Study Calls for Replacing Four Members of the G20, Including Argentina and Indonesia

New Membership System Would Make International Financial Organization More Effective, More Accountable to Taxpayers

WASHINGTON, June 14, 2012 /PRNewswire-USNewswire/ -- The Group of 20, the powerful international organization whose heads of state will meet next week in Mexico to discuss the global economy, needs to change its membership criteria in order to establish a legitimacy that is fast depleting at a critical time. That is the conclusion of a new study published by the 362,000-member National Taxpayers Union (NTU). The study suggests replacing four current members of the G20 based on proposed membership criteria.

"With the anemic economic recovery weakening, global leaders should quickly consider how to fulfill the G20's potential for building economic stability," write the study's authors, Alex M. Brill and James K. Glassman.  "The place to start is by establishing criteria for membership and adjusting the group's composition accordingly."

The authors develop a system that uses key numerical indicators measuring nations' size, governance, and financial interconnectedness to establish country-by-country rankings for current and potential G20 members. Their goal is to create a practical methodology for membership standards that would give the G20 the legitimacy and trust it needs to fulfill its stated objectives: restoring global growth, strengthening the international financial system, and reforming international financial institutions.  Findings include:

• Two current G20 countries—Argentina and Indonesia—fall far short of the proposed membership criteria and should be removed from the body. Two other current G20 countries—Russia and Mexico—fail to qualify by a very small margin.
  
• Four current nonmembers—Malaysia, Norway, Singapore, and Switzerland—should replace these countries.
  
• Membership should be reevaluated periodically—a minimum of every five years and a maximum of every ten years. Such a system would lend further legitimacy to the G20 as well as provide "an incentive for countries on the cusp of gaining membership to implement reforms or strengthen their economies' growth prospects."
  

The authors stress that for the G20 to avoid the "political and operational baggage" of other organizations like the United Nations and the International Monetary Fund, solid membership criteria "can lend credibility to the G20 without affecting the manner in which it conducts its policymaking."

NTU Executive Vice President Pete Sepp notes that by following Brill's and Glassman's recommendations, "[T]he G20 could take a first step to becoming a new model of economic policymaking that depends not on costly bailouts but more on proactive self-discipline in the common interest; such a model rewards free-market solutions from innovators instead of statist behavior from bad actors."

Alex M. Brill is a research fellow at the American Enterprise Institute and former chief economist and policy director to the House Ways and Means Committee.

Ambassador James K. Glassman is the Executive Director of the George W. Bush Institute and a member of the newly established Investor Advisory Committee of the Securities and Exchange Commission. He is a former U.S. Under Secretary of State for Public Diplomacy and Public Affairs.

NTU is a nonprofit, nonpartisan organization founded in 1969 to work for limited government and economic prosperity in the U.S. and around the world. The group has long advocated for more accountable multilateral policymaking bodies that focus on practical, nimble responses to economic growth challenges instead of costly, bureaucratic interventions.

SOURCE National Taxpayers Union