Sunday, November 14, 2010

Cooperation and ethics at the G20 Seoul Summit good news for global development

By Rutherford Johnson

SEOUL, Nov. 15 (ACNS) – The G20 Summit took place in Seoul on Nov. 11 and 12 with a theme of “Shared growth beyond crisis.” The intent of this summit was to continue existing efforts and begin new ones to end the global financial crisis and prevent another such crisis from happening again. The crisis itself was acknowledged by the leaders to be the result of systemic moral atrophy. The leaders decided on an unprecedented level of global cooperation, to include emerging markets and the poorest economies in the world.

Religious leaders around the world urged the heads of government gathered in Seoul for the summit to consider the moral issues at the root of the global financial crisis. Pope Benedict XVI urged cooperation among the leaders in a spirit of respect for humanity, with the goal of the development of mankind. The Archbishop of Canterbury said that the summit was an opportunity for the “'s leaders to reaffirm their moral commitments to the welfare of all.” The response of the summit to the world’s high expectations was the G20 Seoul Summit Leaders Declaration, the Seoul Summit Document, the Seoul Development Consensus for Shared Growth, and the Multi-Year Action Plan on Development, including an Anti-Corruption Action Plan.

The documents produced by the summit leaders and their delegations had a common theme of global cooperation. Improving the job market was placed at the heart of recovery, and financial reforms around the world are intended. There was further a commitment for richer nations to help poorer nations, as well as to strengthen global financial safety nets. They, as representatives of the nations that comprise eighty-five percent of global GDP, recognized their responsibility to the world and promised to hold themselves accountable as leaders.

As part of their efforts to stabilize the world economy and prevent further crises, it was decided to move towards a market-determined exchange rate, with advanced economies having a particular responsibility to guard against excess volatility and disorderly exchange rate movement. This is expected to lessen risks of excess capital volatility in the emerging economies. The poorer countries and emerging markets are especially vulnerable to changes in the world economy and were disproportionately affected by the global financial crisis. The G20’s acknowledgement of the interconnectedness of the world economy and the responsibility of stronger economies to guard against shocks that might lead to a crisis and excessive adverse effects in emerging markets is a positive step towards safeguarding the condition of humanity around the globe, not just in the G20 member states. The G20 leaders committed to “enhance the voice and representation of emerging market and developing countries, including the poorest.”

The challenge that remains is the commitments of governments to the interests of their own people and the promises of governments to other nations and the global community in general. This is a delicate balance. Too far in one direction, and the governments fail to meet their responsibility to their people. Too far in the other direction, and nations act in their own self interest to the detriment of others. It is ultimately an equilibrium position in which the nations act simultaneously in their own best interests and in the best interests of the world that must be found in order to achieve an effective implementation of their plans.

The overall G20 development plan further is committed to free trade and opposition to protectionist policies. Considering that several G20 member states regularly engage in protectionism to varying degrees, it will be interesting to see the outcome of this aspect of the plan. Protectionism is one area in which the interests of the individual state may come in direct conflict with those of the global economy and vice versa.

A significant plan to fight corruption both within each country and across national borders was formed. A key point of this plan is the insistence upon transparency of operations of the G20, governments in general, and the private sector. The G20 has promised to lead by example and also recognizes the essential role of business in combating corruption.

The Seoul Summit Document placed the blame for the 2008 global financial crisis on reckless behavior by financial institution and failures of regulation and oversight. The specific decisions made by the summit leaders tended towards the direction of future moral behavior in the economy, a respect for humanity, and the goal of increased welfare for all. Economics typically defines an efficient economic outcome by Pareto efficiency, in which those who gain money have gained enough that they could, if they wished, compensate those who lost money. The Church, on the other hand, typically does not consider Pareto efficiency to be the final word on economic justice. Those who are leaders of businesses and governments have a duty to those whom their economic, business and financial decisions affect. The Seoul Summit Document recognizes this fact.

Overall, the documents produced by the Seoul Summit recognize the important role of ethics and morality in global financial markets. They present the need of advanced economies to balance their own interests with the interests of the global market. The global financial crisis demonstrated the interrelationship and interdependence of the nations of the world, so such a mutually-beneficial equilibrium of balancing national and global interests must be found for the benefit of humanity.