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COMMENTARY
April 4, 2009
Fantasia
Perhaps I was too optimistic in my Wednesday column, which gave reasons to hope the London G20 Summit would null out entirely -- and thus, no additional damage would be done to the world economy.I tend to underestimate the power of fantasia. When 20-plus of the planet's most excruciating egos are gathered in one place, under a general expectation they will accomplish something, an upbeat communiqué is likely to emerge. In the event, our great leaders were able to conjure another trillion or so (in dollars: Euros would be more expensive) to shovel into the black holes. And they found a common cause, at least in badmouthing the world's few remaining tax havens. In his big moment, the U.S. president, Barack Obama, was able to convince the Chinese president, Hu Jintao, to sign on to this (according to the French president, Nicolas Sarkozy, speaking out of school). The Chinese were rightly worried about the status of Hong Kong and Macao, two little islands of relative economic freedom, and therefore prosperity, which provide a vastly disproportionate contribution to the mainland's overall cashflow. The money is just a little more than before; and while it is true that "a trillion here, a trillion there, it all adds up," it is just one more trillion, and thus averages only 50 billion extra on each diner's tab. That's less than $2,000 for every man, woman, and child in Canada: nothing, compared with what we already owe. Moreover, heads of government are hardly on their word of honour when they pledge to fork over, in summits of this kind. It's generally only the Americans who ante up on a pledge -- part of the reason they are held in such contempt by foreigners. President Bush greatly expanded U.S. humanitarian and development aid to Africa during his terms in office, winning himself and his country no thanks at all. There are no rewards for putting your money where your mouth is, in international politics. The rewards are for striking poses, and that's why after any pledges have been made, the national accountants go to work with their smoke and mirrors. Schemes for the elimination of "tax havens," which we may safely assume both the Obama and EU administrations take seriously, were going ahead regardless of the London Summit. We should be clear that these have nothing whatever to do with economic recovery. They are instead aimed at sucking taxes more efficiently, by forcing lower tax jurisdictions to ratchet up. The overall effect of that can only be economically depressive. Much of that effort is rightly seen, in the Third World, as a conspiracy of the rich countries to keep the poor down. For the only way out of material (as any other kind of) poverty, is through enterprise. The advantage of lower labour costs the poor can always offer; but that is offset by major disadvantages -- as tangible as squalid infrastructure, and as intangible as an underdeveloped work ethic. The one thing a government can do, to cultivate domestic and to attract foreign investment, is keep taxes down. (The other thing is to secure property rights: especially for smallholders.) One laughs bitterly at the conflict between what world leaders say they are doing, and what they are actually doing. One laughs the more bitterly at the G20 demonstrators, who imagine that their three targets of "poverty, climate change, jobs" are somehow compatible; or that any one of them might be advanced by socialist fanaticism and anarchic dementia -- promoted by the usual camera-conscious thuggery (rising to psychopathic as we cross the English Channel). We moved on yesterday from London to Strasbourg, for NATO's 60th anniversary summit -- and I am running out of space. President Obama is trying to use his "rapturous welcome" (BBC English for the current European Obamania) to some good purpose here. Like President Bush before him, and every other U.S. president before that, he is begging the Europeans to carry their share of the burden of defence spending, and at the moment, to make a bigger contribution in Afghanistan. The Europeans, still eager to shirk, are now using the "human rights" foibles of the Afghan regime as their excuse to let the Americans continue with the heavy lifting. Unfortunately, "saving the world" is not a checklist of easy options. Even in pursuit of prosperity, or security, there are no ways forward that dispense with candour and truth. And these, in turn, are the very qualities that would ruin a good summit. David Warren
© Ottawa Citizen
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