Article Highlights:
-G-20 to meet in Pittsburgh this week.
-“Green” economy, banker compensation, and economic regulation are among the topics.
-Unique state of the global economy makes the situation difficult to navigate.
Leaders of the Group of 20 nations will meet in Pittsburgh this week to discuss a wide range of issues, each of which will challenge President Barack Obama’s leadership ability. As host of the summit, he will have the interesting and complex task of gaining general accord between the nations. With the economy in a unique and unprecedented state, leaders will undoubtedly have specific interests in mind when generating international policy ideas.
Among the topics are climate change and sustainability, highlighted by the very buildings in which the meetings will take place. The “green” buildings facilitating the G-20 summit are significant for several reasons. First, they display a commitment to the cause of improving environmental conditions. Next, they demonstrate the progress of the host city. Pittsburgh was once, and on many levels still is, an environmental disaster. With the collapse of many industries, new sources of innovation were needed. “Green” technology has filled this void. But perhaps most importantly, the “sustainable” buildings are a prime example of President Obama’s vision for a “green” economy.
There will be several selling points for the “green” economy at the summit. Among the most vital is the creation of jobs through government action in the energy sector of the economy. By developing new technologies, a bevy of jobs will be created in both the short-term and long-term sense.
Job creation is not the only financial concern of the G-20. Bankers' pay, the role of government in regulating the economy, and the handling of stimulus packages distributed during the recession will occupy a great deal of time at the convention. As mentioned above, the interests of individual nations will pervade the talks as economic recovery ensues. These issues are vital to rebuilding the global economy and G-20 leaders seem to recognize the urgency involved.
Banker pay has been a highly debated topic in recent months and seems to have become universally despised. The general consensus is that bankers’ pay is too high and bonuses are a wasteful allocation of a firm’s money—an issue of contention for many since the bailout packages were distributed.
The newest developments in the pre-summit talks seem to favor a bonus limit that is relative to the capital holdings of a firm. President Obama has been one of the foremost opponents to a specific, absolute limit on bonuses, citing impracticality. He also told Bloomberg News that a cap on Wall Street compensation introduces the question of athlete salaries and major industry-leading companies. Certainly a regulation of these types of salaries would be controversial and difficult to enact.
Attacking the regulatory issue is difficult for several reasons. For one, different nations have different ideas on laissez-faire economics and what the role of government should be. In addition, there are disagreements on whether shareholders or the government should be responsible for setting standards. Obama, unlike many of the European members of the G-20, favors the shareholder option in companies that do not use government money. Since the taxpayers are not at risk, he believes it shouldn’t be a governmental concern.
The overarching theme of the convention appears to be compensation. In the past, this has been a domestic issue. However, a highly globalized economy calls for compromised standards between nations. By settling these issues now, the G-20 leaders hope to avoid fallouts like those that led to the current global recession.
