 Good morning, and welcome to Davos. My name is Jim Frederick, and I'm the International Editor at Time Magazine. And it is my great pleasure to welcome you to one of the kickoff sessions of the 2012 World Economic Forum in Davos. As you all know, Davos is a forum where some of the world's most distinguished minds come together to discuss the world's biggest, broadest, and most pressing problems. And I think, as this past year has shown, some of the problems we are facing today are more pressing than they have been in a long, long time. As a bit of a departure and in an attempt to foster a more spirited discourse, the World Economic Forum and Time have framed today's panel as a debate. Centered on discussing the premise is 20th century capitalism failing 21st century society. This morning, I'm honored to be flanked by some of the finest minds who have convened here today to help us get some traction on these issues. In alphabetical order, but not necessarily in seating order, we have Sharon Burrow, General Secretary of the International Trade Union Confederation. We have Brian Moynihan, CEO Bank of America. We have Raghu Rajan, the Eric G. Gleacher Distinguished Professor of Finance at the Booth School of Business at the University of Chicago. We have David Rubenstein, co-founder and managing director of the Carlisle Group. And Ben Vervan, CEO of Alcatel Lusant. And my thanks to all of you for joining us. So some specifics about how we're going to run this morning. In keeping with the spirit of an Oxford-style debate, I'm going to begin soon with a vote that I will throw out to the audience about whether they agree, disagree, or undecided about the resolution that 20th century capitalism is failing 21st century society. And then, because I don't really think that a five-part, that Oxford-style debates are not really designed to be answered in turn by five people. And I think it would get quite tiresome if we went all the way down the line, do you think this is true, do you think this is true? I'm going to break the session up into smaller, more generalized mini postulates to see if our panelists will be willing to take positions before or against. After a couple rounds of that, we'll have some more info to see where our panelists stand. I might have some follow-up questions. And then, with anywhere between 20 to 25 minutes to go, I can open the panel all up to questions from the audience. And finally, with only about two or three minutes to go, we'll close the session with another round of voting to see if anybody in the audience has changed their position on whether or not they think in Oxford-style debate style that they think that 20th century capitalism has failed 21st century society. So that's a lot of material to get through. Thanks again for being here. And just as a reminder, because we do have so much to talk about, if both panelists and audience members alike could be completely yet succinct in both their questions and answers, even probably more succinct than I've just been. So in order to begin, I'm going to offer the resolution. 20th century capitalism is failing 21st century society. From the audience, could I please see a show of hands? Those who agree with the resolution. I'm going to say that's about 40% to 50%. How many disagree with the resolution? That's probably 20%. You have a roll call vote? What? You have a roll call vote? Well, we could, yeah. Unfortunately, this is a room without the little voting machines. And because it is an option, how many are undecided? Ooh, at least it's a resolute group. Actually, I'm curious from the panel, if I could just throw this out, how many of you are in favor of the proposition that 20th century capitalism is failing 21st century society? We have one vote. One against four. OK, so we know where Sharon will stand. She will be the confrontationalist for the. I think I'm outnumbered. There's something slightly unfair about this. Come forward. I assume it's not a gender related issue, either. OK. So as promised, because I don't think it necessarily makes sense to have them answer in turn the same question five different times, I'm going to throw out a smaller premise that I hope will get us some information moving towards the larger premise. So here's a concept that's been much discussed in the press, including time and other places in the aftermath of the economic crisis. And these premises are necessarily vague and generalized. We can drill down deeper into them as we discuss. But here's a premise. Corporations have too much power. And here I'm not just talking about arguably under-regulated companies in Western liberal democracies, but also resurging state capitalism systems in China and Russia, Middle East, and elsewhere. Now, Sharon, as probably the designated confrontationalist, I have a feeling that you would agree to this premise. Absolutely. What you've got, we believe in a principle called fair go all around. And when you have extremes of power on any side of the equation, then whether it's capitalism or governance or governments, then the balance gets out of whack. And right now we've lost a moral compass. We think you need to reset, redesign to some extent capitalism. We believe, by the way, in sustainable business and secured jobs, so it's not about the system. It's about the model of the system. And when you have the greatest inequity since just before the 30s Depression, this is actually bad news for capitalism because their prescriptions are actually eating themselves up potentially. If you look at Europe, you've now got the latest predictions of negative growth. And yet we warned that rushing mindlessly to austerity, listening to the obscenity of the marriage between the ratings agencies 3 and oligopoly in the world, too much power if there was ever any example of that. And the bond markets, without sitting down and looking to a growth strategy, would fail both business and workers. So think of some of the statistics. Greatest inequity since before 1930. You've actually, and the Great Depression, you've actually got 17 of the richest countries in the world who've gone backwards in equitable terms. What's that do to demand? Then you've got 210 million people out of work. So the market's lost its capacity to actually soak up people who need to be employed, to have a job, to create that demand, to generate sustainability. And we have 45 million young people, our children and grandchildren, entering the labor market every year to economies that can't accommodate them. So, you know, I could go on. I mean, there's the greed. We must redesign the model, but we must reset it. Greed, stop the greed. You know, there's, of the high-worth individuals, there's something like $11 trillion plus in offshore assets. That's $250 billion of tax that could be going towards. In fact, it's something like three times the amount of aid provided to the developing world. And if you look at taxation, you know, this is now a national sport, everywhere, avoid taxation. We actually need to say, if capitalism's going to sustain itself, it's going to provide secure jobs. It has to distribute wealth evenly, and it has to make a contribution to the common good. And let me say, finally, on the power piece, greed, profit, above all, you know, unless you actually reinvest in social protection, the social protection floor now endorsed by many of the world's leaders and ourselves, unless you actually invest in minimum wages on which you can live, and unless you reinvest in collective bargaining to distribute the wealth, then frankly, those who want to have greed at all costs, to not work with unions and other civil society groups in terms of the common good, whether it's bargaining with unions or aid and development with others, then you're actually undermining your own future. So, absolutely, too much power, and it's time to reset, redesign, let's see some innovation, and let's get a seat at the table for the real economy. Will the real economy stand up? The financial sector's killing you, and unless employers and workers actually sit at the table with governments and redesign the system, then it will continue to fail our societies. It's as simple as that, and nobody will like the social unrest that will follow. Thank you. Ben, I was going to ask you about this question, because we talked about it a little bit in the green room, and you pointed out that this was a very vague concept, you know, power meaning what, corporation meaning what, but framed within her response, she talked a little bit about iniquity, she talked a little bit about greed, there was an implied critique of governments and the, I would say, the late 90s-style capitalism, profit motive above all, would you care to respond to the concept that, you know, admittedly vaguely, corporations have too much power? For the sake of the debate, my answer would be they have not enough power. Great, and the question is not enough power for what. I mean, I understand this is a debate about who's the villain, okay, who's the culprit? And first of all, maybe the culprit is the philosophy, so the culprit is capitalism. Well, if you travel the world, you'll find places where the aspiration is to go to capitalism, because it has lifted millions and hundreds of millions of people out of poverty. So maybe it's not the philosophy itself, it's the way we execute it, and now people say, well, okay, if that's the case, maybe it's the corporations. Well, I heard the discussion, it was interesting to talk about securing jobs. Securing jobs is the problem. If you're in a job, you get the unions to secure where you are. But if I'm not in a job, how about creating jobs? Creating jobs is something completely different from a philosophical point of view than securing jobs. I think we have to have a real discussion. At the end of the day, we are living in a world that is