Lecture Hop: Global Thoughts on the London G20 Summit
Written by Bwog Staff
Professors gathered last night to discuss the G20 summit in London last week. Bwog’s International Quibbling Correspondent James Rathmell reports on the profs’ hopes and fears for the economic futures of the US, Latin America, Russia, and India.
If you’ve been under a rock in Butler, you may or may not have heard that the G20 summit held in London last week got a little hot and heavy. Beyond the general disorder caused by the riots, President Sarkozy’s threats to boycott the summit, and how awesome Michelle Obama is, there’s still debate over what, if anything, was actually accomplished.
A panel of distinguished professors, moderated by Merit Janow, gathered last night in IAB 1512 to discuss the summit’s ramifications for various global regions. Richard Clarida and Sharyn O’Halloran, representing the United States, and Guillermo Calvo, Padma Desai, and Arvind Panagariya, respectively representing Latin America, Russia, and India, were each given 10 minutes to express their views on the summit’s impact.
After introductions, O’Halloran contextualized the summit, and gave a broad overview of the reason for its organization; “Everything’s tanking,” she said, referring to economies worldwide, “There needs to be a huge structural adjustment.” She went on to link the falling out of many economic bottoms to a steep decline in global trade, a large component of every country’s GDP. In addition, she described the necessity for “cooperative monetary and fiscal policy among nations.” She pointed out that the summit was successful in its ability to collect some $1.1 trillion for the International Monetary Fund, for its creation of the Financial Stability Forum, and for the encouragement of voting rights for China, India, and Brazil, who are all rising world economic players.
O’Halloran gave the floor over to Calvo, who, when told that US issues would be addressed at the beginning and end of the panel, referred to it as an “American sandwich.” Calvo described the current crisis in terms of Mexico’s own crisis in 1985; the main difference, he explained, is that this time the lender of last resort (in this case the IMF) has insufficient funds to cover the projected $400 billion in losses to the Latin American economy. In light of this, he criticized the summit for putting too much emphasis on financial regulations at the cost of not discussing the lender of last resort.
Panagariya briefly addressed the impact of the summit for India, which he said was mainly the “symbolic meaning” of being present at the summit at all. He explained that India was now “hanging with the big boys.” In addition, he expressed an optimism that the Indian economy would quickly recover from the current crisis, and return to its high growth rate of 9% within several years. Clarida came off as a supporter of the summit, despite “cynicism and skepticism” about its function; indeed, he called the summit “quite remarkable” and “impressive in scale and scope.” However, he was hesitant about China’s proposal for the IMF to adopt Special Drawing Rights as an international currency.
Desai spoke at length about Russia’s financial woes: “Russia was an odd man out at the summit,” she said, “but there’s a silver lining to their crisis.” She explained that the reason for this is that Russia’s crisis is different due to the crumbling value of the Rouble and the expansionary nature of their economy pre-crisis. She ended with a joke, and described the Russian sense of humor as “very intellectual…constantly changing” and now “very Stalinist.”
Though the panelists were contentious on some issues, such as the validity of SDRs and the voting roles of certain countries in the IMF, they were respectful of one another, and seemed hopeful about the effects of the G20 summit. It seems as if, at least financially, the future may be looking brighter.