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G2O
ON THE
WHAT IS THE G20?
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TheGroupofTwenty(G20)comprises19
countries:Argentina,Australia,Brazil,Canada,
China,France,Germany,India,Indonesia,Italy,

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Japan,Mexico,Russia,SaudiArabia,South
Africa,SouthKorea,Turkey,theUnitedKingdom
andtheUnitedStatesofAmerica,andthe
EuropeanUnion,whichisrepresentedbythe
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rotatingCouncilpresidency.
TheG20isplayinganincreasinglyprominent
roleinthecurrenteconomiccrisis,andthefirst
summitmeetingofG20headsofstate/
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governmenttookplaceinNovember2008.The
secondoftheselandmarksummitswilltake
placeinLondoninApril2009.Aswellasthe
headsofstateorgovernmentoftheabove
countries,plusSpainandtheNetherlands,the
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ChairofTheNewPartnershipforAfrica’s
Development(NEPAD),theChairofthe
AssociationofSouthEastAsianNations
(ASEAN)andthePresidentoftheEU
Commissionareinvited.TheChairmanofthe
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AfricanUnionCommissionwillalsoattend.

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Informationtakenfromwww.g20.organd
www.londonsummit.gov.uk/en/summit-
aims/faqs/general-questions/who-will-attend
March2009 20
ThisbookletwasfirstpublishedinApril2009.©ippr2009
FOREWORD
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On2April2009leadersoftheG20countries,togetherwiththoseofSpainandthe
Netherlands,andrepresentativesofmajormultinationalorganisations,gatherfortheLondon
Summit.Theymeetatatimewhentheglobalfinancialsystemisexperiencingitsworstcrisis

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sincethe1930sandtheworldeconomyisinthemidstofthedeepestglobalrecessionsince
WorldWarII.Inahighlyunequalworld,thecrisisishittinghardestthosewhoaremost
20 vulnerabletopovertyorinjustice.
G20leadershavealotontheiragenda.Expectationsarehighandfailureisnotanoptionasfar

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asthemillionsofpeopleworldwidewhohavebeenaffectedby,orarethreatenedby,thecrisis
areconcerned.
Tohelptheleadersfocusonwhatreallymatters,weaskedanumberofleadingprogressive
20 thinkerstoeachcomeupwithonepolicyrecommendationfortheG20andtoexplaintheir
choiceinaround200words.Theresultsarecontainedinthisbooklet.

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Ourthinkersrangefarandwidewiththeirproposals.
Somefocusontheimmediateeconomiccrisis.Theyrecommendmeasurestocounterthe
downturn,suchasGerryHoltham’scallforacoordinatedfiscalstimulus;ortoalleviatethe
plightofthosemostaffectedbyit– DianeCoylewantsspecificmeasurestohelpthe

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unemployedandthoseindangeroflosingtheirhomes.
Othersareconcernedwithrightingtheimbalancesthatareperceivedtohavecreatedthecrisis.
TheseincludeDieterHelm’srecommendationforaswitchfromconsumptiontoinvestmentand
20 JayatiGhosh’scallforaredistributionofincometoallowwage-led,ratherthandebt-led,growth.
JohnPodestaandProfessorJiahuaPan,twomembersoftheGlobalClimateNetworkestablished

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lastyearbyippr,areunitedintheirpleaforfiscalstimulitobefocusedonlow-carboninitiatives.
Bothalsowanttoseegreeninnovationandfinanceflowingfromrichtopoorercountries.

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Athirdgroupcomesupwithsomeverydifferentsuggestionsforwaysinwhichtheglobal
economicsystemshouldbereformed.JimO’Neillwantsanoverhaulofthesystemofglobal
governanceandthecreationofanewG4group,whileRobertSchillerwouldliketheG20to

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establishaninternationalmarketinGrossDomesticProductsofthecountriesoftheworld.
Therearealsocallsforreformofthefinancialsystem.DavidPitt-WatsoncallsfortheG20to
agreetheprinciplestowhichallregulatoryregimesmustconform.CostasLapavitsaswants
commercialbankstobeplacedunderpublicownership.
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Lastly,theG20areurgednottoforgetissuesthatwereontheagendabeforethecrisis
developedandthatremainimportanttoday,includingpovertyandclimatechange.For
example,GobindNankaniandNancyBirdsallwantincreasedresourcesforthedevelopingworld
andRowanWilliamscallsforacommitmenttoagreementonclimatechangeatCopenhagen
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laterthisyear.
TheproposalscontainedinthisbookletcouldhelptheG20limittheeffectsoftherecession,
restorestabilitytothefinancialsystemandputtheglobaleconomybackoncoursefor
sustainableandbalancedgrowthwhichdeliversforthemostvulnerable.Theproposalspoint
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towardsthekindofprogressivepoliciesthatipprbelievesareneededtobuildafairer,more
democraticandenvironmentallysustainableworld.
Ofcourse,theG20’sworkwillnotbefinishedaftertheLondonSummit.Oncetheimmediate
crisisisover,worldleaderswillhavetocomeupwithpoliciesthatensureamorestableglobal
economyinwhichfairnessandenvironmentalsustainabilitytakecentrestage.ippr,throughits
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newGlobalChangeProgrammeandinitiativesliketheGlobalClimateNetwork,planstobepart
ofthedebatethathelpsdevelopthesepolicies.

