G-20 Promises: What They Mean

The G-20 Summit is wrapping up today. We can compare its performance to promises made in advance [1]. Leaders discussed financial markets, of course, but they also made promises about jobs and work. Some highlights:

“3. We must promote employment [1] through structural policies, active labour market policies, and training and education.”

In other words, leading economies from China to Germany — 80 percent of the world economy! — recognize that the invisible hand can’t work alone. Government doesn’t always need to get out of the way. Sometimes it needs to take the lead.

-- What “active labour market policies” do we need in America? A higher minimum wage? Health care that isn’t tied to your job? The Employee Free Choice Act to protect workers’ right to form a union?

-- What does America need for “training and education”? More public funding for higher education? Even if it takes money from the banks [2]?

-- What can other countries do? China can stop devaluing its currency or improve labor or safety standards [3] so U.S. products compete on a more level playing field … but I’m not holding my breath.

“5. We will work to achieve high, stable and sustainable growth [1], which will require orderly rebalancing in global demand, removal of domestic barriers and promotion of the efficient functioning of global markets.”

-- Does the G-20 realize that America can’t stay a debtor nation [4] forever? It’s good for our lenders in the short run, but it’s good for nobody in the long run.

-- We put it this way in our report, Pittsburgh, G-20 and the New Economy: [5]
“The G-20 must … chart the process by which the global economy that emerges out of the crisis is more balanced, and no longer dependent on U.S. citizens spending more than they earn. That means the U.S. must invest more and consume less, make more and import less. And the surplus nations must do the reverse: consume more and buy more from abroad. This will require wrenching changes in policy and in attitudes. But if we are to move to growth that is sustainable in Pittsburgh as well as Beijing, we have little choice.”

Did the G-20 Summiteers meet their goals? Is there a way to hold them to it?

Here’s a step we can take at home. The next time domestic Republicans yell about “protectionism” and “get the government off my back,” remind them how grown-up economies talk about government. “Active labour market policies” (#3) and “orderly rebalancing in global demand” (#5). Those are changes we need.