Opportunity - US Zeitgeist 2010

Uploaded by zeitgeistminds on 13.09.2010


Chrystia Freeland: Thank you.
Thank you very much, Nikesh.
And as Nikesh was talking, I realized what the genius of
these Zeitgeist conferences is, which is the genius of Google.
He pointed out that people don't come to these conferences
to hear Google people talking; they invite lots of others.
So it's user-generated content.
They get all of us to come here and talk to one another.
Anyway, like you, I attend a lot of conferences, and
I have to say, this is my very favorite one.
I'm not just flattering Nikesh and his great team.
They always manage to assemble the really smartest, most
provocative people from a huge number of different fields.
And I was particularly delighted to be asked to
moderate this opening session, because we're going to hear
from four -- five of the most interesting, most influential
-- but I would say also -- most iconoclastic thinkers
and actors around.
We're going to start with two economists, with Jim Wolfensohn
and Nouriel Roubini.
They're each going to make presentations and then
we'll have a panel discussion with them.
Then to show how moderating is really done, we're going to
have Tom Brokaw talk to Ted Turner.
As a journalist, I'm really thrilled and honored that we
have really one of the most important media pioneers of
our time here speaking.
And they're going to be joined then by Mikkel Vestergaard, a
really innovative and important social entrepreneur.
So we're going to start with Jim Wolfensohn.
Please join us.
Jim Wolfensohn, as you all know, is a legendary former
head of the World Bank.
He now is the chairman of Wolfensohn & Company, an
investment and advisory firm.
He's also about to publish a book, so in October please
go buy "A Global Life."
I'm particularly glad he's here because of
his global perspective.
He's an Australian originally, and now is on the advisory
board of CIC, China's sovereign wealth fund, so he brings that
really global perspective to the issues of today.
And I just wanted to add, in case anyone is feeling
particularly proud of themselves for climbing
camelback, Jim is an Olympic athlete as well.
He was on the Australian fencing team.
And just to add to his sort of intimidating renaissance
qualifications, he is also a cellist and learned how to play
the cello in his 40s and went on to perform in Carnegie Hall.
So maybe tonight, Nikesh, for free entertainment you can get
a cello out and we'll see how good Jim is.
He's going to give us a tour de raison of the
world economy now.
Please, Jim.
James D. Wolfensohn: Well, I think with that introduction
I shouldn't speak at all because it's downhill from here.
But I have been asked to share the panel here with Nouriel,
and that in itself is daunting when you're asked to speak
about the economy, because I've spent the last couple of days
Googling Nouriel and everything he's said so that I could be
smarter than he is, and by agreement, I'm going to stay
very lightly on the current economy and simply say that
today is almost two years from the date of the Lehman
Brothers collapse.
It just seems like a helluva lot longer for those of us
that have been living through this environment, which
I guess all of you have.
And it's only 18 months since we finished the significant
downturn, at 6 or 7% per quarter, that
followed that event.
I need hardly remind you that before that, we had Fannie Mae
and Freddie Mac, that we had Bear Stearns and we had Merrill
Lynch going into Bank of America, and so we've been
through a sort of revolution in terms of the financial
industry, and a period that is certainly unprecedented in my
working lifetime and which has shaken very much the way in
which I, at least, have looked at the global economy and at
the financial markets.
I'm sure Nouriel will comment on the last quarter and the
disappointing results, and as you know, he is very
significantly balanced or slightly pessimistic, perhaps,
in his approach to where we're going, but it's valid because
we're in a time when unemployment -- primary
unemployment in our country is at 9.6%.
When you add the people that are involuntarily unemployed
for part-time work, you're around 16, 17% unemployment.
And these are numbers that we really have not thought of in
my working lifetime until recently, and they have a
profound effect on the way in which we judge our economy
and in which we judge the world in which we live.
Inflation, as I need hardly tell you, is not a real issue
at the moment, but our budget is in poor shape
in our country.
I need hardly go into those figures with you.
And we're on the way to 2020, 2030, of having our country
with a hundred percent debt to GDP, which is not a trivial
moment and raises questions about where do we
go from there.
But let me move away from that and the current analysis and
just think a little bit about where we're going in the future
and what is it that we, in this forum, and indeed outside this
forum, need to be thinking about as the global frame
in which we're working.
As I worked in my early career up to the year 2000, it
was all fairly simple.
There were a bunch of rich countries that had 75 to
80% of the global GDP.
There was about a billion people in a planet in 2000 of
6 billion, and there were 5 billion other people who
had 20% of the global GDP.
And if you were especially farsighted and interested, you
started to think about what might happen to those people,
what happened -- well, what were the issues of poverty,
what were the issues of social justice, and if you were crazy,
you then went to work for the World Bank to see if you
could do something about it.
And it was not an easy challenge, but it was a
challenge which was there before us, until the year
2000, in fairly static form.
If you were young and vigorous and you were interested in
social justice, you tried to get a job working part-time
or some time in the developing world.
And as I discovered coming from Australia, it was incredibly
difficult as a young Australian to get a job that would take
you into this activity.
And so I took another alternative and gave up the law
and went to the Harvard Business School, which couldn't
be more far from these issues.
Except that today, Harvard and many other universities are
starting to look at this question of what is the world
that's out there that we haven't spent a lot of time on.
In the first 10 years of this decade, we have seen that 75 to
80% of global GDP in the rich countries moving down by 10%,
and we've seen an extraordinary change that I'm sure all in
this room would understand, but far too many do not understand
when they do the analysis, which is a move eastward again
to a growth of global economic activity.
Notably in China and India.
In the year 1500, and in 1815, China and India were
50% of the global GDP.