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CareyOppenheimandLisaHarker,Co-directors,ippr

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CONTENTS
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RaymondW.Baker wantstheshadowfinancialsystemdismantled ... 6


NancyBirdsallwantsUS$1trillionfordevelopingcountries ........ 7

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Ha-JoonChang urgescandidnessaboutprotectionism............. 8
DianeCoyle wantshelpfortheunemployedandat-riskhomeowners .. 9
20 DianeElson callsfortherightsofthepoortobeprotected ........ 10
JayatiGhosh urgesafocusonwage-ledgrowth ................. 11

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DieterHelm wantsaswitchfromconsumptiontoinvestment ....... 12
GerryHoltham callsforacoordinatedfiscalreflation ............. 13
20 CostasLapavitsas proposesthecreationofpublicbanks .......... 14
PhilippeLegrain wantsresistancetoprotectionisminlabourmarkets .15

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GeoffMulgan wantsinvestmentininnovationforthefuture ....... 16
GobindNankani urgesincreasedresourcesfordevelopingeconomies 17

20 JimO’NeillcallsforanewG4grouping........................ 18
JiahuaPan proposeslow-carbonrecoveryinitiatives .............. 19

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DavidPitt-Watson wantsprinciples-basedregulation ............ 20
JohnPodesta callsforaglobalstrategytoreducecarbonemissions . 21
RobertShiller callsforaninternationalmarketin‘trills’ ........... 22
20 GrahamTurner proposeslimitsoncurrentaccountsandcapitalflows 23
RobertWade wantsmorestabilityandlessinnovationinfinance .... 24

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KevinWatkins wantslow-carbontechnologytransfer............. 25
RowanWilliams urgesagreementonclimatechangeatCopenhagen . 26
MuhammadYunus callsforcreationofaglobalsocialbusinessfund . 27

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RAYMOND W. BAKER
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TRANSPARENCY!ThisisbecomingtheneglectedareaintheG20process.Economic
stimulusisreceivingenormousattention.Talkaboutstrengtheningregulationofthe
globalfinancialsystemisongoing.Buttransparency– dismantlingtheshadow
financialsystemthatgotusintofinancialcrisis– isincreasinglyde-emphasised.
TheG20leadersspeakoftheneedforregaining‘stability’inglobalfinancial 20 20
operations.Doesthismeanreturningtothepre-crisisstatusquo?Toanextent,the
structureoftaxhavens,secrecyjurisdictions,disguisedcorporations,anonymous

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trustaccounts,fakefoundations,abusivetransferpricingandmoneylaundering
techniquesliesattheheartofthecurrentchaos.Regulationwithinthissystemwill
notpreventfuturecrises;dismantlingtheshadowfinancialsystemwill.
Transparencymeanssubstantiallycurtailingmispricingoftrade,requiringknowledge
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ofbeneficialownershipinallcross-borderbankingandbrokerageaccounts,
automaticexchangeofpersonalandcompanytaxinformationbetweennations,and
country-by-countryreportingofsalesandprofitsbymultinationalcorporationsand
financialinstitutions.Notrocketscience,butamatterofpoliticalwill. 20
IftheoutcomeoftheG20processistoapproachtheambitionsarisingfromthefirst
G20meetinginWashingtonDConNovember15,transparencymustbereturnedto
thetopoftheagenda. 20 20
RaymondW.BakerisdirectorofGlobalFinancialIntegrity,aguestscholaratThe

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BrookingsInstitution,andseniorfellowattheCenterforInternationalPolicy

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NANCY BIRDSALL
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UptoUS$1trillionofofficialfinancewillbeneededby2011tohelpdeveloping
countriesweatherthestormunleashedbyrich-worldregulatoryfailures.Dealing
withdebtmightabsorbhalfthatamount.$500bnwouldbeavailabletofillrevenue

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gapsandforemergencyjobandfoodprogrammes,providingafiscalstimulusthat
thesecountriescannototherwisefinanceinthecurrentclimate.$500bnisequalto
about3percentoftheGDPofalldevelopingcountries,comparedwithUSand
Chinesestimuluspackagesof7and10percentofGDPrespectively.

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$1trillioncouldbemadeavailableatalmostnoimmediatecosttothetraditional
donors.TheIMFcouldmake$400bnavailablethroughmeasuresincludingthe
20 issuanceofnewspecialdrawingrights(SDRs).TheMultilateralDevelopmentBanks
(MDBs)couldprovide$300bnbymakingbetteruseofcurrentcapital;and$50bn
forlow-incomecountriesthroughmeasuresincludingfront-loadingdisbursements

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fromsoftloanwindows.IfsomeofthesefundswereusedinconjunctionwithUS
andEuropeanswapstodevelopingcountrycentralbanks,andifmorecountries
werewillingtolendtotheIMF,$1trillioncouldbefound.
TheG20couldmakethishappenbyencouragingtheIMFtoissueSDRs,callingfora

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temporarysuspensionofrestrictionsontheMDBs,andcallingontheMDBstomake
betteruseoftheirexistingcapital.
20 NancyBirdsallisthefoundingpresidentoftheCenterforGlobalDevelopmentin
WashingtonDC

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HAJOON CHANG
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Despitethecontinuedaffirmationoftheircommitmentstofreetrade,therich
countriesarenowincreasingtheprotectionfortheirkeyindustriesthrough
subsidiesandgovernmentprocurementprogrammes.Thisschizophreniaisonly
goingtoencouragehidden,open-endedprotectionism,whichwillslowdown
adjustmentsanddamagetheintegrityoftheworldtradingsystem.Theyshould
admitthevalueoftime-bound,conditional,andtransparentprotectionismintimes
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likethis,andcomeupwithaninternationalframeworktoaccommodateit.

