If it’s 10 years since the global financial crisis, it must be 10 years since the elevation of the Group of 20 to the status of a “leaders’ summit” – the next of which will be in Buenos Aires in two weeks’ time.
You could say the decision to supplant the G7 with the G20 as the premier forum for global economic co-operation is the one good thing to come out of the financial crisis.
The G7, like the various international bodies set up after World War II, is too Western and Eurocentric, being limited to rich North America, Europe and Japan.
The G20, by contrast, adds in the developing countries and all parts of the globe, encompassing the G7, all five permanent members of the UN Security Council and all five emerging-economy BRICS – Brazil, Russia, India, China and South Africa.
And did I mention it gives Australia a seat at the top table for the first time?
While the G7 accounts for only about 30 per cent of the world economy (measured according to purchasing-power parity), which is projected to have fallen below a quarter by 2040, the G20 accounts for almost 85 per cent of the world economy, which should still be about that in 2040.
The G20 also accounts for 84 per cent of global investment and 63 per cent of the world’s population.
The rich and poor worlds could have spent years arguing over the formation and composition of such a group, but in the heat of the financial crisis, no one doubted that a representative but not unwieldy whole-world body was needed to quickly achieve a co-ordinated response to the threat of a global depression.
The avoidance of such a calamity is all the proof anyone should need that the G20 has justified its existence.
At the time of the crisis, the G20 achieved co-ordinated discretionary fiscal (budgetary) stimulus averaging more than 2 per cent of world GDP in both 2009 and 2010.
It tripled the International Monetary Fund’s lending capacity and facilitated an increase in lending from multilateral development banks of $US 235 billion, at a time when private sector sources of finance were scarce.
Later, it established the Financial Stability Board to tighten up regulation of the world's financial institutions, including banks judged too big to fail.
It’s also working with the OECD to reduce tax avoidance by multinationals, through its BEPS project – base erosion and profit shifting – and having more success than many imagined it could.
But if you want to argue that, in the years since then, the G20 has done a lot of meeting, talking and passing of resolutions without achieving all that much, you wouldn’t be wrong.
You would, however, have missed the point. Do you imagine this was the last economic crisis the world’s leaders will have to cope with? Or that the next crisis is sure to be decades away?
As Scott Morrison’s G20 “sherpa” (every leader ascending summits needs the assistance of a personal sherpa), Dr David Gruen, said in a recent speech, the G20 is best thought of as an institution that comes into its own when it’s most needed - “more a ‘rough weather’ friend than a ‘fair weather' friend".
It is, he says, like a global fire department. It may sit around for days not doing much, but as soon as the need arises it rushes off to put out the conflagration.
What gives the G20 its fire power is its status as a “leaders’ summit” – all G20 leaders attend summit meetings, almost without exception. And when they attend, they talk to each other, just as Donald Trump and Xi Jinping are scheduled to have a meeting on the sidelines at the summit in Argentina, no doubt to chat about their little trade war.
Let me ask you, which would you prefer – world leaders who knew each other and talked regularly, or leaders who didn’t?
The more meeting and chatting they do, the safer the rest of us are.
Gruen reminds us it was the legendary American economist Thomas Schelling who realised international conflicts can arise simply because one side can't understand what’s eating the other side. That messages sent in public may differ from messages sent in private.
A book Schelling wrote led to the installation of the hotline between the White House and the Kremlin. The annual G20 summits are a big step up from that. Nor does it hurt to have the countries’ finance ministers and central bankers meeting regularly.
With Trump’s America behaving so crazily, picking fights with its allies and major trading partners and threatening the rules-based international order the Americans laboured so long to build, we need the G20 to hang together and keep our leaders talking to each other more than ever.
