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Monday, August 17, 2009
The idea of creating a Gleco (global economic council) is presented by Timothy Adams and Arrigo Sadun in this morning's FT. That's right: a Gleco.
In the realm of poorly-thought-out acronyms, surely the Gleco stands out among its peers. I can imagine a scenario where, in attempting to raise the idea of a Gleco with a co-worker, they instead become convinced that I am talking about a small green lizard, and that I have a speech impediment. It hardly inspires confidence, and confidence is what our financial system requires to function.
But never mind that, because the Gleco idea faces problems that extend beyond the liguistical. Adams and Sadun are promoting the creation of a new body that presides over other international organizations like the IMF, World Bank, the WTO and the rest. A supra-international body, if you will.
Adding layers to an already convoluted system seems like a strange approach to addressing global financial stability. I get that their aim is to provide an overall direction to things, to guide the various international organizations towards a coherent objective. But that's not likely going to play out in practice. Every organization that this Gleco oversees would have to have a seat at the table, in addition to the reps from nation-states.
And even if this Gleco is chaired by the G20, in ten or fifteen years a series of Unforeseen Events will likely result in membership that no longer represents the true balance of power - precisely the same argument they level against the IMF.
Adding layers to an already convoluted system seems like a strange approach to addressing global financial stability. I get that their aim is to provide an overall direction to things, to guide the various international organizations towards a coherent objective. But that's not likely going to play out in practice. Every organization that this Gleco oversees would have to have a seat at the table, in addition to the reps from nation-states.
And even if this Gleco is chaired by the G20, in ten or fifteen years a series of Unforeseen Events will likely result in membership that no longer represents the true balance of power - precisely the same argument they level against the IMF.
The fact is, for this financial crisis at least, it was the policies and not the institutions which caused the problems. And its hard enough to get the key players to agree on what exactly were the problematic policies in the first place, never mind what to do about them. A Gleco will not fix this.
Take the FSB (no, not that FSB, the Financial Stability Board - the closest thing to an existing global economic council). With two dozen member states and another dozen reps from international bodies, I suspect that the participants of the FSB find that it's plenty difficult to reach agreement as is, thank you, and you can take your Gleco idea and stuff it away somewhere for later.
I think that's probably the way to go. Proposals of this sort make for interesting op-ed material, but in practical terms its more helpful to focus on improving our existing institutions. A Gleco is at best a colourful distraction.
