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Readership
Sep
29
G20 and the economy
September 29, 2009 | Comments Off | Mark Crosby
Apparently a big result for Australia over the weekend, with the G20 to replace the G8 as the major international forum for discussing economic coordination. John Denton had a piece in today’s Age where he argued that this was the right body for economic leadership. I can’t remember any significant change in domestic economic policy in any country as a result of these types of forums. Is the US going to change monetary or fiscal policy in any way as a result of these meetings? Definitely not. Are we? Of course not. The main area where there is a need for international economic policy coordination is in the area of trade – and on this front the US prior to the G20 summit whacked a tariff on Chinese tyres, an act that the Economist magazine rightly described as “economic vandalism.”
Clearly this summit will make no progress on the trade front. The G20 have committed to reducing global imbalances. This is pure hot air. There is no way that the US will commit to reducing their imbalance between supply and aggregate demand, just as there is no way that China will move quickly to a more flexible exchange rate. These are the two major policy changes that would produce lower levels of imbalances, but in both cases domestic policy objectives rule these changes out. And at the moment these objectives in both countries seem reasonable.
As an aside, Denton suggested that as well as a G20 we ought to have a B20 group of business leaders to discuss issues of relevance to business, running parallel to the G20. To my mind B1 and B2 are enough.
And finally, I spent last week in Shanghai. While in Shanghai I watched while someone remotely hack into my laptop, which was equally disturbing and intriguing. If this ever happens to you, I can recommend Alejandro Salinas from the University of Chile as an excellent cybercop to investigate the damage! Let me know if you ever need his address.