The FT has given Prime Minister Malcolm Turnbull top billing in its G20 wrap:
As befits a gathering deservedly known for having a high ratio of words to actions, the G20 wrapped up its meeting last weekend with a strong but ill-defined call to make globalisation and capitalism work for the good of all.
Malcolm Turnbull, the Australian prime minister, spoke of the need to “civilise capitalism”; Christine Lagarde, head of the International Monetary Fund, said that growth had been “too low for too long for too few”.
They were reflecting a concern that the insecurities wrought by globalisation, particularly trade and migration, were fuelling populist sentiment and with it a flight towards protectionism and xenophobia. But few universally applicable solutions were offered.
In a way, that is not surprising. Not only are such concerns largely limited to a set of rich countries, but the answers that they demand will vary from nation to nation. The globalisation of trade, technology and to some extent migration are widespread challenges, but there are no universal international solutions. The response to globalisation must begin at home.
To much of the world, the obsession with rising inequality and populism must look like western solipsism. Thanks to the rise of emerging markets, modern globalisation has produced the first worldwide fall in inequality since the west’s industrial revolution. There is little sign of a general shift towards populism across emerging markets, albeit many of them are starting off at a pretty high level.
The PM does cut a fine figure with his Goldman Sachs heritage and elegant turn of phrase. It is chalk and cheese with Tony Abbott whose G20 appearances were beyond excruciating. For that we can thankful.
Turnbull’s message is also di rigeur, apposite and urgent. The collapse of globalisation is upon us, as Martin Wolf describes today:
An analysis from the Peterson Institute for International Economics argues that ratios of world trade to output have been flat since 2008, making this the longest period of such stagnation since the second world war. According to Global Trade Alert, even the volume of world trade stagnated between January 2015 and March 2016, though the world economy continued to grow. The stock of cross-border financial assets peaked at 57 per cent of global output in 2007, falling to 36 per cent by 2015. Finally, inflows of foreign direct investment have remained well below the 3.3 per cent of world output attained in 2007, though the stock continues to rise, albeit slowly, relative to output.
So, well done to PMT for lifting Australian form at the G20.
But what about function? How does the PM measure up against his own benchmark of “civilising capitalism” at home? Well, let’s see:
- during the election his two primary policies were a grand corporate tax cut that owing to Australia’s imputation credit regime will almost exclusively benefit foreign shareholders, and his second was to fight off negative gearing taxation reform that would cheapen houses for Australian children instead of fatten rent-seekers, including the large influx of Asian investors currently in the market;
- since taking office his policy cupboard has been pretty close to bare. He’s been silent on crucial debates around immigration and foreign investment, allowing a racist fringe to occupy the debate. His regime for treating with China is unclear and arbitrary with no clear definition for what we should sell and what we should keep nor how that fits with an equally unclear position on China’s increasing strategic muscle versus the US alliance;
- he’s launched a crusade to repair the Budget while simultaneously throwing a GDP party based upon fiscal stimulus that is largely recurrent spending and not investment and so won’t benefit the nation’s children long term;
- he’s overseen the launch of a bizarrely disjointed series of banking inquiries to deflect from what is clearly needed in the form of a coordinated royal commission into systemically unethical bank behaviour;
- he’s appointed a Treasurer with inappropriate links to the Real Estate Institute of Australia, allowed his Trade Minister to walk into a private sector position where he can leverage his public contacts, and let the head of Australia’s Foreign Investment Review Board take a position advising Carlysle private equity while keeping his public job.
- he’s capitulated to a rump of hack-libertarian nutters in his political party on just about every policy including superannuation reform which grotesquely favours the wealthy;
- we’re all still wondering, too, if Chinese money with dubious quasi-Communist links and full leverage into Australia’s ‘citizenship exports’ sector of education and property will be investigated and banned for bribing the Parliament.
I know it’s early days and all, but a little ‘civilised capitalism’ would go a long way at home right now, Malcolm.
