Learning to love the G20

Learning to love the G20

Reuters has a story up highlighting criticism of the G20 by European Central Bank board member Jörg Asmussen. He reportedly warned yesterday that the G20 might be running out of steam as a vehicle for economic and financial cooperation:

Asmussen, who attended the first G20 meeting in Berlin in 1999, working for the German finance ministry at the time, said the forum had lost momentum in recent years, also "to an important extent due to a waning sense of urgency".

"Global economic governance as we know it today seems to be well equipped to manage a global crisis. But it is less effective during normal times, which also lessens its ability to prevent future crises," Asmussen said in a speech in Berlin….

To revive the G20’s power, Asmussen said it needed to adopt a more transparent decision-making process and a more focused and concise operational agenda.

At least as quoted, Asmussen’s speech pretty much tracks the conventional wisdom on the G20: It played a useful role during the financial crisis but hasn’t done much of value since. Its meetings now produce vague and ambiguous declarations that consume chunks of senior policymaker time to little apparent effect (witness the confusion over whether the G20 actually criticized Japan’s currency moves).

This kind of criticism is fair enough as far as it goes. But it also implicitly devalues what is actually an extraordinary accomplishment: creating a global forum that can play a useful role during economic crises (even if it can’t do much beyond that). As Daniel Drezner has pointed out repeatedly on his blog, avoiding cataclysmic outcomes is a big deal:

Formal and informal global governance structures still perform some important tasks at preventing worst-case scenarios from metastasizing, be it in security or economics.  Call it "’good enough’ global governance" — it’s not a new world order or anything, but it’s also not as chaotic or dysfunctional as many pundits proclaim.

If G20 meetings and consultations during non-crisis periods  do nothing more than keep lines of communication open and the crisis machinery well oiled, that’s more than enough.