The recent Group of 8 (G8) meeting, for all the hoopla that surrounded it, did little to address, much less solve, the world's immediate economic and financial problems. It all but ignored them, in fact. Some good came out of that conclave of presidents and prime ministers. The assembled did at last address the Syrian mess and even showed the gumption (a trait usually absent from such gatherings) to confront Russia's support of the regime of Bashar Assad. There was much made of plans to craft a major trade agreement between the United States and the European Union (EU), which will likely do considerable economic good, but only after a long lead time. The world's leadership also set out to crack down on tax evasion. There was, however, no mention at all of Europe's ongoing recession and fiscal crisis, the associated question of banking reform, the less-than-stellar economic and financial position of the United States, or serious concerns that new Japanese economic policies raise the prospect of currency war.
As important as other issues are, the G8 cannot justify its neglect of such crucial matters. The news of the day certainly demands attention. Europe's economy seems to sink deeper into recession with each new statistical release. Unemployment for the Continent as a whole totals more than 26.5 million, 12.2% of the work force and, in more hard-hit regions, the unemployment rate exceeds 20%.1 North America is in better shape, but its recovery is far from breaking any land speed records, while U.S. fiscal policy remains a shambles, threatening global financial stability. Japan has pursued a questionable but nonetheless aggressive policy. The G20 group of the world's major trading nations has already criticized it as a form of currency manipulation to promote exports at the expense of that nation's trading partners. But the G8 seems unconcerned, almost complacent on these fronts, a posture that is still more upsetting because Europe at present seems to have lost the policy consensus it once had.
Frequently, the press of events causes international meetings of this sort to neglect what is otherwise important. The G8 cannot make that claim this year. From the start, it planned to look away from these critical issues. The agenda was narrowly focused on what British prime minister David Cameron (and this year's meeting host) called the "three Ts": trade, transparency, and tax. The first of these referred to the launch of negotiations for a U.S.-Europe trade deal, which even its most ardent supporters expect will do little good for two or more years yet—hardly an answer for today's urgent economic and financial strains. The other two Ts conflate into an effort to crack down on tax avoidance and evasion. The EU claims that avoidance takes some €1.0 trillion a year out of government revenues,2 so such efforts could help close huge fiscal imbalances. But surely this is not enough to solve the Continent's ongoing financial problems and can only offer marginal relief to the region's economic suffering. What is more, this strange agenda was a clear departure from that of 2012's G8 meeting, which openly, if inadequately, debated policies to alleviate economic and financial distress.
What makes this year's behavior so galling is that G8 guidance is, if anything, more critical now than it was a year ago. Then, Europe still held to a policy consensus, a combination of budget austerity and the kinds of structural reforms that could make these economies more flexible, growth-oriented, and competitive, effectively a broad application of the German reforms of some years ago that strengthened that economy and its finances. But since the 2012 G8, politics has muddled this commitment. Mixed election results in Italy have eroded Rome's commitment to both the austerity and the structural reforms. Spain, Portugal, France, and others have, to varying degrees, turned away from the policy consensus as well. Greek difficulties with privatizing government assets have also created doubts about future policy directions. In view of such wavering across Europe, questions have now arisen about whether the German elections this September will produce a result that will interfere with the country's support for Europe.
This is a bad time for the G8 to act with complacency about such matters and effectively pretend that these economic, financial, and policy needs do not demand its guidance. Doubtless, Europe's and the world's economic and financial difficulties are too complex for even the most forceful and transparent G8 debate to offer all or even most of the answers. But the complete absence of such a debate will surely only deepen those problems by creating still greater doubt and more policy drift. Strides on Syria, the prevention of tax evasion, and longer-term trade deserve attention to be sure—but so do the day's urgent economic and fiscal strains. The failure of this year's G8 to take them up is more than just a disappointment: it is a dereliction of duty.
1 Eurostat (European Union).
2 Eurostat (European Union).
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