Chiếm 85% GDP toàn cầu, 80% thương mại quốc tế, 2/3 dân số thế giới, G20 tỏ ra khá phù hợp với vai trò kích thích kinh tế thế giới thoát khỏi khủng hoảng.
Một thập kỷ trước, để đối phó với cuộc khủng hoảng kinh tế tại châu Á và Nga, các bộ trưởng tài chính của 7 nền kinh tế lớn nhất đã thành lập một tổ chức mới, G20. Chín năm sau, ảnh hưởng của G20 đã gia tăng, nhưng không nhanh. Sau đó, hồi năm ngoái, G7 lại tự nhận thêm một nhiệm vụ là điều phối phản ứng toàn cầu về cuộc khủng hoảng tài chính. Như thế, lần đầu tiên G20 ngồi vào chiếc ghế lái. Cuộc họp chính thức của lãnh đạo các nước G20 sẽ chính thức diễn ra vào ngày 24-25 tháng 9, được khởi động bởi cuộc họp của các bộ trưởng tài chính hồi đầu tháng với thông cáo chung gồm những biện pháp đẩy mạnh Quỹ Tiền tệ Quốc tế (IMF) và Ngân hàng Thế giới.
This transfer of control is a major step forward, and our government is to be congratulated for supporting the move. But there is also another game in town, and our government seems to believe that supporting one game means raining on the other.
The alternative to the G20 is the United Nations, which in late June held a conference to explore approaches to the global financial crisis. A background document for the conference was the report of a UN Commission of Experts on the crisis, headed by the Nobel laureate and former chief economist of the World Bank, Joseph Stiglitz. Yet despite the eminence of the report’s main author, and the critical need to consider a range of approaches to a crisis as severe as this one, the Australian media gave almost no coverage to the UN process.
This lack of interest is strange because our government wasn’t simply uninterested in the UN process, it obstructed it. When the recommendations of Stiglitz’s report were discussed at the United Nations in the month leading up to the conference in June this year, Australia joined other rich countries in blocking and watering down most of the innovative proposals. The directive from the prime minister’s office was to support no process that would undercut the centrality of the G20. The upshot was that the UN conference issued a series of bland resolutions largely devoid of real content.
Before we look at Stiglitz’s recommendations it’s worth going back to the decisions made by the G20 nations at their meeting in London in April this year. The key decision of the meeting was a plan to inject an extra US$1 trillion into the world economy. One-quarter of this sum is to be committed to supporting trade finance, another quarter is to go into new Special Drawing Rights, or SDRs, and the remaining half into extra resources for the International Monetary Fund to lend to countries.
This looks okay. It reads even better. The G20 directives are filled with high aspirations and exhortations to enhance the “open trade and investment regimes, and effectively regulated financial markets that foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction.” Who can be against growth, employment and poverty reduction? Surely the G20 is on the right track?
But when one reads the detail a different picture emerges. Ensuring financing is available for trade is important, but this is merely replacing private funding with public money. It doesn’t actually do something extra to respond to the crisis, it merely patches a crisis-caused hole in the system.
SDRs are a form of reserve assets for countries. They can be drawn down at very modest interest rates and are a fine source of capital. At times like these, extra SDRs are the sort of medicine that will help poor countries (which is why Stiglitz recommended them in his report). But countries can only draw down SDRs in proportion to their quotas, which means the majority of SDRs are available to the United States and European countries. So this is the right medicine and better than nothing, but in doses too small to cure the disease.
In contrast, the extra loans that will be channelled through the IMF are the wrong sort of medicine for two reasons. First, this new credit facility requires substantial conditions be met by borrowers which will exclude the countries that most need the assistance. Second, these countries don’t need loans, they need a two-year interest holiday on all their official loans (from developed countries and from multilateral agencies such as the IMF and World Bank). A halt on interest payments would give poor countries cash to direct towards domestic stimulus. More loans do the same thing, but at the long-term expenses of more indebtedness, for economies already staggering under unsustainable debt burdens. Short-term gain for long-term pain is the wrong medicine.
So why did the G20 do what it did? Well, it was cheap. Official loans and trade finance facilities are always repaid by debtors, because when times are really tough these are the only available funding sources. So the G20 nations know all these funds will be repaid. Yet a trillion dollars still has a real ring to it – promising a trillion is insulation against being charged with doing too little. And, finally, this is in part a stimulus package for western commercial banks; past experience tells us that a portion of the new money lent by the IMF will be used by middle-income debtor countries to repay due bank debt. So there is some real self-interest in these measures.
