ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MADELEINE BRAND, host:
And I'm Madeleine Brand.
For many of the leaders gathered at the U.N. in New York this week, their next stop is Pittsburgh. The G-20 meets there on Thursday and Friday. The G-20 consists of the big, industrial countries plus the biggest developing countries. The group previously met under crisis circumstances last December. It was trying to fashion an emergency response to the global financial downturn.
Now, as NPR's John Ydstie reports, this week's focus is ensuring long-term stability.
JOHN YDSTIE: At the top of the Pittsburgh summit agenda is an attempt to correct the mistakes that led to the worst economic crisis since the Great Depression. Among them, a failure of regulation. Most of the headlines in the run-up to the meeting have involved plans to rein in the huge salaries and bonuses paid to bankers and traders.
It's a cause that resonates in every country, says Ted Truman of the Peterson Institute for International Economics.
Dr. TED TRUMAN (Senior Fellow, Peterson Institute for International Economics): Every political leader and many business leaders, for that matter, have declared themselves as outraged. And it plays well in the political process.
(Post-broadcast correction: President Bush's aide at the December G-20 summit was incorrectly identified as Dan Prince. His name is Dan Price.)
YDSTIE: France's President Sarkozy has proposed capping compensation for bankers. Dan Prince, who was President Bush's chief aide at the first G-20 summit last December, says Sarkozy's proposal is a distraction.
Mr. DAN PRICE: Fortunately, President Obama and his advisers are on record opposing that, and rightly so. So, as I say, the final risk is that there is the possibility as you run up to these things that something kind of hijacks the attention and becomes a distraction from the important work of reform.
YDSTIE: The leaders will likely endorse a set of compensation guidelines, without caps. They'll also likely address the issue of requiring banks to hold more capital. But for the Obama administration, the most important work of reform is addressing global imbalances that American officials believe set the stage for the crisis.
For instance, in the years before the financial meltdown, countries like the U.S. and Britain consumed too much and saved too little, while big export machines like China and Germany saved too much and didn't consume enough. Their huge savings surpluses helped create a huge pool of cheap money that led investors to take too much risk. The U.S. wants the G-20 countries to agree to get their savings and consumption in closer balance.
Nick Lardy of the Peterson Institute says for countries like China and Germany, that would mean increasing their consumption, and relying less on exports for growth. For the U.S., he says, it's basically the opposite.
Dr. NICK LARDY (Senior Fellow, Peterson Institute for International Economics): That we are going to be saving more, that the United States consumer is not going to be the globalist consumer of last resort.
YDSTIE: Many of the G-20's nations, including China, agree this rebalancing is a good idea in principle. But the Chinese are leery of signing up to meet specific targets, says Lardy.
Dr. LARDY: They've adopted a lot of policies that will help move them in that direction, but I don't think they really have the confidence yet that they'll be able to sustain that. So they're very reluctant to sign up for an international agreement that would constrain them, and might cause them to have to adopt policies that would lead to much slower growth.
YDSTIE: Ted Truman, a former Treasury official who helped the Obama administration prepare for the last G-20 summit, says that likely means no targets. Instead, he sees a role for the IMF keeping track of how the countries are doing. And then at future G-20 meetings, he sees the leaders reviewing their own progress.
Dr. TRUMAN: Discussing among themselves, well, we wrote this in September of 2009, and to what extent are we, either individually or collectively, living up to our commitments?
YDSTIE: A global framework that eliminates economic imbalances might create more stable global growth. But history suggests the odds of implementation are low. Similar frameworks have been tried several times before in the past 25 years, with little success.
John Ydstie, NPR News, Washington.