Why the G20 matters to our pocketbooks, and more
Gee whiz, that G20 just met again.
Over June 28 and 29, government heads, central bankers, and finance and foreign ministers from the Group of Twenty principal economic powers met in Osaka, Japan.
Who cares about a gathering of government big shots who dwell in a world removed from the average person? The answer is you should care, and so should we all, for several central reasons.
This latest gathering of finance gurus has occurred as the United States government, led by the White House, continues to pursue aggressive protectionist measures. For the moment, that offensive is on hold. This major global gathering is one reason why.
Today, actions taken by G20 officials have profound lasting impacts on the majority of the population of the world. National finance ministries manage international policy machinery, which is proving to be remarkably effective, and this system long-term has undeniably promoted both global economic prosperity and international political stability.
That translates into a better, more secure life for most people. Many people have lost money and lost jobs because of automation and other dislocations of rapid industrial change. They have better odds of regaining economic ground, and increasing their income sooner, because of this relatively stable underlying foundation.
In one sense, the G20 is coming home again through the Japan meetings. The international financial organization was established in 1999, spurred by the Asia financial crisis of 1997. In that traumatic experience, the collapse of the Thai currency spread like a financial gasoline fire throughout the enormous Pacific region.
Rapid response by policy leaders, led by the United States, mobilized public and private liquid capital to relieve nearly disastrous financial pressures on the Asia economies. U.S. Federal Reserve Chairman Alan Greenspan and Treasury Secretary Robert Rubin deserve credit for working effectively with President Bill Clinton to stabilize that earlier crisis.
Moreover, not all Asian economies were hard-hit. The relatively stable economies of China and Japan also helped recovery.
In 2010, G20 meetings took place in Gyeongju and then
Seoul, South Korea. The selection of this nation aptly, and appropriately, symbolized the exceptional economic development of their powerhouse economy — and stable functional democracy — during the years following the devastating Korean War of 1950 to 1953.
Japan was a participant in the initial, predecessor G7 organization of economically advanced nations. The successor G20 has provided a wider arena to include China, along with Brazil, India and other rapidly industrializing large economies of the world.
The fact that, worldwide, very poor people are becoming prosperous is good news for everyone. They represent new competitors, but also potential new consumers of our products, partners in our investment efforts, and donors to humanitarian philanthropy. Wars are on balance less likely.
President Barack Obama shrewdly picked Pittsburgh as the site for the fall 2009 G20 summit. In the 1980s, that city personified economic decline, as domestic steel manufacturing faded and unemployment approached 20%. Sustained hightech investment has turned that around.
At the 2009 summit, Bill Gates of Microsoft dedicated a new computer science complex at Carnegie-Mellon University. Apple, Disney, Google and Intel are some of the other major investors in the city. The U.S. remains overwhelmingly dominant in global high-technology companies.
We have learned through the terrible 20th century experiences that protectionism is ultimately self-defeating, nationalism is dangerous, and there is no substitute for market competition. The G20 provides a workable means of implementing this understanding.