What is missing in all the G20 documents is any evidence of any thinking outside the box that brought us the global financial crisis. We need to rethink fundamentally the role of capital and financial products and the privileges and rights we, the people, confer on banks by granting them a banking licence. Financial crises of increasing severity have been the defining feature of the past fifteen years and this is to be expected, because our current financial system was designed for a non-globalised world of finance that no longer exists.
The Stiglitz Commission tackles the longer-term systemic reform task with many recommendations. New financial mechanisms should be introduced to mitigate risk, including international institutions lending in local currencies. The governance of the IMF and World Bank should be reformed to make them responsive to the needs of their clients, the developing countries. Highly indebted countries should be given a moratorium or partial cancellation of debt, and new mechanisms for handling sovereign debt restructuring, such as a sovereign bankruptcy court, should be introduced. A Global Economic Coordination Council is needed at the level of the UN General Assembly and Security Council, meeting annually, as well as a Global Financial Regulator and a Global Competition Regulator. And, perhaps most controversially, the US dollar should be replaced as the global reserve currency by something like a greatly expanded SDR regime.
The first four of these proposals are the most do-able. There are strong reasons why all reschedulings of rich country to poor country loans through the Paris Club (a group made up of the financial officials of the world’s nineteen richest countries) should be in local currency, as should all lending by international financial institutions such as the IMF and World Bank. Our current system places the currency risk on the party least able to bear it, the borrower. This is nuts. Lending in local currency puts the currency risk on those best able to bear it and hedge against it, the lenders.
Likewise there are strong arguments for debt relief for more countries than currently receive it, and for an orderly, rules-based approach to sovereign insolvencies.
The remaining recommendations in my summary of the Stiglitz recommendations are far more controversial. To be effective, global financial and competition regulatory authorities are going to require real power to make rules, which raises all sorts of sovereignty concerns. And the recommendation for a new reserve currency made me wince. Not because it is silly; in fact, it is sensible, essential and probably inevitable. But one suspects the United States will die in a ditch to try and keep the dollar as the global reserve currency. So this recommendation alone is likely to attract the full force of US opposition to the report.
A new reserve currency is almost inevitable because the current arrangement is leading to ever greater volatility, and because China is fed up with it. Premier Wen Jiabao has said he is worried that China holds most of its reserves in dollars, and well he might be, as the decline of the dollar in recent years has cost China a fortune. Twice this year the governor of China’s central bank has called for a new reserve currency regime focused on special drawing rights. China Inc doesn’t make such comments without careful consideration, and it is hard at work researching alternatives.
The Stiglitz Commission may have been better off analysing why the move to a new reserve currency is highly likely and highlighting the benefits of an orderly transition and the potentially devastating effects of China and other countries dumping their dollar-denominated bonds. The report presents the sound technocratic arguments for change, but giving the practical reasons to seek to manage this process may have engendered more listening, and less opposition, in Washington.
But this is just one criticism. Overall the Stiglitz Commission report is informed by a different type of thinking than that which brought us the global financial crisis. As Joseph Stiglitz wrote earlier this year, “Financial markets are not an end in themselves, but a means: they are supposed to perform certain vital functions which enable the real economy to be more productive: (a) mobilising savings, (b) allocating capital, and (c) managing risk.” The financial crisis was a direct result of treating the creation of financial products as an end in itself – as a valuable driver of economic growth independent of the products’ effects.
Stiglitz believes a financial sector exists to provide capital, a necessary input into the productive process. Just like telecommunications, electricity and roads, a financial system is an important piece of infrastructure. There’s nothing new in this thinking. Everyone thought this way thirty years ago. It is just that many people forgot it. More fundamentally, one gets the impression that Stiglitz believes economies exist to advance societies, rather than societies to advance economies. Thus he approaches the issues from a framework quite different to that of the nations that shaped the G20 response to the GFC.
We have a national history of going All the Way with foreign ideas. This time our government has committed itself fully to the G20’s response to the crisis. In doing so we have missed a major opportunity to promote the only sort of thinking that will stop recurrent financial crises. The United States is sufficiently grown up to value a friend that has its own mind. We no longer need to play follow the leader. Our financial interests are profoundly different from those of the United States and Europe. Our primary interest lies in a fair and functional global financial system. The Australian people have a right to expect bigger and better thinking on these issues from our leaders. The next G20 meeting, late next month in Pittsburgh, would be a great place to start. •
Ross Buckley is Professor of International Financial Law at the University of New South Wales.
