G-20 Tug-of-War

A lesson from the G 20 so far seems to have gone unlearned. This regular confab among the nations' elites has produced a revealing insight: A central question about the current economic problems has produced complete disagreement. The Americans, true to Keynes, want to continue the flood of federal money to prime dry pumps and create the hitherto undemanding aggregate demand. The German camp, remembering the world altering effects of the last hyperinflation period in Germany, want to cut expenses and deficits and shrink their budgets.

So the basic question of the G 20 is unanswered. Moreover, there is antagonistic disagreement over how to approach the question. The solutions offered by the two camps are diametrically opposed.

The average guy should take this news with some concern. The really big leaders and elites just do not disagree, they completely and totally disagree. Paul Krugman really, really disagrees with the German position. The Austrian economists really, really disagree with the Americans. Now some disagreement within the most heterogeneous of groups is inevitable but a 180 degree disagreement in a leadership group is not. Somehow this schism within the world leadership has not been viewed as anything more than interesting. But it is a lot more. There is no middle ground between these positions, no compromise. There is no "partial pump priming", no "sort of budget control". There is no agreement and no hope for one. The average guy should be plenty worried. There is no solution pending and the leaders not only are stymied, they would not know what to do if they could. One option is disconnection; different countries with different visions could pursue different courses. But that means some will be wrong. Some might lose. And with the vision that we are one world, that solution is anathema.

The average guy probably thought he was in better hands.