It wasn’t supposed to be this way.
Last November, I interviewed former British Prime Minister Gordon Brown about the state of the global economy and efforts he undertook during the financial crisis in 2008 and 2009. Among the goals set by Brown and others who made up the G-20 meeting in April 2009 were simply these: prevent a global depression, – check, implement global regulatory reforms – check for the most part and a growth pact among the leading economies – unchecked.
Hey, two out of three ain’t bad is it? Well, when the “coordinated growth pact” disintegrated into “every country and central bank for itself,” we have achieved in building a two legged stool. Back in September 2011, Brown wrote an article called “Divided We Fall” arguing for greater cooperation, particularly on the growth front. In it, he pointed to an IMF study that estimated a coordinated macroeconomic, trade and structural policy approach could achieve 5.5 percent higher GDP, create an additional 25 to 50 million jobs and pull 90 million people out of poverty.
Brown admitted that multinational coordination on growth has been a failure. In a January article for Reuters article titled “Stubborn national politics drag down the global economy” penned by Brown, he wrote that “big question is whether the momentum for growth can be sustained by national initiatives alone in the absence of global action or will instead melt away once again under the pressure of narrow, self-defeating national policies.”
Brown recognizes that “even the boldest of national initiatives may fail not because targeting growth is the wrong thing to do, but because there is no way to sustain the level of growth we need without better global coordination.”
He is correct, the current environment just like the crisis period, requires much greater international coordination and vision. But there appear to be few, if any signs of it.