By Pater Tenebrarum at Acting Man blog
The G-20 met in Brisbane again this weekend for a shrimp-fest at reportedly considerable cost to tax payers (it cost more than $400 million and shut down an entire city for the best part of a week). What did the meeting achieve? According to the communique, it will achieve miracles. Not only is there going to be an intensification of the fight against the non-problem of “climate change” (as if the climate cared what we do or don’t do), but governments will “create economic growth” – allegedly $2 trillion worth of it over the next five years.
Since this figure refers to global GDP it can of course be achieved, mainly because GDP is a very poor measure of growth. All sorts of activities that really make us poorer are counted as “growth” – all that counts for the purposes of GDP calculation is “spending”, no matter what the spending entails or who actually does the spending. The Soviet Union had “growth” too – in fact it reported plenty of it. It even grew while millions died in famines during the collectivization drive. Western intellectuals were duly impressed by Stalin, who seemingly demonstrated the superiority of communism over capitalism in the 1930s. People in the Soviet Union were even paid in something that was called money, but there was very little they could actually buy with it.
All this government intervention-induced growth should perhaps be called “growth at a price” – it is a bit like buying $1 bills with $5 bills. According to the AP, the G-20 want to create more jobs specifically for women as well (by means of quotas? They didn’t say), but it is actually not necessary to plan specifically for that, at least not in the industrialized nations.
As the real incomes of the middle to lower strata of society in the developed world have plunged over the past few decades of ever more extensive central bank intervention in the market economy, the times when a single breadwinner could hope to shelter, feed and clothe a family are long past.
In that sense it is quite ironic that the G-20 have announced a new “war on poverty” in the same breath. The last one worked real well (announced by Lyndon B. Johnson in the US, and judging from its results, a failure so total, it could easily serve as the very definition of the term failure in dictionaries).
As soon as the US “war on poverty” was declared, poverty rates promptly stopped falling – via cepr.org.
As the AP reports:
“Under pressure to jolt the lethargic world economy back to life, leaders of G-20 nations on Sunday finalized a plan to boost global GDP by more than $2 trillion over five years. The fanfare, however, was overshadowed by tensions between Russian President Vladimir Putin and Western leaders.
The communique from the Brisbane summit of Group of 20 wealthy and emerging nations revealed that the plan for jump-starting growth includes investing in infrastructure, increasing trade and the creation of a global infrastructure hub that would help match potential investors with projects.
Leaders also aim to reduce the gap between male and female participation in the workforce by 25 percent by 2025, saying that would put 100 million more women in employment and reduce poverty.
Speaking at the end of the summit, Australia’s Prime Minister Tony Abbott said countries will hold each other to account by monitoring implementation of their commitments to boost growth.
The G-20, criticized in recent years as being all talk and no action, was urged to deliver measurable results this year. Perhaps in response, the group said the International Monetary Fund and OECD will also play a role in monitoring progress and estimating the economic benefits of the growth plan.
IMF managing director Christine Lagarde dismissed concerns that countries might fudge their growth figures, saying that while the monitoring isn’t scientific, it’s a thorough and detailed process. “We’ll make sure they keep their feet to the fire,” she said.”
Many of these plans certainly sound like they are bound to increase global debt levels further and waste even more scare capital. The sole exception is the idea of easing international trade restrictions, but since trade negotiations tend to take many years, we wonder what exactly is supposed to happen over the next five years in that respect – presumably not a whole lot, but we will try to keep an open mind about it.
Investors need a hub to be “matched with projects”? We wonder how investors have found stuff they wanted to invest in up until now. Were they groping in the dark?
900 Plans Become 800 Plans …
The articles in the mainstream press are very short on details, but we know that the G-20 had something like “900 plans” when they met last time. Apparently that has now shrunk to “more than 800”:
“The G-20 communique says if the $2 trillion initiative is fully implemented, it will lift global GDP by 2.1 percent above expected levels by 2018 and create millions of jobs. Abbott said countries agreed on more than 800 new measures to spur the global economy, which the IMF describes as facing a “new mediocre.”
“People right around the world are going to be better off,” he said. But the G-20, which represents around 85 percent of the global economy, faces an uphill struggle to implement its plan after international agencies downgraded their global growth forecasts in recent months. Growth in China and Japan has weakened and Europe is teetering on the brink of another recession.
And experts warned that the countries would need to comply with every one of the 800 measures to achieve the 2.1 percent target, a virtually impossible task, given the difficulties they will inevitably face in pushing some of the policies through in their home countries.
“There are two questions: whether the specifics are credible and whether the political backing by leaders is convincing,” said Thomas Bernes, an analyst with the Center for International Governance Innovation, a Canadian-based think-thank.”
Abbott said the group had been most productive on the issue of trade, calling it the “key driver of growth.” The leaders adopted reforms to streamline customs procedures and reduce regulatory burdens.
Again, the decision to “reduce regulatory burdens” in trade is to be welcomed, but it remains to be seen if it is actually implemented. The question of payment for the various infrastructure plans is not addressed above, but presumably this will involve a lot of government spending. As Ludwig von Mises noted to this point:
“At the bottom of the interventionist argument there is always the idea that the government or the state is an entity outside and above the social process of production, that it owns something which is not derived from taxing its subjects, and that it can spend this mythical something for definite purposes. This is the Santa Claus fable raised by Lord Keynes to the dignity of an economic doctrine and enthusiastically endorsed by all those who expect personal advantage from government spending. As against these popular fallacies there is need to emphasize the truism that a government can spend or invest only what it takes away from its citizens and that its additional spending and investment curtails the citizens’ spending and investment to the full extent of its quantity.”