shifting, power shifting from west to east. Reality is shifting from a physical world to a digital world. People are 24 seven involved. The young people have a very different set of criteria than the people that are empowered today. So we need to talk about innovation, sustainability, I mean real sustainable. And we need to talk about reform, not just about corporations and greed. I mean, it's too easy. It's about decision making. Why does it take Europe two years to come to a conclusion that they knew that they had to face in any way? The only way that happened is bad news became worse because we waited two years to do the inevitable. Unless we're going to take the hard questions seriously, to be honest, this is a great lead off of frustration, but it doesn't solve anything. Can I just ask one follow up question? I mean, that was a fantastic answer and it provides a lot of fodder for the rest of our discussion, but you introduced it saying that the corporations don't have enough power. What would you like your corporation or other corporations to do that you feel that they're unable to do? So I took three points. The first point that I took was, let's see what we can do in innovation. Innovation means creating. If you look at legislation and regulation, you know, I'm a green believer. So if we want to do what we really need to do, we bump into conflicting priorities from all kinds of regulates, the EU, the American government, and all kinds of others. In one side, they say this is what we want, but the rest of the world, their own world, isn't there yet. So there are all kinds of conflicts there. That's why I say, not enough power. We need to choose. Got it. Okay, there's a lot of great information here and we will get back to a lot of it. I'm gonna move on to another premise. And I like the way that Ben framed it because let's be frank, you know, he said really a lot of what this panel about is who is the villain, who is to blame. And frankly, banks have received a lot of the blame for a lot of the problems that the economic system has suffered over the past several years. So I have a premise here that large banks can cause harm to the social good because they enjoy a disproportionately favorable risk-to-reward ratio, or I guess it would be reward-to-risk ratio. This is the too big to fail syndrome. Then there seems to be an ongoing social bitterness and resentment that being too big to fail is both a real and vicious cycle. Now, Professor Rajan, I'm gonna ask you whether or not you agree with this premise because if I'm not mistaken, you have written about this quite extensively, including in most recently in the most recent issue of time. So would you take a four position on this that to a certain degree, banks do have an overly favorable reward-to-risk ratio? I think the answer is yes for large banks, but let me come to that in one second. I wanna address the previous debate a little bit. I mean, this issue of inequality and whether warped corporate governance is the cause of this inequality. I think that was the premise that we first heard. And I would argue that the deeper forces which are driving the inequality and unless we tackle those deeper forces, we have no chance of rectifying it. So I think three big forces, the fact that technology has required greater and greater skills. Second, the fact that we have a global market now and therefore the competition for talent is global and talent is more important because it has a global arena in which it plays. And third, that clearly over time, the rewards to innovation, the need for innovation is also increasing again, the demand for skills. So technology, competition, globalization, need for innovation, all these are pushing for higher pay at higher levels of skills. Now, this is not to say that this explains what is happening at the top 0.1%, but clearly when you look at the top 90th percentile, why that's running away from the 50th percentile, it's ultimately because of these forces. These are not going to be affected by corporate governance. Lawyers, doctors and lawyers today are earning much more than they used to. A lot of the people in the top 1% are not necessarily just corporate executives. They're lawyers, they're doctors, they're professionals. The returns to skills have increased. But the minimum wage in America is $7.20. That's lower in real terms than in 1969. How can those people buy your product? That is a different question. The question is whether the skills are being rewarded justly or whether this is a complete failure of corporate governance. I don't think it's a failure of corporate governance by-laws. Not to say there aren't egregious instances where corporations overpay their executives. Those are problematic. But I don't think by and large, you can explain the rise in wages of the upper levels of the population simply by bad corporate governance. Now to the question that you asked me a minute on that. Clearly large banks have had an advantage. They are too big to fail. They are too complicated to fail. That is not to say immediately that the answer is to break them down. You may replace too big to fail by too many to fail. And we have seen instances certainly during the Great Depression in the United States. The big question was why do we have so many small banks because they're failing like flies? We need to find ways to revive them. We've got deposit insurance then. So the immediate answer is not shut down the large banks and create a lot of smaller banks. It is to make the larger banks better managed and second, have the larger banks carry better buffers and third, make the larger banks more failable, so to speak, more easy to fail so they don't enjoy this premium. Which I think is a privacy of capitalism when any entity sort of survives regardless of how bad it does. When there's no chance of it being destroyed, it prevents entry, it prevents competition, and that ultimately is the cause of the demise of capitalism. Okay, now Brian, I think that you might be interested in taking the opposite side of whether or not banks enjoy a disproportionate reward-to-risk ratio. I think you have to go back and it's embedded in all this as what the role we play as an institution. So we play a role where we transmit in society basically what goes on. We reflect economies of whatever country a bank is in by and large, and so when capital markets are going strong you'll see capital markets activity heat up when consumers are borrowing, you'll see that heat up. And so we do that for everybody here. I mean, we literally, the clients like Alcatel or the clients like the university, they work for and clients like unions. You know, but our relationships with the unions around the world, we do things like credit cards where they receive revenue from that stream to help and provide what they can do. So we reflect the economy. So the quote power that we have or the size that we have comes from the size of the economy. And so that's the reality. Now, against that is we also reflect the excesses. And so what you saw is that the economic excesses build up the financial services to the United States and around the world reflect today. And so the amount of leverage that the consumers taking on and transmitting that, we've done a lot to pull that out. And regulations and rules that the societies have developed around the world have changed that, whether it's a Basel III on the one hand, whether it's Bob Frank. And I think that there's been a lot done on that. And that's the kind of corrective course of capitalism. We have a boom and bust. But I think the idea that we enjoy some sort of special thing, we also pay a lot of special things. So the FDIC insurance in the United States is paid for by the system. And the cost of that is largely in smaller bank failures today. But that's the reality of what goes on and we're fine with that. So I think if you think about it, our power size capabilities come from our clients. The 285,000 people employ, what we do to transmit that in society. Every piece of revenue is a representative of economic activity taking place. The amount of things that went on that would have considered to be excessive and off to the side have largely been constrained. And most of the people running institutions that survived and took over the institutions that largely were outside the regulatory scheme and failed have brought that into a more sober minded and more direct thing. And the third thing is we are also gonna reflect the pluses and minuses of capital in a good day. So when our accesses, you'll have boom and bust cycles. Real estate related and late 80s and United States, foreign, Latin American debt related and emerging debt related in another decade. But the job is to continue to learn from that, correct it and try to keep it. And there's times when innovation stuff gets ahead of it makes it harder to do and that's what we're going through now. Sharon, you're shaking your head. Oh, look, I'll just find this incredible. You know, too big to fail is about socializing your losses and not about sustainability in a genuine sense, not about serving the real economy. And in fact, what it is is about being so big that when it works against good governance, works against competitive competition in terms of the price of credit to small to medium enterprise goodness sake. I actually agree with Ben, this is a bit scary really, but much of what he said about sustainability, innovation, small to medium enterprise and the relationships are right. However, if you've got a group 29, I think the financial stability board says that are too big to fail. What does it mean? Means that you are the biggest bullies on the planet because when your governance fails, then in fact, you actually demand of governments because they don't have any choice to bail you out with whose money, with our