And if the problem is truly a global matter, are not many national conversations by definition incomplete and perhaps even self-defeating?
The world’s interdependence has once again been demonstrated in recent weeks. A loose statement anywhere can sink stock markets everywhere. In a world economy driven by global, not national, flows of finance and by global, not local, sourcing of goods, what happens to the richest citizen of the richest country can instantaneously affect the poorest citizen in the poorest country.
Of course the world’s leaders have phoned each other. In fact, they appear to have done nothing but phone each other and explain their problems — with no global agenda on the table. And yet a global tragedy is what is unfolding. Unemployment for the decade to come threatens to be of such a scale that 1.25 billion of the world’s students — up to one-third — is likely to suffer a period out of work after leaving school.
The economic crisis is so deep that no single nation, however powerful, and no bilateral, triliateral or quadrilateral initative, no matter how bold, can prevent a lost decade.
To understand why global coordination alone can work, try appreciating how individual nation-by-nation decisions have been closing down growth. At the core of Washington’s debt decision last week were four “no-go” areas for policy: no more taxes, no more stimulus, no more public investment and no more cuts or increases in entitlement spending. Under these politically imposed constraints, growth from consumer spending and public investment is blocked off. With little chance of private-sector investment in a stagnant home market, America has locked itself into a low-growth cycle for years to come.
With its own four “no go” areas — no bailouts, no defaults, no more money and no devaluations — European consumer spending or public investment will not grow, and Europe has written off any public stimulus.
There is one lifeline for both continents: to export their way to growth. But if that is the policy of the United States, Germany, Britain and now the euro zone, it is also the stated policy of China, India, Brazil and the rest. And an export drive that works means that some countries will have to import more than they export. So without a grand plan, the “export or die” strategies look like a zero-sum game.
Can global leaders reconcile what appears irreconcilable? Is it possible to find a pathway to balanced, sustainable growth in a world that cannot sign a global trade agreement or a climate-change agreement (despite the fact that it would have stimulated billions of trade in renewables) and where the instincts of protectionism and nationalism are far more powerful forces than the imperative for global cooperation?