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Workers look to G20 leaders to pull world out of recession

We need a new set of rules for both the global economy and those who profit from it the most.

Ken Georgetti is in London for the G20 meeting as a labour Ken Georgetti, President of the Canadian Labour Congress

April 01, 2009 — Leaders of the G20 will meet in London tomorrow to follow up on their commitment in Washington last fall to deal with the global economic crisis. Trade union leaders from around the world, including myself, will meet with British Prime Minister Gordon Brown and his counterparts and press them to live up to their responsibilities.

The global economy is in free fall, gripped by what the International Monetary Fund calls a "Great Recession." In a crisis that is unfolding everywhere at once, trade and production are slumping, unemployment is soaring, pension funds are evaporating, banks are toppling, stock markets are cratering, and workers everywhere are terrified and angry.

This crisis happened by design with the collaboration of almost every G20 national government. It is the product of a reckless, unregulated financial system and it will not be ended until we have a new set of rules to govern the global economy. We must govern banks, balance trade more fairly between countries, and ensure that economic growth leads to shared prosperity and not just the enrichment of a tiny global corporate elite. Our help must be directed primarily toward the victims.

G20 governments must ensure that their commitments last fall to a major, coordinated stimulus package are met, but they must also redouble their efforts. The planned increase in government spending is large, but it is inadequate given the ongoing collapse of global trade, business investment, and consumer confidence. Canada must follow the US call for even greater efforts, and press other governments to match and go beyond the target of 2 percent GDP.

The priority should be income support for the millions of unemployed workers who have families to feed, and major job-creating investments in public infrastructure and services, toward a green economy.

The second priority is simple. The people who control and have influence over vast sums of money must be subject to clear and transparent rules and oversight to ensure compliance. We must stabilize the global financial system, particularly in the US and Europe. If governments do not take the needed radical steps to deal with the problem of insolvent "zombie" banks, there will be no recovery, but rather a multi-year, extended, Japanese-style downturn.

The third priority must be to redesign the financial system to make sure that a crisis like this never happens again. We must regulate the so-called shadow banking system of irresponsible hedge funds and private equity funds, prohibit super-risky financial products and limit excessively risky borrowing. And we must, once and for all, make tax havens and jurisdictions that allow secret bank accounts illegal.

We have to make sure that ratings agencies are truly independent and trustworthy so that our pension investments are safe. We need to put an end to the incentives and lucrative multi-million-dollar bonuses which led bankers and CEOs to take huge and enormously destructive risks.

The fourth priority must be to ensure more effective global economic governance and oversight. The international labour movement supports a stronger role for the International Monetary Fund, but it and other global institutions must be made much more representative and accountable. The G-20 - which brings together countries with more than 80 percent of global output, including big developing countries like China and Brazil - is a more useful forum than the small club of advanced industrial countries that currently dominate the IMF.

Finally, the world's trade unions strongly support the call for allocating greater resources to help emerging economies deal positively with the crisis. This is in contrast to previous structural adjustment programs that have led to depressions and dramatic cuts to jobs, wages, social programs and public services.

Prime Minister Stephen Harper will be in London and will set the agenda for next year's G8 meetings in Canada. It remains to be seen if he can abandon discredited conservative economic dogma and join the search for something new. The first priority of trade and global expansion must be to improve the lives of the world's citizens.

Links and sources
  Canadian Labour Congress website

Posted: April 02, 2009

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