G-20: Governments are “Growth” Magicians
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.
Since governments want to fight “climate change” (there is no point in fighting “global warming” anymore, since it has stopped dead in its tracks more than 18 years ago), they are bound to create some of that magical growth by wasting scarce resources on alternative energy subsidies. It should be obvious that such investment is wasteful – if that were not the case, it would not need to be subsidized (Germany’s citizens have seen their electricity bills soar in the course of the rigorous implementation of the “green energy” boondoggle in that country). However, it will register as growth in the GDP accounts, just as numerous housing bubbles around the world looked like growth until they blew up in 2008.
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.”
