On September 24 and 25, 2009, world leaders will gather at the G-20 Summit in Pittsburgh, an important city in the U.S. economic recovery plan. With September marking the one-year anniversary of a series of events that accelerated the U.S. and global financial crises, the G-20 in Pittsburgh provides a good opportunity to review recovery progress in the world’s largest economies. President Barack Obama is expected to speak about the U.S. experience over the past year, touching on various aspects of recovery management, including the collapse of Lehman Brothers and Bear Stearns and banker bonuses.
At 12:30 on September 23, Colin Bradford, former chief economist at the U.S. Agency for International Development, and Fred Barbash, senior editor at Politico, answered your questions about the G-20 Summit and global economic recovery. The transcript of this chat follows.
12:29 Fred Barbash-Moderator: Welcome everyone and welcome Colin Bradford. Thanks so much for doing this. Let me begin by asking…why Pittsburgh?
12:31 Colin Bradford: Glad to be here today and I look forward to all the questions.
Pittsburgh, because it’s western Pennsylvania and Ohio where jobs are the key public issue for the ordinary person. So, it focuses the summit not on the complexity of financial markets, transactions and other complex issue, but something that people understand job loss, mortgage payments and reteirement funds.
12:32 [Comment From Daniel Lippman, DC] What do you assess are the prospects for getting financial regulatory reform through Congress this year? And, the G20 will be talking a lot about rebalancing the world economy with US being less of a consumer and more of a saver. But if you shift that way, couldn’t that hurt economic growth just as we’re getting out of the recession?
12:33 Colin Bradford: This is a two-year project, not only in the U.S. but in the international markets, as well. Finanical reform is a key project of all the nations of G-20. The role of this summit is to keep the pressure on parliaments, in general, to institute reform.
12:35 Colin Bradford: The simple answer to your second question is yes. The complicated answer is, if China reduces its saving and increases its consumption, then consumption-driven growth in China would increase its imports from the rest of the world – including the United States.
12:36 [Comment From Paola Peduzzi] Do you think there will be a real rift between US and China at G20?
12:38 Colin Bradford: No. I think there is awareness in both countries and governments of the need for rebalancing. The good news here is that the attention is being focused on internal imbalances (like the U.S. fiscal deficit) rather than on exchange rates which are a reflection of imbalances as well as a cause of them.
12:38 [Comment From Chia Ting Chen, Ph. D] What would be the impact of the US’s printing of so much money on the US and the world?
12:39 Colin Bradford: The simplistic answer is that expansionary monetary policy along with expansionary fiscal policy does put more money in circulation.
12:41 Colin Bradford: This causes inflation and depreciation of the dollar. But, the Fed does not just “print money” to finance the U.S. deficit. The Fed issues treasury bills which people buy, which means money comes out of circulation that matches money going in to circulation from the deficit.
12:41 Colin Bradford: So, the net monetary effect is neutral.
12:42 [Comment From Greg Robb, MarketWatch.co] Has the G20 accomplished all that it will accomplish – holding off protectionism, for the most part, until the crisis simmered down? What else can leaders do? It is not the technocrats at BIS who matter in terms of capital standards and accounting issues?
12:43 Colin Bradford: Tricky issue… given the recent U.S. action on tires. I think there is an understading in all G-20 countries that restraining protectionism is an important part of the recovery process itself.
12:44 [Comment From jddeluca] Does the “crisis committee” have anyone working on a contemporary version of a “Global Marshall Plan”? The original Marshall Plan was very good at stimulating economic recovery?
12:45 Colin Bradford: A Marshall Plan for today should be addressed to the poorer countries of the world. And there is an effort on the part of the G20 governments to increase resources for the multlateral development banks to support economic growth and development in poor countries.
12:47 Colin Bradford: The G-20 has proposed and will deliver a trillion dollars in resources for the IMF – some of which will be helpful to low income countries. But the bulk of that money is meant to plug holes in the global financial systems so that large countries don’t inflict damage on smaller countries through financial disturbances.
12:47 [Comment From Lee (MMBJack)] How does President Obama speech to UN today dove-tail with the G-20 meeting?
12:49 Colin Bradford: Climate change may not receive major attention in the G-20 communique, but I think G-20 leaders in Pittsburgh will discuss together, formally and informally, the challenges of climate change reform for their countries and for the world.
12:49 Colin Bradford: Some invisible advances toward reaching an agreement on a post-Kyoto framework may well occur.
12:51 [Comment From Karl Knapstein] I think the cost of of globalization in human terms has been devastating to our workers and industrial infrastructor. Would backing out of trade agreements really be that bad for us as a nation?
12:52 Colin Bradford: Backing out of bi-lateral trade agreements would not have a major effect on the U.S. economy, but that doesn’t mean we should do it. The real deal is whether to go back on liberalization agreements from major trade rounds.
12:52 Colin Bradford: What would be a success today would be a standstill on major trade agreements that are enforced and disciplining significant reversals and selective protectionism.
12:53 [Comment From Sarah] What role will developing countries have this week at the G-20? How will the US leverage and encourage public-private partnerships in order to encourage economic growth and development?
12:56 Colin Bradford: South Africa, India, and Indonesia have all had elections since the London G-20 Summit on April 2. So, what will be interesting to see is the degree to which these leaders, especially India PM Singh and Indonesia reformist President Yudhoyono, assert stronger positions in Pittsburgh givern their strong domestic political base.
