UK Prime Minister Gordon Brown spoke today to a Joint Session of Congress (full remarks here). The speech was, in most parts, a loving paean to American values, and began by announcing the knighthood of Senator Kennedy. But towards the end it became a bit more concrete, as Brown called for a response to the financial crisis that's global, rather than national, in nature:
So when people here and in other countries ask what more can we do now to bring an end to this downturn, let me say this: we can achieve more working together. And just think of what we can do if we combine not just in a partnership for security but in a new partnership for prosperity too.On jobs, you the American people through your stimulus proposals could create or save at least 3 million jobs. We in Britain are acting with similar determination. How much nearer an end to this downturn would we be if the whole of the world resolved to do the same?And you are also restructuring your banks. So are we. But how much safer would everybody's savings be if the whole world finally came together to outlaw shadow banking systems and offshore tax havens?Just think how each of our actions, if combined, could mean a whole, much greater than the sum of the parts:- all, and not just some, banks stabilised;- on fiscal stimulus: the impact multiplied because everybody does it;- rising demand in all our countries creating jobs in each of our countries; and- trade once again the engine of prosperity, the wealth of nations restored.No one should forget that it was American visionaries who over half a century ago, coming out of the deepest of depressions and the worst of wars, produced the boldest of plans for global economic cooperation because they recognised prosperity was indivisible and concluded that to be sustained it had to be shared.And I believe that ours too is a time for renewal, for a plan for tackling recession and building for the future. Every continent playing their part in a global new deal, a plan for prosperity that can benefit us all.First, so that the whole of the worldwide banking system serves our prosperity rather than risks it, let us agree rules and standards for accountability, transparency, and reward that will mean an end to the excesses and will apply to every bank, everywhere, and all the time.Second, America and a few countries cannot be expected to bear the burden of the fiscal and interest rate stimulus alone. We must share it globally. So let us work together for the worldwide reduction of interest rates and a scale of stimulus round the world equal to the depth of the recession and the dimensions of the recovery we must make.Third, let us together renew our international economic cooperation, helping the emerging markets rebuild their banks. And let us work together for a low carbon recovery worldwide. And I am confident that this President, this Congress and the peoples of the world can come together in Copenhagen this December to reach a historic agreement on climate change.
It's a bit of a confusing speech given that Britain's stimulus plan is fairly paltry: 0.9 percent of GDP, as compared to 5.5 percent of GDP for our effort. As Justin Fox writes, this creates a free rider problem. "The concern is that if we in the U.S. do lots of stimulating and other economies don't, much of the money will just leak out overseas as we spend on imports but others don't buy our exports." Brown's speech implies total agreement with this analysis, but his country's policies aren't quite so aligned. Meanwhile, everyone is pissed at Germany.
