In The Media

Terence Corcoran: If this is the end of the G20, the world will be just fine

by Terence Corcoran (feat. Colin Robertson)

Financial Post
July 5, 2017

Advance press on this week’s G20 meeting in Hamburg is not good. “This could be the first failed summit,” said John Kirton of the G20 Research Group at the University of Toronto. Much depends of course on one’s definition of “success” and whether the word can even be applied to any previous G20 summit or, for that matter, to the entire G20 bureaucratic machine since its creation in 1999.

Even when the G20 appeared to be functioning effectively, as during the 2009 summit of national leaders to resolve the financial crisis, the results were limited and the carry-through to future global economic growth was weak to non-existent. Former Bank of England governor Mervyn King, in his recent book on the current plight of central banking and global financial governance, comments that since 2009 the G7 and G20 summits have provided “more employment for security staff and journalists than they add value to our understanding of the world economy.”

This year’s summit promises to create even more employment for security staff and add even less value to the world economy. The clash of personalities and policies looks explosive: Trump vs. Putin, Trump vs. Merkel, Putin vs. Merkel, China vs. Germany, climate vs. growth, free trade vs. protectionism, easy money vs. tighter money, fiscal stimulus vs. spending discipline. In Canada, the advance media hype has portrayed Prime Minister Justin Trudeau as a possible peacemaker and bridge builder who can bring warring Trump-Merkel-Putin factions together for a climate and trade hug-in and thereby save the planet and the world economy.

The Trudeau-as-saviour prospect seems unlikely, despite the fantasies of his intellectual groupies. Veteran Canadian diplomat Colin Robertson mused that Trudeau, previously a “contender for Asia-Pacific Economic Co-operation hottie” with Mexico’s President Enrique Peña Nieto, is now an “experienced leader (third in G7 seniority), a constructive internationalist and someone who is managing well his relationship with Trump.”

Trudeau’s rise from hottie to veteran in two years may not be enough to salvage the summit. Nor would it be a global catastrophe if he failed and the G20, a hodgepodge collection of dictatorships, fake democracies and genuine democracies, were to stumble out of its 2017 summit with little agreement on key issues.

Do we need it?

There are plenty of reasons to believe the world does not need more G20. The organization was created by national finance ministers and central bankers in 1999 in the wake of the Asian financial crisis. The objectives included stabilizing the global currency system and preventing future crises. Nine years later, the world tumbled into the 2008 financial crisis without warning or preparation from the hapless G20. Since then, under G20 approval, massive fiscal and monetary interventions were initiated to revive economic growth. The results have been less than amazing, with many saying G20 has sown the seeds for a future financial crisis.

Another troubling characteristic of the G20 is its wobbly ideological foundation as another agency of the United Nations’ sustainable-development movement. The official German overview of this week’s Hamburg summit states that “The G20 will be resolute in its endeavours to ensure the rapid and comprehensive implementation of the 2030 Agenda for Sustainable Development, with its global goals for sustainable development, and of the Addis Ababa Action Agenda. Germany’s G20 Presidency will undertake concrete measures to progress toward this goal and, with this in mind, intends to build on the Action Plan on the 2030 Agenda adopted at the G20 summit in 2016.”

That 2030 action plan is a 35-page outpouring of every known cliché in the UN handbook of global bureaucratese: “We are determined to end poverty and hunger, in all their forms and dimensions, and to ensure that all human beings can fulfil their potential in dignity and equality and in a healthy environment.” The objectives are grand and meaningless.

“We are determined to protect the planet from degradation, including through sustainable consumption and production, sustainably managing its natural resources and taking urgent action on climate change, so that it can support the needs of the present and future generations.” And it takes aim at prosperity. “We are determined to ensure that all human beings can enjoy prosperous and fulfilling lives and that economic, social and technological progress occurs in harmony with nature.”

Civil society

The German advance note on Hamburg reports that Chancellor Angela Merkel will also meet and hold talks with civil society representatives, including members of the Business 20 (B20), non-governmental organizations (Civil20), trade unions (Labour20), science (Science20), think tanks (Think20), women (Women20) and youth (Youth20). No mention of Girls20, which also met recently in Munich to provide input to the Hamburg summit.

No wonder the G20 has been unable to make much headway on important economic issues. It’s the wrong collection of nations based on an incoherent generalized set of objectives. The G20, by all the evidence, is ill equipped to deal with individual national and global problems, including migration.

As the leaders meet, most member economies chug along with slow growth, soaring government debt, near-zero interest rates, central bank confusion and more regulation to support sustainable-development objectives and macro-prudential financial regulation. The G20 has no real guiding economic principles. It can barely bring itself to endorse free trade, let alone free markets within each country.

The Hamburg summit will not be the end of the G20. But even if it were, the world might do better with something else.

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