A lot smaller than today.
And after World War II, China and India were
1 1/2% of the global GDP.
Basket cases in terms of the impact and in terms of their
apparent economic outlook.
And we in the west were dominant in terms of first
manufacturing, then in the service sector, and certainly
also in the research and the high-tech field.
A lot changed in this last two years to draw our attention to
the fact that we couldn't relax in terms of that situation.
The first thing, of course, that happened is that we
had $50 trillion in sort of global write-downs.
We had a 12% reduction in global trade.
Commodity prices went through the floor.
Capital flows from the rich to the poor countries went from
1.3 billion a year down to 350 million a year.
These are not trivial adjustments.
These are fundamental changes in the way in
which our world operates.
But perhaps more important than that is the fact that the
dominance of the west, the dominance of people in this
room who, no doubt, are still dominant, the dominance in
manufacturing and the service industries and high-tech
are shifting.
It's shifted very meaningfully to Asia.
And you need only to look at some of the statistics to
see just what is happening.
China and India have sequentially taken over
leadership in a substantial part of these three areas.
And as we look at the way in which the future is holding
itself, as we look at education and as we look at research, in
our country and in the G20, research is dropping in terms
of a percentage of GDP, and if you look at the academic
statistics, it's really quite astonishing.
There are some 350,000 Indians and 350,000 Chinese studying
abroad each year at university level.
About 100,000, according to the latest statistics, each for
China and India, at our universities.
And if any of you attend graduations, you will see when
you look at the doctoral degree candidates and the degree
people in engineering and for most of the scientific areas,
it looks significantly like Asia.
And that is true with the various universities that I've
attended their ceremonies.
And when you talk to the professors about the students
that are going there, significantly -- and without
great statistics, significantly they will tell you that the
movement towards Asia is both real and significant.
And indeed, if you just happen to go to the co-op of any one
of these universities and you walk through to see, you want
to buy a T-shirt, you'll see inside these co-ops the
extent to which Asia is projecting itself.
And we're falling behind also in terms of growth.
If the world growth is 4% this year -- and I'm sure Nouriel
will comment on this -- the advanced economies are
something less than 2% in terms of annual growth.
China and India, with China in the lead, of course, are
virtually double digits in terms of growth.
And these are not just numbers to throw around.
These are material advances in terms of the pace
of economic activity.
And while I don't put too much strength in terms of World
Bank's statistics since I left, I have got the new
statistics --
-- I do have the new statistics, and they are really
quite remarkable as you project out shares of global income.
Just let me give you a few numbers.
The G7 in 2010, 52% of global income.
2025, 41.7.
2050, 25%.
Drop down to China and India.
2010, 11.2%.
By the way, substantially up from years past.
2025, 24.8.
2050, 47.5.
With a 60% expectation of share of global growth
in Asia by 2050.
Now, let's assume I'm off by 10% or 20% or 25%, or that I'm
off by 5 years or 10 years.
The truth is that this change is monumental in terms of the
way in which we look at our planet, and very, very sadly
we're doing very little about it.
I mentioned the 350,000 students coming from China and
India -- each country -- 40 or 50,000 in my country of origin
of Australia, amazingly, 100,000 plus in this country.
We have 13,000 students, as of two years ago, studying in
China and 3,100 in India.
And if you look at the statistics of where our kids
are studying, it's still going back to Europe, with some in
Latin America, and more recently some interest
in the Middle East.
But in terms of projection, we're missing out.
In terms of the breakdown of students from Asia, notably
from China 35% in engineering or in engineering-related
In the United States, 5%.
Now, I don't guarantee all these numbers.
They happen to be the ones that I got from the bank.
But directionally, you have to draw a message.
The message is that there is a huge move to Asia.
In a meeting like this where we have people from many countries
and a significant U.S. presence, you have to be
encouraged by what is happening here and by the resumes of the
people here and by the companies that are
represented here.
But relative, in terms of global growth and in terms of
global economic activity, we still have the Googles and we
still have some other examples, but the challenge is
there and is very real.
And so the point that I want to leave Nouriel with, as I'm sure
he will also cover -- perhaps more adequately than I these
areas -- is that we're in the midst of a really major
change of moving eastward.
It's a change that my generation didn't anticipate
and sadly didn't do a helluva lot about.
But it is reality and for anyone who visits China or
India today, or Asia in general, this reality
is apparent.
Certainly I believe that at this forum, where many ideas
will emerge, we would do well to recognize that we're not
alone in thinking about the future and at least at this
moment, Asia has to be having a momentum that we sorely lack.
Thank you very much.
Thank you very much, Jim.
You, like me, may have been a bit worried when you saw this
session was titled "Opportunity" thinking it was
going to be a little bit feel good, Pollyanna-ish.
So I think Jim has set us off on a very sober note.
He's also shown what a diplomate he is by describing
Nouriel Roubini, our next speaker's stance as
"slightly pessimistic."
Anyone who is familiar with economic thinking right now
probably knows that Nouriel has, I think, earned the
sensationalist journalistic nickname that he hates of
"Dr. Doom."
But I hope he won't mind my repeating it, because
I think it's a name he should wear with pride.
He's one of the very few economists who was actually
right about the crisis, who called it in advance
and saw it coming.
While you are waiting for October and the release Jim's
book "A Global Life," you can keep yourself busy reading
Nouriel's best seller "Crisis Economics," which talks about
thinking that led up to his prediction of the crisis.
The last time I heard Nouriel speak, he was
still pretty gloomy.
So we'll hear now what he has to say.
