What the Summit Missed
As usual, leaders of the world's top economies dealt with their job needs and the anxieties of the moment rather than the big picture at their annual summit.
The Group of Seven leaders (a.k.a. the G-7) left Lyon, France, last week awarding themselves at least as many stars as Michelin deals out to Lyonnaise chefs. The chefs have more credibility than the chiefs.
What the G-7 leaders failed to do was come to grips with the planet's two biggest questions:
1. How to promote global growth (prosperity and jobs) and still preserve the planet's environment?
2. How to curb government spending in order to be prepared for the heavy retirement-funding demands of early next century?
Both questions focus attention on the kind of world people everywhere intend to leave their children. And the two interlock. Failure to solve the government budgets problem inevitably risks future joblessness and poverty. And that makes solving the planet's growing ecological problems more difficult.
On the economic-growth front there is moderately good news. The United States is no longer the sole engine pulling the global economy out of the post-cold-war doldrums. Japan's long-delayed recovery continues. Western Europe's sputtering attempts to stimulate growth seem at last to be taking hold in Germany and its neighbors. Russia unfortunately continues to see its economy shrink, and may see its much-improved inflation figures rise again. China, India, and Brazil (which, like Russia, really should be invited to join the annual economic summits) are growing successfully. All are enlarging their educated middle class, as China's neighbors, the Asian Tigers, have done.
But in all these old-rich and nouveau-riche states, incentives are urgently needed to ensure that new factories, building booms, and roads use the environment-friendly manufacturing processes now becoming available. And pop- ulation restraint becomes more urgent every year.
As for population already here, it's essential that governments downsize their budgets before graying baby boomers reach for welfare-state retirement benefits. Global governments will sell off inefficient state businesses totaling some $85 billion this year. But more cuts are needed. Governments still consume far too large a portion of their citizens' output. An International Monetary Fund study shows rich governments' cost to their economies rising from 28 percent in 1960 to well over 50 percent by the year 2030, when boomer retirements peak.
If leaders seriously begin to tackle these two problems next year, they'll deserve three stars.