perhaps aliens would struggle to make sense of how leaders of the world have responded to the global financial crisis. In the face of arguably the biggest single threat to world stability in recent times, some leaders virtually ignored it (former US President George W. Bush), some said the system was near to collapse (Australian Prime Minister, Kevin Rudd), some said they did not help cause the crisis in any way...

    • 15. Managing trans-boundary crises: leadership challenges for the EU Presidency
      (pp. 323-330)
      Bengt Sundelius

      In the bulk of this book, research findings have been presented on how national leaders have handled the many aspects of the recent international financial collapse and its multiple effects on their societies. Theoretically informed empirical examinations of several political systems have shown the perils of leadership under severe financial conditions. We expect much from our public leaders in the national hot seats.

      In this chapter, I heighten the stakes of top-level crisis management even further. Trans-boundary crises such as the financial meltdown in 2008–09 or the likely pandemics of the 2009 influenza season are even more complex than...

    • 16. Public leadership and the social construction of economic catastrophe
      (pp. 331-352)
      Paul ʹt Hart and Karen Tindall

      In a study of Alan Greenspanʹs rhetorical leadership, Bligh and Hess (2007:98) state:

      It is entirely possible that in a post-crisis situation characterised by tremendous uncertainty, no prior cases or precedents to examine, or previous experiences to draw upon, leaders grapple with not only how to make sense of a situation but also how to frame the situation when they themselves may not have a firm grasp of what it means for the future.

      Precisely this predicament—how to engage in persuasive public meaning making when your own backstage sense making is continuing and problematic—has been faced by the...