Inside
Một thập kỷ trước, để đối phó với cuộc khủng hoảng kinh tế tại châu Á và Nga, các bộ trưởng tài chính của 7 nền kinh tế lớn nhất đã thành lập một tổ chức mới, G20. Chín năm sau, ảnh hưởng của G20 đã gia tăng, nhưng không nhanh. Sau đó, hồi năm ngoái, G7 lại tự nhận thêm một nhiệm vụ là điều phối phản ứng toàn cầu về cuộc khủng hoảng tài chính. Như thế, lần đầu tiên G20 ngồi vào chiếc ghế lái. Cuộc họp chính thức của lãnh đạo các nước G20 sẽ chính thức diễn ra vào ngày 24-25 tháng 9, được khởi động bởi cuộc họp của các bộ trưởng tài chính hồi đầu tháng với thông cáo chung gồm những biện pháp đẩy mạnh Quỹ Tiền tệ Quốc tế (IMF) và Ngân hàng Thế giới.
Bao gồm 19 quốc gia và Liên minh châu Âu, G20 chiếm 85% GDP toàn cầu, 80% thương mại quốc tế, 2/3 dân số thế giới. Bên cạnh các quốc gia G7, trong G20 còn có cả Brazil, Trung Quốc, Ấn Độ; Indonesia, quốc gia đông dân Hồi giáo nhất, Thổ Nhĩ Kì, cầu nối về nhiều mặt giữa châu Âu và Trung Đông, và cả Nam Phi. G20 giờ đây tỏ ra khá phù hợp với vai trò kích thích kinh tế toàn thế giới thoát khỏi khủng hoảng.
Một tổ chức khác cũng đang đứng ra làm nhiệm vụ này là Liên hợp quốc. Tổ chức này đã họp hồi cuối tháng 6 để bàn về cách tiếp cận với cuộc khủng hoảng tài chính toàn cầu. Một văn bản đưa ra trước hội nghị là báo cáo của Hội đồng Chuyên gia Liên hợp quốc về khủng hoảng, đứng đầu là người từng đoạt giải Nobel và từng là nhà kinh tế hàng đầu của Ngân hàng Quốc tế, Joseph Stiglitz.
Trước khi xem xét khuyến nghị trong báo cáo của Stiglitz, chúng ta hãy cùng điểm lại những quyết định mà các quốc gia G20 đưa ra tại hội nghị London hồi tháng tư năm nay. Quyết định quan trọng nhất của hội nghị là kế hoạch bơm 1 nghìn tỷ vào nền kinh tế toàn cầu. 1/4 số tiền đó được cam kết là để hỗ trợ tài chính thương mại, ¼ nữa dùng vào đồng tiền “Quyền rút vốn đặc biệt” SDR, và một nửa sẽ dùng làm vốn tăng thêm của Quỹ Tiền tệ Quốc tế cho các quốc gia vay.
Tuy nhiên, khi xem xét chi tiết thì lại thấy một bức tranh hoàn toàn khác nổi nên. Việc đảm bảo hệ thống tài chính cho hoạt động thương mại là điều quan trọng, nhưng điều này chỉ đơn thuần là việc thay thế việc cấp vốn tư nhân bằng tiền của nhà nước. Nó thực tế không hỗ trợ thêm được điều gì để đối phó lại cuộc khủng hoảng, mà chỉ đơn thuần làm công việc vá lại những lỗ hổng trong hệ thống do khủng hoảng gây ra.
SDR là một dạng của tài sản dự trữ đối với nhiều quốc gia. Đồng tiền này có thể được vay tỷ lệ lãi suất thấp và là một nguồn vốn tốt cho đầu tư. Vào những thời điểm như thế này, đồng SDR tăng thêm là một loại thuốc sẽ giúp được các nước nghèo (đó là lý do tại sao Stiglitz đề nghị sử dụng trong báo cáo của mình). Nhưng các quốc gia này chỉ có thể rút SDR theo một tỷ lệ có hạn, điều này có nghĩa là đa số các SDR là sẵn có với Mỹ và các quốc gia châu Âu. Vì thế, điều này có thể là một thứ thuốc tốt và tốt hơn là không có gì nhưng liều lượng thì loại quá nhỏ để chữa trị cho “căn bệnh” khủng hoảng này.
