 Merci de vous asseoir. On va essayer de commencer pour pas prendre trop de retard. Si vous pouvez, si vous pouvez, alors que nous pouvons commencer à partir. Merci d'être ici. Il va être une grande session, je suis sûr. On va parler de l'économie du monde, l'état de l'économie du monde et de la gouvernance, ce qui est, bien sûr, un important issue pour les prochains mois et années. Et pour cette discussion, nous allons avoir un grand panel, je dirais, avec Henri de Cast, qui est l'un des plus finissimes chefs français avec des vies globales sur l'économie du monde et aussi des vies fortes sur ce que tous les pays, comme France, ont besoin d'adapter aux réalités nouvelles du monde. Kemal Derwisch, il n'a pas besoin d'introduction, mais il est le ministre de l'Economie de l'Economie dans son pays, en Turquie, et l'un des figures de la démocratie sociale dans l'Europe et dans le monde, je dirais. Et aussi, il est maintenant vice-président de l'institution de Brookings. Jacob Franckle, un bancaire central qui va pouvoir parler d'économie et tous les défis qu'on est face en ce respect. Pascal Lamy, qui, bien sûr, est le dirigeant général du WTO et aussi le figureur de la démocratie sociale, je dirais. David O'Shield, bien sûr, est le président de Rothschild Bank. Et nous avons Mr Sakong de l'Economie de l'Economie de l'Economie de l'Economie de l'Economie, dans son pays. Nous l'avons oublié qu'il était l'un des plus importants en charge de l'organiser le G20, un peu plus tard. Juste quelques mots pour prendre la débat et puis je vais donner la parole à nos panellistes. Un peu de mots sur l'économie du monde, parce que ce que nous nous observons maintenant est une petite accélération du growth du monde, c'est à la fois ce qui est protégé pour l'année prochaine, quelque chose de 3,2%, peut-être un peu plus. Et c'est une accélération de l'année prochaine qui va arriver à 2,7%, peut-être. Je voudrais juste donner quelques mots sur cette fin de l'année. Mais c'est, bien sûr, une discussion. Mais d'abord, nous avons eu des chocs financiers qui ont atteint plusieurs économies émergées, comme l'Indien, le Turc, le Brésil, l'Indonésie, et même l'Afrique. Toutes ces économies combinées représentent 12% de l'économie du monde. C'est donc un événement important de l'année prochaine. Un autre traitement important de l'année prochaine, que je pense, c'est la Chine. Une des grandes questions des années auparavant, c'était si la growth de la Chine s'allait s'entraîner. Et en fait, l'économie Chine est quand même assez forte. Et la protection de l'année prochaine est 7,5% de growth, 7,3% peut-être. En tout cas, la Chine a arrêté de décélérer, et c'est une bonne nouvelle. La chine, bien sûr, est de l'U.S. D'où la growth est en train de faire une bonne chine, probablement 2,5% de l'année prochaine. Le Japon est toujours une question de marque, mais l'économie à l'aéroport est en tout cas en train de faire des conférences dans l'économie japonaise. Et c'est une bonne chose. Ce pays est aussi en train de faire des défis gigantes, des défis financiers, comme nous le savons. Et en Europe. Et en Europe, il y a, je dirais, il y a deux Européens, l'une qui commence à se développer. C'est particulièrement le cas de la Chine. La protection de l'année prochaine est en train de faire 1,7%. Et puis, l'Union européenne est aussi en train de faire des conférences. Et puis, le reste de l'Europe, c'est un peu plus difficile. L'Union européenne est en train de faire des conférences. C'est une bonne chose, mais une bonne chose, c'est qu'il n'y a pas de grosses choses. C'est une grande picture, je dirais. Il y a, bien sûr, beaucoup de défis, comme l'endroit de l'extrême laxiste, de la politique monétrique, et nous ne le savons pas, mais peut-être que certains des paniers vont avoir des idées sur comment nous exister de ces policies. Et puis, bien sûr, un point que je voudrais aussi se rapprocher est que, si les grands pays de l'Emerging que j'ai parlé d'aujourd'hui pourraient avoir un growth plus balancé dans le futur. Mais, bien sûr, il y a beaucoup d'autres défis en face de l'économie mondiale. Donc, nous allons commencer, peut-être, avec vous, Kemal, et, si vous pouvez, peut-être, donner nous une picture générale de l'économie mondiale, comme vous le voyez. Bien, vous avez déjà commencé. Merci beaucoup. Laissez-moi faire quelques points pour obtenir la discussion. Et je suis vraiment heureux d'être ici, et je remercie vraiment l'économie mondiale pour toujours avoir ces conférences. C'est un point très bon. Le premier point que j'aimerais faire est que je suis optimiste en termes de medium-long termes de growth dans l'économie mondiale. Il y a une tendance maintenant, et des brains très bonnes sont en train de devenir très pessimistes. Larry Summers, il y a quelques jours, a envoyé un message pessimiste sur le growth mondial. Je pense que, dans le long terme, la combination de technologies est encore avancée très rapidement et aussi de continuer des nécessaires humains. Il y a, malheureusement, une classe mondiale très forte. Il y a encore 3 ou 4 millions de gens qui sont très en pauvreté, pas de la pauvreté extreme, mais très pauvres. Il y a besoin d'investissement de l'infrastructure et de la technologie. Je pense que la combination de ces choses, si les balances macro-économiques sont bien managées, si le contexte socio-politique est bien managé, je pense qu'il pourrait permettre le monde à gérer à 3,5 ou 4 % pour deux ou trois décennies plus. Et puis, plus tard, c'est difficile de dire, bien sûr. Je pense que les droits, les termes médiums, les droits et les sources de growth restent très fortes. Le deuxième point, il y a l'issue de climat, je ne vais pas le faire. Je pense que ça peut être managé, l'une doit être attentionnée, mais si les prix et les incentives sont bonnes, je pense que les technologies vont arriver à gérer le problème de climat. Le deuxième issue qui a vécu un peu aussi sur les meetings du monde IMF en février, c'est l'économie du marché d'économie. Et vous l'avez dit un peu. Et je pense que, ici, on doit faire la différence entre la période de crise et le long-run. Depuis la fin de l'année 1980, le marché d'économie s'est créé à 2,5 % plus vite que les pays avancés dans l'agricat. Pendant la période de crise, en 2008 et 2012, la différence s'est créée à 4,5 %. Et ça, bien sûr, c'est exceptionnel. Donc, je n'exprime pas le marché d'économie d'économie d'économie de 4 ou 5 % plus vite. Mais je crois que, parce que de l'économie, parce que de l'économie d'économie d'économie, de l'investissement d'économie, et parce que de l'économie d'économie d'économie, including Africa, growth in the emerging markets in the developing countries, can remain quite strong, I would say in the 5-6 % as an aggregate. But there is one difference one has to make. And I think things will be... It is not right to... Having said that, one shouldn't generalize too much, just like one shouldn't generalize in advanced countries. There are those countries which have a high savings rate, a high investment rate, are not dependent on foreign capital inflows, basically emerging Asia, with the savings rate, if you take out China, which is a case in its own, but even excluding China, emerging Asia has a savings rate close to 30 %. And then you look at Latin America where the savings rate is more like 16-17 %. And I think