Uncle Junior and the G-20
As the G-20 begins to converge in Washington, the Economist provides an excellent backgrounder. The more I think about this, the gloomier I tend to get, for two reasons. First, the basic conundrum is that governments would like to regulate financial institutions in such a way that private capital does not come up with a ...
As the G-20 begins to converge in Washington, the Economist provides an excellent backgrounder. The more I think about this, the gloomier I tend to get, for two reasons. First, the basic conundrum is that governments would like to regulate financial institutions in such a way that private capital does not come up with a way to evade those regulations and engage in the exact same activities with a lower regulatory cost. In the history of financial regulation, however, private capital has excelled at regulatory avoidance. Given the complexities of financial markets, I have every confidence that even if the G-20 were to agree on common standards, they would not be airtight. The loopholes that would be found would let the air out of any governance balloon that was inflated. Second, I'm beginning to wonder if the United States is the Junior Soprano of the G-20 summit. Let me -- or rather, Wikipedia -- explain. One of the highlights of the Sopranos was when Tony actually applied advice from his therapist to deal with a succession crisis in his business. What Tony did was to allow his uncle and rival, Junior Soprano, to technically became the boss. However, Tony had more control of the family -- he and the other capos would agree on actual policy, while using Junior as a front to distract law enforcement. The lame duck status of the Bush administration exaggerates the parallels, but the way in which this summit was arranged -- Sarkozy whispering into Bush's ear -- has the definite echo of Tony using Junior Soprano. Commenters are encouraged to post their expectations of what, if anything, will emerge from the G-20 meeting.
As the G-20 begins to converge in Washington, the Economist provides an excellent backgrounder. The more I think about this, the gloomier I tend to get, for two reasons. First, the basic conundrum is that governments would like to regulate financial institutions in such a way that private capital does not come up with a way to evade those regulations and engage in the exact same activities with a lower regulatory cost. In the history of financial regulation, however, private capital has excelled at regulatory avoidance. Given the complexities of financial markets, I have every confidence that even if the G-20 were to agree on common standards, they would not be airtight. The loopholes that would be found would let the air out of any governance balloon that was inflated. Second, I’m beginning to wonder if the United States is the Junior Soprano of the G-20 summit. Let me — or rather, Wikipedia — explain. One of the highlights of the Sopranos was when Tony actually applied advice from his therapist to deal with a succession crisis in his business. What Tony did was to allow his uncle and rival, Junior Soprano, to technically became the boss. However, Tony had more control of the family — he and the other capos would agree on actual policy, while using Junior as a front to distract law enforcement. The lame duck status of the Bush administration exaggerates the parallels, but the way in which this summit was arranged — Sarkozy whispering into Bush’s ear — has the definite echo of Tony using Junior Soprano. Commenters are encouraged to post their expectations of what, if anything, will emerge from the G-20 meeting.
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
More from Foreign Policy

Saudi-Iranian Détente Is a Wake-Up Call for America
The peace plan is a big deal—and it’s no accident that China brokered it.

The U.S.-Israel Relationship No Longer Makes Sense
If Israel and its supporters want the country to continue receiving U.S. largesse, they will need to come up with a new narrative.

Putin Is Trapped in the Sunk-Cost Fallacy of War
Moscow is grasping for meaning in a meaningless invasion.

How China’s Saudi-Iran Deal Can Serve U.S. Interests
And why there’s less to Beijing’s diplomatic breakthrough than meets the eye.