Why Is Obama at the G-20?
In dark times, as storm clouds gather over Syria and nations align themselves on either side of the conflict (or fall by the wayside), global leaders have gathered in Saint Petersburg, Russia, to discuss … the global taxation of multinational corporations? The deleterious effects of the potential tapering of the U.S. Federal Reserve’s quantitative easing ...
In dark times, as storm clouds gather over Syria and nations align themselves on either side of the conflict (or fall by the wayside), global leaders have gathered in Saint Petersburg, Russia, to discuss ... the global taxation of multinational corporations? The deleterious effects of the potential tapering of the U.S. Federal Reserve's quantitative easing policy?
In dark times, as storm clouds gather over Syria and nations align themselves on either side of the conflict (or fall by the wayside), global leaders have gathered in Saint Petersburg, Russia, to discuss … the global taxation of multinational corporations? The deleterious effects of the potential tapering of the U.S. Federal Reserve’s quantitative easing policy?
This seems a bit absurd. Far be it from me to decry a good conversation about the global economy, but the microeconomic concept of opportunity cost comes into play here. Is this a good use of President Obama’s time?
Consider some of the reasons one might support attendance:
1. A consequential agenda. Issues such as international taxation, monetary coordination, and global growth are important. They are discussed at academic conferences all the time. The question is whether much more will be achieved by having world leaders around the table. I addressed the question of the G-20’s ineffectual efforts on growth not long ago.
On monetary coordination, developing nations such as India, Indonesia, Brazil, and South Africa are rightly concerned about their plunging currencies, as money rushes out of emerging markets and back toward the developed world. It would aid them in their efforts if the major developed-world central banks were to loosen their monetary policy (cut rates, postpone tapering). But they won’t. The major central banks appear singularly focused on their domestic mandates. In the United States, given the independence of the Federal Reserve, there’s not even much Barack Obama could do about tapering, even if he were so inclined, at least until he appoints Chairman Ben Bernanke’s successor.
Nor does global tax coordination seem much more promising. In the United States, talk of tax reform has foundered on questions of what will happen with the revenue. It also waits far back in line, behind a full agenda before the U.S. Congress. The marginal impact of a G-20 communiqué on the debate is likely to be near zero. The economic agenda does not seem to demand the president’s presence.
2. Respect for multilateral institutions. Until the last couple of weeks, this would have seemed a serious argument. In the context of Syria’s use of chemical weapons, however, the administration has taken a decidedly pragmatic, rather than dutiful, approach to the United Nations. If Russia is sure to veto a Security Council resolution condemning Syria, why even bother? That makes a certain degree of sense, but why should such pragmatism not extend to the G-20? What will it really accomplish along these lines? In each case, if there is no cost to observing diplomatic niceties, then we should clearly do so. But what if the cost is high?
3. Basic manners. Given that the Russians were so nice as to invite us, it would be rude to decline at the last minute.
4. It’s all about Syria anyway. Even though the G-20 agenda may nominally be filled with economic topics, the gathering still provides an opportunity to coordinate with other leaders on the Middle East.
The problem with this argument is that there seems little room for further progress along these lines. Obama will not be holding bilateral discussions with either British Prime Minister David Cameron or Russian President Vladimir Putin. The French were already aligned. China warned that a strike against Syria would harm the global economy — unhelpful to the U.S. president’s cause, but at least bringing the discussion back to the nominal purpose of the gathering.
At best, Obama may leave the G-20 unscathed on the topic of Syria. At worst, he could be bruised by one of Putin’s throws.
So what is the opportunity cost of the president’s G-20 attendance? He is not home, persuading a skeptical public to back his plans for Syria. Shadow Government‘s Peter Feaver has repeatedly stressed the importance of civilian leaders building public support for a war effort. In a recent Pew poll, public opinion ran strongly against Syrian airstrikes, with 48 percent opposed and 29 percent in support (with 23 percent uncertain). The strongest opposition came from Democrats and independents, with Republicans less opposed.
For all the abuse it takes, Congress is usually responsive to the constituents its members represent. Early vote tallies signal problems in the House. The House leadership has offered the president support, but a spokesman for Speaker John Boehner stated: "All votes authorizing the use of military force are conscience votes for members, and passage will require direct, continuous engagement from the White House."
The impending congressional vote on authorizing the use of force against Syria has enormous implications for both U.S. standing in the world and the remainder of this president’s term. While Vice President Joe Biden and other aides can lobby lawmakers this week, it will be a difficult sell in the face of deep public skepticism. Obama is uniquely positioned to win over the public through persistent, reasoned argument. Except he’s in Russia.
Phil Levy is the chief economist at Flexport and a former senior economist for trade on the Council of Economic Advisers in the George W. Bush administration. Twitter: @philipilevy
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