The Reconstruction
To us proles, the G-20 summit ended with a hearty sense of accomplishment among the "20", but few clear results. Simon Johnson, former chief economist at the IMF disagrees and says the biggest change is the one no one is talking about: The Last European: Why the G-20 Was a Success
On the highest-profile issues of financial regulation, fiscal stimulus and monetary policy, there was little progress. But on the International Monetary Fund, the American side engineered a breakthrough — not just in terms of how much money the fund can lend to countries, but also in terms of rebuilding its legitimacy and making it more effective as the world’s only global crisis-fighting organization......The managing director of the I.M.F. is very powerful, with a great deal of authority and discretion, and has always been a European — in effect, appointed by European governments to represent their interests. The G-20 made it clear that this will stop — the communiqué says the selection process will be open, transparent and competitive. But really this is code for saying they will pick someone from an emerging-market country, such as India or Brazil (and there are some excellent candidates). The right person in this job could have a huge positive effect on the I.M.F.’s legitimacy.
Could be. I would much rather have international systems speaking with an Asian voice, rather than a hide-bound European one (although I will miss the sex and money scandals that flow from Old Europe's internationalists). But what is clear is the persistence of the old order. With markets in chaos and the flow of money frozen both by a loss of equity and a loss of trust, the world will be leaning even more heavily on international organizations like the IMF and the World Bank, relics of the post-WW2 era.
Gordon Brown and other progressives can say there is a "new world order," and declare an end to the "Washington consensus" to their hearts' content. But the US and the emerging economies in Asia have impliedly chosen to leave Europe out of any such change, and will persist with the system as is.
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