And, just as a final sort of tantalizing observation about
him before we hear his remarks that may lead us to feel kind
of grim, I wanted to reveal to you another embarrassing fact
about Nouriel, which is I first heard of him when I was an
undergraduate in college because he was the economics
tutor of one of my college roommates.
And I'm afraid she had a huge crush on him due to his
charismatic way of talking about the world economy.
So there you go.
She anticipated one of the great stars of economic
thinking today.
Please, Nouriel.
Nouriel Roubini: Chrystia, thank you very much for
the kind introduction.
It's a great pleasure to be here in front of this great
audience and speaking after Jim Wolfensohn, who is really truly
a Renaissance man who succeeded brilliantly in business, in
policy, in culture, in arts, philanthropy and so and so.
It's an honor being here with you.
I want to speak about the outlook for the U.S.
and the global economy.
I will say only a few things about the short run where we
have many difficulties, because, after all, this is a
conference about the long-term opportunities about the
risks and the challenges.
But we have to link what's happening in the short
run with the long run.
On the short-term I would say following thing: As been
recognized, we've just gotten out of the worst economic and
financial crisis since the Great Depression.
Luckily, we're out of it.
There is a tentative U.S. and global economic recovery.
But we're not yet out of the woods, you know?
In a typical economic recovery from a recession, the
recovery is V shaped.
You rapidly return to potential growth, or actually about
potential growth, 4-5% for a couple years.
I've been arguing for a while that the recovery is not going
to be V-shaped; it's going to be at best U-shaped and
(inaudible) far below trend in U.S., in Europe, in Japan,
for reasons I'll explain.
There is even risk of a double dip recession, something
like a W, if not an L.
If you look at the latest economic data, it's clear that,
you know, the kind of V recovery is out of the window.
The recovery has been an anemic in advanced economies who
are in this hard slog of weak economic recovery.
And there's even some downside risk of a double dip recession.
Why that's not the case and why it's not been a typical
recovery, this crisis was caused, first of all, by
excessive debt and leverage in the private sector --
households, financial institutions, even some fat
tail of some parts of the corporate sector.
And while there's a lot of talk about de-leveraging, the
de-leveraging is barely started.
Those debt ratios in the private sector are stabilizing
at the very high level, but there's the burden of insolvent
financial institutions, households and even firms.
And there's, in the meanwhile, been a massive re-leveraging
of the public sector.
Very large budget deficits, 10% to GDP in most advanced
economies, public debt expected by the IMF to go to all the way
to 120% of GDP in a number of years.
Why this re-leveraging of the public sector was automatic
stabilizers where countries conceived fiscal policy to try
to stimulate the economy after a recession.
And also socialization of private losses.
We put on the balance sheet of governments the losses of
banks, financial institution, households, and
even corporates.
And, therefore, we see now a massive re-leveraging
of the public sector.
Therefore, the recovery is going to be anemic, because
you need the hard slog of slow and gradual de-leveraging of
financial institutions, of households, and now
the governments.
And, if the government is going to do de-leveraging of their
own large deficits, there is a risk even of
sovereign defaults.
Look what's happening today in Europe and in
countries like Greece.
So that's where there is a risk of a slow anemic recovery and
United States growth now is at stall speed and the third,
fourth quarter expected to be only 1%.
It's not going to be a double dip recession yet, but 1% is
well below potential growth rate of 3%.
And anything can kick you then into double dip, because you
reach a stall speed for the economy when you're growing so
much lower than potential.
And it's going to feel like a recession even if, technically,
it's not a recession because we grow so low.
The unemployment rate is high and rising; budget deficits are
larger; home prices keep on falling; losses to the banks of
unloaded mortgages and consumer credit, consumer loans are
larger; and protectionist pressure are going to
be worse than before.
So those are the kind of risks we face in U.S. But those in
half of the Euro zone where there is still economic
contraction, in Spain, in Portugal, in Ireland, in Greece
and Italy, and in a country like Japan that is in a pattern
of slow and anemic economic growth.
So those are the downside risks about the short run.
I don't want to be all doom and gloom, and let me speak about
what are the opportunities and potential upsides in the global
economy and some of the risks we're facing.
If you're to talk about the bright spots about the global
economy over the short and mid term, I would speak
about three of them.
First of all, there's still a process of globalization,
of trade, financial flows, migration and you name it.
And in spite of this very severe financial crisis,
globalization is not reversed.
Some fear the reverse of globalization.
So far that has not occurred.
Secondly, there is, as pointed out by Jim, not just in Asia
but in most of the emerging market economy, the recovery
has been V-shaped, much more robust economic growth above
potential in some cases.
These countries have higher potential growth than advanced
economies and they're less leveraged both in the private
sector and the public sector.
Third observation that is good about the global economy is
there is still a huge amount of technological progress
and innovation.
And, in the long run actually, as we know, technological
progress, innovation is a major source of economic
performance around the world.
Now, if we are talk about these three positive spots, I would
like to point out what are the positive upside about them.
But those are risks and challenges that come from
globalization, from technological progress, and
from the emergence of these emerging market economies.
First of all, if we're to define our era, it's an era of
increased globalization, greater trade in goods, but
also greater trade in services.
Services used to not be tradeable.
But now with IT technologies, you can outsource stuff and
then new trading in services.
We have massive amount of capital -- flows, both foreign
direct investment and foreign investment in stocks, bonds,
securities, you name it.
There is greater amount of labor migration and also
offshore off-sourcing that increases over time
productivity growth.
We have now have global corporation firms and
businesses, and we have a global supply chain that
also increases productivity.
And the most important thing is there is a greater amount of
technological innovation and spread of information, of
innovation and ideas, of technology or progress from
advanced economies to emerging markets.
