The G20's Fiscal Failures: North America and Western Europe
By Ann-Marie de Veer
Saturday 22 November 2014
On the 15-16 November 2014 the G20, an international forum of representatives from 19 nation states and 1 regional authority, arbitrarily chosen by Caio Koch-Weser and Timothy Geithner in 1998, representing over 80% of world trade, met in Brisbane, Australia to ponder the latest initiatives aimed at the international coordination of economic policy. The meeting, having migrated from its original format of Finance Ministers in 1999 to Heads of State in 2008, is little more than a stage managed and choreographed event aimed at broadcasting the initiatives that have already been agreed by numerous officials and other functionaries in a draft communiqué usually issued weeks earlier.
Nonetheless, these annual performances of a non-event event have become routine, regardless of the costs involved which this year saddled the Australian taxpayer an eye-watering AU$ 400m while the total bill, including transportation, accommodation and security of the visiting heads of state and their entourages is estimated to be over AU$ 1bn.
While the need for the physical presence of these people and the subsequent costs of all those involved is highly questionable and merits close scrutiny, given the technological solutions available for teleconferencing, it is a minor issue compared to the results of their deliberations. In the final communiqué, a five-page document, two of which were an annex containing references to agreed documents, ministerial statements, supporting documents, issues for further action and acknowledgements, the missive detailed just 21 points on the preceding three pages. As a closer examination of the document reveals, style over substance has reigned supreme as the following summary reveals:
- 1., 2. & 4. To raise global growth in a sustainable and balanced manner in delivering jobs and better living standards while managing debt.
- 3. To lift the G20's GDP by an additional 2.1% by 2018.
- 5., 6. & 7. To create a Global Infrastructure Initiative to lift investment and collaboration in building infrastructure worldwide.
- 8. To facilitate trade by lowering costs, streamlining customs procedures and reducing regulatory burdens to promote competition and innovation.
- 9. & 10. To reduce employment participation rates between men and women by 25% by 2025 and youth unemployment by investing in apprenticeships, education and training while improving workplace Health & Safety and social safety nets.
- 11. To eradicate poverty, aid development and reduce the global average cost of transferring remittances to 5% while enabling the G20 Food Security and Nutrition Framework.
- 12. To finalise regulatory reforms of the financial system in the wake of the GFC.
- 13. & 14. To ensure fairness of the international tax system, secure countries' revenue bases, prevent cross-border tax evasion and support the 2015-16 G20 Anti-Corruption Action Plan.
- 15., 16., 17., 18. & 19. To support regulatory reform in the IMF, facilitate negotiations for the stalled WTO agreement, promote energy efficiency and action consistent with the United Nations Framework Convention on Climate Change.
- 20. To support the Ebola outbreak in Guinea, Liberia and Sierra Leone and any other humanitarian crises.
- 21. See items 1., 2. & 4. Next stop Turkey in 2015 then China in 2016.
That over AU$ 1bn has been spent on producing a communiqué replete with bland and meaningless statements, save for the unrealistic targets that neither the developed, nor developing countries can ever hope to achieve, the narrative clearly merits an award for being one of the most obtuse and rhetorical missives ever to emanate from the G20. There can be no doubt whatsoever that the contents of this statement is a desperate bid by a small coterie of bottom feeders headed up by Canada, who is 13th on the G20 GDP Growth Rate ranking list, followed by the US, Germany, the UK, the EU (primarily: Greece, Ireland, Portugal & Spain (GIPS)), France, Japan and Italy. While Japan's poor performance is understood to be caused by an ageing workforce, a very low birth rate and a slow but inexorable reduction in its population, the West cannot offer any plausible explanation at all.
As the rankings of the G20 GDP Growth Rates from The World Bank for the last 10 years demonstrate:
All is not well in the Western economies.
As the table clearly indicates, the leaders, China (#1) and India (#2), the two most populous nations on the planet who are in the midst of a massive development cycle, are in the lead while the West are floundering along the bottom. Naturally, the leaders have seen their GDP Growth Rates decline over the last two years, more by design than chance, as they seek to manage their growth more pragmatically. Nonetheless, they have grown by an average of 10.22% and 7.53%, respectively, per year for the last 10 years. What is even more interesting is that the majority of nations in the G20 from Saudi Arabia, ranked (#3), all the way down to Mexico, ranked (#12), have achieved GDP Growth Rates of 6.33 % (max) to 2.64% (min) on average per year during the same period of time.
That the West, represented here by Canada, the US, Germany, the UK, the EU (GIPS), France and Italy, both before, and after, the GFC of 2008-9 have consistently underperformed is a damning indictment of the competence of successive regimes who have failed their people and their nations. While Canada, ranked (#13), tops the laggards section of the table with an average GDP Growth Rate of just 1.9% during the last 10 years, Italy, ranked (#20), has a growth rate stuck in reverse, shrinking by an average of -0.22% per annum during the same period. The growth rates among this group of nations clearly indicate that it is their performance which needs to improve; i.e. it is they who should lift their GDP Growth Rates to a minimum of 3% and not try to impose unrealistic demands or constraints upon other nations who are in a different stage of their development cycle.
Thus, it is in this context, i.e. the parlous state of the GDP Growth Rates among the Western cabal, that the G20's final communiqué should be reviewed. The missive reeks of a desperate bid by the West to rejuvenate their flagging fortunes by imposing unrealistic targets on others in a vain attempt at lifting themselves out of the mire in which they have been wallowing for years. The fact that their GDP Growth Rates have been below average for some considerable time and are unlikely to rise in the foreseeable future, coupled with the impossible task of raising the Global GDP Growth Rate by 2.1% above current levels, is as clear an indication, if any were needed, that it simply will never happen. And so, bereft of funds, their unwillingness to countenance any of the other initiatives in the 21 point communiqué in any meaningful way is practically guaranteed.
That a putrid stench of self-righteousness is emanating from this coterie of fiscal failures in the G20's latest communiqué is all we can be certain of at the moment.
- Fiscal prudence is not in the lexicon of those who spend other peoples money.