Those who thought that Dr Goebbels came to an end on a stretch of waste ground in Berlin in 1945 have been forced to think again. The piece of theatre that concluded in London on Thursday was one of the great confidence tricks of our lifetimes. Just getting the 20 most important heads of government on the planet together in one place and not being unpleasant about each other was, we must concede, something of an achievement. But it won't make a blind bit of difference to the world's economy. Nor, I imagine, will it have any effect on the result of the next general election. In the months ahead, as thousands more people go on to the dole every week, more businesses go under and confidence continues to seep out of a system wrecked by politicians, few will link in their minds the words "Gordon Brown" and "triumph". I have long thought that our Prime Minister was around elevenpence ha'penny to the shilling. His fantasy press conference at the end of the G20, with his grandiloquent (and preposterous) claim to have founded a "new world order", confirmed it. – UK Telegraph
Dominant Social Theme: The leaders can't lead.
Free-Market Analysis: We've stated in several articles now that the G20 meetings would be, and was, a bust – despite the ambitions of the political players – and that nothing much would get accomplished. We return to it now, and probably not for the last time, because so much has been written about the meetings and so much of the information is questionable. The great triumphs of the G20, trumpeted around the world, were more propaganda than practical reality in our opinion. In fact, the funds for the International Monetary Fund were already in the pipeline, the regulatory accomplishments supposedly hammered out in last week still need a good deal more work before any implementing can begin, and the international regulator that Nicolas Sarkozy was so steamed about never materialized.
The main accomplishments of the G20, according to reports, were to boost IMF lending capacity to developing countries, agree on sanctions for blacklisted tax havens and commit to regulate the biggest hedge funds and other financial institutions. But all of these agreements still have to be IMPLEMENTED. Were the world an easier place, and the financial crisis less biting, we would be (as a free-market paper) more alarmed. As it is, the devil is in the details. Here's what a recent analysis in the Wall Street Journal had to say:
The leaders concluded a summit by turning especially to the International Monetary Fund to warn of impending problems and assess whether G-20 countries are keeping their promises on regulation and fiscal stimulus to ease the impact of the recession. Those are tasks beyond the IMF's traditional role, and may require the fund to show more spine in dealing with its largest members than it has managed in the past. The leaders agreed to quadruple the financial capacity of the IMF with a $1 trillion commitment. The G-20 also worked to clamp down on tax havens and to tighten financial regulations, bringing large hedge funds and financial institutions into the global regulatory net. The G-20 wants to register hedge funds with domestic regulators, disclose how much they have borrowed and to make sure there is effective oversight, even if the fund operates across borders. The measures may ease some pain from the economic crisis. But many declarations were of principles that have to be followed up — some at another G-20 meeting set for later this year.
A follow-up G20 meeting may reveal more about how the vague nostrums developed at this meeting will be carried forth. Bear in mind, however, that ultimately it will be up to each nation to enforce regulations as it sees fit. Until Western leaders can fully agree on an international regulator whose word is law, it is an open question how the most aggressive parts of a new world order will be implemented.
This is not of course for lack of trying. We do happen to believe what is obvious: That world leaders want as much centralization as they can get. We just don't think it is going to happen very fast and we even happen to think that the Internet may have put a fatal kink in their plans to generate this sort of aggressive centralization any time soon. We don't dismiss it of course. A lot of damage can be done when powerful people set their collective mind to accomplishing something, no matter how wrongheaded.
And of course, the G20 is a big deal, in terms of the progress of a world state. As faithful readers know, we spent plenty of time charting the propaganda that led up to the big meeting. We showed our readers how the IMF was positioning itself for more power. And how other countries were jockeying to help it create a new currency (see other article, this issue.) But propaganda does not necessarily generate credibility, nor a full gamut of desired results. Understanding the mechanism that was supposed to produce a successful G20 and proclaiming the G20 a success (in terms of the evolution of global government) are two different things.
Why does it have to be a success, anyway? To be perfectly honest, we happen to believe the participants are not so concerned either about the success of the summit. Certainly they are concerned with the APPEARANCE of success. But many of these leaders, in our opinion, aren't really all that interested in helping out the world economy. For one thing, the economic crisis is giving them considerable attention and clout. If they solve it quickly (not that they can), they'll lose leverage. Doesn't make much sense, and these are sensible and clever (if cynical) people. They are failing upward, in our opinion, with the best of them. According to the Wall Street Journal, the G20 failed on numerous fronts. They "didn't agree on a fiscal-stimulus target, failed to find a solution for getting banks to lend again, [and didn't arrive at] any enforceable agreement against protectionism or much support for Doha trade talks."
So we are left with a vague determination to punish tax havens, an idea that hedge funds should register and proclaim their trades and a commitment to keep pouring funds into the dysfunctional IMF. In fact, it is a testament to a certain bankruptcy of imagination of the G20 that the best they could come up with is resolute backing for an agency (the IMF) that is truly hated by a large portion of the globe. This ranks right up there with the determination of the European Union to make Ireland vote again on a treaty to give the EU more power. The EU may be able to muscle Ireland into a "successful" revote but who in their right mind believes this will provide credible cover for an expansion of EU authority?
Six or seven years ago (been a long time) the editors of the Daily Bell made the point in a series of articles elsewhere that the Internet was like the Gutenberg press which effectively undermined much of the authoritarian pillars of medieval Europe. It took about 100 years, but after that time, once people could read what the Bible really said (and other books as well) there was not much to salvage. The Catholic Church virtually collapsed and along with it the royal arrangements that were supposedly backed by divinity. The great families of Europe retreated and world power was rearranged.
We don't think the world will have to wait that long for a communications revolution to take effect this time round. Those who want to see a closer and better regulated world will continue to make the attempt. But we happen to believe it may be too late, already, for it to be truly effective or efficient. After World War II there was a general consensus in the West about what worked and what didn't and how to build effective societies — not that they were correct. Cut to the present. Does anyone believe that the IMF is the world's future financial policeman? Or that the United Nations is a credible repository of world government? Or that the European Union has the backing of its manifold nations to build a United States of Europe.
The big idea of the monetary elite is to seek an ever closer union worldwide. But the Internet is likely fracturing the credibility of the participants. Strides will continue to be made, but the ground is crumbling, in our humble opinion. There is a vast free-market movement growing in America. Many in Europe have no affection for the monstrosity sprawling in Brussels. There is no doubt that the structure of a new world order can continue to be imposed — and the Internet continually controlled. But there must be true believers, and a lot of them — and that is the fundamental issue. Control imposed from the top doesn't really work in the short or long term. Without belief, there is considerable doubt as to whether a given political structure or movement can stick. Here's a litmus test: When was the last time you heard anyone spontaneously speak up for global government?