there is a difference there. So the growth rate between Latin America and I think emerging Asia will be quite significantly different with Latin America growing much, much more slowly. Africa, I remain an optimist, but we'll discuss this more, I think later during the conference, I think Africa is making tremendous institutional progress from a very difficult situation, of course, but I can easily see Africa growing at 6 % or so over the next two decades. Now, in terms of the overall macroeconomic balances, the demand side of growth, rather than the long-term supply side, technology and needs and so on, I do believe there is an overall problem of income distribution in the world. The most dramatic statistics are not everywhere the same, but I think we've all seen the statistics and in the US, the post-crisis recovery income growth, 94 % of total income growth in the US accrue to 1 % of the population. Now, whatever we think about this from an ethical point of view, from a political point of view, I don't want to get into that. One can have different views on income distribution and mobility, but I think from a purely macroeconomic point of view, this is also a problem, because when you don't have a much wider distribution of the benefits of growth, when everything gets concentrated at the very top, then the strong demand, which was the driver of growth for so many decades in the advanced countries, the healthy middle-class demand is not there, it can't develop. And also there's a general sense of tension and even conflict that brings with it. So I really do believe that quite apart from ethical reasons, and that's a separate issue, but from the point of view of pure macroeconomics, I think paying more attention to income distribution and to how growth is taking place and how it's spreading through societies I think is very valid. I'm very happy that the President of the United States, President Obama, has put this upfront in his agenda for his second term. In many speeches I think he sees the problem and there are many issues of course in the US, but I am personally very happy that the President of the United States is taking a leadership role on this issue. Now the last point, I think I will leave to my colleagues, many other points, but I think in terms of global imbalances, and it was actually at the World Policy Conference last year in Cannes, that I really made this point strongly and I remember Jean-Claude Trichet was kind of reacted quite in a very interested way and I'm glad that he's with us and I have great admiration for him and so on, but I think the imbalances in the world are shifting and China is not going to have a large current account surplus this year. Germany has a current account surplus that is much higher than China's and the Eurozone as a whole because the adjustment happened in the southern countries which have eliminated their deficit now, but the northern countries are not really contributing to the adjustment so we find the Eurozone with a 260, 270 billion dollars surplus in the Eurozone as a whole. We have the Mediterranean countries trying to adjust and they are doing it to a great degree and with some pain and not always in the most efficient way, but nonetheless unit labor costs in Spain, in Portugal, even in Greece and Italy are falling, but the Euro is appreciating. So vis-à-vis the competitors outside the Eurozone, if I'm a Spanish enterprise or a Spanish worker, I'm becoming more competitive, but vis-à-vis the world as a whole because the Euro is appreciating, all my efforts are going to not. So I really do believe that there is a need for adjustment within the Eurozone and particularly northern Europe has to contribute to that adjustment. Now I stress that very much last year. At this point the European Commission, as you know, has started the procedure vis-à-vis Germany looking into the German surplus. The United States Treasury has complained strongly about it and while I admire the sense of dynamism in Germany and so on, I think that there is a real issue of economic policy for Germany itself. I don't think it's a question of transferring resources to others, but there are huge investment needs inside Germany itself. There are huge things that can be done for the welfare of the German people themselves, which indirectly will help others not just by attracting imports, but also by having some influence on the value of the Euro and preventing too strong an appreciation of the Euro, which will be very bad for Euro. So these are some of the points I wanted to start with. Thank you. You won't be surprised if I share most of what Kemal has said. I'll just add a couple of things on the long term and maybe comment on the short term. On the long term, to the factors you have mentioned, Kemal, I would add demography and longevity because I think these are two very important drivers of the growth going forward and the fact as an example that in 10 years, Africa will have 300 million people more and Japan will probably have 4 or 5 million less, will have an impact, longevity is still progressing and this is potentially a very significant source of wealth creation if well handled. So I think this is an important driver. When I look at the middle term situation, I think the situation is better, but fragile and uneven because we have under the appearance of a sort of decent growth, very powerful underlying trends which are creating disruptions. You have mentioned the inequality in income. I think we are underestimating the impact of technology on many of the industrial sectors but also on many of the services industries. If I look at my own industry, the way both big data and digital are going to fundamentally change the landscape within the next 5 to 10 years is grossly underestimated, I think. So a 2% growth can dissimulate minus 20% in one sector and plus 20% in another. This is within the existing economies creating risks of disruption. The other thing where I agree with you is that I don't think that emerging countries are, as they were for most of the last 5 years, one bag with similar animals. I think you have the emerging countries which have sound balance sheets and the ones who have more issues either because they have deficits in the balance of payments or because they are slow at implementing their structural reforms. I mean to mention the elephant in the room, I think most of the very large investors have been disappointed by what has happened in India over the last 2, 3 years because they were expecting a change at a much faster pace. If I look at Europe and the US, I mean we are as an institution pretty optimistic about the US because we think that the combination of technology and energy revolution are creating a sound basis for restart of the US economy even if they find, sorry, especially if they find an even awkward compromise on the budget. So middle term we are not pessimistic about the US. We are more cautious when we look at Europe because there we think that the situation is really uneven with some countries who have really started to address the issues in terms of structural reforms and others who are lagging behind. And if you look at what has been going on, I think the Europe and Central Bank has been doing a marvelous job in trying to fix the issue now a little more than a year ago but it does not dissimulate the fact