And a lot of innovation now is occurring also in some of these
emerging market economies.
And I would say the role of technological progress
innovation is key because, in the long run, what really leads
to economic growth, leaving aside a natural population
growth and demographic is productivity growth.
And productivity growth depends critically on
technological progress.
So we don't know what are going to be the new successful
sectors of the new economy in the future.
We don't know whether there's going to be alternative energy
and the green economy, whether lots of progress occurring in
life sciences, things like cellular research,
neuroscience, genetic therapy and new applications, whether
it's going to be nanotechnology and its own applications,
whether it's going to be the integration of telecom and
media, or new IT technology -- Web 2.0, 3.0, social media,
user-generated content, cloud computing, new search
technology and things of that sort.
There's a lot of creative stuff occurring all over the
world, in U.S., in Europe, in emerging markets.
In the long term, this technological progress
is going to be a source of economic success.
The third source of economic kind of success in relation to
globalization and technological progress is this shift of
economic power that is occurring today from advanced
economies to emerging market economies.
So we're becoming a multipolar world where there are major
sources of economic growth, locomotives and engines,
not just United States or Europe or Japan.
It's Asia; it's Latin, America; it's China, India, Brazil,
and many other ones.
If we're to really think about what's going on in the global
economy to expand some of the points that Jim has made, there
is a shift of economic, trade, financial, and, eventually,
also political power from the U.S. to China, from the G3 --
U.S, Europe and Japan to the BRICs -- from the west to the
east, from north to south, from U.S. and Europe toward Asia,
Latin America, and other emerging market economies, from
advanced economies to emerging markets.
And the center of global economic governance has gone
from the G7 that have become obsolete to the G20 that are
becoming the new steering committee of the global
economic power.
And some people go as far as saying that even a country or a
region like Africa that was underdeveloped might
be the next BRIC.
There are lots of things happening even in Africa
that might lead even Africa of getting out of this
trap of underdevelopment.
Now, remember, that a few years ago at Davos, Larry Summers
made the point that the emergence of Chindia, China and
India, in the global economy was the most important event in
human history in the last thousand years after the
Italian Renaissance and the Industrial Revolution.
And, certainly, the integration of 2.3 billion Chindia, let
alone other billions of people in Asia, Latin America, and the
global economy, the fact that billions of people are joining
the global labor force is a key element that's going to change
radically the global economy.
And here in the west sometimes we're not aware
of the importance of it.
So it's really historical.
Now, this rise of emerging market economy explains also
many of the paradoxes and conundrums that we see
in the global economy.
For example, the fall in the real wages of unskilled workers
in advanced economies.
If you add, you know, two billion Chindians and they're
all low skilled, that implies from a trade point of view, of
course, a fall in the relative return to unskilled labor and
return higher to capital.
We also have other problems, however.
We have greater income inequality in
advanced economies.
We don't know how much of it is driven by trade, how much of it
is driven by skill intensive technological progress, how
much of it is driven by winner (inaudible) effects.
But that's a source of tension.
We have these rising commodity prices, all energy, food, and
other ones coming from the higher growth of China, India,
and other emerging markets.
We have this phenomenon of global savings lot where
increasing savings in emerging markets keeps long-term
interest rates low.
We have current economic imbalances where U.S. is being
the consumer of first and last resort and China the producer
of first and last resort.
We have this paradox of capital not going from advanced
economies to emerging markets but going from emerging markets
to advanced economies, with advanced economies having
current deficits and being net debtors other than creditors.
Now, all these things imply the following thing: The rise of
the emerging market in the long term is going to be a positive
force in the global economy.
Economies think not in terms of zero sum games, but they think
that integration actually is a positive sum game.
The fact that China and India are emerging is going to be in
the long run good for all of us.
So lower cost of goods and services is beneficial
to everybody.
But it's also true that globalization has to be
managed to make sure that it is good for all.
And there are lots of tension in this location that derive
from this globalization.
So what are the risks that come from this globalization?
We have greater trade conflicts and risk of trade protection.
We have increased income and wealth inequality, especially
in advanced economies.
We have these trade wars and these currency wars.
Look what's happening with the currency of
countries like China.
We have this hot money flows that are flowing in and out of
the countries and sometimes lead to financial crisis.
That's why many emerging markets react with
capital controls both on inflows and outflows.
There's been some degree of backlash against sovereign
wealth funds, the phenomenon not just of trade but also
of financial protection.
There's been an increased in frequency and virulence
of financial crisis around the world.
They used to occur once every 20 years.
Now they occur every other year.
Not only they occur with more virulence, but the
international contagion of them is more severe.
Not just from large economies like U.S. to other countries
but even small economies can have global effects.
Look what happened in the spring with Greece having
global contagious effects.
So even a small economy can have through financial channels
global transmission effects.
There's been a rise of state capitalism with sovereign
wealth funds, state-owned enterprises, and publicly-owned
multi-national cooperations in emerging markets becoming more
powerful with the question about what they're going to do,
whether they're driven by profit motives or
political ones.
There's been a failure of the Anglo-Saxon model of a pure
laissez-faire model, but also failure of the continental
European social welfare model.
So what's the right economic model?
And Asian economic model?
It's not clear there is one.
So those are some of the questions that you have to
keep in mind about the immediate long term.
It's not only the rise in absolute terms and the relative
fall of the U.S. and the West that is occurring, but in many
ways I would argue that there is an absolute fall also in the
economic performance of advanced economies, not just
the emerging markets that are emerging in relative terms, but
there's also been an absolute decline.
Take Japan, take Eurozone and the European Union and
take the United States.