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Moreimportantly,therichcountriesshouldadmitthatthedevelopingcountries
needevenmoreprotectionismthantheydo.Theforced,excessivetrade
liberalisationofthelastthreedecadeshasreducedeconomicgrowthinmany
developingcountriesbyhamperingtheirabilitytoprotecttheir‘infantindustries’.
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Indeed,therichcountriesthemselves–startingfromeighteenthcenturyBritain,
throughnineteenthcenturyUnitedStates,totwentiethcenturyJapanandKorea–
usedsuchprotectionismwhentheyweredevelopingcountriesthemselves.
TheDohaRound,whichisthelatestintherichcountries’pushfortrade
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liberalisationinthedevelopingcountries,shouldimmediatelybestopped.Anew

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roundoftradetalksshouldbestartedthatwillreversemanyoftheexcessivetrade
liberalisationmeasuresandcreatemore‘policyspace’fordevelopingcountries.
Ha-JoonChangisareaderinthepoliticaleconomyofdevelopment,Universityof
Cambridge
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DIANE COYLE
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Thecrisishasunderminedthedealgovernmentshavebeenofferingtheircitizens
forthepost-1989globalisationgeneration:thatthescopeofgovernmentcanbe
safelylimitedbecausethemarketwillprovide.Forthedurationoftherecession–

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especiallybecausenobodyknowshowlongorhowsevereitwillbe–governments
willneedtoprovideadditionaleconomicsecurity.
Twomeasuresarevital.First,keeppeopleintheirhomes.IntheUK,thisshould
meanapromisethatover-extendedborrowerscanstayintheirhomesaspart-

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owners,withtheGovernment–throughlocalauthoritiesandsociallandlords–
takingonownershipsharesasnecessary.
20 Second,provideaguaranteeofmeaningfulwork.Thereshouldbeapledgethat
anybodywhowantspublicsectorwork,onpaythatgivesabitmorethanthe

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benefitstheywouldotherwisereceive,canhaveit.Thisworkwouldrestoresome
much-neededcivilityandfundstopartsofourpubliclife.Itisimportanttokeepas
manypeopleaspossibleconnectedtothejobsmarketandderivingsatisfactionand
20 socialconnectionsfromtheirwork.Andtaxpayersaremuchbetterfinancingmore
artsgrouppersonnel,better-tendedparks,visitorsfortheelderlyandsoon,than

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unemploymentbenefits.

20 DianeCoyleOBErunstheconsultancyEnlightenmentEconomicsandisavisiting
professorattheInstituteforPoliticalandEconomicGovernanceattheUniversityof
Manchester

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DIANE ELSON
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UsethemoralcompassprovidedbytheUniversalDeclarationofHumanRightsto
guidealleconomicpolicy– thisisthemostimportantstepthattheG20leaders
couldtaketoprotectpoorpeoplefromtheeffectsoftheglobaleconomiccrisisand
toensurethatrecoveryfromthecrisisleadstoareductioninpovertyandinequality.
Trustinfinancialinstitutionshascrumbled.Socialsolidarityisweakandgetting 20 20
weaker.Reregulationandreflationarenotenough.Areturntogrowthandgreedwill
notreduceinequality.AsAdamSmithemphasised,economiesdonotworkwellif

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guidedbyself-interestalone;theyneedtheguidanceof‘moralsentiments’.
TheDeclarationsetsoutaninternationallyagreedsetof‘moralsentiments’,
includingnotonlypolitical,civilandculturalrightsbutalsoeconomicandsocial
rights,includingtherighttowork,therighttoanadequatestandardofliving,the
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righttoeducationandtherighttohealth.
TheG20leadersshouldcommittoensuringthateconomicandsocialrightsare
progressivelyrealisedintheirowncountries.Theyshouldcommittodoingnothing
tohinder,andasmuchaspossibletohelp,othergovernmentsincarryingoutthe
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samecommitment.Alldetailedpolicyproposalsshouldbeevaluatedinthelightof
thiscommitment.

DianeElsonisaprofessorintheDepartmentofSociologyandtheHumanRights
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Centre,UniversityofEssex

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JAYATI GHOSH
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Recently,globalcapitalismhasgrownbylurchingfrombubbletobubble,
encouragedbystatepoliciesandfedbyspeculativemarketforces.Thedangeris
thattheG20(whichisanywayanillegitimateattempttobypasstheUnitedNations)

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willtrytorevivegrowthbydoingmoreofthesame.Butthatreplaybuttonwillnot
work,becauseothermajorglobalimbalanceshavetoberesolved:betweenfinance
andtherealeconomy,withaconsequentlargedebtoverhanginmajoreconomies;
betweensurplusanddeficiteconomies;betweeneconomicgrowthandnatural

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resourceuse.
Therefore,evencoordinatedfiscalstimuli(whichareobviouslynecessary,if
20 currentlyunlikely)andtransnationalregulationoffinance(equallynecessarybut
evenmoreunlikely)willnotbeenough,andmayjustleadtoanother,possiblyeven
bigger,globalcrisisafewyearsdowntheline.