that the pace of structural reforms in some of the countries is still insufficient and I think if this doesn't change and now doesn't change fast, the risk of significant disappointment and significant disruption is lying ahead of us and to a certain extent with the Central Banks having not overused but used very much the tools at their disposal but next time if there is a very significant tension what is going to remain in the toolbox and this is a concern. So that's why I think middle term we have many reasons to be optimistic because technology, demography, flows of capital, flows of talent are going in the right direction but we should not underestimate the disruption risks on the road. The last point I would mention in terms of global governance because this is one of the issues of this forum is I'm very impressed by the fact that we are probably seeing a sort of end of the Vestalian states. Borders, classical borders are becoming irrelevant in more and more areas. It's true as far as internet big data is concerned but it's not the only place where it's true. If you look at the sources of tension in the world the dividing lines are not anymore or many times not the borders. They are religion, economic centers, I mean complex issues and this is going to force us to reinvent the way. We look at communities, communities being as well states as economic groups. Thank you. So the states and the governments need to act and to reform after the central banks have done their job. A former central banker will give us his view on the world economy Jacob. Thank you and thank you very much. It's a pleasure and honor to be here and thank you Thierry for this excellent program. I was introduced as a former central banker but the good news is that the only title that nobody can take away from you is former. Let me share with you before I move on. I'll share with you the trauma that I got 10 minutes ago. When I came here I told the moderator that I have a beautiful presentation of 45 minutes and he told me that really I did not have so much time and when I looked at the email which I received I saw that my secretary transcribed wrongly I was supposed to have 4 to 5 minutes opening remarks and here I have 45 minutes. So let me squeeze it and if I have more time I'll tell you what Bernard Shaw would have said about it but I don't. I will go telegraphically on several challenges for the world economy with the hope that as we move on in the discussion we will also discuss the solutions to these challenges. And I first want to start by sharing the atmosphere that was introduced by the first two speakers a sense of optimism. It's extremely important and I would say we should be now optimistic but not sanguine. And it's extremely important state of mind because few years ago and not more than few years ago the atmosphere was of a doomsday of the floor disappearing from underneath us of a financial crisis the reflected huge vulnerability. I think this is behind us. I see here Jean-Claude Richer one of the heroes that enabled this to happen but we are now in a situation where there are still many challenges but let's call them challenges rather than crisis points. First the good news, the world is growing. You know some of you looking at his neighbor, her neighbor say you see that but yes the world is growing. In fact since 2009 which is the year that we would like to forget because the world shrunk every year the world has been growing. So why do we feel tension? Because the center of gravity of the world has moved and some parts of the world especially the industrial world particularly within the industrial world Europe have not been growing but the center of gravity has changed and that's the major drama of a mega trend. In 1990, two thirds of world output was produced by Japan, US, Europe. You wanted to know where the world goes you looked at these three blocks and it's over you knew everything. Today only less than 45% is produced by these three. Where did it all go? In 1990 only 7% of world output was produced by China and India together. Today more than 20%. A decade ago from European exports only 5% went to China. Today more than 20%. A decade ago from American exports only 7% went to China. Today 25%. What does it mean? It means that the world center of gravity is moving that businessmen and entrepreneurs know to recognize opportunity and yet some policy makers are fighting each other and indeed the champion of free trade and opening trade had to confront our friend Pascal Lamy had to confront these sentiments. A decade ago when you were talking about China and you went to Europe and the US you've been told that's a threat. Today when you go to US and Europe and speak about China you are being told that's an opportunity. That's a very, very different state of mind. Much of the focus a decade ago was about the trade between China and the US and Europe. Let me tell you that volume of trade between China versus US and Europe is less than half and the volume of trade between China and the rest of Asia. That's where the action is. We need to recognize it. Second issue, Europe. Again I spoke about the fact that Europe was a very pessimistic perspective. Today it's not. But what are the challenges? There are still several challenges. Diversity within Europe is huge. Unemployment rate in Spain and Greece is more than 25%. And if you are young it may be 50%, 60% and moving north. And unemployment in Germany is 6.9%. Imagine a conversation between the Minister of Finance of Germany and the Minister of Finance of Spain and Greece. They really have different types of problems. And instead of addressing these problems they go to the ECB. The fact is that monetary authorities have done more than can be done. And the idea is not to solve a problem but to give breathing space to the problem so that those who can solve it can address it. And that's where the issues, structural issues. We have unemployment rate today in Europe 12.2%. Do you know how many of those have been unemployed for more than a year? More than 50% of those who are unemployed today have already been unemployed for more than a year. Additional 18% of those who are unemployed today have been unemployed for the period of between 6 and 12 months. It means that there are a lot of structural issues in the unemployment which requires education, which requires issues that have to do with labour mobility, etc. It is not a monetary issue. By the way, in the US, the rapid decline of the unemployment rate from what it was, more than 10% to today 7% was not all job creation. Many of them are reflected by the fact that individuals got discouraged and left the labour force. In fact, labour force participation in the US has declined very rapidly. It was 68% few years ago. It is now significantly less. And in Europe, the rising unemployment rate is because of a rising labour force participation. Those are structural issues that money and credit itself were not solved. You said that the tool kit is exhausted. This is a good point to have made, because the danger is that people started to think that if interest rates are zero, we can find other policy instruments. We can find forward guidance. We can do non-conventional measures. So let me tell you, those non-conventional measures and forward guidance were very effective to reduce the extraordinary