Japan is a country that has low potential growth, has a
demographic decline that is severe, is a country that has
never done structural reform, had 15 years of near
depression, has a blocked political system that is
not doing any reform.
They've changed something like five Prime Ministers
in the last four years.
Looks like Italy in the '60s and '70s.
This year alone they had two Prime Ministers and if Ozawa is
successful, there's going to be third Prime Minister
in 12 months.
They've not done the structure reform, and they're in
secular long-term decline.
It's becoming already the third largest rather than the second
largest economy in the world.
That's a serious problem.
There's deflation.
There's the strength of the yen.
Look what happened this spring in the Eurozone.
They kicked the can down the road with trillion dollar
bailout package, but some spreads are back
to the May level.
There's low economic growth.
They have deflational risk, loss of competitiveness, risk
of a breakup of the Eurozone down the line, risk of
sovereign default in some of the countries.
I was last week in a conference in Italy, and the Prime
Minister of Belgium said that the Europeans are going to
react to this financial crisis by becoming even more
common policies and doing coordinated policies.
The problem is he cannot keep together his own country.
Belgium is a country breaking up politically.
Might be divided into two.
So the guy cannot keep together his own country let alone
having united Europe.
Those are the problems that are faced in the Eurozone.
Let's think about the United States.
The United States in the last 30 years had periods of high
economic growth only when there was a financial bubble.
When the real estate bubble in the '80s ended up in the S&L
crisis and a similar recession 1991.
Then when the tech bubble in the '90s ended up
with financial crisis in 2001 recession.
And then we created the sub-prime credit bubble of
'06/'07 and then ended up in the worst economic crisis
since the Great Depression.
Can we grow in a way that's sustainable without going from
one financial bubble and one bubble followed by
crash and bust?
It's not clear.
Certainly this model of laissez-faire approach to
financial market without regulation and supervision has
failed in the United States.
We have very large fiscal deficits growing, $3
trillion deficit for as far as the eye can see.
Large current economic deficits.
We have, both in U.S. and advanced economies, aging of
population and unfunded liabilities coming from
social security and high and rising healthcare costs.
How are we going to deal with it?
We have poor and crumbling infrastructures.
I would say we even have a very low skills of the labor force.
Now, at places like this one and places like Google, of
course, the human capital is very high and skilled.
But think about what's happening on the
average American.
There's been a recent study by the U.S. Army that tried to
figure out which kind of people they can take into the Army.
And they decided to exclude people who have the following
characteristics: People who were obese, were drug users,
who don't have a high school degree, and have a
criminal record.
Why would the Army care about a criminal record
if you're a fighter?
It turns out, if you have a criminal record, you start
stealing right and left.
Turns out, if you use these four criteria to exclude young
people, you think young people, two-thirds of the young
population in the United States does not qualify for the Army.
So that's the result of a strategic study of the Army.
So they don't qualify for the Army, let alone for being
employed in a low-skilled or high-skilled job.
This is a serious problem.
We don't think about it.
We think about high tech and we think about the high human
capital around this room and high tech company.
But two-thirds of the population young in the United
States who doesn't have the skill to be in the Army.
That's a serious problem.
We have a culture of instant consumption, instant
gratification, of not enough savings.
We have increased income and wealth inequality.
Is it normal that 1% of the households in the United States
control 25% of the income, double from 20 years ago?
It's something that's problematic.
We have agreed lock and stalemate in U.S.
Congress in politics.
Someone who has been around in Washington 30 years told me
I've not seen so much unity but hatred between the two parties.
The problem can be resolved with bipartisanship.
There is no bipartisanship.
And after November there will be more lack of
bipartisanship and division of government.
It is decline of the geopolitical power in the
United States that the U.S. doesn't seem to
be able to accept.
We are going to a multi-polar world today.
We have now, these nationalist, activist and isolationist
policies in the United States on immigration towards
Muslim and the role of religion in society.
I would like to summarize, making the following
final points.
The problems in the global economy are global, but the
policies are still national.
To resolve these global problems, we need global
coordination but that is not occurring.
We need it on global climate change.
Conflicts on water and resources, over fishing of
fisheries, global trade conflicts, energy and all
security, global current econ imbalances, restoring global
monitoring and financial stability and avoiding
crises, achieving global security and peace.
All these things are international problems
requiring international policy but the policies are national.
Now, there is a theory in geopoli that says that in
every century, you need an (inaudible) that is providing
the global public goods.
In the 19th century, it was the U.K.
In the 20th century, it was the U.S.
Today people talk about the Asian or the China century.
The trouble is that the U.S. is in fiscal decline.
It has fiscal burden.
It has insular policies, and there is not a
balance of great power.
It is hard to achieve a coordination of this policy at
the global level because many of these emerging markets,
whether it is China or India, are free riding and are
not providing these global public goods.
China is free riding on global climate change,
on political issues.
Russia as a declining power is not cooperating.
The problem is that also formal power is imbalance at the U.N.,
at the IMF, at the World Bank, at the G7 level.
And so far we have not had a shift of effective global
economic power or in the institution of global
economic power.
So the conclusion is the following one: Globalization,
emerging market economies, trade, technology on progress
can lead to an outcome is a better one in the long run, if
it resolves the problem in the short-term.
If you don't do it, actually you could end up like Japan
with a situation of long-term economic stagnation.
That doesn't have to happen, but the policies especially
in the advanced economies have to start to go in
a different direction.
[ Applause ]
Chrystia Freeland: Okay.
I don't know if you guys caught about maybe about five minutes
into his presentation Nouriel said, "I don't want to be just
gloomy." So, Nouriel, you didn't do a very good job
of not being gloomy.
