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Home > India > Business > Columnists > Guest Column > D Ravi Kanth



The G-20's empty cupboard

March 31, 2009

Jobs, justice and climate," is the war cry of thousands protesting to G-20 leaders who will congregate in London this week. It is easy to dismiss them as anarchists and anti-globalisers, but difficult to address their hopes for immediate survival as they lose their jobs in the global meltdown.

Surely they cannot be asked to wait patiently with empty stomachs till the return of normalcy since they were not responsible for the problems in the global financial markets which have brought the real economy to its knees.

The global economic order may well survive this make-or-break moment, but its continuation is replete with challenges such as financial instability, climate change and energy shortages, massive poverty and inequality, and myriad security challenges. "I mean, laissez-faire had its day", the embattled British Prime Minister Gordon Brown told The Guardian, suggesting that the Washington Consensus that fuelled financial and trade liberalisation is inappropriate now.

"Unless they (the leaders at London gathering) do something for the developing world there will be serious collapse in that part of the world," warns George Soros, the guru of hedge funds and currency manipulations.

Thanks to central bankers like Y V Reddy, many developing countries did not fall prey to the forced doses of market-fundamentalism. Yet, they are now being ravaged by the "gigantic casino" which grew over the last 30 years to sustain the bubble economy.

In such a situation, leaders are either falling like a house of cards, as in the case of Hungary and the Czech Republic last week, or are continuing with policies based on their domestic political agendas that are being likened to "the road to hell".

Therefore, it is somewhat naive to expect either any radical reform at a time when many countries are on fire or a coordinated global plan to revive the tottering international economy. Yes, there would be some results in the form of enhanced regulation of the financial markets as well as more funds for the IMF to help poor countries and so on.

Ironically, this is also a propitious moment for multilateral organisations and their chiefs - the United Nations, the World Bank, the IMF, the World Trade Organization, and the International Labour Organization among others - to showcase their respective agendas. Though some of these venerable chiefs are responsible for the problems they had created in their previous avatars, they now have solutions too.

Consider, for example, two specific reports issued last week from Geneva. The ILO, which is one of the oldest international bodies, issued a damning report on the financial crisis and its implications on jobs the world over. Worried over the retrenchment of workers and resulting social unrest, the ILO said the G-20 leaders must agree on a "global jobs pact" to ensure that jobs and workers are not treated like scavengers.

While capital is showered with more benefits despite the unstoppable inferno it caused, labour and wages are being ruthlessly attacked, the ILO complained.

In sharp contrast, the WTO's 46-page report chronicled the slump in the global trade by 9 per cent this year and the rising spectre of trade restrictions in the arena of goods and also services. It provided an account of proliferating trade-restrictive measures, including measures contained in stimulus packages to boost the aggregate demand.

Though the report said it was not a "judgement" on the measures adopted by its members, there was subtle finger-pointing as well as some blatant sucking-up to leaders like Brazilian President Luiz In�cio Lula da Silva and US President Barack Obama for their commitment to keep trade open and free.

Besides, it said consumers could gain as much as $150 billion if the Doha agreement on cutting duties on agriculture and industrial goods is agreed to by G-20 leaders. Even though there is no consensus among economists on the likely gains and losses to countries from the Doha trade pact, the WTO's French director general claimed that consumers will gain "over $150 billion" if the Doha deal is signed and sealed now.

The moot issue is whether the consumers have money to spend at a time when they have no jobs and income. Starving consumers must "eat cake" now since they have "no bread", in quite the same way that happened during the French Revolution!


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