money, with taxpayers' money and who's bearing the sovereign debt costs now. The crisis didn't create a sovereign debt didn't create the crisis. Crisis created sovereign debt. And you know what? We stupidly bought into it. We actually promoted the stimulus packages that the then director of the IMF called for and government heads said would actually help leverage demand. And in some countries at work, because it went to jobs, went to the real economy, the retail sector, the construction. In many countries, it went to bail out the banks and that's still the debate, three years on. In fact, the second wave of the crisis, the fact that we've got now a bitter crisis of unemployment, greater impoverishment is because governments were too coward to move to do what they said they do. You remember them saying at the heart of 2008, nine, never again will the financial sector be in control of the real economy. Well, guess what? Inaction, government inaction is the reason we're now in this situation again. Well, that segues nicely to my next point. I think that things are going lively enough that we don't necessarily need to hold to the debate premise format. But I do have a question for you, David, then, because you were going to be one of the people that I picked out. Sharon just mentioned government regulation and I think in your role at the Carlisle Group, you might have a thought about whether or not increased government regulation is possible, desirable, and a solution to the current economic crisis. Before I address that, I'd like to everybody just think back, I suppose this panel was being held 100 years ago and the question was in 1912, is 19th century capitalism ready for the 20th century? You're going to help the 20th century? And look what happened in the 20th century. We really couldn't have predicted in 1912 what happened throughout the entire 20th century and nowhere near can we predict now where 21st century capitalism is going to take us because we're only 12% into the century. But what happened in the 20th century was that you had fights between communism and socialism and capitalism as the prevailing economic model for the world and more or less capitalism prevailed. Not because capitalism was perfect, nobody said capitalism was perfect, as Winston Churchill famously said about democracy, it's the worst form of government except every other form. Capitalism may be the worst form of economic systems except every other system. Capitalism prevailed at the end of the 20th century and now in the 21st century because it more or less provided more wealth, more productivity, more jobs for people anything else the man could come up with. However, it has its imperfections and those imperfections are seen best when you have the current environment we have. We've been in a very deep recession, the Great Recession. When you look at something in the trough of any kind of economic period of time, it's gonna look very bad. So as a result of this recession which has lasted much longer than anybody predicted and will probably go on for a number of more years in effect we really never got out of the Great Recession in my view. We're gonna have a lot of economic disparity, the two greatest problems that capitalism has produced and capitalism still will produce for many years into the 21st century is it doesn't have the ability to modulate risk and reward and growth and lack of growth. So you have these boom and bust periods of time for a while in the latter part of the 20th century we thought we were so smart that we eliminated the economic cycle we haven't really done that. So we still have to deal with the economic problems of boom and bust and we're seeing the problems of the bust right now still affecting many of the people that you're worried about. Many of these people are really hurting and this is one of the problems that capitalism produces. Secondly, we have the problem that disparity, economic disparity is very, very bad in many parts of the world and capitalism has not solved that problem. Capitalism has many great virtues and many people are wealthier than they ever were before but we haven't solved the economic disparity problem. The question is how do we deal with it? How do we eliminate the economic boom and bust cycle in capitalism and how do we eliminate economic disparity? Obviously nobody in this panel has this answer and nobody in the world seems to have this answer. The question is how can we work through this problem? And my view is that government is supposed to be the leader. We elect people to be our leaders and government because they are the ones who are supposedly the ones who have the ideas and want to lead us and I think what we'd like much more in the business community is leadership from the government officials that we elect. In the West we have seen a lot of inability to provide leadership during this recession and I think that is one of the problems that has created the continued economic disparity and the continued growth of the, or the lack of our ability to get out of this recession. I wish we had more economic leadership. In terms of regulation, everybody thinks they're over-regulated. I've never met anybody who says please regulate me more. I need more regulation. I need your help. Nobody ever says that. Nobody ever says tax me more. I want more taxes with the possible exception of Warren Buffett. Nobody ever says tax me more. And nobody ever says regulate me more. So I don't think that I want to be more regulated. My concern is that whenever there is an economic problem in the United States, we had Enron, we had the recession. What we do afterwards, at least in the United States, is we regulate and we pass legislation. We pass Dodd-Frank's, which is 2,300 pages. The regulations for which have not been issued, the Volcker Rule, the most famous part perhaps of the Dodd-Frank's, hasn't had any regulations that are finalized yet. The business community doesn't really know what the rules are that we're supposed to live by. So, yes, we don't mind regulations in the business world. We think regulations are appropriate, but tell us what they are in a reasonable period of time in a simple way so that we can actually operate under what the government wants us to do. Right now, many people in the business world think that we don't know what the government really wants us to do. If we do A, we're gonna be criticized. If we do B, we're gonna be criticized. Just tell us what you want in a simple way and we'll try to comply the best we can. So I don't think we have too much regulation in some respects and I think we just don't have a clear regulation and it's not timely in many ways. In my own business, the private equity business, we would say we have a fair amount of regulation. Maybe people want more regulation. I think in the banking world, there's no doubt a lot of regulation, but I think the principal problem we have now is the lack of clarity on what the regulation really is and getting this regulation done in a timely manner frustrates the business community more than anything else I know. It's not the fact that regulation's going to occur. Private equity could do two things without any more regulation. I could pay the taxes I should pay. Look at the Romney scandal overnight, but that's just the tip of the iceberg. So just pay the taxes. Stop cheating on what is already a requirement. And secondly, They aren't paying the taxes. The law, I didn't make the law. I don't know who made the law, but whoever made the law, everybody's paying their taxes. If you change the law, they'll pay the taxes. Romney simply said, I'm not his defender, he's paying whatever the law required. If you want to change the law, change the law. But don't criticise them for paying the taxes that the law requires them to pay. But we can show you the figures where corporations are not paying the tax. In the UK, you know, $14 trillion, $14 billion, it is the law. It is the law, but you're right, there are loopholes, but why can't we have governance that's just fair income? Normal people pay their taxes. If they've got a bill to pay, they pay it. And the second thing they could do is actually stop with the shadow trading economy. Over the counter products, borders to our world. These are all wonderful Twitter lines and it underlines one basic issue that I find here. We suffer from hostelsia because we want to go back to the world that we knew. No, that's not true. Guys, listen, we're not going back to the world that we knew because we are not in an incident. We are in transformation. That means the world that we knew, we leave behind and we go to the new world. So all these wonderful things of pointing fingers and saying taxes and all the rest of it, it's not the issue. It is not as easy as David says, just tell us what we do, what you want us to do with you. Because the problem is our governments don't know. We don't know, they don't know. So it's not as easy to say what we want to do. We have to go in transformation. And the transformation is different, in my view, only by three things. First of all, we are more connected as a world than we've ever been. So what happens in one part of the world has an immediate impact on the other. That was never the case. The second thing is we are in a 24-7 information drill. Whatever happens here has an impact immediately around the world. We have no safety barriers there. There is no time to react and there's no time to think. And the third element, maybe the most important thing, it's all about creation of jobs and technology is creating new jobs that are very different than the old jobs and maybe in very different places in the world. So instead of getting the battle of nostalgia, could we please move on and talk about the transformation because in the meantime, governments are still organized as they were in 