potential loss of effectiveness from zero interest rate. But let's not get used to it. It's not a place to be. As far as I know, every central banker in the world would dream that the time will come and normalcy will enable them to have a little more positive interest rates so they do not need to resort so much to non-conventional measures. But in the meanwhile, let's face it. A few years ago, all the balance sheet of the Federal Reserve, which is the Central Bank of America, was composed of treasury bills, very short-dated government obligations of very high quality. Today, a very large proportion is what is called in the jargon, mortgage-based security, which basically says those are less liquid assets which were required in order to solve liquidity problems in specific sectors. But again, it's not something to stay forever. Finally, let me join hand with the previous speaker about demography. If there are forecasts about the future, we all know we are very bad forecasters. But there is one forecast which is robust, demography, that's a very heavy tanker and we know what are the implications of it. In the next 20 years, the world will have population larger than what it is today, by one and a half billion people. Where are they going to be? More than 1.45 of them will be in the developing world. Only Miguel edition will be in the industrial countries. The industrial countries, as was described, is in some places shrinking, Japan. In all places, aging, infecting Japan, the only cohort that will have in 20 years more people in it, is the cohort that will be 80 years plus. So if you want to have more friends, you better be 80 plus. Everywhere in the world, all the cohorts are shrinking. That's terrible for the structure of innovation, structure of education, structure of community, structure of entrepreneurship, structure of dynamism. Where is it all going? In the developing countries. But also in the emerging countries, it's not monolithic. It was already said, China will have more population, maybe 100 million extra, but aging. Well now the one child policy is changing, we will see. India will have about 300 million extra with a beautiful Gaussian distribution. Very healthy. And we see here, the governor from India, and indeed it's a great news. You mentioned Africa. Africa will have additional 450 million people. It will be the largest continent and the youngest continent. What is the challenge that is left? Well of course we know the health issues, but we see here, Mr. Mour Ibrahim who made his career in identifying the issue that connects us in this conference, namely governorship. You solve the problem of governorship, of governments. You deal with the issue of health, you have discovered the new future, Africa. So when all is said together, let me conclude by saying, those are challenges, they are formidable, but like all challenges, they are also opportunities. Thank you. David Rothschild, maybe you could share with us in less than 45 minutes some of your thoughts on financial reforms. Sure. I mean I had understood that the exposition was not 45 minutes, but eight, but I'll try and keep it to four so that there's enough time for other speakers and for questions. I think that there are very few topics who are so linked to both governance and world economy, than what concerns the banking industry. And as I have, I belong to this very popular category of being a European private banker. I think I will stay on that subject and just make a few quick comments. First of all, as the previous speaker says, I think that we've covered a lot of ground, we have a lot of the acute elements of the crisis who are now behind us. Banks have gone through an unbelievable ordeal since 2008, most of that is behind us and of course governments, regulators, the industry itself has worked towards reducing the risk factor around banks, protecting depositors, creditors, taxpayers and also of course, hopefully still being able to finance the economy which is an important function of banks. Now, a lot of things have been done in terms of structural modifications of the banks and in terms of governance. I mean the main things not to become too boring and too technical is that one has changed, the equity ratio means that banks have to have much more capital, one has changed the liquidity ratio which means that banks have to be better funded with longer term funding, therefore probably all the time slightly more expensive and one has changed the leverage ratio which means that the balance sheets have to be smaller. I think that when Lehman went down the leverage was between 30 and 40, Americans have fixed a leverage ratio at 5% which means 20 times your shareholder's fund in terms of balance sheet. This is a fundamental change. In terms of governance, we're living in a historic moment because two things are being put in place within the Eurozone, a centralized supervision which is great, great because the lady who's going to run the supervision is a remarkable French lady, Madame Nuit, all of us here who are in the financial sector know well and I think she'll do a great job. I think that obviously harmonizing, centralizing control is extremely important because we have seen in the past lots of discrepancies between regulators and how one approaches banks and of course the banking union which probably if what is in the presence a few days takes place will be in action by the end of this year and the banking union will mean that there will be a resolution mechanism which is how are you going to treat banks who are in trouble and there will be a sort of unified approach. Obviously the shareholders will be hurt, that is normal. I think the creditors will also be hurt which is a bit new. The shareholders above 100,000, until 100,000 euros will be protected but those above might at some point be hurt and of course ultimately governments meaning the taxpayers. Now all this, is it positive? What has to say yes? Does it restore confidence in banks, credibility of the banking industry? I suppose yes. Now questions obviously have to be put on the table because it's not only describing the things but also asking oneself what are the consequences of all this. First of all it's interesting to realise that profitability of the banking sector before 208, I mean return on equity was something between 15% and 25%. It is now going to be something between high single digit to low double digit for the best performers. Therefore considering the constraints that have been put on the industry profitability goes down. You can say two things. You can say if you look at a bank as a utility 9, 10, 12% return, it's a great investment and therefore when banks need to grow and increase capital they will find capital because they are safe. If you consider that there's a strong risk component in the bank you may say that that sort of return is not enough and therefore there might be an issue for the development of the banks going forward in terms of capital increase. Second question which is directly linked in terms of what are the consequences of all this is can they perform properly the lending job to fuel growth? It's very difficult to give a quick answer. In some countries you would say no, in other countries you would say yes, some banks are perfectly in the position to do some or not. It's a difficult answer but it is