Elsewhere we read that they plan to “tackle climate change and crack down on tax avoidance.” The former is a Don Qixote-like fight against windmills, except that it is several orders of magnitudes more expensive and a lot less entertaining. The latter can only be done by erasing what pitiful remains of financial privacy still exist and by closing the few loopholes that still allow capitalism to breathe. Neither will do anything for “growth” in the sense of improving anyone’s living standards (political cronies excepted of course).
So long, and thanks for all the fish…it took more than $400 million for this bunch to meet and issue another meaningless communique at the end. We can assure you we can throw a party for 20 people for slightly less than that.
(Screenshot via Gateway House)
Main Course: Putin Bashing
As mentioned by the AP above, the summit was “overshadowed” by various government leaders (with the notable exception of those representing the bulk of the world’s population, i.e., the BRICs) competing with each other who could beat his breasts more forcefully over Vlad the Terrible from Russia. The latter let it be known that he would not sit idly by while Kiev’s military resumed shooting the Eastern Ukraine to rubble and complained, not unreasonably, of the fact that the Western press is as one-sided as the Russian press in its reporting on events there. Surprisingly though, the Western mainstream press for once actually did report on the fact that Eastern Ukrainian citizens blame no-one but Kiev for their misery – but of course, they are uneducated sub-humans that should best be nuked, so what do they know? The lack of education of the people living in the war zone is also demonstrated by the fact that the estimated 900,000 or so Eastern Ukrainian citizens who have fled the scene almost to a man seemed unable to read a map. We must conclude this from the fact that nearly all of them fled to Russia into the arms of evil Vlad instead of fleeing into the warm embrace of democratic Western Ukraine.
As Mish points out, the government in Kiev has just decided to “punish the separatists” by ceasing payments to hospitals, schools and pensioners, as well as effectively shutting down all banks in the Eastern Ukraine. Since the government is in clear violation of the European charter on human rights with the latter decision, it will – in due time – ask for an exception to be made, or rather, it will simply “keep the EU informed” (quote: “Poroshenko asked the government Saturday to keep the Council of Europe informed on Kiev being forced to take steps violating the European Convention for the Protection of Human Rights in Donbas”). Who can doubt that the EU will agree that this is “regrettable, but necessary”? After all, as we keep hearing, all those guys adorned with swastikas and SS-insignia who have been raping, pillaging and murdering their way through the civilian population in the East are all just “harmless nationalists” and as we all know, boys will be boys! To be sure, the separatists are not exactly treating their perceived enemies with kid gloves either (Amnesty International has issued reports on crimes committed by both sides in the conflict).
Just as long as we’re all clear on who the evil guy is:
David Cameron issued a fresh warning to Russia over Ukraine as he prepared for a showdown with Vladimir Putin at the G20 summit on Saturday. The Prime Minister said that further sanctions would be slapped on Moscow if it continued to “bully” the former Soviet bloc state. In some of his toughest words to date, he likened Vladimir Putin’s behaviour to Adolf Hitler’s in the build up to the Second World War. Mr Cameron said Russia’s aggression towards Ukraine was “unacceptable”.
Putler! Case closed!
Putin, as imagined by David Cameron
Cameron, as imagined by Steve Bell
Meanwhile, the evil dude, apart from being clear on the fact that he won’t let the Ukrainian army/volunteer battalions go on another rampage – even while steadfastly denying any Russian involvement in the Ukraine – inter alia had this to say:
“Russia does not intend to demand early repayment of $3 billion which it lent to Ukraine last year, President Vladimir Putin said in an interview with German TV channel ARD, a transcript of which was released by the Kremlin on Saturday.
“If we do it (demand repayment) the whole financial system will collapse. We have already decided that we will not do it. We do not want to aggravate the situation,” Putin said. “We want Ukraine to get on its feet at last.”
ARD is broadcasting some comments on Saturday and the full interview on Sunday. Under the terms of the loan, which Russian extended last December in the form of a purchase of Ukrainian Eurobonds, Russia can demand early repayment if Ukraine’s debt exceeds 60 percent of its gross domestic product.
Putin also said that Russia’s state-owned Gazprombank had the formal right to demand early repayment of $3.2 billion loans to Ukrainian energy company Naftogaz, but his remarks implied that it also would not do so.
Obviously, it is impossible to have a dialogue with someone dripping with such meanness. More sanctions will surely do the trick!
As an aside to all this, the above is certainly not meant to declare Putin a saint. He quite clearly is not exactly a model democrat, and many of his domestic policies are positively cringe-worthy. However, it should be clear that he has been put into a very difficult situation. Western politicians seem to imagine Putin is a dictator with limitless powers who isn’t subject to domestic political pressures. There are however hawks in Russia too, who constantly accuse Putin of “leaving Ukraine’s Russian population in the lurch”. Among those using the opportunity to continually attack Putin for being “too soft” is Gennady Zyuganov, the leader of Russia’s communist party (the second-strongest force in the Duma).
It seems to us though that apart from seizing Crimea so as to ensure the port of Sevastopol remains in Russian hands, Putin is open to discussion – as far as we can tell he is not averse to actually playing nice, as long as he can be reasonably sure that what his government regards as its legitimate security concerns are addressed (evidently, this would include some guarantee that NATO doesn’t continue its encirclement of Russia and the adoption of a federalized structure in the Ukraine). What we are saying is: from the evidence, the Western approach is aligned with Kiev’s view that the separatists must surrender without condition, and that Russia has no legitimate interests in the region except those “allowed” it by the West. The problem is that this approach is absolutely certain not to produce the desired results – on the contrary, it is likely to make the situation even worse.
If the G-20 were to meet to discuss deregulation of the economy, lowering of taxes and how to shrink the Leviathan State, the meetings may actually be good for something. Since very little has been on the agenda in this respect (trade being a small exception), it seems the meetings are mainly a waste of effort and money.