Who Should the Twenty Be?
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Brill, Alex M; Glassman, James K., "Who Should the Twenty Be? A New Membership System to Boost the Legitimacy of the G20 at a Critical Time for the Global Economy", National Tax Payer Union, June 14, 2012
Who Should the Twenty Be?
A New Membership System to Boost the Legitimacy of the G20 at a Critical Time for the Global Economy
By Alex M. Brill and James K. Glassman
June 14, 2012
Alex M. Brill is the CEO of Matrix Global Advisors, an economic policy consulting firm. He is also a research fellow at the American Enterprise Institute. Previously, he was chief economist and policy director to the House Ways and Means Committee. James K. Glassman was formerly U.S. Under Secretary of State for Public Diplomacy and Public Affairs. He is currently executive director of the George W. Bush Institute and a member of the Investor Advisory Committee of the Securities and Exchange Commission. This report was sponsored by the National Taxpayers Union. The authors are solely responsible for the content. Any views expressed here represent only the views of the authors.
“We live in an increasingly global economy.” This phrase—or variations upon it—has become such an overused expression on the part of our leaders that it can be meaningless to the average taxpaying citizen. Yet, the need to find such meaning and ensure it informs U.S. fiscal policy has never been more urgent. The issues facing us in this quest are numerous, among them: How can trade taxes (tariffs) and other trade barriers be lowered to facilitate commerce among nations? How can our own tax laws be reformed to create a business climate more capable of nurturing investment and job creation? How can our country compete more effectively abroad without resorting to counterproductive subsidies that contribute to our rising national debt? How can the United States serve as an example to other countries by more fully embracing market-based economic principles? How should our nation participate in multilateral institutions concerned with matters of worldwide financial importance?
It is the last question that prompted the National Taxpayers Union (NTU) to support this study. Since its founding in 1969, NTU’s work on behalf of lower taxes and limited government has often touched upon international financial issues. In 1977, for example, NTU initiated a public education campaign, chaired by experts in finance, to warn that the mounting debts of the developing world and (then) Iron Curtain countries could not be readily repaid. During the 1980s, we opposed the Carter and Reagan Administrations’ attempts to vastly increase International Monetary Fund (IMF) quotas, and thereby burden taxpayers with shaky liabilities.
In more recent times, NTU has advocated suspending additional U.S. contributions to the IMF and multilateral development banks until participating nations honor their debt obligations. We have also called for greater protections for whistleblower employees with timely information about waste, fraud, and abuse at these organizations. Meanwhile, as a founding member of the World Taxpayers Associations, NTU has, for the past twenty-five years, partnered with activist groups on six continents to develop positive reforms that have guided nations toward limited governments.
In the G20, however, a tremendous opportunity exists to avoid taking on what this study’s authors rightly describe as the “political and operational baggage” of other entities such as the IMF and the United Nations—baggage that, not coincidentally, often encumbers taxpayers here and abroad with heavy liabilities. This can be achieved through basic decisions to establish more transparent and rational membership standards, which can provide the most valuable capital for any multilateral body: legitimacy among the taxpaying constituencies it intends to serve. In so doing, the G20 could take a first step to becoming a new model for economic policymaking that depends not on costly bailouts but more on proactive self-discipline in the common interest; such a model rewards free-market solutions from innovators instead of statist behavior from bad actors.
In 1983, NTU’s then-Chairman James Dale Davidson testified before the House Banking, Finance and Urban Affairs Committee on issues of international development. He warned:
Economic growth is not an accident of nature. It is a consequence of human choice. Any country can impoverish itself by maintaining overvalued exchange rates, subsidizing foodstuffs and thus destroying domestic agriculture, erecting corrupt and inefficient state enterprise to monopolize industrial development, and imposing domestic fiscal policies which push aggregate expenditure above output. . . . Rather than dealing out yet another hand to be stacked on international banking’s house of cards, we should take care, and look to the long run to the real sources of economic growth and prosperity. These lie in policy adjustments by the borrowing countries, not in subsidized lending.
Although much has changed in the global economic sphere—from the advent of the Information Age to the increased complexity of financial transactions—taxpayers everywhere continue to demand accountability from international institutions operating in that sphere. That is why some thirty years later, Davidson’s words still have relevance, and they should be read not as an indictment of all multilateral approaches to economic challenges. Instead, they can define a balanced vision for cooperation that respects the sovereignty of taxpayers, recognizes the responsibility of individual nations, and fosters stability—all while resisting the impulse to replace dynamic, often self-correcting market forces with the arbitrary judgments of bureaucracies.
Some would ask, can such an ambitious blueprint ever be reflected in the design of any international forum, much less the G20’s? Time will tell. It is our sincere hope that this study will begin a conversation on how to build such structures in the future—a conversation in which taxpayers deserve the most prominent voice.
Pete Sepp Executive Vice President National Taxpayers Union