While all eyes were on the rantings of Mahmoud Ahmadinejad at the United Nations, the United States — under President Barack Obama — was surrendering its economic sovereignty at the G-20 summit.
The result of this conclave, which France's President Nicolas Sarkozy hailed as "revolutionary," was that all the nations agreed to coordinate their economic policies and programs and to submit them to the International Monetary Fund (IMF) for comment and approval. Although the G-20 nations and the IMF are, for now, going to use only "moral suasion" on those nations found not to be in compliance, talk of sanctions looms on the horizon.
While the specific policies to which the U.S. committed itself (reducing the deficit and strengthening regulatory oversight of financial institutions) are laudable in themselves, the process and the precedent are frightening.
We are to subject our most basic national economic policies to the review of a group of nations that includes autocratic Russia, China, and Saudi Arabia. Even though our GDP is three times bigger than the second-largest economy (Japan) and equal to that of 13 of the G-20 nations combined, we are to sit politely by with our one vote and submit to the global consensus. Europe has five votes (U.K., France, Germany, Italy, and the EU) while we have but one.
And the process will be administered by the IMF, whose counsel to less-developed nations during the past two decades consistently has called for social pain and economic austerity. The IMF's misguided policies have been responsible for more revolutions than Marx, Engels, and Lenin combined. Its bureaucrats' arrogance is legendary and their search for appropriate punishments to fit the crime of spending too much on the poor smacks of colonialism and imperialism. They are our new overseers.
This combination of the IMF and the G-20 will work not only to structure national economic policies but also to limit executive compensation at financial institutions. The watchful, wise leaders of such nations as Turkey, Saudi Arabia and Indonesia — among others — will monitor Wall Street to assure themselves that its compensation is not out of line. One particularly looks forward to the views of the Saudi monarchy on this question of excessive personal enrichment.
Perhaps as part of his public spasm of apology, President Obama also strove, successfully, to increase the voting strength of the debtor nations on the IMF from 43 percent to 48 percent. This is the economic equivalent of giving deadbeat debtors more votes on their bank's governing board of directors.
Thus, the world's most successful economy — ours — which is the only one that has produced reliable economic growth for three decades and has lifted real personal incomes almost every year, is going to subject itself to the burden of justifying its own economic policies in front of a global community of 20 nations, some of which do not even embrace free-market economies in the first place.
Indeed, it is only through access to our markets that nations have been able to escape poverty. Japan, Germany, South Korea, Taiwan, Singapore, China, and India sequentially have trod this path into prosperity.
Obviously, we live in a global economy. But the United States is 24 percent of it. We are entitled to more than one-20th of a voice, and it is the world that should be following our policies — not the other way around.
Much of the damage of the Obama administration can be undone at the next election. But such grants of sovereignty to autocratic, backward, bureaucratic, and even communist nations will be hard to undo. The world is recovering from its leftist obsession — e.g., the Merkel victory in Germany.
But by the time the voters discover how phony, failed, and fraudulent these policies are, we may have given it all away already. Irrevocably.