Interview with Martin Wolf on What We Should Expect from G-20 but Won’t Get

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Barack Obama and G-20 leaders will probably emerge from the sessions that start today with (1) commitments on international financial regulatory reform, (2) non-binding commitments to various (mostly modest) stimulus strategies within their own economies, (3) a commitment to significantly enhance the resources of the International Monetary Fund and (4) a joint commitment to “resist protectionism” in their countries.
But the major benchmark of whether this G-20 Summit matters or not will be the degree to which the surplus countries of China, Japan and Germany commit to a plan to rewire their economies to derive more of their growth from domestic consumption as opposed to export led growth.
For well over a decade, overall global growth and these surplus countries in particular have depended on the economic narcotic of an American consumer that vastly overconsumed in comparison to what he and she produced. In contrast, Germany, China and Japan chronically underconsume in relation to their exports and production.
Obama seems to get this, but it remains unclear how hard he will push other major global stakeholders to wake up and recognize their responsibilities in driving a greater share of global consumption than they have in the past. Germany is strongly resisting the Obama administration’s nudges. China has taken steps forward. Japan, which continues to amass surpluses, seems to have lost a great deal of its ability to control the course of its economy.
The subject of “What Will Replace the American Consumer?” was the topic of this forum organized by the New America Foundation/Economic Growth Program last Thursday and featuring such voices as Martin Wolf, George Soros, Laura Tyson, Bernard Schwartz, Mark Zandi, Leo Hindery, Richard Vague, Clyde Prestowitz and others. A resource page of charts, graphis, and other materials prepared to educate about the subject matter being discussed by the G-20 is available here at the new site, New American Contract.
But as Martin Wolf says in his Financial Times essay yesterday — and in the video interview I do with him above — we must get the surplus counties to kickstart their consumption. . .on a much more massive scale than they are engaged in. Otherwise, despite the pleasant optics and generally chummy atmosphere, this Summit will be an unfortunate bust.
— Steve Clemons

Comments

3 comments on “Interview with Martin Wolf on What We Should Expect from G-20 but Won’t Get

  1. Mr.Murder says:

    There’s no way to piss on the fire with the bailouts.
    The only certain resolve is to introduce debt forgiveness on a massive scale to the extent the third world can get back some of the water, mineral, and resource it has lost to plunderers, errr, development.
    Let’s throw public taxpayer money in this black hole, instead of basically going to reset mode and intorducing better market competitiveness as a result.
    Debt relief would level the playing field and stop us from putting so much public funds into provate hands.
    It would never be done. The charade of democracy must continue filling the feed trough of Orwell.

    Reply

  2. arthurdecco says:

    “Obama seems to get this, but it remains unclear how hard he will push other major global stakeholders to wake up and recognize their responsibilities in driving a greater share of global consumption than they have in the past.” Steve Clemons
    …”a greater share of global consumption”?!?!?!
    You’re 180 degrees wrong, Mr. Clemons.
    Our present predicament should be teaching us that WE, (as in: the self-centred, selfish and complacent consumerist ignoramuses we appear to have become here in “The West”), have to slim down, not encourage the rest of the world to fatten up!
    I know you’re concerned with climate change. So what gives? Aren’t you willing to give up the perks that the subjugation of the 3rd World affords you to protect all our children of the future from the corruption of consumerism that has terminally infected almost all of us? …and that will eventually lead to the destruction of all you hold dear?
    Just asking.

    Reply

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