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Is the global economy facing a “Bretton Woods” moment?

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President Joe Biden (center) and first lady Jill Biden (left) react upon arrival at Cornwall Airport Newquay, on June 9, 2021 near Newquay, Cornwall, England.

President Joe Biden (center) and first lady Jill Biden (left) arrive in Cornwall for the G-7 summit. Phil Noble - WPA Pool/Getty Images

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Back in April, in front of an international panel, Treasury Secretary Janet Yellen said the world collectively faced something of a “Bretton Woods” moment — a reference to the 1944 gathering at Bretton Woods, New Hampshire, where representatives from 44 countries established a new global financial system to address the needs of post-World War II economies.

While the global problems of today are noticeably different, Yellen explained that current world leaders may need to consider a similar level of change to adequately fix economic issues related to climate change, supply chain shortages and the ongoing COVID pandemic.

Now, in June, leaders of the G-7 economies are meeting in Cornwall, England, to continue discussions on that topic. It could prove to be the beginning of a new “Bretton Woods” style restructuring, according to Felicia Wong, CEO and president of the Roosevelt Institute, a nonprofit, liberal-leaning think tank.

“This is a moment where leaders and countries can step up to show that we can have solidarity, we can actually collectively manage our risks better,” Wong told “Marketplace Morning Report” host David Brancaccio.

Below is an edited transcript of Wong’s conversation with Brancaccio on how exactly this summer’s G-7 meeting could start laying out groundwork for a new, global economy and what G-7 leaders, especially President Joe Biden, need to keep in mind.

David Brancaccio: You got to participate, the topic is resilience. This is something that has been discussed among policy experts for years. Do you think its time has come? Do you get an indication that this is going to become more official, that we want a more resilient economy?

Felicia Wong: I do think, David, that it’s time for a new vision for economic resilience, not just for the United States, but for the entire planet in this post-COVID era. And I was fortunate to be invited to sit on an expert panel with representatives from all G-7 countries to consider this question in advance of the summit in Cornwall that’s coming up.

A new vision for economic cooperation

Brancaccio: Resilience. I mean, we’ve covered it over the years, but, you know, things will happen, and you don’t want it to pop the economy every time a thing happens.

Wong: Well, one of the things that our panel is putting forward for the G-7 leaders is something we’re calling a “Cornwall Consensus.” That’s in contrast to the old “Washington Consensus” of the late 1980s, which was one way of thinking about globalization. But that ended up really prioritizing a kind of “just-in-time” economy that made many of our international economic interactions, very thin. And that turns out that that doesn’t work very well.

So the Cornwall Consensus is something that really looks to multilateral cooperation to solve real problems for real people. Obviously, fighting global pandemics is one of those things. But we’re also arguing for things like more economic inclusion. We want to make sure that we facilitate full access for developing countries to global markets. Obvious ways, something like access to the COVID vaccine, is one important part of inclusion. So that’s a big piece of the Cornwall Consensus. We’re also arguing for better governance. It’s important that our international economic cooperation uphold labor standards across the board, that we promote sustainability, that we invest in a greener economy, again, not just in the United States, but internationally. And this is the vision for the Cornwall Consensus. You know, I think Joe Biden will be bringing that vision to the meetings that are upcoming.

Brancaccio: There’s a lot being made of President Biden: He’s going to be there, America is now going to play a more active role in this kind of global leadership compared to President Trump. But just showing up isn’t exactly leadership?

Wong: Well, I do think that one thing that the president will have to do is to show up as a good leader, as a good partner. America is back and ready to participate fully on the global stage. But he also has to show up with a vision that meets the moment, right? These intertwining crises that we face: obviously a global health crisis, obviously a climate crisis and also this crisis of trust, too many citizens don’t trust their governments to do what is good for them. And these are crises that I think Biden actually will have a vision to try to put forth at the G-7 meetings. I’m optimistic about that vision and having it be part of what our allies also agree to.

The global minimum corporate tax plans

Brancaccio: One of the big headlines already out of the G-7 is a global corporate minimum tax. We have the Treasury Secretary of the United States Janet Yellen who pushed for that. Yet most of those news stories, Felicia, ended with “Yeah, but it’s got to get through national parliaments, it’s got to get through the U.S. Senate. That’s unlikely.” How important is that agreement? Because it was an agreement in principle, it’s not a law.

Wong: You know, I think Secretary Yellen’s leadership on this question of a global minimum tax is incredibly important. Obviously, I hope that it will be passed by national parliaments, by the U.S. Senate, by the U.S. Congress. But regardless, I think what Yellen’s leadership shows here is this idea that the U.S. is back with a vision for what we need to be doing to make sure that we actually have the revenues to invest in this kind of public-purpose, common-good, decarbonization vision that both she and the United States writ large hold. So I think the fact that Yellen led on this is incredibly important. You know, the BBC, a BBC reporter said, “You know, we’re used to a very different Washington Consensus.” And I actually think that this idea of a Cornwall Consensus, it’ll be great if that’s actually led by the United States.

Brancaccio: Right, this Cornwall Consensus. I mean, how far do we take it? As World War II was coming to an end in 1944, they gathered up in New Hampshire, Bretton Woods, and reordered a lot of global economic relations. Is this at that scale, do you think?

Wong: I think we’re at that moment. We’re at a moment where, you know, we are suffering from COVID and climate and an overall distrust of governance. And this is a moment where leaders and countries can step up to show that we can have solidarity, we can actually collectively manage our risks better, we can actually create stronger supply chains. That’s been a lot of the economic conversation lately. Can we have a stronger supply chain, in say, semiconductors to make sure that we’ll have the parts that we need to build a decarbonized economy? All of these things — solidarity, risk management, supply, inclusion — these are part of the Cornwall Consensus, and now is the moment, I am hopeful, that we can make this happen. And I am certain that we have the vision, at least, to put forth on the world stage.

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