The G-20’s Empty Gestures

CAMBRIDGE – The world’s 20 most important finance ministers and 20 most important central bankers traveled to Washington this month from every part of the globe to accomplish, predictably, exactly nothing.

The subject of the G-20’s recent meeting was “global imbalances.” According to the communiqué issued by the group, the meeting focused on developing a procedure for identifying which G-20 countries have “persistently large imbalances” and why they have them. This delicate analytical task was assigned to the International Monetary Fund, which is to complete its work before the ministers’ next meeting in October.

It hardly takes a team of IMF economists to answer these questions. Anyone who has taken a first-year undergraduate course in economics would have no difficulty in identifying the countries with the largest trade surpluses and deficits. The United States wins first prize with a trade deficit of more than $650 billion in the most recent 12 months. No other country comes close enough to be awarded second prize.

The broader current-account indicator (which includes trade in services and net investment income) confirms America’s leading role: its external deficit is nearly $500 billion. No other country has more than a $100 billion current-account deficit.