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Instead,coordinatedpoliciesshouldfocusonwage-ledgrowth,whichrequires
progressiveredistributiongloballyaswellaswithincountries,andchanged
productionsystemsthatmeettherequirementsofmoresustainablelifestyles.This
requiresallowingtradeandcapitalaccountstobemanageddifferently,and

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encouragingdiversificationoftradeandinvestmentawayfromexistingpatterns.

20 JayatiGhoshisprofessorofeconomicsatJawaharlalNehruuniversity,NewDelhi,
andtheexecutivesecretaryofInternationalDevelopmentEconomicsAssociates
(IDEAS)

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DIETER HELM
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Thecurrenteconomiccrisishasbeencausedbyexcessconsumptionsupportedby
highlevelsofborrowingindevelopedcountries.Economicstabilityrequiresareturn
tosustainableconsumptionlevels.Short-termkick-startstoconsumptionand
borrowingwillsimplyperpetuatetheimbalances,andmakethetransitiontoa
sustainableconsumptionpathmorepainful.
G20leadersshouldinsteadplacetheoverwhelmingemphasisonaswitchfrom
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consumptiontoinvestment.Intheshorttomediumterm,thatinvestmentshouldbe

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targetedatinfrastructure,andwithininfrastructurethosecomponentswhichhelp
thetransitiontoalow-carboneconomyshouldbeprioritised.Electricitygridsand
distributionssystemandsmartmeteringarethemostimportant,followedbymore
sustainabletransportnetworks.Thelong-terminvestmentpriorityfromaclimate 20
changeperspectiveisR&D,facilitatingtransformationaltechnologiesbythe2020s

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and2030sincludingbatteries,technologieswhichmovetransporttoelectricity,and
large-scalesolarenergysystems.
Afocusoninvestmentratherthanconsumptionwillrequireamajorexercisein
leadership.Dealingwithclimatechangeisurgentandexpensive–worldleaders
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shouldstoptellingpeopleitischeapandthatboostingconsumptionnowismore
importantthanholdingconsumptiondowntoprovidethefundsforinvestment.

DieterHelmisprofessorofenergypolicyattheUniversityofOxford
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GERRY HOLTHAM
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TheG20shouldagreetoacoordinatedfiscalreflationwithascheduleofspecific
commitmentsfromparticipatingcountries.Thecurrentaccountsurplusshouldbea
keyindicatorwithsurpluscountriescommittingtoproportionatelybiggerpackages

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ofspendingandtaxcutsthandeficitcountries.Somemayresist,butanunbalanced
programmeinwhichthedeficitcountriestookonthemajorroleinboosting
demandwouldperpetuatepaymentsimbalancesintheworldeconomy,makethe
programmelooklesssustainableandsoweakenconfidence.

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ThisshouldbebackedupbyareformprogrammefortheIMFwithanincreasein
quotas,particularlyforkeyemergingeconomies,andadilutionofthevetopowerof
20 theUnitedStates.ArevampedIMFshouldbechargedwithmonitoringthereflation
programmeandreceiveexpandedresourcesthroughtheGeneralAgreementto
Borrowsothatitcanlendtothepooreremergingeconomiesthatarenowshortof

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bankfinance.Thusitwouldprovidesupportforworldtrade.
Thesewillbedifficultgoalsandthetemptationwillbetofocusonimportantbut
lessurgentissueslikeaspectsoffinancialregulation.Somehowpolicymakersmust
concentrateonthefirstimperative,whichistopreventaslideintoglobal

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depression.

20 GerryHolthamisahedgefundmanager

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COSTAS LAPAVITSAS
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Largecommercialbanksinseveralcountriesareeffectivelybankrupt.Publicmoney
shouldnotbewastedonthem.Theyshouldbeplacedunderpublicownershipand
reorganisedunderfulldemocraticscrutiny.
Publicbankswouldhavesocialauthoritytorevealbaddebts,assignvaluetoasset-
backedsecurities,anddealfairlywithbankbondholders.Theywouldprovidecredit 20 20
tosupportoutputandemployment,insteadofusingpublicfundstoprotect
shareholderswhilereducinglending.
Publicbankswouldhelprestructurewesterneconomiesawayfromfinance.They
wouldfinancegreenindustries,healthandeducationservices,advanced
technologies,andprovidemortgagesandconsumercreditwithoutimposing
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exploitativechargesandrates.Publiccreditwouldofferchoicewhilebuttressing

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expandedpublichousing,educationandhealthprovision.Publicbankswouldalso
createmoneyandoperatethepaymentsmechanism,supplementedbythePost
Officeorsimilar.
Inefficiencyandcorruptioncouldposeproblems.Publicbankswouldbeaddressed
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throughfullaccountabilityanddemocraticcontrolwithemployeeparticipationand
throughmanagingrisksinlinewithlong-termsocialandenvironmentalaims;they
wouldoutperformprivatebanksintheserespects.
Therearehundredsofthousandsoffinancespecialiststhatcouldhelpoperate
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publicbanks.Whatisneededispoliticalwillandpopularorganisationfrombelow.