1912. Institutions are still organized as they were in 1950 and companies maybe were as they were in 2011, something like that. So we have to move on on all those three layers. Transformations, right. But for what? What are the value set? What's the value set of a society where capitalism should serve the cohesion, the growth, greater equity? These are the questions we should be asking. If you start to admit that this transformation, you don't talk in the first line about job security, you talk about job creation. You talk about the next generation. You talk about young people who have no chance today that need to get chances in the first place. I'm absolutely up for job creation. In fact, we can show you 2% invested in the green economy, which you profess to actually enjoy over 12 countries by five years equals 55 million jobs. Why can't we have it right now? The money's there. It's on the balance sheets of companies that are not investing in non-financials in the US $2 trillion. There's a capital strike here. So we can talk about that, Ben. But let's talk about what the function of the market is. What's the function of business? I'm not talking about anything other than jobs for people who don't have them, secure incomes so that they can buy your product and we have sustainable demand. We want a seat at the table. I've been through. You can't wipe Labor off to the side. We've been through in Australia, one of the most stable economies, all of these structural adjustments. We're at the table. We've created the skills revolution in Australia. Who did that? The union's government with business. When people work together, when we accept responsibility and you don't just have the 1%, the wealthy folk that can actually say, well, you know, we'll decide what's good for us. When you have people sitting at the table taking responsibility. So my challenge to business is come to the table. Real economy. I'm not interested in the greed of the financial sector. I am interested in the financial sector that serves the real economy, productive wealth. But we've got to actually stand up and say how do we generate those jobs? How can we provide secure incomes? How can we sustain demand? And by the way, how can we move in to a low carbon future? Well, business must have come together in Australia, I assume, to do what you wanted, right? They must have come together and you're happy with what happened, is that right? Well, I can tell you the vulnerabilities of the two-speed economy Australia. But what I'm pointing to is people, when people work together, you have a solution. When people work in the interests of their own greed, their own direction, when there is too much power in any one part of the spectrum, government, workers, or indeed representative labor, all business, the world gets out of whack. And right now it's out of whack because business, particularly the financial sectors, lost its moral compass. Well, in Australia, the business community, I guess, came together with the Labor community and you're reasonably happy with it. So the business community couldn't have lost its moral compass in Australia. Presumably, the model of Australia may be a very good one. Maybe other people should take a look at it. So the business community is not losing, I don't think it's lost its moral compass. I think the business community wants to create jobs. The business community wants to create jobs and create wealth. More jobs they create, the greater wealth they're gonna create. Their shareholders are happier, executives are happier. So they're not exactly sitting there saying, how can we reduce jobs and reduce wealth? We wanna make sure that the system doesn't work. Business people want to make the system work. Now it's not easy to do, maybe the Australian model is one we should look at, but it's not that business people are sitting in their board rooms saying, how can we find our moral compass? We don't really have a moral compass. We're against creating jobs. We're against making sure workers have enough to live on. They don't wanna do that. They want everybody to be happy. They are pro short-termism. A short-termism won't work. Well, short-termism is not something that business community invented. For sure, there's no doubt there can be improvement, but the Australian model is perhaps something that business community should look at. Okay, this is great stuff and clearly we're having a debate. So this is fantastic. If I could just back, absolutely, no, this is great because these are clearly hot-button issues and these are some of the things that this entire meeting is going to be talking about for the next four to five days. If I could just back up a little bit and summarize some of the things from my standpoint that I think that we've been talking about. Some of the keywords that keep coming up again and again are inequality and prosperity and disparity. Innovation, globalization, a shift of power from East, I'm sorry, from West to East. I regret the fact that we don't have a representative from a major governmental power to talk about the role of government here, but I also think that either the role of government or the lack of clarity from government are interesting concepts, but I think it does keep coming back to, this entire discussion keeps coming back to jobs, job creation versus job stability in what sounds like developing versus already developed countries and anxiety especially in the Western world about income inequalities when in fact jobs are moving to developing economies rather nicely, it would seem like. Professor Rajan, do you want to chime in on anything having to do with some of the summarizations or what you've heard here so far? Sure, thanks for giving me the chance to speak. I think what we have to step backwards, I think nostalgia is a bad thing, but the past does affect where we are. Where are we, why are we in this situation? In some sense because growth has failed us relative to the promises we made. Governments made a ton of promises in the 60s when growth was very high. We had the welfare state across the industrial world and then growth started falling off in the 70s, in the 80s, some countries, the UK, the US tried to revive it through deregulation and managed for a while, but in general the real issue is our growth is too slow in the industrial world relative to the promises we have made. Therefore, just saying that the government should go out and spend and create new jobs is not the answer, we have to revitalize growth. That is the long-term answer. How do we do that? Two essential ingredients. One, we need more innovation, more productivity growth in the industrial world. That means giving entrepreneurs the right to go out and innovate, to create new companies and so on. We have to make sure we don't destroy that environment, that's very important, otherwise we'll be stuck in a negative spiral in these countries. The second thing is we have to improve the capabilities of the workforce and I think that's very important for the kinds of jobs that will be created when we have this innovation. There I think a partnership between government, industry and labor is extremely important. This is something that we've neglected for a fair amount of time, especially in the United States where the capabilities are falling behind tremendously. But my sense is if you put these two together, you have a chance of leveling up, reducing inequality by leveling up, which I think is the way we want to go, rather than reducing inequality by leveling down, which I think would be detrimental to longer-term growth. The final thing I'd like to say here is that even though you have inequality rising in industrial countries, as you pointed out, one of the reasons for this is because some of the emerging markets are in fact rising in wealth and therefore globally some of this is having an effect in reducing inequality rather than increasing. But that is not to say one shouldn't feel for the worker in industrial countries who is now seeing wages not rise, but I think the answer to that is improved capabilities, longer-term answer. It's not a short-term answer but it's the most sustainable answer. Yeah, Brian, do you have either something to add or elaborate on that or where the Bank of America can fit in in that? Look, just going more broadly, I mean, we have thousands and thousands of companies and corporations, so we get a pretty good insight of how they're thinking. But I think one of the fundamental things is, first of all, I disagree with the premise that we've lost our moral compass, but that's a different thing. But I think the fundamental thing we're dealing with is most of the ways, and I think it's embedded in Son of Dial earlier, that we defined systems as country by country. The reality is even relatively mid-sized companies are now global citizens. And so the shift in demand is actually the difference in the cycle we're in now versus other cycles. So take a classic American company who would quote offshore workers and all the things that people would talk about. The difference now is the actual demand they're feeling is outside the country. So the way we define the success of capitalism or not is usually country by country by how they have applied it. Whereas the reality is that participants are no longer single country citizens at all. And that's a relatively modest-sized company that's involved in the global chain, not only from where they get the products, which is traditional, but where they sell their products. That then changes the scheme. So when you talk about our moral compass of creating jobs, is it great to create jobs? You create jobs all over the world. And so the difference between creating jobs in country A, who the people in country A may feel good or bad about, versus country B, same thing. The issue is from a company's perspective, they're