The world economy needs institutional deepening to allocate capital in a more stable, productive, and sustainable fashion, as well as to translate economic growth and integration into stronger, broad-based gains in living standards. Economic institution building along precisely these lines was crucial to the success of many advanced countries in creating middle-class prosperity and stronger, more stable growth as their economies integrated nationally in the 20th century. It also holds the key to humanizing globalization and making it more sustainable. But this institution building will require the international community to go beyond the roadmap of financial sector and temporary macroeconomic stimulus measures that have been the main result of the G-20 leaders’ process until now.
Leaders have a golden opportunity in Pittsburgh to fashion a Global Deal along these lines that would amount to a populist approach to globalization in the best sense of the term—a concrete plan to make it work for more people. They must begin to refocus international economic policy and institutions on the goal of improving the quality of global economic integration and not simply its quantity. As progressives understand instinctively, a strategy to place institution building on an equal par with integration and efficiency is a strategy to increase both equity and growth. Far from being mutually exclusive policy objectives, these can be mutually reinforcing, a truth that has been obscured by conservative economic dogma for far too long.
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