Last week’s G-20 economic summit in South Korea was widely depicted as a failure for the Obama administration and a rebuff for the United States. In many respects, it was. Obama remarked that if the U.S. hadn’t tried to set the agenda, it would have had an easier time. “Part of the reason that sometimes it seems that the United States is attracting some dissent is because we’re initiating ideas,” he said. “We’re putting them forward. The easiest thing for us to do would be to take a passive role and let things just drift which wouldn’t cause any conflict.”
It’s a fair comment but also an exercise in gilding the proverbial lily. The fact remains that the United States entered the summit hoping for joint agreement on addressing global surpluses and deficits and on currency valuations. The key players here, of course, are China and America, but China was not alone in rejecting American formulas for global economic stability. Germany and Great Britain were equally dismissive of American financial policy, and especially excoriating of the Federal Reserve and Ben Bernanke for recent measures to inject $600 billion of liquidity to spark what has so far been an anemic recovery in the United States.
As a result of the Fed’s moves, the Chinese were able to turn the charge of “currency manipulation” right back at America, and all but accused the U.S. of blatant hypocrisy. The British prime minister, meanwhile, scoffed at the inability of Americans to bring spending under control.
All of that was text, but the subtext was more telling. Essentially, the other economic powers of the new world were informing the old economic power that they were done with lectures and dictates. They were done with America showing up and pronouncing how other societies ought to order their economic affairs. Take care of your own house first, they lectured right back, and come back to the table when you’ve learned some humility.
The irony, of course, is that Obama is the first president in memory who actually does combine strength and humility, but at this summit, it didn’t matter who he was. It mattered what he represents: an American legacy of power and control and an American reality of a changed global position where it remains astonishingly powerful but simultaneously challenged by a host of new competitors who are flexing their own muscle and refuse to be intimidated. The summit was therefore the most dramatic sign to date that the world after the financial crisis will not be the world before. Economists and historians may hate the phrase “this time it’s different,” but this time, it is.