Những khoản cho vay thêm qua kênh IMF là một thứ thuốc trị không đúng bệnh vì 2 lý do. Trước hết, những khoản tín dụng mới sẽ yêu cầu những điều kiện khắt khe mà người vay phải thỏa mãn trong khi lại loại ra những nước cần sự trợ giúp này nhất. Thứ hai, những nước này không cần vay tiền, họ cần một sự hoãn thu lãi suất trong vòng 2 năm đối với các khoản vày chính thức (từ các nước giàu và từ các tổ chức đa phương). Việc tạm ngừng phải trả lãi suất sẽ giúp các nước nghèo có thêm tiền trong hoàn cảnh khó khăn cho các gói kích thích của mình.
Vậy tại sao G20 lại làm như vậy? Bởi đây là biện pháp không tốn kém. Các khoản vay chính thức và các công cụ thương mại tài chính luôn được người vay trả nợ, bởi vì khi kinh tế gặp khó khăn, đây là những nguồn cấp vốn sẵn có duy nhất. Do đó, các quốc gia G20 biết rằng những khoản cho vay này sẽ được hoàn trả.
Điều mà tất cả những văn bản của G20 đều thiếu là những suy nghĩ khách quan bên ngoài về nguyên nhân dẫn đến khủng hoảng tài chính. Cuộc khủng hoảng tài chính ngày càng nghiêm trọng là kết quả của 15 năm qua, do hệ thống tài chính hiện tại chỉ được xây dựng cho nền tài chính phi toàn cầu, mà giờ đây, hệ thống này không thể tồn tại được nữa.
Chính vì nắm bắt được điều này nên Stiglitz và đồng nghiệp của mình đã tiếp cận vấn đề theo cách đó. Ủy ban của ông đã đưa ra những khuyến nghị thuộc hai nhóm: các giải pháp tức thì và các giải pháp cải cách hệ thống dài hạn. Trong giải pháp ngắn hạn, ủy ban đề nghị sử dụng 250 tỷ USD trị giá SDR thông qua IMF mỗi năm cho cuộc khủng hoảng và các nước giàu phải đóng góp 1% gói kích cầu trong nước cho các gói kích cầu tương tự của các quốc gia có thu nhập thấp.
Về giải pháp dài hạn, ủy ban của Stiglitz kêu gọi những cải cách hệ thống dài hạn với nhiều khuyến nghị. Cần lập nên những cơ chế tài chính mới để giảm bớt rủi ro, bao gồm cả những thể chế quốc tế cho vay bằng nội tệ. IMF và World Bank nên được cải tổ để có thể đáp ứng nhu cầu của đối tác, các nước phát triển.
Trong khi đó, G20 chỉ chấp nhận một khuyến nghị sử dụng 250 tỷ USD tiền SDR, nhưng chỉ áp dụng một lần cho một nước. Liệu đây sẽ là một sự trợ giúp lớn đối với các nước đang phát triển? Mỹ đang là nước có những đóng góp lớn nhất cho IMF, liệu việc tự “thoái lui” đồng đô la với vai trò là đồng tiền quốc tế có dễ dàng được Mỹ chấp nhận?
Stiglitz tin rằng hệ thống tài chính tồn tại sẽ cung cấp vốn, đầu vào quan trọng cho quá trình sản xuất. Giống như truyền thông, điện đường, hệ thống tài chính cũng là một bộ phận quan trọng của cơ sở hạ tầng. Không có gì mới trong cách nghĩ này so với 30 năm trước. Chỉ có điều nhiều người đã quên nó. Chúng ta thường hiểu rằng kinh tế tồn tại để giúp phát triển xã hội, hơn là xã hội tồn tại để phát triển kinh tế. Vì thế Stiglitz tiếp cận vấn đề từ một góc nhìn khác hoàn toàn so với các quốc gia tham gia phản ứng với khủng hoảng.
- Đình Ngân (Theo Inside)
The G20’s missed opportunity
Australia and the west missed an opportunity when they largely ignored a United Nations report on the financial crisis,
writes Ross Buckley
08/24/2009
writes Ross Buckley
08/24/2009
A DECADE AGO, in response to the Asian and Russian economic crises, the finance ministers of the seven biggest economies created a new organisation, the G20. For the next nine years the influence of the G20 grew, but slowly. Then, last year, the G7 handed it the role of coordinating the global response to the financial crisis. For the first time, the G20 was in the driver’s seat.
