Just when we’d thought that the G-20 Summit of Big Swinging Economies had hit an impassable pothole, we received the electrifying news from Seoul that negotiators were inclined to agree on “more market-determined exchange-rate systems”—duh!—and on the creation of a guideline on sustainable current account imbalances in time for… the next G-20 meeting. Thank you, Baby Jesus, for this smoking hot procrastination. (Let the record show that this next meeting will be in Paris.)
Let us give thanks, also, for the working dinner, that great Asian institution: There’s nothing like kimchi to concentrate the mind—even as the Federal Reserve makes such concentration supremely difficult.
Mercifully, this year’s summiteers gathered on American Veterans Day, so the blather from Seoul was rightly relegated to a lower rung of attention. More compelling than Seoul, also (at least to our news programmers), was the story of the hulking luxury liner that had seized up, mid-ocean, and was being towed into port somewhere. At least that crippled, stagnant cruise ship, its passengers subsisting on emergency rations of Spam, serves as a coarse metaphor for the condition of our global economic system.
I did wonder, however, as desultory snippets came to us from the G-20 summit, why they didn’t skip the whole exercise this year. After all, was there anything President Obama could learn from Hu Jintao, or Hu from Angela Merkel, or Merkel from David Cameron, or Cameron from Manmohan Singh, that they didn’t know already?
Earlier this week, my son, all of 11 years old, asked me what the G-20 was. There was no artifice to the question, no intent to make his dad look foolish. I struggled to answer, and by the time I was deep in detail on how the G-20 is a self-appointed club of most (but not all) of the world’s leading economies, one which meets annually to reach some sort of consensus on how we can all get richer—pause, here, for “What’s ‘consensus’?”—the lad had lost interest. And who can blame him.
The reigning narrative has stayed unaltered for several months, save for some drama injected late in the script by the Federal Reserve’s decision to pump billions of dollars into the economy, sending Beijing, Berlin, and Brasilia—the three Bs, if you will, and three most unlikely bedfellows—into high monetary dudgeon.
For econo-geeks, there was also the titillating sideshow yesterday of Nouriel Roubini, the economist dubbed Doctor Doom, scolding Wolfgang Schauble, Germany’s finance minister, for calling this latest quantitative easing (referred to as “QE2”) “clueless.” In a riposte that will send a thrill up the legs of the quantitative-easing cognoscenti, Roubini said: “In my view it is not just going to be QE2. The Fed eventually is going to do QE3, QE4 and even QE5.” Take that, Wolfgang! Deutschland unter alles.
How do you stop Americans, in other words, from being cheeseburger-eating foreclosure monkeys?
But the fundamental story is still the same: China and Germany want us to keep the dollar from declining so we can buy more things from them. And we’d like somebody—anybody—to buy things from us, but we only make the McRib sandwich, and that, too, for a limited time. The big problem continues to be that the world’s largest consumer population is hurting because of low asset values, high unemployment, and wage stagnation. And the world’s largest producing populations are wondering what happened to all that “decoupling” talk from a year or two ago.
In truth, no one has come up with a solution to this imbalance between mercantilist-producers and binge-consumers other than to keep the engine running and hope for better times in the U.S. to serve as the rising tide that lifts all ships. So… couldn’t they have just hashed that out over email?
Of course, at bottom, this economic crisis should keep anthropologists and sociologists (not to mention historians of culture) as interested as it does the economists. This is because every corrective put forward by economists calls for a radical revamping of deep-rooted national culture and attitudes. After all, how do you cure Americans of their addiction to borrowing without a national psychological remake of epic proportions? How do you stop Americans, in other words, from being cheeseburger-eating foreclosure monkeys (as the French might put it)? Equally, how do you get Chinese people to consume more and save less without unraveling thousands of years of ingrained Confucian reflex? And how on earth do you get Germans to be less fixated on frugality and productivity (a phrase used by Uri Dadush of the Carnegie Endowment for International Peace) without asking them, in effect, to stop being German?
Underlying all of this is an inconvenient truth: The U.S. president is no longer the undisputed boss-man of the world. In fact, at gatherings such as the G-20, it is becoming increasingly hard to assert that he is even primus inter pares—first among equals. Given the insurrectionary mood in the global economic hierarchy, led by a hyper-assertive China and an exasperated Germany, an American president debilitated by political defeat at home and genuine policy incoherence in his own agenda cuts a pretty sorry figure.
Weak at home, and weak abroad: that’s Barack Obama’s lot. Maybe he’ll decide to give this G-20 thing a miss next year—and do it all by email.
Tunku Varadarajan is a national affairs correspondent and writer at large for The Daily Beast. He is also the Virginia Hobbs Carpenter Fellow in Journalism at Stanford's Hoover Institution and a professor at NYU's Stern Business School. He is a former assistant managing editor at The Wall Street Journal. (Follow him on Twitter here.)