G20 Unity

The G20 are meeting in London to identify methods for ending the world-wide recession. Some participants have expressed concern that the G20 will fail to reach a consensus (Edwin Chen and Hans Nichols. “Obama, Brown Urge G-20 to Unite to Combat Crisis (Update1),” Bloomberg, April 1, 2009). Reading news accounts written in advance of the meetings, I am impressed by the lack of cohesion among the participants. I might add that I do not believe that a “global” response will be of much value in speeding an economic recovery. It is a safe bet that all representatives of the G20 are playing to domestic constituencies. Perhaps they are relying on different economic models as the current crisis has opened challenged what had appeared to be a growing consensus on policy among macroeconomists.

President Obama, Prime Minister Brown of England, and Prime Minister Taro Aso of Japan want the G20 members to implement larger fiscal stimulus packages (Edwin Chen and Hans Nichols. “Obama, Brown Urge G-20 to Unite to Combat Crisis (Update1),” Bloomberg, April 1, 2009).

President Sarkozy of France and Chancellor Merkel of Germany want more fiscal discipline (Steven Erlanger and Nicholas Kulish. “Sarkozy and Merkel Try to Shape European Unity,” New York Times, March 30, 2009)and additional governmental oversight of the financial sector through new accounting norms, regulation of trader bonuses, a registry of hedge funds and a weakening of tax havens. President Sarkozy has threatened to walk out of meetings if the results are unsatisfactory. Merkel does not share Sarkozy’s flamboyance, and disapproves of a walkout (“France and Germany 'demand regulation at G20’,” AFP, April 1, 2009).

Russian and Chinese representatives have expressed interest in developing a new currency to replace the dollar. They have also expressed an interest in working with India and Brazil to work toward a developing country economic platform (“Russia, China cooperate on new currency proposals:,” Breitbart.com, March 30, 2009).