a question that we will be faced with for a fairly long time. The short answer is yes, we will be faced with a couple of things that will need to be verified over time. Now, in 2014 there will be another round of stress test, there will be another asset quality review, so I think by the end of 2014 one will have a fairly stable environment in all this. But what it means is that the banking sector who's always been regulated is very highly regulated. Now there's nothing wrong in being regulated but another question that comes up on the table is that there's a lot of shadow banking. Shadow banking is something very respectable. It just means banking which is not regulated and where a lot of interesting things happen in the terms of finance. Now, you would say well then you have to regulate the shadow banking area. My own view is that too much regulation is never something that creates a lot of prosperity in the economy. Equalé, the balance between too much and too little regulation is a very tricky one because if you go too far in regulation thinking a couple of years ahead, you face the risk of having talent transfer from regulated sector to non-regulated sector and therefore it weakens the banking sector as we sort of define it. So I think it's an interesting period. I think that Pascal Lamey is the expert so it's always silly to make comments in front of an expert but the issue about Europe is it too much or too little and I think it's a combination of both. Too many details that you would like to see Europe not looking after and some key factors of convergence that you would like to see in order to have a better Europe because we're in the middle of the river, we can't go back and therefore we've got to have more Europe and a better Europe and I think that what is happening in the banking sector caters to a more organized and a better Europe. I'll finish by one word because an investment banker could never stop a speech without selling his own shop. I'm not going to sell my own shop. I'm going to say that our main job is to help people achieve their goals which is we advise people who want to do things, transactions, buy other people's sell, finance themselves, we even do some work for a lot of sovereign governments. Talking about what the previous speaker said which is are we coming into a period of improvement? Yes, I think we are. Since 2008, the overall mergers and acquisition market which is a small measure but is a measure has dropped by 25% to 30% and has not come back yet. So it is an indication that people are more cautious, they are afraid of overpaying, they don't want to sell too cheaply, they are not sure to find exactly the financing they need but slowly one can see a little bit of light at the end of the tunnel. Thank you Thierry for your invitation, great privilege being here. Thank you. Il s'accompagne, let's move to Asia with you and jump into these global governance issues that are key of course to the stability of the world economy. Well, thank you very much. As always is a great privilege to be here with all of you and particularly distinguished, the panelists sharing the podium. I thank you, thank you Thierre, Montréal for inviting me. Well, given the time constraint, I will focus my very brief comments on the global governance with specific reference to G20. But before doing so, I may follow up on the couple of points made by previous speakers. Camille Davis referred to the recent, the Lady Summers and Paul Krugman's view of secular stagnation to see the current state of the world economy from that secular stagnation perspective. The current state of the world economy can be characterized as slow growth and the weak job creation. And this Lady Summers and Paul Krugman's is not just as a cyclical, but a more secular stagnation phenomenon, whether you agree with him or not. But I always thought it's useful to pay attention to such a view from our global governance perspective. And that is that it takes stronger country level or regional level, global level policy actions and perhaps closer policy cooperation. Second point I would like to follow up on is another point on the Camille Davis mentioned global imbalance. But so far the economists and we all tend to look at the global imbalances mostly in macroeconomic terms and specifically in more real economic terms, real economy terms rather than financial linkages and financial channels and financial imbalances. I think we have to pay more attention to the global imbalances in the financial sector because financial stability is critically important to have the real economic stability and the real economic growth. So I just wanted to full note on these two ideas. Regarding the G20, I don't think we have to get into the origin and what has been achieved by the G20. But we all know that G20, which replaced the G7 by actually G7 leaders themselves by recognizing the fact that the global economic power constellation has changed such that new global governance is needed. So G20 emerged from that perspective and thanks to G20, the global world was able to avert another great depression. So the G20 leaders so satisfied with the G20's achievements, they agreed in Pittsburgh 2009 to designate G20 as their premier forum for international economic cooperation. I emphasize this fact that G20 leaders, including G7 leaders, agreed to designate the G20 as premier forum for international cooperation and they committed to it and also they specifically agreed to have what is called MAP, mutual assessment process. Unfortunately in my view, in recent years, G20 is not living up to the their earlier commitments and promises. You look at G7, the last G7 which was held in the UK, look at the agenda, you will see all the economic issues back on the agenda. I just wonder, those G7 leaders forgotten about their earlier commitments to G20. G7 alone cannot handle many of new global issues as we witnessed after the Lehman Brothers bankruptcy and therefore we have to have G20 somehow reinvigorated in this not multipolar world, no polar world or the in journalistic terms it's a zero world. We need a collective leadership. The G20 can be a source of collective leadership. And so in that regard, as always, as I did last year at this very conference, the G20 needs its own further institutionalization to strengthen its own governance system, to provide collective leadership which the global community needs at this point. How to further institutionalize? Whenever immediately I say this and people say well as proposed to build a full-blown secretariat as such, you don't have to go that far. You can even institutionalize further the current existing system. There are many different ways of doing it so that G20 can keep its own institutional memory for consistency and continuity. Mind you, G20 Summit is not annual health events. It is a process. So I would like to see this whole process it's been continued throughout the years. Have more frequent, more structured deputies' meetings and finance ministers' meetings, shoppers' meetings and before to have the summit because leader's time is the most scarce resource in the world. So they cannot meet often but at least it is 7 deputies and the finance ministers meet more often frequently. Look at what's considered the imminent US Fed's tapering this monetary easing. I think it ought to be brought