12:59 Colin Bradford: It may not just be the U.S. that encourage public-private partnerships to encourage growth. I just heard a lecture yesterday from a Chinese expert on commerical transfers of technology to address climate change hrough private channels. This could be more important than government-sponsored transferd of technology. G-20 countries need to look at this together.
1:00 [Comment From Lee (MMBJack) McCarty] Do you relate the G20 and the UN speech as a confirmation that the world looks to President Obama as the symbolic leader in the world for real progress in cooperative efforts on his agenda?
1:02 Colin Bradford: I think President Obama sees the G-20 as a good grouping of countries in which to address big global challenges. It is more effective and representative than the G-8 (which is too small and parochial) and it’s easier to get consensus with the G-20 than the UN which is highly representative but less effective.
1:03 [Comment From Frank Young] This summit appears to have alot—perhaps too much—on its shoulders. However, beyond climate change, Global Marshall Plans, and the like, what is the likelihood that the meetings will serve as a springboard to bring the long derailed and delayed Doha Round to a positive conclusion?
1:04 Colin Bradford: My own view regretably is that despite efforst by G-20 leaders, it will be difficult to complete the Doha Round because of the powerful representation of agriculture interests in parliaments in Europe, Japan, and North America.
1:05 [Comment From Rebecca] Will Obama’s troubles pushing through domestic policies (health care, climate change) affect his impact at the G-20 summit?
1:07 Colin Bradford: I think it could work the other way where President Obama uses the G-20 to push hard on the linkages between health care reform, job creation, trade, economic growth, and climate change. And demonstrate that the major countries in the G-20 all face these challenges at home just as we do.
1:08 Colin Bradford: His speech to the UN yesterday was honest about the debates in the US Congress about the fact that other countries have similar debates and that, as he said, “just because it’s difficult doesn’t mean you don’t do it.”
1:09 [Comment From Sally] What are the implications of the US slapping a teriff on Chinese tires? Will that spark another round of protectionism? Or is it a minor issue?
1:09 Colin Bradford: It’s well within the legal framework of trade agreements. I don’t think it will trigger a round of protectionism but it is not an unimportant specific action.
1:10 [Comment From Raul]
What’s the point of this meeting when most of the developing world is uninvited?
1:11 Colin Bradford: The global majority is significantly represented in the G-20 in terms of the number of people represented by the leaders of the 10 emerging market economies.
1:12 Colin Bradford: The G-20 is a major improvement over the G-8 in bringing leaders from non-Western to the summit table. It is true that 170 other countries are not there. Down the road, consultative mechanisms need to be put in place so that the issues of the rest of the world are channeled to the summit table.
1:14 [Comment From Frank] There seems to be some debate about the G-8 vs the G-20. Any thoughts on how to involve rising powers like Brazil and India in global decision making?
1:16 Colin Bradford: Brazil and India are both members of the G-20. The idea of meeting at 20 instead of 8 is precisely to broaden the engagement of emerging powers in the global decision-making. And this means that advanced industrial country leaders need to welcome contributions from non-Western leaders and that non-Western leaders need to make strong substantive contributions to the discussion. So far, so good, but we’ll see what happens in Pittsburgh.
1:17 [Comment From Wes] Do any of the other G20 countries take us seriously anymore now that we’ve wrecked the world’s economy?
1:19 Colin Bradford: Absoultely they take the US seriously. In part, because we have a new leader who was not reponsible for the situation, and he has a different idea of global leadership than the previous one. The US is a major factor in every significant global issue, so what we have to say matters.
1:19 [Comment From Frank Young] But, what is the likelihood that there will be future G-20 Summits? And how will this forum influence future G-8 meetings in your view?
1:20 Colin Bradford: It will be suprising, indeed, if there is not specific agreement to have another G-20 summit in Korea in the spring of next year as the calendar warrants.
1:22 Colin Bradford: The G-20 is, in effect, becoming the global steering committe in the 21st century. The awkwardness for the G-8 is that it has to choose between being a caucus of Western nations alone or continuously meeting at G-8 plus some number of additional countries – which means it’s not really the G-8.
1:23 Colin Bradford: How this will play out is not clear. Canada chairs the G-8 summit in late June of 2010 and will undoubtably have to pick up where the Korean G-20 summit leaves off.
1:23 [Comment From Irving] Can you say more about what the G-20 can do to help undereceloped countries? E.g. suggest new economic policies to be fostered by bilatarela and multilateral donors. What might these new policies be e.g. globalizatio vs.. country self sufficiency.
1:26 Colin Bradford: One way to think about the global rebalancing between the US and China is to think about shifting toward a more investment driven growth path rather than a consumption driven growth path in the US. And, the pattern for developing countries might be similar in investing in health and education, in infrastructure, and a low-carbon growth path which would make their growth more socially, as well as environmentally, sustainable.
1:27 [Comment From erin] Can we expect any big decisions or breakthroughs from this G-20 Summit?
1:30 Colin Bradford: That’s a good question! Headlines are hard to generate when the solutions are already in process and have a long term trajectory. Nonetheless, I think Gordan Brown’s global compact idea could provide an overarching framework with specific issues within it. The global public can get both an idea of broad strategic direction as well as more specific areas of action on climate change, recovery, terrorism, nuclear proliferation and poverty as he proposed in the New York Times today.
1:31 Fred Barbash-Moderator: Thank’s to all our readers with apologies to those questions we could not get to. And thanks to Colin Bradford for taking the time to do this. We’ll be back here–Politico and Brookings–next week.
Bye for now…