<p><b>Romesh Vaitilingam</b>: &nbsp;Welcome to Vox Talks, a series of audio interviews with leading economists from around the world. My name is Romesh Vaitilingam and today's interview is with Professor Dennis Snower, president of the Kiel Institute for the World Economy and director of the Global Economic Symposium, an initiative he launched in early autumn, 2008. When Dennis and I spoke in July 2011, I began by asking him what he felt the GES had achieved over its first three years.</p>
<div style="margin-bottom:11.0pt;"><b>Dennis Snower</b>: &nbsp;Well, after three years of Global Economic Symposium, we've had a few major insights. The first insight came right at the first symposium, which took place two weeks before the collapse of Lehman Brothers. There it emerged that the panels all believed that we were standing at the edge of a precipice and that the world was going to hit a huge financial crisis, something that would have struck each individual participant as very unlikely. So what we learned from that is that if you bring a lot of interesting people together across nations, cultures, professions, and let them interact, they come up with more than what any individual could himself or herself have predicted or seen into.</div>
<div style="margin-bottom:11.0pt;">The second thing is that it has become clear through all these symposiums that there is a need for global problem-solving at a decentralized level. Our global institutions are failing to deal with the big problems that we face, from climate change to financial crises. Even in international organizations, national governments often pursue their own national perspectives.</div>
<div style="margin-bottom:11.0pt;">But many people around the world understand that we deserve better as a world community, and therefore it's important to have occasions in which we come together for the purpose of global problem-solving.</div>
<div style="margin-bottom:11.0pt;">I think the third insight that we gained is that in order for us to work effectively, to deal with problems that we all share, we probably all will need to develop a global identity. Among the many identities that we have in our various walks of life, one of them should be an identity as a human being among many other human beings engaged in helping the planet to thrive.</div>
<div style="margin-bottom:11.0pt;">And if the Global Economic Symposium helps push these ideas along, then I think it will certainly have served its purpose.</div>
<div style="margin-bottom:11.0pt;"><b>Romesh</b>: &nbsp;You talk in the introduction to the latest edition of the Global Economics Solutions report about the importance of the idea of global citizenship. And you describe these two models of how we think about society - one as a marketplace, one as a melting pot - as being ideas that we should move beyond and think about global society in a different way. Can you expand that idea a little bit more?</div>
<div style="margin-bottom:11.0pt;"><b>Dennis</b>: &nbsp;What's clear is that the only way for us to deal with big global problems is for people to come together across national lines. This is difficult because most of the instruments of policy are located at the national level. Now in order for us to come together across national lines, it requires that we identify with one another. There have been various ideas, models of how we might identify with one another. One is a market-based model that says that as part of our engagement in the global economy, we will come together as independent agents in the conduct of our economic transactions. Reaching common goals because through our economic interactions we make each other better off.</div>
<div style="margin-bottom:11.0pt;">This hasn't worked for various reasons. The main one being that there are huge problems of public goods - such as greenhouse gas emissions or tragedy of the common problems such as deforestation or overfishing - that free markets simply can't deal with.</div>
<div style="margin-bottom:11.0pt;">Another way to overcome this problem that's been suggested is that we consciously become a global community, as if we were part of one world government. &nbsp;But this seems increasingly unlikely because national identities, cultural identities, religious identities are becoming more rather than less important with the passage of time. And to rely on a global identity to emerge, I think, is probably a recipe for disaster given the seriousness of the global problems that we have.</div>
<div style="margin-bottom:11.0pt;">And so, the idea that underlies the GES is that we don't have to give up our identity to work on global problems. All we must be engaged in is an effort to build the global home. That means that we, across cultures and nations and professions, work together to deal with big problems that we all share and thereby create an environment in which we all can feel more at home in.</div>
<div style="margin-bottom:11.0pt;">And in the process of doing so, we gain a higher degree of affiliation and understanding for one another, which will help us in our further global problem-solving efforts.</div>
<div style="margin-bottom:11.0pt;"><b>Romesh</b>: &nbsp;Perhaps we can talk a little bit about some of the solutions that have come out of the three meetings of the Global Economic Symposium over the past three years. You've ranged very, very widely in the kind of issues you focused on, from issues around the financial crisis, economic recession, climate change, energy issues, education, poverty, and development. Are there one or two solutions that you might particularly pick on to give a demonstration of the kinds of work that the GES comes up with?</div>
<div style="margin-bottom:11.0pt;"><b>Dennis</b>: &nbsp;OK. Let me give you three completely different types of solutions that have emerged from the GES that are all useful in very different ways. The first proposal was to suggest that all financial institutions that are too large to fail issue debt that automatically converts into equity as soon as they have solvency problems, as soon as their capital ratios are too low. What that would mean, if this proposal were implemented, is that institutions that are too indebted would lose their indebtedness but their stock market valuations would decline. That would give stockholders the right incentive to tell the managers of these companies to avoid generating excessive systemic risk. That's one of the things that we lack. One reason why we got into the financial crisis is that these large financial institutions generated more risks than they themselves had to bear in terms of costs, because they're bailed out by national governments. And this proposal would put the responsibility and the cost of the risk back into the hands of the financial institutions themselves.</div>
