The Chandrayaan has detected water on the moon. When you see the NASA presentation, you realise why physical sciences are way ahead of the social sciences. There is no machine that will detect ?green shoots of recovery? on any surface on Earth with the accuracy that the Chandrayaan did with the M3 instrument. No one is agreed about whether the recession is finally over or if the recovery will be this year, next year or never.
G-20 which intervened dramatically in April last, needed no subtle instruments to know that the world was facing an abyss. It acted quickly to restore confidence, suppressed its internal disagreements and came up with a fat number of $ 5 trillion for the expected reflation. Or was it just $ 1 trillion ?
The details did not matter. Six months later, there is a feeling that the output recession is over though employment is lagging behind. The worst is behind us. But while that is good news, that also creates a problem. Lacking real urgency, countries emphasise differences. Global imbalances need correction and IMF has launched new SDR bonds which have had a modest take up. But China is not ready for any greater change in its economic policy. It is easier to say that China in particular and Asia in general should abandon its export obsession and redirect itself to domestic consumption. America should stop being the World?s lone excess consumer and save and export more. The US would like everyone to agree to a sustainable growth strategy and have a global supervisor to check on national policies.
Obama may want IMF or Gordon Brown a revamped G-20 secretariat to do oversight, yet the US Congress will refuse to cede such powers to an outside agency. The Germans and French already know that their reluctance to match the Anglo- Saxon splurge of fiscal reflation has paid off and their recovery is quicker and sounder. The corner having been turned, the full recovery to a level that prevailed before September 2007 will take different shape and speed in different economies. There is no case for co-ordination let alone concerted action, even if we knew what to do.
Still the G-20 has been a good thing for global governance. The reason for this was clear to see last Wednesday in UN General Assembly. If Gaddhafi could rant on for 90 minutes and obey no rules, who would trust the UN to solve the world?s problems? The Commonwealth expels members for violating its norms; the WTO insists that members qualify to join by adapting their economies to a common set of rules. They have serious agenda and voting procedures. The UN has neither and every year the UNGA is a spectacle of the impotent and irresponsible wasting everyone?s time and the powerful staying away.
Hence the G -20 . It is small and serious and covers 90% of world?s GDP. It acted under emergency conditions last April and will tick over at a less effective but still useful pace. But the G-20 has lessons for the climate change problem. Despite the best scientific evidence and many concerned people?Rajendra Pachauri and Nicholas Stern among them, the world is still not seized of the urgency of the issue. The UN session was hot air and while many efforts were made to detect movement on part of China or the US, the findings were less reliable than what the M3 found on Chandrayaan.
Kyoto has come and almost gone. Copenhagen is already in danger of failing and many are saying that it should be postponed for another year so that serious business can be transacted. I am sceptical of any concrete result. Treaties may be signed, targets may be agreed but when the leaders go home, their short-term economic interests override. The reason is simple. The leaders know that while the warnings of several degrees rise in temperature are credible, their citizens are not yet focussed on the issue enough to suffer. It is not like the recession; it will happen by 2030 or 2050. The world lived for 60 years with the threat of nuclear annihilation and did nothing.
So let us have every treaty we can , but what will work is much more modest thinking on how to change household and company behaviour. How to make small changes in prices via taxes and subsidies to cut consumption of carbon emitting products and services, how to initiate new technologies which will help people adapt their behaviour without too much hardship?an electric car rather than a petrol driven one rather than no car, for example.
It will be many small changes as people slowly adapt in light of changing environment which will work. I doubt that we will have a real climate catastrophe like the recession scare which has just happened. The difficult task is to act in absence of a scare.
?The author is a prominent economist and Labour peer