CostasLapavitsasisprofessorofeconomicsandassociatedeanofresearch,School
ofOrientalandAfricanStudies,UniversityofLondon
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PHILIPPE LEGRAIN
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G20leadersshouldcommittoresistingprotectionisminthelabourmarket.
Makingitharderforforeignerstocometoworkinacountry– orworse,expelling

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thosealreadyworkingthere– isasshort-sightedandperniciousasprotectionismin
trade,whichG20leadersrejectedinWashingtonDClastNovember.Itwould
depressdemand,reducinglocalemployment.Itwouldplayhavocwithpublic
20 services,deprivingpatientsofdoctorsandnurses,theelderlyofcarers,andchildren
ofteachers.Itwouldcausefurtherdislocationtobusinessesstrugglingwith

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shrivelledcreditandcollapsingdemand– anddepriveeconomiesoftheskills
neededtodriveeventualrecovery.
20 Unfairlyexcludingpoorandvulnerablemigrantswouldalsoexacerbatethe
downturnindevelopingcountries.Themoneytheysendhomeisalifeline,

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especiallyinacrisis.RemittancestodevelopingcountriesexceededUS$300billion
lastyear,almostthreetimestotaloverseasaid.Theyaccountforalargeshareof
GDPinmanycountries,protectfamilieswherethereisalimitedsocialsafetynet,
20 andsupportdemandincountriesthatcannotaffordafiscalstimulus.Insteadof
tryingtoreservejobsfornationals,G20governmentsshouldacttogethertoboost

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demandandemploymentandsustainremittancestodevelopingcountries.

20 PhilippeLegrainisajournalist,economistandauthorof Immigrants:Yourcountry
needsthem,andOpenWorld:Thetruthaboutglobalisation

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GEOFF MULGAN
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TheG20needstocombineactionontheimmediatechallengesofthecrisis,and
actiontosolvethelonger-termproblemsthatriskbeingsidelined.Thecrisisispartly
theresultoftheimbalancesoftheUnitedStates’hugeover-consumptionanddebt,
combinedwithChineseover-productionandunder-consumption,imbalancesthat
havenoprecedentineconomichistory. 20 20
Theonlyplausiblelong-termsolutionswillinvolveamajorrebalancing,withChina
boostingdomesticdemand;reducingsavingsratesbycreatinggovernment

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guaranteesforwelfareandhealthsecurity;andslowlyraisingitsexchangerate,
probablywithsomecontrolstoreducetherisksofspeculation.Meanwhile,theUS
willneedtoreshapeitseconomytocurtailcreditanddebt,andtoraisesavings
rates.Almostcertainlythesechanges,whichwilltakemanyyearstoimplement,will
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requirenewglobalinstitutionsandarrangements.
Inparallel,theG20nationsneedtocommittoaconcertedprogrammeof
investmentininnovationinsteadofdirectingfiscalstimuluspackagestofailing
industries:theyneedtofixthefuture,notthepast.Thatrequiresintensiveand
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systematicinnovation,muchofitacrossnationalborders,directedtogreenjobsand

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technologies,ageingandchronicdisease,povertyandeducation.

GeoffMulganisdirectoroftheYoungFoundation 20
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GOBIND NANKANI
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Theresponsetotheglobalcrisisremainsparadoxicallycentredonthedeveloped
countries.Asitseffectshavemovedtohurtfirsttheemergingeconomies,andnow
the‘bottombillion’economies,theWorldBank,IMF,regionaldevelopmentbanks

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andtheUKGovernmenthavesoughttoputthespotlightonthem,sofarwith
limitedsuccess.Theparadoxispartlyexplainedbytheasyetunreformed
governancestructureofglobalinstitutionsandforums.Thereislittlerecognition
thatanytransferofpurchasingpowertothedevelopingworldwillsurelybespent,

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notsaved,andwillgenerateglobaldemand.
Thedevelopingcountriesareindispensabletoovercomingtheglobalcrisis.To
20 increaseresourcesforthemandtointroducethebeginningsofanewgovernance
structureinthemultilateralinstitutionsweneedto:
•DoublethevolumeofSDRs(SpecialDrawingRights),distributingthemequally
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betweentheIMFandthemultilateralbanks
•Introduceanewvotingstructurethatreflectsthedistributionofglobal
economicactivityforalldecisionsontheallocationofthesenewSDRs
•Introducefast-tracksupportforsingleissuepolicychangesundertakenby
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countriesinsupportoffiscal,monetaryorstructuralreformsthatwillbuild
greaterresiliencefortheireconomiesinthecurrentcrisis.

GobindNankaniispresidentoftheDelhi-basedGlobalDevelopmentNetwork

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JIM O’NEILL
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IthinktheG20shouldusethisopportunitytooverhaulthesystemofglobal
governance.TheG7andG8havebeen,sincethelate1980s,theprimaryfocal
pointsforinternationaleconomicpolicymakingdecisions.Sincetheaccelerationof
theimportanceofChinaatthestartofthisdecade,toholdanymeetingswithout
thempresentisalmostpointless,whethertheyrelatetoglobalimbalances,foreign
exchangeissues,orindeed,globalresourceusageorclimatechange.
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ChinahasrecentlyovertakenGermanytobethethirdlargesteconomyintheworld.
Moreover,since1999,France,GermanyandItalyhaveallsharedacurrencyandthe
samemonetarypolicy,sotheyshouldnolongerbemembersoftheG7separately.In
addition,itisunclearwhyCanadaandtheUKshouldbepresent.Weshouldhavea 20
newsysteminwhichtheG20meetsquarterlyorbi-annually,whileonglobally

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importantcyclicalmattersofimbalancesandforeignexchangemarkets,anewG4,
consistingofChina,Japan,theEuroarea,andtheUnitedStates,wouldmeet
quarterlyorthereabouts.
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JimO’NeillisheadofglobaleconomicresearchatGoldmanSachs