trying to grow, they're trying to fill the demand where the demand exists. They're trying to drive that growth, they're trying to innovate into that growth. And that then leads to this problem that in some of the societies where they're suffering, the types of things the professor talked about, the reality is they're filling the same demand that they used to fill. It's just over here. And that's gonna be tough for us to deal with in a more developed society. That's the reality. This is interesting because- That's not the debate, though. The debate is how do you create jobs every week? You know, it's not about pitting work against worker or company base against company base. No, I'm a global labor leader. It's about creating jobs anyway. But I think this is the global issue. We actually agree with this about creating jobs everywhere, but the reality is when demand moves, the simple discussion about taking something, raw materials, shipping some place else, manufacturing, shipping back when you can take the raw materials, convert them there to the final product and selling that final product, changes this dynamic. We have no argument with you about that, Brian. In fact, this is the dialogue we wanna have. How do you create jobs every week? What are the strengths of modern economies? What's the financial base that actually serves productive wealth, the real economy? And that's what's not happening. So companies feel defensive, I get that, because- I don't feel defensive at all. No, no, but you know, people get upset. You know, the 99% versus the 1%, social unrest is growing. But take any part of the world. I mean, you know, the North African revolutions, despite the kind of absolute need for democracy, those young people are now absolutely having their hopes dashed, because the jobs aren't there. The scale and urgency of creating jobs requires all of us, and all of us to take responsibility, not to simply say, well, we've moved our production here. That's not the argument. The argument is, what's the productive future in every country that will give our kids and our grandkids jobs with wages on which they can- Okay, Brian, first then. So I agree with creating jobs as a principal. And now I want you to come back to why we have to have size and scale as an institution is to be able to support people who are operating in talent to support people to operate all across all those economies. And that then leads to a larger size, because our scale is not defined by the United States economy, it was one of the largest, it's defined by the worldwide economy, which is multiples of the United States. And so there's two big issues that we're talking about. We are a result of that. And so that's the linkage that I think people start to lose. We're not big because we're big. We're big because our clients are operating around the world. We have to be able to support them. I think the Cold War ended more or less and Soviet Union collapsed. The view was in the world that Western style capitalism had prevailed and that more or less the United States and Western European style capitalism was to be the model for the future. And unfortunately the people who were in those economic systems probably got a little complacent and they didn't do as many things as they should have done to create new jobs. And as a result, the people in the emerging markets said, well, we follow the ideas of the Western capitalist system, but we can do them even better. And so they worked harder, they innovated more, they did many of the things that we said that they should do and they basically ate our lunch for about 10 years or so. And as a result, you now have two types of capitalism competing with each other. The Western style capitalism, which is largely laissez-faire, though to some extent in Europe there's more government involvement and more state capitalism that you now see in China and other governments where the government is much more heavily involved in trying to create jobs. It's unclear which model will prevail. Right now there seems to be a view that the state capitalism model creates more jobs. They may not be high paying jobs, they may not be the jobs that many people in the West would like to have, but they seem to be able to create jobs at a greater rate than we are in the West. What we have to do in the West is recognize that we have some severe problems, we have to solve our debt problems, we have to solve our deficit problems, we have to solve some of our entitlement problems, we have to make our government much more efficient. If we don't do that in the West, in the United States and Western Europe, the state capitalism model will prevail and while that is probably good in some respects for people living there compared to what they had before, it is not gonna create the kind of high paying jobs with the kind of retirement security that people in the West have come to want. All right, as Ben's been waiting so patiently, I'm sorry, and then we'll come to... I think the essence of any form of capitalism is the consumer, with a free choice. Now, the consumer is also the citizen. There is, however, unfortunately no law that they have to be consistent. So the consumer goes to the grocery shop and buys globalization. Then with his two bags full of globalization, turns around to the government when he leaves the shop and said, protect me against the results of this. And that's their right to do that because as a citizen, you have different emotions than as a consumer. But at the heart of everything we do is a buying consumer with a choice. Now, I think the uncomfortable truth is that, yes, we have pockets of disillusioned and unfulfilled promises that we have to deal with because there are so many new consumers on the market now that have their rights and their day in court. I mean, we talk about doom and gloom here in Davos. If you would go to Brazil today and you would talk about where the world is, they have a very different view. And if you look to young people in the... In the mega polls of India, they have a very different view of where the world is. So this is a very different discussion depending where you are and how you look at it. And on globalization, I think the real uncomfortable truth is is that we think that we take decisions on a national level. Well, the reality is that most of the decisions are taken either regionally or globally and that the other component is not national but local. So there is a handshake between global and local but unfortunately we still have the assumption that everything has to be translated on the national level and they're in the middle and squeezed. So that's why there's this uncomfortable decision making because if you want to get real, talking about jobs, it's not on a national level. You have to do it locally. You have to have one university and one set of innovation and one cluster that works together. That is the local power that brings globalization to reality. Roger, who did you? Yeah, two things. One on the state capitalism. I do think it is another form of capitalism but I think it has natural limits. It is very good for catch-up. It is very good when the innovation is already out there, you can take it up. But when you have to innovate yourself, large state-owned corporations are miserable at it. And that is where I think these state capitalist models will reach their limits. When they reach the frontiers and then at that point they will have to look for something different. Even in China today, the small and medium enterprises are contributing a lot to growth. And I think that is where we should see hope in the emerging markets. The day in themselves will embrace the free enterprise capitalism that the West has embraced. That said, I think the West has one significant strength. It has already a large number of innovative corporations. It has to make it possible for the innovation to take place and allow that to feed through the economy. However, it has one challenge we haven't talked about yet. I think Ben referred to it a little bit, which is that demand is shifting. More and more of demand, Brian also talked about, is coming from the emerging markets. In the past it was very easy to run businesses here because demand was outside the window. You look at what's going on, all the innovation takes place here, all your finance, marketing, everything can be done here. When the markets move there, a lot of those activities will start moving there. That's when the challenge for creating even skill sector jobs in industrial countries will become harder. This is an interval of about 10 years when the industrial countries have the time to improve their capabilities. They have to use it well, not spend it in frittering away government spending, but use government spending to improve the capabilities of the workforce. I think the West should be tired. No, I was just gonna pick up on this point. But we think the only inclusive growth models at the moment can be found in places like Brazil, Argentina, Uruguay to some extent. I mean, if you go over the border to Chile, it's profit or growth figures look fantastic, yet you have to take out a loan as a middle income parent to send your kids to school or to get a health treatment. So the unrest there is enormous and that's where the inequity plays into and inability to make growth work for societies. But I wanna come back to two points. One is the fact that it's not as simple as saying the demand's moving there. If it was, it would backwash and we'd all be a lot more comfortable. But China, India, Brazil to some extent, emerging economies cannot pull the world out of a growth slump that now in Europe is going into negative figures and indeed, because I don't have a growth strategy, I have an austerity strategy, but not a growth strategy and globally could be as low as half a