G-20 Needs to Emphasize Competition, Not Harmonization

Anthony B. Kim / June 21, 2010

In a June 5 communiqué, G-20 Finance Ministers collectively recognized that,

recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances.

The words “differentiated for and tailored to national circumstances” are a welcome relief from the more typical “harmonization” (from the EU) or “balance” (from the U.S.) that often dominates G-20 conclusions.  While cooperation can be a healthy thing, we need to remember that it is competition, not cooperation, that is the primary driver of economic growth and progress.

That’s true when we are talking about competition among firms, and equally true when we are talking about competition among countries. Indeed, we have laws to restrain too much “cooperation” among competing firms, and we shouldn’t be too quick to embrace harmonization among countries’ policies and regulations. (more…)