into the G20 framework. Of course it is US domestic policy but the potential spillover effect will be so great and so the reverse spillover effect will affect the United States anyway and therefore it is not only good for the rest of the world but good for the United States. It should bring into the G20 framework. There is MAP, Mutual Assessment Process which can be technically assisted by the IMF and other multilaterals institutions. So I think actually in distant future maybe perhaps I don't know how distant it will be but it's Japanese. The tapering time will come and we have to expect that and that should be brought into the G20 framework. So there are a lot to be done and can be done. I know it will be difficult but it has to be done in this no polar world. We need a collective leadership functioning collective leadership. To have a functioning collective leadership we should further institutionalize G20. Let me stop here and then maybe we'll come. Thank you very much. Thank you. To go on on this issue Pascal, let me your diagnosis maybe on the strengths and weaknesses of global governance and collective leadership as Il Sakong said. Well, let me try and follow up on what Dr Sakong just said and also on what Thierry de Montréal said at the introduction of this afternoon and take let's say a slightly different stance. Dr Sakong was talking about the G20 and how great it is and how much it should provide leadership. Thierry was talking of global governance in terms of powers major power, middle powers, major middle powers. I don't think that's the right intellectual framework for the future. And I'm saying this after a one year work with a number of world luminaries which were gathered under the auspices of the Oxford Martin School. Major people including a few in this room, Marie Brayme, Jean-Claude Trichet, which shows that there is a connection with the World Policy Conference which I have the privilege to share and where we tried to look at future generations and more precisely how to bridge this gap between what we know of challenges for the future and we know a lot of that and the very limited action capacity which we all deploy on these challenges. And what we did was a sort of scientific method. We looked at let's say 10 global issues that worked reasonably well for the last decade and 10 other issues which failed more or less miserably. And instead of taking this from the theoretical or philosophical point of view, we just looked at why did what work work and why did what didn't work not work? Why did HIV AIDS work reasonably well? Why did Y2K work well? Why did ocean depletion not work? Why did financial regulation before O8 not work? Now, one of the main lessons and I'm not going to expand on the whole of the conclusions of this report which you will find on the website of the Oxford Martin School. One of the main conclusions is that where it worked when were these issues were tackled by more or other than sovereign nation states. What Henri called a moment ago the Westphalia and systems. And that's something which is important for the future and we tried to envisage, looking at future challenges, what sort of new ways of addressing this gap between knowledge and action. And one of the main conclusions is that you need coalitions that go far beyond normal sovereign nation state action. In a way we need to demonopolise international governance from the Westphalian system, from sovereign nation states. We need to look at a higher diversity of public institutions. For instance, mega cities have in the solutions of the problems of this planet, sometimes much more power than many of the 200 nation states which you find around the UN table. Many a growing number of multinationals are engaging in whatever shape of a corporate social responsibility on environmental or social issues. And of course you've got now quite a large number of global NGOs whose effective power is again often much bigger than many of the average 200 nation states on the planet. So that's one of the ways, I'm not sure it's the only one, but that's one of the ways forward in order to try and be better at, in many ways, moving these long term issues nearer to our action capacity. One example of the 10 or 50 proposals which we make in this report, and again I'm not going to expand on them all, some are reasonably innovative or provocative, is for instance on climate change, let's work with what we call a C20, C30, C40, 20 countries, 30 major multinationales, 40 megacities. These clubs exist. There is a G20, there is a C30 by a number of important multinationales. There is a group of megacities who share a lot of experience and network in environmental issues. Now our suggestion is that if you put the three clubs around the table, then this huge problem of global warming and carbon emission disciplines will be solved within this group and if it is solved within this group then the rest of the system will adjust to that. So let me leave it there and with a sort of hope, suggestion, maybe for Thierry and the organizers that in the future we share a bit of that. We look a bit at these global governance issues not just in, and you know, I know that and I myself have been trying to identify for a long time how this machinery can work like classical vestalian systems, sort of post vestalian systems. Well I think now, and that's a suggestion again for our future reflections, we should look at a vestalian systems. Thank you. So if I understand correctly, long-term issues can be handled and very efficiently by the private sector and local authorities rather than sometimes more efficiently than by governments. And that's interesting. This is supposed to be also a discussion so I would like to open the floor to everyone if you want to raise questions. En français ou en anglais d'ailleurs comme vous le souhaitez. Monsieur. Thank you. It's a question for all the panel. One of them is two questions. One is what would you suggest to do in order to change the distribution of the fruits of the growth? As a matter of fact, one of the speakers says that 90% of the income United States goes to 1% of the population. And of course it is like bomb explosion was going to be explored between the poor people and very, very rich people. The gaps can become more and more large in every country in the world especially the sort growing in economy. And the fruits of the economy are not distributed to the low layer of people. What would you suggest to do? To governments? How to change the distribution of money? Second, what do you think about the Bitcoin? About the Bitcoin. Bitcoin. Bitcoin. Who would like to handle the issue? By the way, 95% of the increase of income has gone to the 1%, the richest 1%. I mean, very quickly of course. But I think strong education and a good health system, a human resource system that really is equal for everybody and gives the equal opportunity to everybody is extremely important. And of course the private sector can play an important role here but the state has to continue to play a very, very crucial role. So I think the skill, we had some results about France the other day and we see that despite the quite I think admirable egalitarian culture or philosophy in France, the actual functioning of the education system creates greater inequality. So just as an example, it's not just France in