Of Elvis fans and economists

By Will Inboden

Here in London, as I write, the G-20 proceedings have recently ended, and local attention remains split essentially across three fixations:

• 1) The substance of the G-20 summit itself, and the question of whether the actions that came out of it will be at all meaningful (with many competing meanings of "meaningful");
• 2) The domestic political question of how the G-20 will affect Prime Minister Gordon Brown’s standing and electoral prospects;
• 3) A somewhat morbid but nearly irresistible voyeurism around the mind-boggling array of protests, protestors, counter-protests, and riot police.

On #1, the emerging narrative of the inchoate Merkel-Sarkozy pro-regulation/anti-stimulus alliance against the Obama-Brown pro-stimulus camp was intriguing as political sideshow, but unsettling both in terms of economics and geopolitics, with one ironic by-product being the creation of even more maneuvering room for China and Russia to position themselves as global leaders on economic policy. Given the alternatives, perhaps the "best" outcome was the sort of anodyne statement that failed all of these tests, which is what we got, seriously sweetened with $1 trillion in pledges to the IMF.

On #2, April is a pivotal month for Brown, bracketed as it is by the G-20 at the beginning and the unveiling of his government’s budget at the end of the month. Early returns seem to regard Brown’s meeting and press conference with President Obama on Wednesday as a success and a much-needed boost, though given the painful optics from their first meeting last month, the bar of expectations was set very low. 

On #3, mindful of reports that some protestors might throw eggs or target spray paint at business attire-wearing capitalists, I wore an old suit just in case of any uncivil encounters with the agitators down the street – but thankfully it was a quiet walk to the office.

Meanwhile, many voices (including my Shadow colleagues Philip Zelikow and Phil Levy) have rightfully decried the global lurch towards protectionism, exemplified by the 17 leading nations that have adopted protectionist measures just months (sometimes even days) after pledging not to at the last G-20 summit in November. The pro-free trade and anti-protectionism rhetoric from yesterday’s G-20 statements was to be expected, but trade policy embodies the wisdom of watching what nations do rather than what they say. It is doubtful that "naming and shaming" violators will be sufficient.

So Wednesday’s release of a letter defending free trade and warning against protectionism, signed by over 2,000 economists (and a number of non-economists as well, including yours truly) will hopefully continue to speak to the G-20 leaders even – especially – as they return to their home countries and face fierce domestic pressures otherwise. Even allowing that group letters signed by economists don’t automatically equate with wisdom (for example, the notorious example of the 364 economists who denounced Thatcher’s economic policies in 1981), this letter’s message deserves to be heeded. 

While Norman Angell remains the paragon of benighted optimism that economic integration will obviate military conflict, the 1930s offer the ominous counter-warning that protectionism can accelerate the risk of war. Or to take a lighter comparison, if 50 million Elvis Fans Can’t Be Wrong, then surely 2,000 economists can’t be wrong either?