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JIAHUA PAN
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Emissionsofgreenhousegaseshavecauseddangerousinterferencewithsocio-
economicandecologicalsystems.Whobenefitsthemostfromtheseemissions?
Thosewhohaveemittedandcontinuetodoso– generallythewealthiest.Who

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suffersmostfromclimatechangeimpacts?Thosewhohaveemittedlessandwhose
emissionsareforbasicnecessities–generallythepoorest.
Actionhastobetaken,veryurgentlyandonalargescale.Willingnessandeffortsto
reduceemissionsarehighlydependentupontherichinboththerichandpoor

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countriesdecouplingcarbonemissionsfromgrowthandwellbeing.Technologyis
importantandfinancingcanhelp,butultimatelyitistherichestsectionof
20 consumerswhodrivethedemandforalltheemissionsandwhocantakeaction.
Therefore,takingtheleadisnotsimplyamatterofdemonstrationbytherichof

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newtechnologiesthatcanhelpincreaseefficiencyanddeveloplow-carbonenergy
supply.Theymustalsoshowhowlow-carbon,high-qualitylifestylesarepossible.It
isimperativethatG20leaderstakethistotheheartoftheirpolicymakingandlead
20 thewaywithlow-carbonrecoveryinitiatives.

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JiahuaPanisexecutivedirectoroftheResearchCentreforSustainable
Development,ChineseAcademyofSocialSciences

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DAVID PITTWATSON
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WhatevertheG20triestoachieve,itneedstobepractical.Draftinga
comprehensivesetofrulesthatwillgovernglobalfinancialmarketsandthatwill
workfairlyandeffectivelyinalljurisdictionsisnotapracticalgoal.Butitshouldbe
possibletoagreetheprinciplestowhichallregulatoryregimesmustconform.These
wouldbethat: 20 20
•Allactorsinthefinancialsystemareresponsible,theyunderstandthat
responsibilityandtakentogetherthoseresponsibilitiescreateastable,

20
trustworthysystem.
•Allactorsareaccountableandthosetowhomtheyareaccountableare
legitimate,qualifiedandtaketheirresponsibilityseriously. 20
•Informationisprovided,byindependentagents,thatisrelevantand

20
comprehensive.
•Financialinstitutionshavebeenstresstested,bothforsolvencyandliquidity.
•Civilsociety,regulatoryinstitutionsandcentralbankingauthoritieshaverights
20
andpowersthatgivemeaningtotheabove.
Suchprincipleshavecorollaries:apreferencefortransparencyinalltransactions,
clearlinesofauthority,coordinationamongregulatorsandanendtoopaquetrading
inderivatives.Theyimplynewinstitutionsandalenderoflastresortforsmaller
20 20
countries.AndtheyraisequestionsovertheincentivestoCreditRatingAgencies

20
andtheadoptionof‘decisionuseful’accountingstandards.

DavidPitt-WatsonisfounderofHermesFundManagersLtd,forwhomhestill
works,andisco-authorofTheNewCapitalists
20
20
JOHN PODESTA
20
20 20 20 20 20 20
20
20 20 20 20 20 20

TheLondonSummitisanhistoricopportunityfordevelopedanddeveloping
countriestobegintomakeafundamentalshiftinthewaytheyproduceanduse
energy.Thismustbeapriorityissue.Countriesaroundtheworldaremakingmore

20 20
thanUS$2trillioninnewinvestmentsinanefforttorecoverfromtheglobal
recession,andthisspendingmustmoveusalltowardsalow-carbonfuture.The
chancetoalignpublicexpendituresofthismagnitudewillsimplynotpresentitself
againfordecades.

20
ThetransformationoftheUnitedStatestoalow-carboneconomyisnecessaryto
meettheclimatechangechallenge,butitisnotsufficient.Atrulyglobalstrategyis
20 neededtoreducecarbonemissionsandtogreentheeconomiesoftherapidly
developingworld.

20
Aspartofthiseffort,theG20mustalsoensurethattheenergyneedsofthe
poorestcountriesareaddressed.Morethantwobillionpeoplelackregularaccessto
modernenergyservices,and1.6billiondonothaveelectricityathome.Lackof
20 accesstoclean,reliable,affordableenergyincreaseshealthrisksandearlymortality,
andimpedeseconomicdevelopment.

20 20
Theworld’spoorestcountrieshavearighttodevelopmentinacarbon-constrained
world,and,astheprimarycontributorstoglobalwarmingpollution,thewealthiest
nationshavearesponsibilitytoassistinthisdevelopment.

20
JohnPodestaispresidentandchiefexecutiveofficeroftheCenterforAmerican
Progress
20
21
ROBERT SHILLER
20

20 20 20 20 20 20
20

20 20 20 20 20 20
IwouldliketoseetheG20establishaninternationalmarketforGrossDomestic
Productsofthecountriesoftheworld.