Made up of nineteen nations and the European Union, the G20 represents 85 per cent of global GDP, 80 per cent of world trade, and two-thirds of the world’s people. In addition to the G7 nations, it includes Brazil, China and India; Indonesia, the world’s most populous Muslim nation; Turkey, the bridge in so many ways between Europe and the Middle East; and South Africa. Even Australia gets a guernsey. The G20 is far better suited than its predecessor to the job of steering the world through a crisis.This transfer of control is a major step forward, and our government is to be congratulated for supporting the move. But there is also another game in town, and our government seems to believe that supporting one game means raining on the other.
The alternative to the G20 is the United Nations, which in late June held a conference to explore approaches to the global financial crisis. A background document for the conference was the report of a UN Commission of Experts on the crisis, headed by the Nobel laureate and former chief economist of the World Bank, Joseph Stiglitz. Yet despite the eminence of the report’s main author, and the critical need to consider a range of approaches to a crisis as severe as this one, the Australian media gave almost no coverage to the UN process.
This lack of interest is strange because our government wasn’t simply uninterested in the UN process, it obstructed it. When the recommendations of Stiglitz’s report were discussed at the United Nations in the month leading up to the conference in June this year, Australia joined other rich countries in blocking and watering down most of the innovative proposals. The directive from the prime minister’s office was to support no process that would undercut the centrality of the G20. The upshot was that the UN conference issued a series of bland resolutions largely devoid of real content.
Before we look at Stiglitz’s recommendations it’s worth going back to the decisions made by the G20 nations at their meeting in London in April this year. The key decision of the meeting was a plan to inject an extra US$1 trillion into the world economy. One-quarter of this sum is to be committed to supporting trade finance, another quarter is to go into new Special Drawing Rights, or SDRs, and the remaining half into extra resources for the International Monetary Fund to lend to countries.
This looks okay. It reads even better. The G20 directives are filled with high aspirations and exhortations to enhance the “open trade and investment regimes, and effectively regulated financial markets that foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction.” Who can be against growth, employment and poverty reduction? Surely the G20 is on the right track?
But when one reads the detail a different picture emerges. Ensuring financing is available for trade is important, but this is merely replacing private funding with public money. It doesn’t actually do something extra to respond to the crisis, it merely patches a crisis-caused hole in the system.
SDRs are a form of reserve assets for countries. They can be drawn down at very modest interest rates and are a fine source of capital. At times like these, extra SDRs are the sort of medicine that will help poor countries (which is why Stiglitz recommended them in his report). But countries can only draw down SDRs in proportion to their quotas, which means the majority of SDRs are available to the United States and European countries. So this is the right medicine and better than nothing, but in doses too small to cure the disease.
In contrast, the extra loans that will be channelled through the IMF are the wrong sort of medicine for two reasons. First, this new credit facility requires substantial conditions be met by borrowers which will exclude the countries that most need the assistance. Second, these countries don’t need loans, they need a two-year interest holiday on all their official loans (from developed countries and from multilateral agencies such as the IMF and World Bank). A halt on interest payments would give poor countries cash to direct towards domestic stimulus. More loans do the same thing, but at the long-term expenses of more indebtedness, for economies already staggering under unsustainable debt burdens. Short-term gain for long-term pain is the wrong medicine.
So why did the G20 do what it did? Well, it was cheap. Official loans and trade finance facilities are always repaid by debtors, because when times are really tough these are the only available funding sources. So the G20 nations know all these funds will be repaid. Yet a trillion dollars still has a real ring to it – promising a trillion is insulation against being charged with doing too little. And, finally, this is in part a stimulus package for western commercial banks; past experience tells us that a portion of the new money lent by the IMF will be used by middle-income debtor countries to repay due bank debt. So there is some real self-interest in these measures.
What is missing in all the G20 documents is any evidence of any thinking outside the box that brought us the global financial crisis. We need to rethink fundamentally the role of capital and financial products and the privileges and rights we, the people, confer on banks by granting them a banking licence. Financial crises of increasing severity have been the defining feature of the past fifteen years and this is to be expected, because our current financial system was designed for a non-globalised world of finance that no longer exists.
THIS IS WHERE Stiglitz and his fellow commissioners come in. The commission, which issued a preliminary report a few weeks before the G20 meeting, divided its recommendations into two groups: immediate measures, and longer-term systemic reforms. As an immediate response, the commission proposed that $250 billion of SDRs be issued through the IMF for each year the crisis persists. It proposed that rich countries move quickly to donate 1 per cent of their own domestic stimulus packages to low-income countries, to be applied there for similar purposes, and that regional liquidity arrangements such as the Chiang Mai initiative in East Asia be used to inject extra funds into regional economies. The commission also recommended establishing a new credit facility without conditions attached, and proposed an international panel on economic policy comprised of government representatives, leading academics and others, similar to the Intergovernmental Panel on Climate Change, to advise on coherent international responses to the global economy.