[ Laughter ]
If people are feeling really depressed, I have a little bit
of good news, which is in the next session we are going to
have one of the most brilliant thinkers of our time,
professor Martin Seligman.
And he is the guy who really came up with this notion of
"learned optimism" and how if we have the right attitude, we
can make our lives better.
[ Laughter ]
So don't slit your wrists.
Hang on until 11:00, and I think he's going to rescue us.
Before then, though, I'm going to have a little bit of a
conversation with Jim and Nouriel.
And then I hope we will have a few minutes for
you to ask questions.
So please get ready.
I just want to start, Jim, by asking you -- both you and
Nouriel have talked about this really painful not paradox but
sort of dichotomy that we're seeing right now with rising
Asia but really decline in the west, including in America.
Does that mean there's going to be a trade war?
Are we going to see U.S. politicians responding with
some sort of pressure on China?
James Wolfensohn: That is one way to do it, but I think the
general view is if you get into trade wars, it really hurts you
in the end and it doesn't achieve an objective to
give you an advantage.
I don't think that there is anything that we can
do other than to look at the fundamentals.
We have to get our education system better.
We have to really deal with the next decade to make sure that
our kids are in a position where they can be competitive
with their Asian counterparts.
Second thing we have to do is we have to deal -- and this is
very difficult given the entitlement programs.
We have to deal with our budget deficit issue.
The strength of our country is being eroded as we build
up our budget deficit.
And for my money, I think you can have short-term palliatives
by having trade barriers, but it doesn't solve the basic
problem, which is that we need to take a very careful look at
ourselves, stop thinking of ourselves as the dominant force
in the world and recognize that we have a lot of work to do if
we are going to be competitive.
And if we are going to have the leading position on
the planet that we want.
Chrystia Freeland: And you have talked about deficits.
How do you get that balance right?
What you are talking about costs money.
So where -- you have spent a lot of time in Washington.
What should Larry Summers be doing?
James Wolfensohn: I don't think how long Larry
will be doing it.
Chrystia Freeland: We can have a pool on that.
James Wolfensohn: Maybe Nouriel can go back and do it for a
democratic administration.
But I think we have a real difficulty at the moment
because our political system has become so antagonistic,
Republicans to Democrats, that almost the national -- the
national focus and the national program becomes secondary to
the debate between the two parties.
But what is needed is for the two parties to come together
and say, as a nation, "We're falling behind." Statistics
that I gave -- and I think some that Nouriel gave -- lead you
to believe that our country is not as competitive as it was,
either in manufacturing or in services or in innovation.
And that is a fact.
And you can't solve that by artificial trade barriers.
What we have to do is to address the fundamentals and
have the confidence in ourselves and have people like
the audience here take the lead in terms of innovation and
in terms of getting our country going.
But the first thing to do is to recognize that we have a real
problem and that we have to look at ourselves in real terms
by comparison with other countries, notably in Asia.
Chrystia Freeland: Now, Nouriel pointed out the Japanese
situation as sort of a real nightmare scenario for America.
But if we think back not too long ago, people were holding
up Japan as the great challenge to American power.
So maybe, Jim, both you and Nouriel are incredibly short
sighted and the big Chindia threat which we see right now
will prove as illusory as the great economic threat that
Japan seemed to pose.
James Wolfensohn: The fundamentals are
very different.
The Japanese population is declining.
The population in China and India is increasing.
The base is lower and what we are looking for is a huge lift
in economic activity and in terms of the creation of
the middle class, first in China and then in India.
We currently globally have two-thirds of the middle
class in the G20.
There are about a billion people and half a
billion in Asia.
By 2025, it will be 3 billion in Asia and 1 1/2
million with us.
It will just be reversed.
We will see the dynamics of moving towards Asia.
I have said before, I'm not sure I will be statistically
accurate, that it will be exactly 2025 and it will be
exactly the numbers I'm giving.
But, directionally, I am sure that that is correct.
And most of us in my age group do not perceive the world
as having changed to the degree that it really has.
And I'm very worried that if the next generation doesn't
do it, we will be behind yet another generation.
I don't know what Nouriel thinks.
He may have a more positive view.
[ Laughter ]
Chrystia Freeland: He's likely to be -- Now, Nouriel, before
you say whether you have a more positive view or not.
Jim just a minute ago -- I don't know if you caught it.
He has nominated you for a big job in Washington if the
Democrats stay in charge.
So if you were right now in the White House or in the treasury
-- you have worked in Washington before -- what
would you be doing?
And specifically right now, would your bias be
towards more stimulus or focusing on the deficit?
Nouriel Roubini: Well, before I get to that question
on the first point --
Chrystia Freeland: But that's the hard one.
Nouriel Roubini: I'll get to that one.
I would say on the changing on the relative powers in the
world, I think that we sometimes overemphasize what's
going to happen with China.
In the '60s, Germany was the rising power and people said
Germany is going to take over manufacturing the world.
Then in the '70s and '80s, it was Japan.
Now people speak about China and India and so on.
The reality is as the capital income rises, then wages rise
and some comparative event that China has today in some
things are going to be lost.
Those productions will be transferred to other countries,
for example, in southeast Asia.
So the globe is going to rebalance with economic
power shifting towards China and Asia.
And so on and no one is going to, quote, take over the world.
But it is true that some countries in the region
will become centers of global economic power.
And, as I said, 19th century was the U.K.
20th century was the U.S. And this century could be the Asian
or the Chinese current center.
We will have to see.