20
Somecountries–Japan,forinstance–havebeenhitmuchharderthanothersby
theworldfinancialcrisis.Onequarter’slossaloneisnotserious,buttheextreme
uncertaintysurroundingtoday’sworldeconomymaymeanthatsomecountrieswill
sufferseriouslonger-termlosseswhileothersprosper.Wedonotknowwhowillbe
20
winnersandwholosers.Enlightenedriskmanagementwoulddictatethatatleast

20
someofthisuncertaintyshouldbesharedamongcountries.
TheG20shouldsetinmotionplanstopromoteGDP-linkedsecurities.Governments
mightnowstateanintentiontoissuelong-termsecuritiesinplaceoftraditional
debt,likethe‘trills’MarkKamstraandIproposed,sharesequaltoatrillionthofthat
20
20
country’sownGDP,andtoacceptsuchsecuritiesfromothercountriesaspartof
sovereignwealthfunds,governmentpensionfundtrusts,orcentralbankreserves.
Doingsowouldmarkthebeginningofaneweraofsharingeconomicrisksaround
theworld. 20
TheincreasedintegrationoftheG20economiesattendantwithholdingsoftrills
wouldalsohelptoaligntheincentivesofpolicymakersandenhanceinternational
cooperationintimesofcrises. 20 20
RobertJShillerisArthurMOkunprofessorofeconomicsatYaleUniversity

20 20
22
GRAHAM TURNER
20
20 20 20 20 20 20
20
20 20 20 20 20 20

Anewglobalfinancialframeworkmusttackletheenormoustradeimbalancesand
evenbiggercapitalflowsthataroseduringthebubbleyears,requiringbothsurplus
anddeficitcountriestotakeremedialaction.Thesourceofcapitalinflowsneeds,

20 20
therefore,tobemonitoredonabilateralbasis.
Internationaltargetsshouldlimitcurrentaccountdeficitsto3percentofGDP.
Capitalinflowsshouldbelimitedtothisbenchmarktoo,andshouldalsonotbe
allowedtoexceedcurrentaccountdeficits.

20 20
Countriesmustalsocollectivelymonitorthegrowthinprivatedomesticborrowing.
TheIMFprovidesconsistentdataonborrowingacrossover180countries.This
comprehensivedatabaseshouldbeusedasabuildingblockforaninternational
agreementtolimitexcessiveborrowing,particularlywhendrivenbyexcessivecapital

20
inflows.Internationally-agreedtargetsneedtobesetonborrowing.Borrowing
targetsbasedonconsistentdatawouldthenleadtoabetterunderstandingofthe
policiesneededtocontrolcapitalflows.
20 Itisunconscionablethatmanyemergingmarketeconomiesexperiencedincreasesin
privatesectordebtthathaveapproachedandevenexceeded1000percentsince

20 20
themillennium.
Thepowerofunregulatedcapitaltooverwhelmacountry’sdefences,sparking
extremeassetinflation,remainsascourge.Itneedstobetackledwithcleartargets
forcurrentaccounts,netcapitalflowsanddomesticcreditencompassingall

20
countrieswithintheIMF.

20 GrahamTurner,GFCEconomics,isauthorofTheCreditCrunch

23
ROBERT WADE
20

20 20 20 20 20 20
20

20 20 20 20 20 20
Thefinancialsystemneedsreformtotiltthetrade-offbetweenstabilityandinnovation
moretowardsstability.Hereareeightreformcomponents.

20
1.‘Repatriate’bankingsothatbanks’cross-borderactivitiesaremoreconstrainedby
thereachoftheirlenderoflastresort.
2.Banks,notshadowbanks,shouldcreateliquidity.
3.Separate‘saving’and‘investing’functions.
20
4.Savingsorganisationsshouldberunona‘trust’basis,asnon-profits,manytolook
likecooperativesormutuals.
5.Investingorganisationscouldbebothpublicandprivate,withthepubliconeshaving
20 20
somedemocraticaccountabilityandexercisingdisciplineovertheprivateones.
6.Bothprivateandpublicbanksshouldoperatewithleverageceilingsmuchlower
thanthe30+:1debt-to-equityratioswhichthebigUSandUKbankswere
operatingwith.
20 20
7.Bothwouldbesubjecttotherequirementthatnewfinancialproductsbeapproved

20
byathird-partyregulator.
8.Centralbanksmustfindawaytodocounter-cyclicalmonetarypolicy,andlimit
bubbledynamicsinassetmarkets. 20
TheMillenniumEqualityGoalmightbetocuttheshareofthetop1percentinUS

20
personalincomefromitspresent23percentto16percentby2020,orhalfwaytothe
9percentitwasin1973.
RobertWadeisprofessorofpoliticaleconomyanddevelopmentattheLondonSchool
ofEconomics
20
24
KEVIN WATKINS
20
20 20 20 20 20 20
20
20 20 20 20 20 20

TheG20isuniquelywell-placedtobreakthedeadlockinnegotiationsforapost-
2012agreementtocutcarbonemissionsandavoiddangerousclimatechange.

20
Anymultilateralclimateagreementmustincludedevelopingcountries,yetthe
governmentsofthosecountriesjustifiablyfearthatacommitmenttocutemissions
couldcompromiseeconomicgrowth,povertyreductionandemployment.
20 Thereisasolution:improvedenergyefficiencyintheshorttermandharnessing
untappedopportunitiesforrenewableenergysourcesinthelongerterm.

20 20
Weproposeamultilateralmechanismtocovertheincrementalcoststodeveloping
countriesofacceleratingthetransitiontoalow-carboneconomy.Themechanism
wouldworkbyfinancingtechnologytransfer,byunderwritinginvestmentrisk,and–
wherenecessary–buyingoutintellectualpropertyrights.

