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G20 Summit Reinforces Neoliberal Ideology
Over the week-end, President Bush hosted a summit of the Group of 20 nations to discuss the financial mess in which the world finds itself. The final communique, which was written before the meeting by staffers, reiterated the neoliberal ideology that brought the world to this pass. Free markets appear to be the solution to problems caused by free markets. Does anyone sense a problem with this?
The meeting's final communique diagnosed the problems correctly. The big shots said the difficulties stemmed from “inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms, which led to unsustainable global macroeconomic outcomes.” What they left out was inadequate transparency.” They also did say “Against this background of deteriorating economic conditions worldwide, we agreed that a broader policy response is needed, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support emerging market economies and developing countries.”
Then came a serving of waffle that would feed all of Belgium for a decade,
Regulation is first and foremost the responsibility of national regulators who constitute the first line of defense against market instability. However, our financial markets are global in scope, therefore, intensified international cooperation among regulators and strengthening of international standards, where necessary, and their consistent implementation is necessary to protect against adverse cross-border, regional and global developments affecting international financial stability. Regulators must ensure that their actions support market discipline, avoid potentially adverse impacts on other countries, including regulatory arbitrage, and support competition, dynamism and innovation in the marketplace. Financial institutions must also bear their responsibility for the turmoil and should do their part to overcome it including by recognizing losses, improving disclosure and strengthening their governance and risk management practices.
The idea of an international capital market is reinforced rather than questioned, and the solution offered is simply more of the same. This is nonsense. The failure of the market is what has brought the world to this sorry state, and greater market activity is not a solution to the overall problem. It remains the challenge of global regulators.
Ultimately, the true solution to the world's economic problems is the free application of the market to a global free trade regime. The difficulty is how one gets to that solution. Immediate opening of markets, especially capital markets, is nothing short of unilateral disarmament. Yes, greater transparency is needed, but so is greater international regulation – and the G-20 don't seem to see it.
© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.
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