There are many challenges in China about rebalancing growth,
moving from exports to domestic consumption, from regional and
coastal kind of growth to more internal growth, dealing with
environmental damage that has been done, political
There's going to be (inaudible) and an authoritarian state.
In many ways in all, China is a different challenge from Japan
because we are speaking about 1.3 billion people, not
about a hundred million.
Secondly, Japan was under the kind of defense and
geopolitical umbrella of the United States while China is
going to become also rising geopolitical power with
probably interests different from the United States.
Those are the things we have to think about.
You know, I don't know what I would do if I
was in Washington.
The reality is that in many dimensions, we are running
out of policy bullets.
Policy rates are zero.
We already doubled base money.
Banks are sitting on trillion-dollar reserves and
not lending it because either credit demand or credit supply.
If we do more QE, they are not going to lend
the second trillion.
Chrystia Freeland: QE, quantitative easing?
Nouriel Roubini: Quantitative easing.
They are not lending the first trillion.
Why would they lend the second trillion?
So monetary policy becoming input then because it can
relieve liquidity problem, not with credit and solvency
problem, the source of the problem in the private sector.
The fiscal policy is also constrained.
There is this debate today with G20 between fiscal austerity
now or stimulating growth with more fiscal stimulus now.
U.S. is in the growth-now camp while everybody else
is in the fiscal austerity.
But even in the United States, the limit to how much we can do
more stimulus, you know, the budget deficit, 3 1/2 this
year, is expected to be at a trillion for the next
ten years every year.
Even the U.S. cannot go from a budget deficit of 10%
GDP to 12 to 13 to 15.
At some point, the bond vigilantes would wake up
even the United States.
Chrystia Freeland: Okay.
But bottom line, what would you do right now?
It is a terrible, hard situation.
What should they do?
Nouriel Roubini: I would say that -- I would do a plan
of medium-term fiscal consolidation and monetary
stimulation in the short term.
Chrystia Freeland: So another stimulus?
Nouriel Roubini: Well, I would say as long as you can commit
to reducing the budget deficit over the medium term by raising
taxes and controlling entitlement spending, then you
can afford in the short run to do more of a stimulus, whether
it is infrastructure, instead of subsidizing.
By the way, capital with an investment tax credit, I would
actually have a temporary cut in the payroll tax so you can
boost the demand for labor which would make labor
costs lower for the firms.
The problem in the United States is not enough investment
that firms are doing enough investment.
They are not hiring workers because the cost of
labor is too large.
So I would do a two-year payroll tax cut that's funded
by increasing the tax that are expiring on the rich.
That's something that would be budget neutral and is going to
have an effect on labor demand.
The big problem is jobs, we are not creating jobs.
Creating jobs is going to be key.
The longer these people remain unemployed, the more
they lose their skills.
They're human capital, and the worse it's going to be.
They will be long-term unemployed.
That's the problem we are facing today.
Chrystia Freeland: Okay.
I'm going to ask Jim and Nouriel one more question, and
then I hope you all will have a few questions to ask them.
There are mics on the floor.
I'm looking, Jim, for a few points of light in the
rather grim picture the two of you have painted.
Nouriel said one, I thought, quite optimistic thing about
this idea that Africa could be the coming, emerging market,
that this might now finally be the moment when we see
Africa taking off.
Do you buy that?
James Wolfensohn: Ideally, I wish I could buy that.
About 16 countries in Africa will show 5% growth or better
this year, which relative to recent history is enormous.
There are 53 countries in sub-Saharan Africa.
And if you look at the projections in terms of the
future of Africa, by 2050 -- 2025, maybe it will grow from
1 1/2 to 2% of global GDP.
But by 2050, it is still around 2% of global GDP.
I think Africa, which will then have a doubled population of
1.7 billion, is really a fantastic challenge, not just
for the Africans but for us.
Africa used to be a place where, if you visited it, it
was very contained in villages and people went out hunting and
the communications were zero.
That is not the case today.
It is a place where cellular radios and where telephones and
things are manifest and where it is part of the world.
Chrystia Freeland: Doesn't that mean it this emerging
market phenomenon there?
James Wolfensohn: Well, it is except that if you have an
average per capita income which is 1/10th of capita income of
China and India and that itself is less than half of the per
capita income in the developed world, you have 2 billion
people that are not in great shape.
And it worries me very much that our country and, indeed,
the west pays all too little attention to Africa.
And I might add it worries me that the Africans themselves
still persist in having 53 countries to run with 53
finance ministers and 53 central banks when the
continent really needs to be run in terms of quartiles
of the continent.
And some of the leaders would like to do that,
but politically it is still not possible.
But Africa is a hell of a big challenge.
It is very rich in natural resources.
It has enormous potential and it has a growing population.
But at the moment, the economy is not keeping up with
the population growth.
Chrystia Freeland: Okay.
So easy answer for Africa, united into either an United
States of Africa or maybe four countries.
James Wolfensohn: That's not an easy answer, but it is one that
the African leaders that I talked to would love to see
happen and would much prefer to see how they can share.
But you have -- you have all the problems of colonialism
where tribalism was disregarded.
And so you have countries with the wrong tribal mix and you
have, unfortunately, a very poor system of governance in
at least half the countries.
Chrystia Freeland: Okay.
Yes, Dr. Roubini, you touched on quantitative easing.
The money supply generally is not one of the levers in the
economy that's talked about very much in terms of
what we manipulate.
And it seems that we may be -- "we" the government -- seems to
be reducing the money multiplier through the
new regulations on banks that restrict lending.
Could you talk about whether more quantitative easing might
be worthwhile and whether we need to reform some
of the bank reforms?
And this is actually for both Jim and you.