percent. I mean, this is just gonna get worse, not better. So I don't disagree with the optimism for emerging economies and that's fantastic, but it's not gonna help the globalization being in terms of sustainability or stability that you wanna help and your point about consumerism is right. I mean, like it or not, capitalism's based on consumerism. Now when the wages share has actually fallen, relative to profits by a third over the last three decades, we're in trouble. When the US president wants to raise the minimum wage in America, one of the biggest countries in the world, to $9.50 and corporations and indeed, the Republicans are fighting him, it would do more for demand overnight in the US than almost anything else. If you had a minimum wage on which people can live in every nation and a social protection floor, you secure a basis of demand and then of course, you know, bargaining for distribution and so on, based on collective and productive wealth over and above that, fantastic. But the American corporate model is doing two things. It's actually smashing wages because it's exporting its own aggressive opposition to collective bargaining. And if you don't have collective bargaining, I don't know what the answer is to fair distribution of wealth because that's when people sit at the table, talk about what companies can bear and I might add on the downsides, save companies without the unions in the US in the collapse of 2008-09, then car companies would have gone under. Without the short-term working model in Germany, then you would have seen unemployment in one of the most successful economies absolutely collapse. I could tell you the same about Australia, about the Netherlands. You know, there are models here that work, but unless people sit at the table on both the distributive side and the solution side when things get rough, you're not gonna have sustainability or stability or generate without wages growth, that consumerism that will hold the consequences. But what worries me in this speech, what worries me in this speech is that you are, at least you portray, to be the owner of the solution. I think what I'm missing totally is the fact that in a world where, look to the youth, I mean the youth is not running to the unions to join. So there is something there that we need to, you know, a lot of what you say makes sense, but a lot what you're missing is reform is not just on one side, the other side of the table. If you're sitting around the bargaining table, it is unfortunately necessary for all parties to think through how we reform. Absolutely. And what I hear you make a speech is, you know, we are already in the solutions phase because you have the wisdom and the other side, if they only would do what we want, then we go back to where we are. We don't go back to that situation. So what I would like to add is a little bit of perspective from your side, what is the reform that we can expect from the labor side? Because labor movements, I mean, I'm stumped to hear you say that work that goes from one country to the other is a bad thing because it is new jobs in markets that may need them very much. I didn't say that, Ben. You said I said that. So what I would like to- I didn't say that. And I- What I'd like to hear is what is the new approach that labor is going to take? Okay. Well, first of all, I'm a global labor leader. We have a global labor market. For me, jobs should be everywhere, decent work, everywhere. There shouldn't be exploitation. There certainly shouldn't be some of the, while I'm not orthodox about state capitalism, and I would argue that something like Dubai Ports actually serves the private sector capitalism very well and operates probably more effectively in terms of bargaining with unions and others in some of the private sector. Nevertheless, that's a model that no one here would support. 21st century enslavement where migrant workers often don't have their papers to move, let alone be able to have a cup of coffee with you or a meal in a restaurant. You're taken home to labor camps. This is the basis on which capitalism is gonna generate society so we can accept no. And I don't believe that any of us has all the solutions. That's just infantile. What we do have is a responsibility. If we don't say how do you generate jobs? If we're gonna ride the wave of the green economy, which we have to, there are no jobs on a dead planet. How's that for reform, Ben? We want the green economy. We want investment and innovation that comes from it. Germany has created the single biggest industry policy. Now, Americans don't like talking about industry policy. We quite like it in Australia, much smaller market. But industry policy, for any other term you can put on it, in Germany, it's been created by a political decision forced by people. No more nuclear energy for it or against it, doesn't matter. It will generate billions of dollars into innovation, new export products. It will keep Germany's export kingmanship alive for decades to come. But you've got to invest. And it's not, I'm not saying again. It's all government investment. On the contrary, with the balance sheet sitting in corporations, we can do a lot. The climate tax fought by corporations everywhere in Australia, particularly the resource sector. But in fact, that will do more to generate the two to 3%, and that's our demand for Davos. Two to 3% of investment in jobs, in the productive economy, in the real economy, with employers and unions and government actually sitting at the table and doesn't have to be government expenditure. On the contrary, it can facilitate unleashing the talents and the wealth of corporations. But what about also the informal economy? If we're talking about entrepreneurism, all we're doing with this model is actually shoving economies, including the developed world, into the informal sector. People are desperate to survive. So you've got an informal economy, some of it's shadow economy in the developed world, but you've got between 30 and 90% depending on the developed or the developing world. How can capitalism sustain itself if it's not formalized? I agree we should have this forum next year in Australia because obviously there are a lot of good answers. I actually live in Belgium these days, but... Oh, okay, we'll do it there too. I was the Australian lady. I have a million and one questions that I could continue to ask. Raghia's been waiting patiently for her response and then I'm gonna open it up to the floor to questions. So if you wanna start thinking about what you wanna ask now, Raghia, do you have a... Well, just that ultimately, if you boil down capitalism to its roots, it's about paying people the marginal product of their wages. And you can rail about that all you want, but if the marginal product of people's work is less than the wages you propose to pay them, firms make losses and ultimately can't employ those workers. So the critical question we have here is how do we increase the marginal product? That's the way to get wages up. And how do you do that in the industrial world? That's the debate we should be having. By all means, we can transfer, we can raise the minimum wage, et cetera, but if that exceeds the marginal product, you're essentially driving firms into penury. So I think the right debate is how do we get the innovation? How do we get the productivity? How do we get the job creation? As a result of that, not... How do you distribute the profits? Eventually, those profits will get distributed, but sure, there's a margin that you can distribute, but you can't distribute more than the marginal product of somebody's labor. Ultimately, they have to be productive citizens. It's called bargaining. No, bargaining takes place, but all I'm saying is you cannot legislate a minimum wage which is more than what a person is supposed to be. And let's put, again, the facts on the table. We are all involved, as labor leaders, in either advocating or bargaining for both minimum wages and collective agreements, and you cannot bargain more than you can afford. So I'm on yours table about that, but come on, the wealthiest country in the world where people have to borrow to actually pay for groceries can't afford more than $7.20 an hour. It's not helping capitalism because they don't have the money to buy the product, but it's actually leaving people in poverty. But again, you're switching to affordability rather than productivity. Well, no, I mean for both. Let's get the productivity, but I can show you the productivity figures and what makes it grow and what makes it collapse. And we can show you what's happened. You demand, you're all suffering from a lack of demand. Yet no one wants to talk about wages. Why? Because it might just take a sliver of the profits that have been exorbitant in the major companies. Now for small to medium companies, it's absolutely a balancing act and you have to bargain your way through all of those factors, productivity, innovation, skills, and indeed the productive wealth distribution of wages after that. So anyone who wants to put us in a camp and say, well, they're over here, they're against capitalism, they wanna break the bank, that's not true. What we want though is a sense of the fair go around. And right now, there are corporations that are way too big with way too much power. And it is about that global reach. I'm actually certainly not against globalization. That's my job. And we believe in everybody having a chance at development. But if you have global corporations that cannot buy and sell governments effectively now, you're right, the model needs to be re-looked at. David, did you wanna cap things off then we are gonna move to the floor. My main point is, well first, if the women wage were increasing, I'd say that'd be fine with me. I just don't think that'll solve all our economic problems. Our