20 20
Cleanercoaltechnologyisanimmediatepriority.Fordevelopingcountries
dependentoncoalthechallengeistogetmoreenergy–andlessCO2 –outofcoal.
AcountrylikeIndiacouldincreasecoal-basedenergyefficiencybyhalfatan
annualizedincrementalcostofaroundUS$3-3.5billionoratotalofabout$78

20
billionuntil2032.Financedbyrichcountries,themechanismproposedherewould
coverthatcost.

20 Byputtingtechnologytransferattheheartoftheclimatechangenegotiations,the
G20couldpreparethegroundforadealthatcutscarbonwithoutcompromising
povertyreduction.

20 20 ThisproposalwaspreparedjointlybyKevinWatkinsandArunabhaGhoshofthe
GlobalEconomicGovernanceProgramme,UniversityofOxford

25
ROWAN WILLIAMS
20

20 20 20 20 20 20
20

20 20 20 20 20 20
Anethicaleconomicpolicyinvolvesfactoringintoourthoughtsaboutmoney-
makingtwofundamentalthings.Thefirstisthatwehavetorecognisethatweexist
inaworldofmateriallylimitedresource–whichmeansthatenvironmental
exhaustionordegradationhastobetakenintoaccountinanyassessmentofthe
costofprojectsortransactions.Thesecondisthatweneedtomoveawayfromthe
superstitionthatsomekindsoftransactionarepracticallyrisk-free.Bothfinancial
20 20
andenvironmentalirresponsibilityreflectthesameunderlyingillusions.Both

20
generatepovertyanddisplaceriskontotheshouldersofthoseleastabletobearit.
SoinconsideringwhatpolicyinitiativestheG20governmentsmightbelookingat,
I’dwanttoask:whatinternationalprotocolsareneededtoguaranteeaconvergent
senseofhowenvironmentalcostistobereckoned?Isuspectthatgettingthisright
20
wouldinitselfintroduceintothelanguageofeconomicsasensethatitcouldn’tbe
onlyaboutthemechanicsofgeneratingmoneyandmightkeepotherissuesin
perspective.Wehavetounderstandthat,inaworldofscarceresources,
environmentalexhaustionimmediatelydrivesthepoorestfurtherintothespiralof
20 20
povertyandultimatelyimpoverishesusall;andnosophisticatedfinancialproducts
canfinallyoffsetcostonthisscale.TheG20shouldcommittodoingeverythingin
theirpowertopressforanagreementonclimatechangeattheUNconferencein
Copenhagenlaterthisyear. 20 20
RowanWilliamshasbeentheArchbishopofCanterburysince2003.Heisthesenior

20
bishopoftheChurchofEnglandandoftheworldwideAnglicanCommunion

20
26
MUHAMMAD YUNUS
20
20 20 20 20 20 20
20
20 20 20 20 20 20

Creditmarketswereoriginallycreatedtoservehumanneedstoprovidebusiness
peoplewithcapitaltostartorexpandcompanies.Inreturn,bankersandother
lendersearnedareasonableprofit.Everyonebenefited.Inrecentyears,however,the

20 20
creditmarketshavebeendistortedbyarelativehandfulofindividualsand
companieswithadifferentgoal:toearnunrealisticallyhighratesofreturnthrough
cleverfeatsoffinancialengineering.
Urgentredesignoftheworld’sfinancialsystemsandamajorshifttoamore

20
inclusivebankingsystemthroughmicrocreditandsocialbusinessisneeded.G20
leadersmustseizetheopportunityofthefinancecrisistocomeupwithan
20 alternativefinancialsystem,basedontrustandselflessness.
Themostimportantfeatureofthenewglobaleconomicarchitecturewillbetobring

20
thehalf-builttheoreticalframeworkofcapitalismtocompletionbyincludingatits
heartasecondtypeofbusiness–thesocialbusiness–inthemarketplace.While
thefinancialworldcollapsesallaroundus,theGrameenschemes– businesseswitha
20 socialpurpose– arethrivingbyextendingcreditandopportunitytotheworld’s
poorest,beggingthequestion:whoisreallycredit-worthy?

20 20
TheG20leadersmuststartintroducingsocialbusinessesinthebail-outpackagesfor
thebottomthreebillionpeople,bycreatingaglobalsocialbusinessfundtoprovide
loansandequityforbusinesseslikeGrameen.

20
MuhammadYunus,2006NobelPeacePrizewinner,ismanagingdirectorof
Bangladesh’sGrameenBank
20
27
20 20

20 20
20 20
ExpectationsfortheG20Londonsummitarehigh.
Tohelptheleadersfocusonwhatreallymatters,ippraskeda
20 20

20 20
20 20
numberofleadingprogressivethinkerstoeachcomeupwith
onespecificpolicyrecommendationfortheG20.Theresults
arecontainedinthisbooklet.
Ourthinkersrangefarandwidewiththeirproposals.
Somefocusontheimmediateeconomiccrisis.Othersare
concernedwithrightingtheimbalancesthatareperceivedto
20 20 20 20
havecreatedthecrisis.Athirdgroupcomesupwithsuggestions
forwaysinwhichtheglobaleconomicsystemshouldbe
reformedandforfiscalstimulitobefocusedonlow-carbon
initiatives.Therearealsocallsforreformofthefinancialsystem.
Lastly,theG20areurgednotforgetissuesthatwereonthe
agendabeforethecrisisdevelopedandthatremainimportant
today,includingpovertyandclimatechange.

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