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Meetings or Markets?

Around the world, conferences have convened. But will they be of any use?

12:00 AM, Mar 20, 2010 • By IRWIN M. STELZER
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The real question is whether these meetings really matter, whether they are full of sound and bottles of mineral water, but signify nothing. It is arguable that in the end you can’t fight markets. Take OPEC: Its members might like $80 oil more than twice as much as they like $40 oil, but if technology permits the vast amounts of natural gas now known to exist in shale deposits to be extracted, and used in cars and trucks, OPEC might be as effective as a cartel that controls the production of horse-drawn carriages. If the rating agencies decide that continued deficits in America are taking sovereign and related debt to levels that will place a claim on too large a portion of national income, nothing the Fed will be able to do at any meetings it might convene will prevent interest rates from rising, and growth from slowing. If the dollar peg unleashes inflation in China, no meeting can sustain it. If passengers decide that the combined impact of high fuel and labor costs makes flying too expensive, some will shift to trains or stay home, and nothing the union bosses can do at their meetings will save the jobs of their members.

But that is for the long run. Politicians do not live in the long run. In America, they live in a two- to four-year cycle; in Britain in at most a five-year cycle; in many other countries in which democracy is the preferred form of organization, many politicians live almost from day-to-day, as opposition parties wait for a stumble by the government-of-the-moment, and demand elections.

So at least for now we are more or less certain to see results of these many meetings that are, to put it mildly, disconcerting. Fiscal policies that increase national debt. Continued loose monetary policy, either based on conviction by central bankers that the recovery is too fragile to allow tightening, or on their fear that to tighten while unemployment remains high will result in a further sacrifice of what remains of their independence from politicians who prefer not to face out-of-work voters. High oil prices. Continued maintenance of an undervalued yen, forcing the Obama administration, already under pressure from its trade union supporters, to swing to protectionism to stem the flow of imports and increase exports so as to create “good, high-paying American jobs.”

Perhaps a meeting moratorium might be in order, and markets left to do their work.

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