Too Many G's
I rather like Simon Johnson's suggestion that the G-8 be scrapped and the G-20 imbued with more importance:
First, emerging markets have obviously risen in both respectable clout and ability to make trouble. China's exchange rate policy is a leading example, but think also about Mexico, Brazil, or India. Having a global economic discussion (e.g., on climate change or aid to Africa) without these players fully at the table does not really make sense--particularly as the G20 now operates effectively at the heads of government level. And inviting these countries to a dinner or other event on the fringes of the main meeting just adds insult to injury.
Second, the Europeans are now organized into a loose political union and all of the major economies--except the UK--are in a currency union. What is the point of sitting down with Italy, Germany, France, and the UK separately? It is much more effective when they--and other Europeans--work out common positions and bring those to the table collectively. The European Union belongs to the G20 but not the G7.
Third, the idea that the U.S. and its allies "lead" by any kind of economic policy example is plainly in disarray. The recent crisis focuses our attention, but we've seen two or three decades with irresponsible credit and throwing fiscal caution to the winds across these countries. These countries traditionally position themselves as "G7 models" worth emulating; this message needs to be toned down.
President Obama obviously has a talent for diplomacy (e.g., at the April G20 summit). He should use the Pittsburgh G20 summit in September to transition away from the dated emphasis on the importance of a G7/G8 heads of government meeting (e.g., reduce the excessive display of nothingness, lower the hype, have it feed into the G20 more explicitly). Canada, chair of the G7 next year and usually very sensible on these kinds of issues, can help.
Posted by: umesh409 | July 9, 2009 12:16 AM | Report abuse
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