<div style="margin-bottom:11.0pt;">The second example, completely different, concerns the problem of overfishing. There, the proposal is that instead of specifying fish quotas by weight, specify them by number of fish. If you did that, then fishermen would have an incentive to avoid catching small, young fish. That would give fish populations a chance to regenerate. So a very simple change in the basis for measuring quotas could have very large effects on the future of fish populations.</div>
<div style="margin-bottom:11.0pt;">A third interesting idea on how to alleviate poverty in poor developing countries is to introduce IOUs that require farmers to pay only in good harvests. In developing countries, a big problem is that farmers don't have access to capital markets. And so they can't borrow money in order to buy machines or fertilizer and so they're trapped in a cycle of poverty. So, they need this access, but they can't afford to pay unless harvests are good.</div>
<div style="margin-bottom:11.0pt;">And this new financial instrument would require them to pay only when harvests are good, and that is something they would be able to do. And given this undertaking, that they would pay when harvests are good, and good harvests are not something that they themselves can influence, they create a financial instrument that is worth something, and by selling that financial instrument, they could get the much needed credit they need to make their investments in agricultural equipment and fertilizer.</div>
<div style="margin-bottom:11.0pt;">So, these are just three examples of very different solutions that are useful on a global scale, and hopefully will be taken up in the future.</div>
<div style="margin-bottom:11.0pt;"><b>Romesh</b>: &nbsp;Could we talk a little bit about the international reach of the GES. The first two meetings happened at Ploen Castle in Schleswig‑Holstein. The last one, in the autumn of last year, was in Istanbul. Seemed to be a fantastic place to have the event. Turkey is such a nexus if you like, in the global economy, global society, the links between Europe and Asia. Can you reflect a little bit about on the importance of GES making this move?</div>
<div style="margin-bottom:11.0pt;"><b>Dennis</b>: &nbsp;It was terribly important to take the GES outside Germany and have it take place in a truly important country. In a country that will be particularly important in the future. Turkey is what we call a fulcrum country. A country that straddles Europe and Asia. A country that seeks to integrate different cultural and religious groups. A country that seeks to have a dialogue between religious and secular segments of society. A country that has been growing quickly. A country that seeks to have a dialogue between Western liberal humanism and Islam. A country that has an increasingly important role to play in world politics. This is an interesting country in which to have had the GES because it shows that the GES is a forward‑looking organization. It is an organization that tries to peer into the world as it will be in 10, 20, 30 years time, and find countries that may help shape the future in useful ways. And in addition, of course, by taking the GES into Turkey, we have access to new communities, which remain loyal to the GES, and help this symposium become truly global.</div>
<div style="margin-bottom:11.0pt;">The only way for it to fulfill its goal is for people in different countries and cultures really to work together, and the best way to help them to do that is to go into different countries and establish communities of interest.</div>
<div style="margin-bottom:11.0pt;"><b>Romesh</b>: &nbsp;You're coming back to the heart of Europe for this year's GES, happening in Kiel in October of this year. Coming back to Europe facing some really big questions. I wonder if you could reflect a little bit on the short and longer‑term issues facing Europe.</div>
<div style="margin-bottom:11.0pt;"><b>Dennis</b>: &nbsp;I think it will be very important to have the GES in Germany this year. Particularly because I think everyone in Europe realizes that we are in the process of writing history. Europe has been in the midst of a financial crisis for some time, and the place of Europe in the world is not clear. But it's clear that the decisions taken now will affect what place is occupied then. How social integration should proceed, how open the European economy should be, how culturally open we should be. Questions of accession to the European Union continue to play a very important role, and will play an increasing role in determining European identity. While all this is going on, we're also establishing hopefully institutions that will enable us to live together in a stable way in terms of our fiscal policies. That is an interesting nexus of questions, which the Global Economic Symposium ought to, and will address.</div>
<div style="margin-bottom:11.0pt;"><b>Romesh</b>: &nbsp;Final question, Dennis. You've got Kiel coming up in October. What future plans for the GES?</div>
<div style="margin-bottom:11.0pt;"><b>Dennis</b>: &nbsp;Next year, the Global Economic Symposium will take place in Brazil. And we're extremely excited about this prospect, for a wide variety of reasons. Brazil is another fulcrum country that has an important role to play in terms of global energy policy, in terms of providing new visions of global integration, new ideas on how to deal with problems of energy and resources, and also on how to deal with problems that arise in megacities. It is also involved in important exchanges culturally that straddle Latin America, North America, Europe, and Asia, and is one of the countries that will determine our global future. So, to discuss environmental issues, energy issues, long‑term economic growth, the future of emerging economies relative to the advanced established economies, to see that from the perspective that Brazil offers will be particularly exciting, and so we're very much looking forward to having our symposium there next year.</div>
<div><b>Romesh</b>: &nbsp;Dennis Snower, thank you very much</div>