Big Words From G-20, But How Much Action?
SCOTT SIMON, host:
Their first two G-20 summits, world leaders scrambled to rescue the global economy from the brink of depression. Yesterday in Pittsburgh, as they concluded their third gathering, they declared their efforts a success. In their final communiqué of their sketched-out plans to put the global economy on a more stable path.
NPR's John Ydstie reports.
JOHN YDSTIE: The two words in bullet point five of the leaders' communiqué was almost a sigh of relief. Referring to the extraordinary actions they took to rescue their economies, they simply said: It worked. In his post-summit news conference, President Obama added this…
President BARACK OBAMA: But because of the bold and coordinated action that we took, millions of jobs have been saved or created. The decline in output has been stopped, financial markets have come back to life, and we stopped the crisis from spreading further to the developing world.
YDSTIE: At this summit, the leaders focused mostly on reforming and stabilizing the global economy for the future, part of the roadmap for reform where guidelines aimed at eliminating compensation practices that encourage big risk-taking at financial institutions.
The leaders endorsed a ban on multi-year bonus guarantees, and even clawing back compensation if deals or investments go bad. There was less specific progress on boosting capital requirements for banks - their cushion against losses. The leaders urged banks to set aside more capital by the end of 2012, but put off coming up with specific figures until the end of next year.
The aim of reform is, as President Obama put it, to make the old boom and bust economy a thing of the past.
Pres. OBAMA: We can't grow complacent. We can't wait for a crisis to cooperate. That's why our new framework will allow each of us to assess the other's policies, to build consensus on reform and to ensure that global demand supports growth for all.
YDSTIE: As part of the new framework, the Obama administration hopes to see China and other big exporting countries boosting demand at home and exporting less, while the U.S. saves more and lives within its means.
There was concern China might not sign up for the new framework because it feared it might not grow fast enough if it had to depend more on internal growth instead of exports. But China signed on. One incentive may have been an endorsement by the leaders of a plan to give emerging economies - mostly China - a bigger voting share at the International Monetary Fund.
President Obama referred to that in his news conference.
Pres. OBAMA: We can no longer meet the challenges of the 21st century with 20th century approaches. And that's why the G-20 will take the lead in building a new approach to cooperation. To make our institutions reflect the reality of our times, we will shift more responsibility to emerging economies within the International Monetary Fund and give them a greater voice.
YDSTIE: Asked at his news conference what he would say to protestors in Pittsburgh who criticized the leaders for not doing enough for ordinary people, President Obama had this response…
Pres. OBAMA: Ironically, if they had been paying attention to what was taking place inside the summit itself, what they would have heard was a strong recognition from the most diverse collection of leaders in history that it is important to make sure that the market is working for ordinary people.
YDSTIE: In fact, at this summit there was an historic transfer of power to the developing world. In their final communiqué, the leaders declared: We designate the G-20 to be the premiere forum for our international economic cooperation. That is a significant concession from the rich countries that make up the G-8 and is one more indication that emerging nations, like China, India and Brazil, will play a greater role in steering the global economy.
John Ydstie, NPR News, Pittsburgh.