The Market State Trilemna

By Dave Anderson:

Cheaper, better, faster: Choose two...

On time, on spec, on budget: Choose two...

Floating currency, policy autonomy, free flow of capital: Choose two

These are all examples of trilemnas and policy trade-off triangles.

Dani Rodrick thinks there is an emerging political-economic trade-off triangle that is depressing as hell:

I have an "impossibility theorem" for the global economy that is like
that. It says that democracy, national sovereignty and global economic
integration are mutually incompatible: we can combine any two of the
three, but never have all three simultaneously and in full.

note that deep economic integration requires that we eliminate all
transaction costs traders and financiers face in their cross-border
dealings. Nation-states are a fundamental source of such transaction
costs. They generate sovereign risk, create regulatory discontinuities
at the border, prevent global regulation and supervision of financial
intermediaries, and render a global lender of last resort a hopeless
dream. The malfunctioning of the global financial system is intimately
linked with these specific transaction costs....

I maintain that any reform of the international economic system must
face up to this trilemma. If we want more globalization, we must either
give up some democracy or some national sovereignty. Pretending that we
can have all three simultaneously leaves us in an unstable no-man's
land.  

I'll have more to say on this once I finish shoveling out the driveway.