As we’ve seen, the G20 adopted one of these recommendations – the $250 billion in SDRs – but only as a once-off measure. The proposals that would have been an immediate help to developing countries or would have significantly reshaped global economic relations were not taken up in London.The Stiglitz Commission tackles the longer-term systemic reform task with many recommendations. New financial mechanisms should be introduced to mitigate risk, including international institutions lending in local currencies. The governance of the IMF and World Bank should be reformed to make them responsive to the needs of their clients, the developing countries. Highly indebted countries should be given a moratorium or partial cancellation of debt, and new mechanisms for handling sovereign debt restructuring, such as a sovereign bankruptcy court, should be introduced. A Global Economic Coordination Council is needed at the level of the UN General Assembly and Security Council, meeting annually, as well as a Global Financial Regulator and a Global Competition Regulator. And, perhaps most controversially, the US dollar should be replaced as the global reserve currency by something like a greatly expanded SDR regime.
The first four of these proposals are the most do-able. There are strong reasons why all reschedulings of rich country to poor country loans through the Paris Club (a group made up of the financial officials of the world’s nineteen richest countries) should be in local currency, as should all lending by international financial institutions such as the IMF and World Bank. Our current system places the currency risk on the party least able to bear it, the borrower. This is nuts. Lending in local currency puts the currency risk on those best able to bear it and hedge against it, the lenders.
Likewise there are strong arguments for debt relief for more countries than currently receive it, and for an orderly, rules-based approach to sovereign insolvencies.
The remaining recommendations in my summary of the Stiglitz recommendations are far more controversial. To be effective, global financial and competition regulatory authorities are going to require real power to make rules, which raises all sorts of sovereignty concerns. And the recommendation for a new reserve currency made me wince. Not because it is silly; in fact, it is sensible, essential and probably inevitable. But one suspects the United States will die in a ditch to try and keep the dollar as the global reserve currency. So this recommendation alone is likely to attract the full force of US opposition to the report.
A new reserve currency is almost inevitable because the current arrangement is leading to ever greater volatility, and because China is fed up with it. Premier Wen Jiabao has said he is worried that China holds most of its reserves in dollars, and well he might be, as the decline of the dollar in recent years has cost China a fortune. Twice this year the governor of China’s central bank has called for a new reserve currency regime focused on special drawing rights. China Inc doesn’t make such comments without careful consideration, and it is hard at work researching alternatives.
The Stiglitz Commission may have been better off analysing why the move to a new reserve currency is highly likely and highlighting the benefits of an orderly transition and the potentially devastating effects of China and other countries dumping their dollar-denominated bonds. The report presents the sound technocratic arguments for change, but giving the practical reasons to seek to manage this process may have engendered more listening, and less opposition, in Washington.
But this is just one criticism. Overall the Stiglitz Commission report is informed by a different type of thinking than that which brought us the global financial crisis. As Joseph Stiglitz wrote earlier this year, “Financial markets are not an end in themselves, but a means: they are supposed to perform certain vital functions which enable the real economy to be more productive: (a) mobilising savings, (b) allocating capital, and (c) managing risk.” The financial crisis was a direct result of treating the creation of financial products as an end in itself – as a valuable driver of economic growth independent of the products’ effects.
Stiglitz believes a financial sector exists to provide capital, a necessary input into the productive process. Just like telecommunications, electricity and roads, a financial system is an important piece of infrastructure. There’s nothing new in this thinking. Everyone thought this way thirty years ago. It is just that many people forgot it. More fundamentally, one gets the impression that Stiglitz believes economies exist to advance societies, rather than societies to advance economies. Thus he approaches the issues from a framework quite different to that of the nations that shaped the G20 response to the GFC.
We have a national history of going All the Way with foreign ideas. This time our government has committed itself fully to the G20’s response to the crisis. In doing so we have missed a major opportunity to promote the only sort of thinking that will stop recurrent financial crises. The United States is sufficiently grown up to value a friend that has its own mind. We no longer need to play follow the leader. Our financial interests are profoundly different from those of the United States and Europe. Our primary interest lies in a fair and functional global financial system. The Australian people have a right to expect bigger and better thinking on these issues from our leaders. The next G20 meeting, late next month in Pittsburgh, would be a great place to start. •
Ross Buckley is Professor of International Financial Law at the University of New South Wales.
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