LEE: The U.S. doesn't need 'advice' from economic grandees

G20 and G24 officials came to Washington offering unsolicited and unnecessary rebukes. Photo: AP Photo

WASHINGTON, October 13, 2013 – Ever had a dinner guest so obnoxious that you wanted to throw him or her out while hors d’oeuvres were still being served? We as a country were graced with just such guests last week. The first etiquette-challenged entourage was the G20’s group of finance officials, which met  together here in Washington. 

They ended two days of discussions by issuing a communiqué stating that the United States “needs to take urgent action to address short-term fiscal uncertainties.” Get a load of this. They come to our capital and tell us what we “need” to do. Could anyone actually not know that we’re having a budget fight? If you hadn’t heard, it’s only been on the news every ten seconds.

But not to be outdone, the G24, which shouldn’t be confused with the previously mentioned G20, were also in Washington last week. They, too, had some annoying and unsolicited advice for us. This bunch was more subtle, though. They merely noted that the exit from unconventional monetary policies in some developed economies may induce higher volatility in global financial markets. Any idea which developed economy they might have been referring to? 

U.S. Treasury Secretary Jack Lew basking in last week’s G20 glory in Washington. (AP)

The G24 then issued a communiqué of its own. It read in part, “We call on advanced economies to be mindful of negative spillover and to clearly communicate their exit strategies.” 

At least this confab phrased it more as a suggestion, albeit it a ridiculous one. Clearly communicate our exit strategies? That’s a great idea. I can just see it now. Whenever it becomes obvious, we’ll proclaim, “At 2:48 next Wednesday, we’ll start reducing our bond buying program!” While we’re at it, we should communicate to our doctors when we’ll next be sick so they’ll be waiting for us. 


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The unstated premise of both communiqués, which we call press releases here in the United States, is the presumption that their individual economies are our primary concern. The gist is this: “You must do this because it would hurt us if you don’t.” It’s phrased not as a genuine request, but practically as an admonishment. 

But consider, when did any of these countries doing the admonishing ever make our economy their primary concern? And don’t believe them if they pretend it was purely altruism that led them to buy our Treasury bonds. They bought them because our Treasurys still constitute the world’s most deeply liquid debt market.

Whatever our personal political affiliation, I believe all Americans can agree that our officials are doing the best they can for those who elected them, for better or for worse. Don’t the leaders of the G20 and G24 presumably do the same? Without having checked, I’m sure every one of them has a primary and overriding responsibility to their own citizens with secondary consideration for the rest of the world, if even that.

Let’s review: The G20 was in our living room lecturing us on fiscal policy while at the same time, the G24 was in our family room lecturing us on monetary policy. Now that’s chutzpah.


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The G20’s meeting concluded by sounding a self-warning about mission creep, the phenomenon, popular in Washington, wherein projects inexorably expand beyond their original intent. In other words, they at least recognize the fact that they might be turning into a bunch of busy-bodies. I couldn’t agree more.

 


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Michael Justin Lee

Michael Justin Lee from the faculty of finance and the Center for East Asian Studies at the University of Maryland, teaches, speaks and writes at the intersection of global finance and politics (with occasional tangents off on one or the other).

He is the author of “The Chinese Way to Wealth and Prosperity” (McGraw-Hill, 2012). A veteran Chartered Financial Analyst, he served as Financial Markets Expert-in-Residence in the U.S. Department of Labor. He can be followed at www.michaeljustinlee.com

 

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