economic problems are very deep because of the debt and the deficit and other things. I think we've got about three to four years in the West to improve the economic model we have. And if we don't do that soon, I think that we've lost the game in competing against emerging market capitalism or state capitalism because they're just having more efficient model right now which is gonna take a lot of jobs away from the West. So I think we've gotta work through these problems. If we don't do in three or four years, when we have this kind of session three or four years from now, the game will be over for the type of capitalism that many of us have lived through and thought was the best type of capitalism. Okay, we're gonna reward the front row here. So we're gonna go one, two, and then in the back there. So we'll do the first three this way. Good morning, my name is Jeff Jarvis. I've found this to be incredibly frustrating. For what I've found is the institutions of the economy, corporation, equity, unions, banks, universities, taking zero responsibility for the state that we're in and you're right, looking nostalgically at some past that is now completely gone. The people who are not here among the disrupted are the disruptors. The entrepreneurs, technologists, and young people who are creating that future and that next economy, the economy we should be talking about. So I'm gonna ask them what the economy is and I'd like to compare that with what you think the future economy is because I haven't heard a single thing today not only about responsibility for the past or vision for the future, somewhat from you Mr. Han, but otherwise I've heard no vision, just a lot of nostalgic debate by the old institutions that frankly deserve to be disrupted. I think, Brian. We spend, this is very difficult in an hour and a half or hour and 15 minutes with five people to give somebody the complete view of how the real world is gonna change in the future and how we can make the world better. So I apologize that we didn't make it more interesting, but next year you can be on the panel and I can sit there and I can tell you that I'd like to hear different answers. It's not that easy to encapsulate all of the world's wisdom in an hour and 15 minutes, but you do make some very good points. Clearly many of the people who are changing the world are not on this panel. Many of the people are young people and the many of the people who lead the social networking revolution are not on this panel. Clearly over the next five or 10 years the social networkers, the people who are communicating with each other through that mechanism and the disruptors are gonna be the people that change the world. What we've learned over the last 100 years or so is you're never able to predict who is gonna make these changes and how the disruption is gonna occur. People in our large kind of organizations we are, are not generally the disruptors. The disruptors are people who are entrepreneurs, small organizations that we haven't heard of today. So five years from today, none of us probably would be invited back and different people will be up here because we will have been disrupted out of our positions. So we don't have five years to not be asked back, but there is two things. First of all, all those people that you want to talk to are here in Davos. So I mean, it's not that the web hasn't organized for it. You have the 20 year old, you have the 30 year old, you have the new entrepreneurs. Second, I mean, your last sentence was a great sentence listening to the applause, but you, I would think twice before you get what you wished for because disruption is great, but by you said destroy what we have, I'm not so sure that you will live with the consequences, but you know, be my guest. But he didn't say destruction, he said disruption. And I think that's right. I think that is a really valid debate. It wasn't the one we were posed with, but I actually think it's a really valid debate. How do institutions evolve, reset, redesign themselves for a 21st century? That will be very different. I mean, if we don't see the political courage to tackle the climate challenge, then you know, this is all pretty irrelevant for our kids and grandkids, frankly. They're pretty frustrated with us. If we don't see the capacity to do something genuinely about people to lift them out of poverty so we end civil wars, then the disruption to the old institutions will happen anyway, and it's the same for us. I don't think unionism is the same brand of product. You certainly wouldn't have seen a woman global leader, you know, 20 years ago, let alone 50 or 70 years ago, and you wouldn't have seen women's participation. You wouldn't have seen, despite what Ben says, young people arguing for different models, but some of them back to the future too, cooperatives, you know, working together, networking, social networking, across barriers that once they physically networked around in a shared wealth production environment. So I think your premise is a very good one. Sadly, it wasn't quite the debate we were posed with. Anyone else? Sir Reed? Oh, okay, go ahead. I mean, I think there is a very real problem for the young today, and I think you can see it across countries, 40% unemployment in Spain, 45 in Greece, largely concentrated amongst the youth, and I think the point you raise about the future being important about visualizing it in a way that these people have a chance. I think that is the central question, the central threat to some extent to the capitalist system. If you don't draw people along, they are going to disrupt it, they are going to fight it, not in the innovative way you're talking about, but in just overthrowing the institutions and perhaps trying to get a new set who knows what that might be. So I think it's extremely important we solve these problems. It made me that some of the solutions are the plain boring ones that we've been talking about rather than some innovations that we haven't anticipated as yet, but who knows, it's probably a mix of both. It's certainly jobs. Brian, you want to make it five for five or are you good where it stands? Inside large organizations, disruption goes on every day. So at the one hand we have branches, the other hand we have nine million mobile banking customers, and the people who fund that help fund all that entrepreneurial society out there, but also do it inside. So one of the challenges running large organizations is how do you refresh and do that? And that really goes down to the question of talented people and treat them well and get in the spirit. So we have people who look like what you're prostrating and we have people who look like me and everything in between. And our job is to hustle that both internally and externally for the benefit of our customers. And so I think these premises that get thrown out, large companies aren't in a day. The premises that get thrown out that, the big companies, we got to think that through and that's the thing we need to think about because the largeness is here and inevitable because economies are globalizing. The question is how do we make the jobs? How do we make the fairness? How do we make the things? Second point is, you've heard me say it before, you hear me say, the people run the institutions that you don't think take both very seriously the issues in the past, we absolutely do. And you should rest assured that how we run our institutions is so different than we ran them a few years ago, even if the people, so that's not an acknowledgement. We're trying to move forward though and we know that and we've learned from it. So don't ever, in my mind, ever discount the fact that we don't wear the scar still today and we'll continue to wear them for the rest of our careers and we understand that. Will we get it right next time? God only knows, we can't predict the future but we all understand that. What we're trying to do is move forward to where the puck is going as opposed to where it's been and that innovation, all the stuff you're talking about, it doesn't mean we don't remember what happened, believe me. Another frustration is that we've all spent many years of our life trying to get to the point where we'd get invited to be in this panel and now somebody wants to disrupt us out of this, but okay. Right, so yeah, the gentleman who has the microphone now and then the gentleman in the back after. Hi, I'm Mohammed Al-Haw, I'm part of the global shapeless community and I'm from Egypt. I have a question. We no longer live in the industrial age and everyone acknowledges this. Why are we insisting on managing it in the same old manner? I don't know if the new name is capitalism or something else but what I care about, how can we have a practice that ensures a platform for young people to create these jobs? So instead of we creating the job for the younger or all that sort of things, how can we create a platform that enables the young to create jobs for themselves and for others? Because it's about talent and if we enable that talent to do that, then maybe that's the solution. So what is the system, what is the practice that can enable such platform? It's a question to the panel. Can I just both support that and challenge it? Like absolutely, we need the young entrepreneurs and they are gonna create new companies we haven't dreamed about yet and they should be supported. But don't dismiss what you call the old industrial age, call it what you like. We have to produce twice as much food by 2050 as we do now, some people say three times, on less arable land. That is about innovation but it's also about production, traditional production. So we have to get that right and that requires a sharing around the globe. If you were a slightly younger labor leader like me in the early 90s and we heard that the technology was gonna change the