WASHINGTON AND BRUSSELS NEED A NEW 'SPECIAL RELATIONSHIP'.

• Author: Green, Andrew

COORDINATING REFORMS HELPED SAVE THE GLOBAL ECONOMY AFTER THE 2008 CRASH. IT CAN SAVE US AGAIN.

Since 2016, the Trump election, Brexit, and rightwing challenges across Europe have revealed an economic crisis of extraordinary proportions. Decades of laissez-faire economic policy have yielded a collapse in financial security for workers and farmers and a concentration of economic power at the very top. Now, China's state capitalism has emerged to challenge the liberal economic and political order, with similar implications for workers and corporate concentration.

Sadly, the nationalist response in the United States since 2016 has largely made the problems worse, while Europe is often left on its own in defending the liberal principles of broadly distributed economic power.

In 2008, the world faced a global financial crisis of similar proportions, but it responded together with extraordinary actions. Instead of our current, failing nationalist approach, America and the European Union must work together again. They can do this by building a new "special relationship" between Washington and Brussels, in which they commit to domestic reforms in flexible coordination with one another. This would have two economic aims: to combat corporate monopolies and to boost worker power globally. And since principle-based agreements like these rely on political will, the new relationship would work best in combination with a progressive trade deal, as Daniel Block proposed in his piece for this magazine last summer.

Block correctly argued that the United States and the European Union must address the collapse of labor power, tax evasion by companies, climate change, and related progressive concerns. But his proposal, bold as it is, is only part of the response. That's because a trade agreement, with limited exception, is a complement to fixing domestic standards, not a replacement.

To that end, the U.S. and the EU should agree to adopt a set of domestic reforms, akin to the international response led by President Obama after the 2008 financial collapse. In the wake of the recession, the U.S. rallied the G20 around a common set of principles to guide financial reforms in each country. The reforms covered everything from standards for how many reserves large banks should maintain to protect against insolvency, to how countries could best manage the failure of large banks if and when that happened. But the principles were flexible enough to permit countries to...