the US. You have the best universities by far in the world. You have fantastic institutions but you now have to pay $40,000 a year, $50,000, $60,000 a year to send your children there. There's $1 trillion of student debt and there's a large part of the school system which is really not performing at all well and so on. So I think that's one angle. The other angle and that goes a little bit to Henri's point about demography, I want to link it, is one has to rethink social policy and the social contract. I think the process of aging is bringing new challenges but also, and I'll reset it, new opportunities if it's handled correctly. So one has to look at life as a process where education, work, leisure and retirement are much more dynamically linked throughout life and financed in a healthy way with an eye to equal opportunity and a greater balancing condition. And finally, there's a global governance side of this. I know, you know, nobody likes high taxes but a good tax income is needed if the state is going to, you know, if the communities and the state is going to deliver the social insurance and solidarity that is needed. So to have a fair tax system that is good for incentives but also takes enough in is important. And that, there is a global governance side to this. We've heard about multinational corporations legally, not illegally, legally minimizing the tax burden by shifting, by claiming that their intellectual property, all their intellectual property is created in Ireland and because they have a special tax deal in Ireland, or things of that sort. So it is hard for single countries to pursue the social policies and the economic policies that are needed for greater balance. It has to be done in a stronger international framework. Jacob? I'm very glad that Kamal, my good friend, started with the issue of education and the long-term issue. But I think that what Minister Chitrit reflected was, but what do we do now? Well, two things I want to emphasize. It's much, if we agree on what not to do, it is already more than 50% of the way. Because the greatest temptations for politicians is to take from those who have and transfers to those who do not have and it looks like a good social policy. We need to be careful not to destroy the entire incentive systems of savings and investment. So that's why we need really to reconcile the fact that those who save and invest are capable of indeed keeping most of the benefits. But by the same token, those who are underprivileged know that the society allocates resources to improve their chances for the future and that's what was discussed here before. On put some numbers on the last point that Kamal made. Today, if you look at the US budget and that's what I want to look at, you take out of the budget interest payments which is really something which is not discretionary. If you look at the US budget X interest payments, 25% goes to social security. Another 23-24% goes to healthcare and therefore for everything else, education, infrastructure, defense, there is 52% of the budget. Fast forward, 20 years, do nothing to the regulations or to the laws. Only the effect of aging and do the same exercise. In the year 2035, which is around the corner, social security will still be 25% of the budget X interest payments. But healthcare will be 40%. Which means that for everything else, education, defense, infrastructure, there is 30-something percent. There is no way that this circle can be squared. Either citizens will recognize that they need to expect less services from the government or will need to recognize that they have to pay for higher proportion of the services that they get. There is no way to find any other middle ground. Now this means of course we need to do either revisit the social compact between governments to increase efficiency of use, less waste, et cetera, et cetera, but increase the pie, not distribute the pie but increase the pie and that's where again the education comes in. Thank you. Pascal Lamy. Yeah, I'm more on Kemal's side on that. And surprisingly, I think the fact is that inequalities are growing. The reality of globalization is that poverty is strongly reduced by globalization but inequalities are growing. And even in systems like Europe whose tolerance to inequality is much lower than in other continents, inequalities are growing. Our social systems are regressing. In most countries, the progress that were made during the previous decades in for instance social mobility through education are moving back. So the answer to this distribution question to this inequality system is first of course a political, philosophical, moral, ethical, whatever choice on what's the proper level of inequality and I happen to say or think that it's not only a moral issue. There is also an efficiency issue. I think personally more equalitarian societies are more efficient than less equalitarian societies. I know other people believe differently but it's a question of how can you concretely improve access to health, access to education, access to housing, access to culture and that's not only a tax system. It's really a question of reprocessing a number of social services, a number of public services in order to make sure that this access is wide for those who at the origin of their life cannot exceed the proper level in order to develop themselves. Maybe one or two points quickly. Many times excessive accumulation is due to the lack of transparency and the lack of competition. So rather than using taxes thinking about the way you can increase transparency and competition is sometimes I think a better way. Second thing I think inequalities are less acceptable when the pie is not growing fast enough. When the pie is growing fast it may widen for a while but it's probably more acceptable and I think the issue we have in many of the European countries is the fact that the pie is not growing anymore which is making it less acceptable. I have a big reluctancy in seeing taxes as the remedy. The city in the US where the Gini coefficient is the lowest is Detroit. Does it mean it's a model? I'm not sure. As far as bitcoins are concerned it's going to be a long time before they become an asset class for insurance companies at least for us. But I think they are revealing one thing and maybe it's slightly caricatural but in a world where interest rates are artificially depressed for savers the look for fancy alternative and sometimes way too exotic asset classes is increasing and it's dangerous. In second. In response to what can you do about the income distribution and the governance. Well I think this polarization issue and the income distribution issue will be with us in coming years and decades. That is because of the acceleration of accelerating globalization and the deepening knowledge society. Of course these two trends have so many merits and therefore we are all for it. However the downsides is when these two big trends marry together produce this polarization issue and the worse income distribution. The polarization problem and distribution problem is not specific to any specific countries is global. Of course to a different extent. How can we deal with it? I think in the short term tax and many other things as previous speaker's point. But I think this real fundamental solution should be found in the educational system reform