Economists To G-8: Want Growth? Try This
If economists were cheerleaders, their favorite shout-out might be: "What do we want? Growth! When do we want it? Now!"
They won't actually shout those words, but they may be thinking them as global leaders meet this week for a G-8 summit. Economists are hoping that at the gathering in Northern Ireland, leaders of eight major economies will discuss expanding global trade and investment to spur job creation.
"The world needs growth," said Scott Miller, a trade policy expert for the Center for Strategic and International Studies, a research group.
Too many countries have legions of unemployed people but too few tools to boost job creation, he said. That's because their leaders are trying to cut government deficits, limiting their ability to fund "stimulus" programs. At the same time, central bankers can't lower interest rates further because they already have done lots of slashing.
So if you can't spend government money or cut interest rates, where can you find a hot poker to jab the economy and get it moving?
"Trade is where the growth is now," Miller said Friday at a gathering of economists and trade experts at the Peterson Institute for International Economics. Miller and the other participants were poring over new data put together by the institute.
The study's conclusion was: "Increased trade means more jobs in the export sector, and export jobs are generally better paid than jobs in other sectors of the economy."
Economists say examples abound. Here's just one: Honda Accords built in Marysville, Ohio, are shipped to South Korea. The Buckeye plant now has 4,400 workers and is undergoing a $23 million expansion.
You don't have to try to persuade British Prime Minister David Cameron that trade can boost growth. As host of the G-8 Summit, he has promised to put the focus on expanding commerce among nations. His agenda is strongly backed by President Obama. The two are meeting at the Lough Erne Resort in Northern Ireland, along with the heads of Germany, France, Italy, Canada, Russia and Japan.
The eight leaders will spend two days on "the three T's" — trade, taxation and transparency.
Given how slow job growth is in Europe, where the unemployment rate exceeds 12 percent, Cameron says more business opportunities have to be created for exporters. The EU says about 30 million of its jobs — or 10 percent of all paid positions — are tied directly to international trade.
The EU and U.S. are about to begin negotiations to create the Transatlantic Trade and Investment Partnership — a pact that would expand trade across the Atlantic Ocean and create the world's largest free trade zone.
Still, Cameron won't have an easy time getting all the leaders on the same page. For example, France is strenuously objecting to any deal that might allow Hollywood moviemakers to overshadow the French film industry. The French already have persuaded EU trade ministers to promise that "culture" will not be up for negotiations, at least for now.
And many Europeans do not want U.S. ideas about data privacy and genetically modified foods to take root on their continent.
And in this country, many labor leaders and consumer groups also have various objections to massive trade deals that could have all sorts of implications for food safety standards, wages, import competition and more.
Those interest groups are not being included in talks that could lead to "trade agreements, enormous in their scope and reach, [that] pose serious threats to consumer health and food safety, in the U.S. and in other countries," Ronnie Cummins, national director of the Organic Consumers Association, said in a statement.