G20 as world's top economic body? Doubts abound.
An expansive governing role for the G20, discussed Thursday by Britain's Gordon Brown, isn't passing the sniff test for many economists.
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But more than a few economists question whether this body, with just three meetings under its belt, is up to the task of directing the world economy.Skip to next paragraph
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“It’s an ad hoc group,” says Simon Johnson, a former economist at the International Monetary Fund (IMF) and now a senior fellow at the Peterson Institute for International Economics in Washington. “They had a good meeting in April, but I don’t think they have demonstrated they are the world’s economic council.”
Last November, as the financial crisis began to ripple through the world, the G20 leaders pledged cooperation to try to stimulate their economies. In April, they pledged financial aid to poor nations. This time, their agenda includes whether member nations should continue with fiscal stimulus, whether to introduce regulation of bankers’ compensation, and perhaps whether and how to balance world economic growth.
Some economists express discomfort about the notion of giving the G20 a lot of influence. One is Stuart Hoffman of PNC Financial in Pittsburgh, who calls the G20 “an important forum, not a governing body.”
But, on a positive note, he says, the G20 format gives smaller nations “more of a voice."
Even if the leaders include in their final communiqué a reference to the G20 as a governing council, some economists doubt the group's decision will have any teeth.
“The rich nations control the major institutions, such as the IMF and World Bank,” says Mark Weisbrodt, an economist with the Center for Economic and Policy Research in Washington. “The G20 will still be just a place to talk.”
The talk may yield a press release that sounds as if the G20 accomplished something, says Mr. Johnson. “The leaders just want to escape without a pounding from the press,” he says. “They are just hoping for good press coverage the next couple of days.”
Johnson expects the group will term the meetings a success. However, as Spatt notes, the members have some fundamental disagreements. “The way they will be taken seriously is by action,” he concludes.
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