G20 SUMMIT
November 15, 2008
The G20 summit in Washington today offers some promise of a useful forum for thrashing out international economic problems, though it is unlikely to lead to anything as constructive as the Bretton Woods conference of 1944.
The old-money powers of North America and Europe are the prevailing forces in established institutions such as the G8 and the International Monetary Fund, but China, India and other members of the G20 also figure largely in the world's economic ills.
Most strikingly, the close but unbalanced relationship between the United States and China was one of the most powerful causes of the present global crisis. China's high rate of saving and the correspondingly high rate of consumption in the U.S. fed into each other. Chinese money seeking borrowers abroad flooded in, helping to keep U.S. interest rates very low, enticing low-income Americans to buy houses they could not afford for long, as well as to buy cheap Chinese exports subsidized by a deliberately undervalued currency.
Clearly, bilateral discussion was not enough. Some new, wider context for pleading, recriminations, negotiations and consensus-building is needed.
The G20 began in 1999 as a group of finance ministers and central bankers, led by Paul Martin and Lawrence Summers, the Canadian and U.S. finance ministers. In 2005, Mr. Martin proposed a more ambitious L-20, with "L" for leadership.
That idea's time has now arrived; the Washington meeting is bringing together heads of state and government, the most eager being the neo-Napoleonic Nicolas Sarkozy of France and Gordon Brown, a dour Scot re-energized by calamity.
In 1944, the conference at Bretton Woods, N.H., was in a position to remake a world desolated by war. Great figures were there: John Maynard Keynes from Britain, Dean Acheson from the U.S. and Pierre Mendès-France from France. The Canadian delegation, from Louis St. Laurent to Louis Rasminsky, was impressive, too.
Leading up to today's lesser meeting, the debate about free markets and regulation has been shadowboxing; all concerned favour degrees of both.
The nation-states of the G20 will not yield their sovereignty to a new international economic system, but they may agree to adopt fairly similar systems of regulation, lest any major country become a haven for highly leveraged banks.
Today, this one-day conference should at least set a helpful agenda.
The G20 summit in Washington today offers some promise of a useful forum for thrashing out international economic problems, though it is unlikely to lead to anything as constructive as the Bretton Woods conference of 1944.
The old-money powers of North America and Europe are the prevailing forces in established institutions such as the G8 and the International Monetary Fund, but China, India and other members of the G20 also figure largely in the world's economic ills.
Most strikingly, the close but unbalanced relationship between the United States and China was one of the most powerful causes of the present global crisis. China's high rate of saving and the correspondingly high rate of consumption in the U.S. fed into each other. Chinese money seeking borrowers abroad flooded in, helping to keep U.S. interest rates very low, enticing low-income Americans to buy houses they could not afford for long, as well as to buy cheap Chinese exports subsidized by a deliberately undervalued currency.
Clearly, bilateral discussion was not enough. Some new, wider context for pleading, recriminations, negotiations and consensus-building is needed.
The G20 began in 1999 as a group of finance ministers and central bankers, led by Paul Martin and Lawrence Summers, the Canadian and U.S. finance ministers. In 2005, Mr. Martin proposed a more ambitious L-20, with "L" for leadership.
That idea's time has now arrived; the Washington meeting is bringing together heads of state and government, the most eager being the neo-Napoleonic Nicolas Sarkozy of France and Gordon Brown, a dour Scot re-energized by calamity.
In 1944, the conference at Bretton Woods, N.H., was in a position to remake a world desolated by war. Great figures were there: John Maynard Keynes from Britain, Dean Acheson from the U.S. and Pierre Mendès-France from France. The Canadian delegation, from Louis St. Laurent to Louis Rasminsky, was impressive, too.
Leading up to today's lesser meeting, the debate about free markets and regulation has been shadowboxing; all concerned favour degrees of both.
The nation-states of the G20 will not yield their sovereignty to a new international economic system, but they may agree to adopt fairly similar systems of regulation, lest any major country become a haven for highly leveraged banks.
Today, this one-day conference should at least set a helpful agenda.
