Resident Fellow Desmond Lachman

Martin Wolf's masterfully written column will certainly resonate with President Obama. For in the same lofty yet non-specific way as President Obama has been selling his American Recovery and Reinvestment Program, Martin's proposed draft speech offers the president with the wherewithal to provide the G-20 with a lofty vision as to where the global economy should be going. And it does so without offering the president the concrete policy proposals that are now urgently needed to get the world economy out of its present terrible predicament.

I would raise two basic questions about Martin's proposed draft speech. Is the world economy now not well past the stage where policymakers should be largely confining themselves to a broad policy agenda that does not seriously address the world economy's present and immediate downward spiral? Instead of primarily focusing on issues relating to the international financial architecture, should policymakers now not be seeking to forge a coordinated and forceful policy response to the grave situation in which the global economy finds itself and which Martin depicts so well? And should not such a coordinated policy response embrace concrete monetary policy, fiscal policy, and exchange rate policy actions that might provide a coherent and convincing global response to the present enormous challenges with which the global economy is now confronted?

The second question that I would raise is whether the G-20 is the right forum for President Obama to hope to get a serious policy response to the world's economic crisis? Judging by the G-20's highly disappointing performance last December, can one really expect so large and diverse a group of countries as the G-20 to come up with a timely and forceful policy response to the world economy's problems? Might not President Obama better direct his energy at convening an extraordinary summit meeting of the leaders of the US, Germany, Japan, and China? Those four countries would seem to be the ones that really hold the key to the world's economic recovery and a smaller group of countries offers a very much better chance of agreement on concrete and relevant policy results than does a meeting with the G-20.

Desmond Lachman is a resident fellow at AEI.