training and ref training in the short term in the long term. For example four year college. As soon as you graduate in four year college what you learn from school can become obsolete in very fast time. So I think this education system itself has to reform so that the people can get reeducated on a continuous basis. Not in taking extension program in the evenings. No. So I think this is the fundamental approach we should take. At the same time I think particularly referring to the emerging economies the strengthening social safety net is a must. Of course as much as they can afford that is important. But I think this education can't be overemphasized in this regard. And the second point what can you do? And I think this Jacob Franco can correct me if I'm wrong. I think it was Milton Friedman said a long time ago a tax crisis to implement the reform. The G20 came about because of the crisis and the global community had sense of urgency so they came up with G20. And then as sense of urgency recedes now. Now there's no unity or the leadership within the G20. So how can you then I mean it's collective leadership. Someone has to gather the leadership within the collective leadership forum. So someone has to take leadership. I think for example the Australia will be chair country next year. I think we'll do as much as it can. And I think we can expect much there. It takes G7 countries particular cooperation there for the sake of the future global community having by providing enough collective leadership for the provision of necessary public goods towards the needs. Thank you sir. Ok. I'd like to make three comments on. I think one of the issues is not necessarily income distribution but the issue of fairness. Income distribution may may become or skewed but if people get a sense of fairness in society that's fine. And this is the big issue when markets are rigged when big companies do not pay their due do not pay taxes then we have a huge challenge. And this is an issue which has to be addressed. Secondly it's the issue of the international regime which was raised by our friend from South Korea. This is a real issue about the international regime and decision making process. And last but not least is ok the financial sector it may be improving but there is the issue of over finance. Jack Lou I mean he made a very recent statement in this regard what should be done about downsizing finance because over oversized finance it's a destabilizing factor in itself. What should be done about it. Thank you. Maybe we can take another question. Yes. We only have a few minutes left so. Ah. Donc je voulais juste faire un commentaire. Je trouve que effectivement c'est très intéressant de parler de tous les problèmes internationaux. Je trouve ça formidable effectivement le G20 est aussi un groupement qui permet effectivement de discuter tous les problèmes internationaux et il y a un vrai problème de gouvernance que vous avez soulevé et ça c'est vrai mais il y a le problème aussi de la dichotomie entre nos réflexions et ceux qui se passent au niveau du gouvernement qui ne sont pas forcément en cohérence puisque nous sommes toujours dans des clivages et que les choses n'avancent pas donc c'est effectivement pas forcément un problème de distribution de richesse mais surtout d'une restructuration fondamentale à faire et donc de bousculer les systèmes dans lesquels nous avons évolué depuis des années et qu'aujourd'hui effectivement de nouvelles émergences arrivent il faut pas en avoir peur mais au contraire c'est eux qui vont nous permettre peut-être de nous remettre en cause et il est temps justement que les réflexions eh bien que nous avons aujourd'hui eh bien fassent que des réformes en profondeur soit en entreprise et que des réflexions telles qu'on connaît aujourd'hui pendant trois jours et bien soit multipliées par des ateliers où les pensées puissent un peu concrétiser pour qu'il y ait peut-être que les politiques arrêtent de nous parler une langue de bois. Merci. Merci, sir. I think the issue of inequality has not really been dealt with comprehensively. We talk about instead of redistribution, let us increase the buy. But what is the point of increasing the buy? We increase the buy usually over the last 30 years but if most of that went to the top 1% then what's the point of increasing the buy? What happened actually? There's a serious redistribution of wealth over the last 30 years and just think of Bush taxation and how much over it's one and a half, two trillion dollars he gave to the top 1% and that was supposed to be temporarily measured and it's going on now. When the top 1% captured the Tea Party and the Tea Party captured the Republican Party and the Republican Party captured the Congress you end up in a very opaque situation. When the salaries of the chief executives in US according to the financial times are equal now to 450 times the average salary of people working for them there is a question to be asked. In UK it's about 300 times. Europe is almost 200 times. People have redistributed already the cake over the last few years because these numbers far exceed what was there before. So there is an issue here. People have redistributed and then when we come and talk about distribution say no, no, no, don't distribute the cake because let us grow it. You guys have rechanged the ratios and then any growth coming in the future going to the top 1% which is not right. What I feel is there have been a moral issue actually and I am one of the people who maybe sometimes I regret the collapse of the Soviet Union because the Soviet Union created a pressure on us to behave. There was a model there about equality, rightly or wrong and that put a lot of pressure on us to really behave reasonably on these issues. Why things started to go downhill since that pressure has gone away? Because we believe now are the masters of the universe we are impeccable and went on and all this mess created really by the way we redistributed wealth where we had new masters of the universe and I think that situation needs to be dealt with. If we are not going to deal with it there are going to be another Lenin rising out of his storm by the way so we better behave before it gets too bad. Thank you sir. We were supposed to finish at 5. It's 5 x 5 so one last comment maybe and then... Well, it's always to be something continued on other panels but this panel was on macro policies, harmonization, good governance and all well and good. But of course at least history suggests often it's micro policy reforms, transportation, deregulation, United States brought the railroad industry, a totally bankrupt industry and the viability. Competition has made some city-states in America do much much better than other city-states and some states do better than other states in the United States and there seemed to be a feeling that if we only had harmonization then we would have a better world. Harmonization is the enemy of competitive pressures to ensure that policies make sense. I think the policies and I guess the rest of the panel today we'll be talking about that. But harmonization, when you hear the term harmonization I think you should reach for your revolver. Thank you. One last comment maybe from some of the panelists. Yes. And if not I see Thierry who is demanding that we stop now. So thank you all, thank you very much.