face, there were gonna be not these old dirty jobs, it was gonna be a whole new world based on skills and talent and I'm a teacher by trade and I've spent my life in the skills sector so I'm passionate about talent. But we heard you need to all go in and be computer programmers and so on and so forth. What we used to say is, look, that's really important and we need those people and particularly the young minds but they're gonna graft their knowledge on traditional industries, to mining, to manufacturing, to agriculture. And now I say to people when they say, well the green economy, there's gonna be no more traditional industry. We can't actually build six star buildings without aluminium, cement and steel, at least today. Now, what you will do is have to graft new technologies and new production cycles so I hate it, frankly, when people pit each other against one another. It isn't about whether or not you should be supportive, of course you should. Platforms should be there, the skills, the investment in education which we've sadly dropped off and it's the biggest productivity figure we could deliver to the world. But also let's look at how we actually shore up the best of the traditional world we know that's going to be required for the next, at least 50 or 100 years. And where does the innovation replace that? You know, manufacturing, why is it amazes me? People say, oh, you know, dirty manufacturing, instead of what some extent it is, even in the raw material sector, you go into a pot smelter now or a foundry and frankly, you will find computers dominate most of the work. But, in fact, biomanufacturing is simply a translation of product or packaging or whatever it is into new products that are more sustainable. So that's where we need the innovation. But the workers will still be there, along with the technology and along with the new industries you're going to create off the back of that innovation. One of the principal changes in the last 10 years in the way society operates in the West, at least I think all over the world, is that the people who rise to the top of these large organizations, business, labor, whatever it might be, are now looking over their shoulders and saying, what are the innovations of the future that I need to adapt to? And those innovations are gonna come from young people. So increasingly large organizations are saying, tell me who the young people are, who are our customers, how are the, what are our young people who our employees doing, what are our young people doing in terms of changing technology? So much greater than 50 years ago, these large organizations are now saying, tell us what the young people wanna do. And this World Economic Forum is adapting to that to some extent as well. Used to be that everybody was invited to the World Economic Forum and we were called, whatever we were called, then they came up with young global leaders and you had to be under 40 for that. Now they have a new thing called new shakers, which are people under 30 and probably next year they'll have something under 20. And the people like us are the old shakers I think because we are not that robust anymore. But clearly the World Economic Forum, I think recognizes this and I think all corporations and unions and other organizations recognize that change is coming from people who are your age and we are much more focused on your thoughts than we ever were. Ben, did you have one capstone and then we need to move on? We only have about five more minutes. I have one line. You come from Egypt. I think you don't have to wait for permission. And there's one thing that I think that is really the big change. In maybe in the past it was asking, give me the platform, give me the tools. Today it's just doing. Which is what the free enterprise system is about, right? You don't have to ask permission. It creates competition and you go out and build your enterprise and you compete with the big guys. The places where we have tremendous youth unemployment, Spain, Greece, are places where the free enterprise system is not working as it should. Too much, too many of the services are clogged up because the incumbents are protected. That's what in some sense we need to change to give the youth a challenge. Do we have another question there in the back? And then we'll move over here. I'm Joe Schoendorf. I am a partner with Axel Partners in Silicon Valley. I've spent 45 years there, the last 25 in venture. I don't like to say that venture capitalists create jobs, we don't. We provide money and we provide mentoring and we make a bet, we pick somebody and we get behind them. A big issue has not been discussed up here. We're one of a couple of hundred venture firms. You go on our website today, axel.com. We probably have a hundred active companies that we have provided the funding and the mentoring for over the last three to five years. We post the jobs for all of those companies. I looked this morning, 1,577 jobs open. Many of them paying six figures. Most of them needing a degree of education and training that is in short supply in the United States. Now, we get into a political issue. We said, all right, give us green cards. We need to bring in engineers from other places. It got stopped in the US political system. But for that engineer who doesn't get hired, you all run companies with technical people. That's probably five or six other people who aren't getting hired that would get hired to support that engineer. And this is a real problem. If I'm one venture firm, and I probably invest in what, David could say, 1% or 1% of the market. And I've got 100 companies and I've got 1,577 jobs and most of them way, way, way, way above minimum wage. Many of them in six figures. And we've got a problem where our government is basically preventing the creation of those jobs. And we've got a training issue. We've got a trillion dollars in US debt for people who have paid for college educations getting degrees where, one, they could be employed in this world if we had more engineers or they should have gone out and tried to do something in the math and sciences. Big companies, the disruption rate of big companies is about to increase. We're gonna lose a global brand this year. I mean, you all bought a Kodak film at some point in your life. The story you may not know is Kodak invented the digital camera, 1975, 0.1 megapixel. They took it to the board. The board said, oh, good idea, but please don't tell anybody about this. So that's true. We talked a lot about competitiveness, but we didn't really, we might have mentioned training, but we didn't use the word education, I don't think, once, but that's a good point. Well, one of the scandals of the world and the undermining of productivity is the lack of investment in education and training. No question. But I wanna also say that the venture capital model that you just heard describes, not all like that, but is absolutely important to think through. What do they do? They actually support someone and they mentor them and they get those startup companies to a point where they are self-sustaining. That is really good work because they create jobs, you're right, most of them are good jobs, et cetera. And I wanna say that for the labor movement, part of what we bring to the table is $25 trillion of workers' capital. Our pension funds and 14 trillion of them are co-managed by labor leaders and business leaders. And that is part of lifting the burden of government debt and indeed, of course, of creating productive investment. If we have more comments on this particular question, I'm afraid this is probably where we're gonna have to leave it, so I'm sorry we won't have time for any more questions and once we cap this out, we're gonna have to end the session. It was too nice to, he's in a quiet period, but one of his companies they invested in was a company called, you've heard of Facebook. I think you've heard of that. Just a small one. I'm sorry, how are you doing? On the issue of education, I mean, that's clearly something that's very important, but of course, there's education and there's education. There's some education which doesn't get you anything in the workforce, doesn't get you any pay, and there's some education, science, technology, engineering, math, which is very crucial in the United States, very important, and we need more of that. It's easier said than done. I think changing education has been on every president's agenda since Gerald Ford, and we haven't really made an impact. I think it is something that we have to take a very close look at. I think President Obama is looking at it, but it is something that there is a lot of resistance to change from within the education industry, I belong to that industry. We would like to do more, we should do more, and hopefully we can do more, but it is clearly in many ways the central problem that we face. One of the points that has been raised recently that's a concern to me in the Western publications is that education is not a good thing. Increasingly, people are saying, you don't need to get a college degree, and you can do just as well without it. I think that is a very, very misleading thing, and if people believe that, they're gonna be very disappointed. The better educated you are, the better you're gonna be prepared for the 21st century, whatever form of capitalism we have. People confuse education and training, and those are two different concepts. They're both important. They're both important, but they're two different concepts. And so, affirming the importance of education, I think that we're gonna have to end it here. I wanna thank the panelists for an incredibly engaging debate, which I think sets the tone for the rest of the week. I wanna thank the audience on behalf of Time and World Economic Forum. Thank you, everyone. Please enjoy the rest of your week.