The G-20 prescription

Epidemiologists have for years debated the likelihood of various global nightmare scenarios, usually involving the speed at which a virus could circle the globe on today’s modes of transportation. They’ve frequently voiced fears of some potentially dangerous bug hitchhiking in the nasal mucosa of an airline passenger leaving New Delhi and landing in New York hours later with nothing to declare except the public-health catastrophe he doesn’t know about — the disaster that passenger could create with one strong sneeze in a crowded place.

The economic epidemiologists who gathered Wednesday and today in London at the G-20 summit — men and women sobered by the impact of the current financial crisis — have offered the first prescription for dealing with something that’s gone from being an American problem to a global problem: the virus of fear that girdled the globe at a breathtaking clip.

The G-20 summiteers agreed to a mammoth $1.1 trillion infusion of capital into the International Monetary Fund, loan and guarantees to be used for the hardest-hit developing nations; they also agreed to begin tighter regulation of financial markets, and more stringent standards on executive compensation — a smart concession to summit activists Nicolas Sarkozy of France and Angela Merkel of Germany.



“By any measure, the London summit was historic,” said President Barack Obama, the junior member of the group and, economically speaking, the biggest stick on the playground. “It was historic because of the size and scope of the challenges that we face, and because of the timeliness and the magnitude of our response.”

That response couldn’t muffle the impact of two mortar rounds of economic information: the jobs report to be released on Friday will apparently show that 650,000 more jobs were lost in the United States in the month of March, deepening an already dire employment outlook. That report put the exclamation mark on another one: According to the National Economic Council and CBS News, the total global wealth destruction in the current crisis amounts to $50 trillion — an estimated $7,385 for every human being on earth — since the recession began at the end of 2007.


Joshua Cooper Ramo, former foreign editor at Time magazine and author of “The Age of the Unthinkable,” was therefore probably right in his recent comments to NBC News: “The very nature of the international system is exploding in complexity. The G-20 in that regard is possibly as important a summit as we’ve had since Yalta at the end of World War II.”

That historic parley, at which the Allied powers met to effectively decide the shape and structure of the postwar world, had an impact that endures today; our geopolitical perceptions, our sense of danger and threat, still use the Nazi example as an emotional tripwire.

Today’s threats are a different thing. But the economic instability the G-20 summit was meant to address is bound up in a web of global inequities that could be the basis of other, more militaristic manifestations of unrest. Skirmishes over money have a nasty habit of turning into wars. Despite its emotional anti-Semitic inspiration, Adolf Hitler's rise to power had its real roots in a battered hyper-inflated Weimar economy in which a wheelbarrow full of deutschmarks couldn't buy a loaf of bread.

◊ ◊ ◊

Obama, who came to London looking for a global expansion of his domestic stimulus-package concept of direct infusion of capital, put the best possible face on being largely rejected by the summit powers.

“I think we did OK,” Obama told reporters Thursday. “We have agreed on a series of unprecedented steps to restore growth and prevent a crisis like this happening again... We have created as fundamental a reworking of resources to these international financial institutions as anything we've done in the last several decades.”

Merkel also accentuated the positive, calling the measures “a very, very good, almost historic compromise” that will give the world “a clear financial markets architecture.”

“For the first time we have a common approach to cleaning up banks around the world to restructuring of the world financial system. We have maintained our commitment to help the world's poorest,” Brown said. “This is a collective action of people around the world working at their best.”

◊ ◊ ◊

Well, maybe not all people around the world. In a statement, Mary Robinson, former president of Ireland and the honorary president of Oxfam International, voiced concerns that the first focus of all this recovery will be on the G-20 nations themselves — not the poorer countries not represented there.

“I do get the strong sense today that the G20's focus is much closer to home — that this meeting is about reforms through stronger regulation and stimulus packages all designed to move the richer and more powerful countries out of financial crisis,” Robinson said.

“The developing world needs its own stimulus package to help ensure better global security and to meet finally the millennium development goals particularly to halve poverty and achieve people's rights to health and education,” she said.

In its optics and its reach for solutions, the G-120 summit was a success, but only as far as it goes. You can fairly call it a beginning — the group is to meet again in the fall — and as such the summit deserves to be seen in a positive light. Now comes the trickier part: execution of the ideas. “The proof of the pudding is in the eating,” Obama said today, and he’s right. What’s next is the need to make those ideas concrete, with cash on the barrelhead where it’s needed, beyond the borders of those in the G-20.
--
Image credits: G-20 class photo: Still from Canal 24h video. Yalta conference: Public domain. Mary Robinson: Still from Democracy Now! video.