Chrystia Freeland: Okay.
Got to love it when the first question is about
quantitative easing.
Go for it, Nouriel.
Nouriel Roubini: Well, I mean, you point out some
things very important.
We've pushed down interest to zero.
We have more than doubled base money, currency in circulation,
and the reserves of the banking system.
So that's what's called base money zero.
But all the other monetary aggregate, M1, M2, M3, are
contracting and credit is still contracting.
So as you point out, there is more money in circulation but
velocity in financial market has collapsed because banks are
hoarding all the excess base monies, excess reserves.
They are not lending it out.
Whether they are not lending it out because there is not demand
for credit, because borrowers don't want to borrow, or
whether banks are constrained because of the new regulations,
still risk averse, or they worry about another financial
crisis or there is a credit crunch for other reasons,
we don't know yet.
But the reality is there is something broken with the
financial institution system.
The big banks have been backstopped, but the FDIC has
on its critical list 840 banks.
Most of them are going to go bust.
Now, each one of them is small.
It is not systematically important as a Lehman
or Bear Stearns.
But, you know, take the local bank that's financing the local
real estate, the residential, the business and so on, that
bank goes bust and you have mini credit crunch.
Multiply it by 800 and you have a nationwide credit crunch.
That's what's happening.
Most of the shallow banking system has collapsed
in the last few years.
Securitization has died a few years ago.
It has not been restored.
350 known bank lenders have gone out of business.
Seasoned conduits are gone.
Bear Stearns, Lehman, Fannie and Freddie, AIG, CIT, major
institutions have collapsed or have de-leveraged.
There is a significant problem in the financial
mediation system.
And just printing money is not going to make
much of a difference.
That's a sense in which it is a credit problem, it is not
a liquidity problem, that's affecting the
financial markets.
Chrystia Freeland: Okay.
So what -- I think we get the difficulty of the situation.
What's the answer?
Is this just something we have to live through?
You've talked about how de-leveraging is something the
U.S. economy has to go through.
There was a bubble before.
We have to go through de-leveraging.
Maybe there is no solution?
Just --
Nouriel Roubini: There's no solution in the sense that in
my view, we live beyond our means and growth was below
potential for a number of years because there was a massive
creation of credit that was unsustainable.
You know, houses, financial institutions, other ones.
And now we quite have a hard slog of growth-below-trend for
a while as we save more, consume less, and
we de-leverage.
And instead we have responded with something that was, in
part, necessary, fiscal stimulus that was necessary
because otherwise the great recession would have become
another Great Depression.
So I'm not against that stimulus, but in some sense
we've piled now on top of private debt public debt, and
again we're stealing demand from the future because at some
point there will have to be fiscal consolidation and when
we start raising taxes and cut spending, growth is slow
down, but that's necessary.
So you cannot keep on kicking the can down the road by having
private debts and then socializing it with public
debts, and in countries where the sovereign are in trouble,
we have super-nationals, like in Greece, bailing out the now
sovereign states, right?
The EU, the IMF, the Eurozone.
At the end of the game, who is going to bail out
the super-sovereigns?
There's not going to be anybody from Mars coming and bailing
out the IMF of the Eurozone.
So there is this much you can do in terms of kicking
the can down the road.
At some point, the de-leveraging of the private
and public sector has to occur so you have lower debt and you
have a greater and stronger, more sustainable basis
for stronger economic growth down the line.
That's why I think that slow below-trend growth is going to
be with us for a number of years until we de-leverage and
the best we can do is through policy avoid something worse
like a double-dip recession, but I think that is
unavoidable, a period of low economic growth.
Chrystia Freeland: Okay.
Jim, do you buy that?
James D. Wolfensohn: I agree with what
Nouriel said, and I think we
should remember that it's only two years ago since we had this
Lehman event which brought home to us the extent of
over-leverage in the financial community.
Two years is not a long time to put that right, and I think
people are still significantly affected in the financial
community by trying to ensure that they're not out of
business, that they can preserve their capital, and
that they can be ready for the next problems that emerge.
So I don't think it's going to be a quick turnaround and I
don't think that we could have -- in view of what happened
before, it seems to me that we couldn't have expected
a quick turnover.
Chrystia Freeland: Okay.
Just more pain.
A blood, sweat and tears panel here.
And we have a final question.
James D. Wolfensohn: It's getting better, but...
So my question is: Nouriel, you talked about the fact that
global coordination is needed, but assuming that the
governments can't get their act together and nobody from Mars
is going to come rescue us, what is the role that you think
that global corporations that are border-agnostic can play
in terms of saving us?
Nouriel Roubini: Well, you know, I think that one of the
important things, as I pointed out, that's happening in the
global economy -- and, you know, you said that, you know,
I was pessimistic but I spoke about three things that
are actually positive.
One is globalization is driven by global corporations; two is
the emergence of these emerging market economies; and three,
there's a massive amount, as I pointed out, of technological
progress that is done, again, by global corporations that
are at the cutting edge.
Most of that indeed is done by small, medium size,
and larger corporations.
So I think that, you know, global corporations have
to play their own role.
One of the paradoxes that's happening in the U.S. right
now is that corporates have become mean and lean, right?
They're sitting on, at most, 2, $3 million of cash.
They've cut labor costs massively, they've fired
8.4 million workers, and now they're starting to
think about the future.
They have to invest more, they have to start -- hire more
and they have to think --
Chrystia Freeland: But Nouriel, if they listen to you and Jim,
aren't they going to invest in the emerging markets, not
in the United States?
Nouriel Roubini: Well, that's a trend that has to occur, and
it's going to occur regardless of.
You know, this shift in global economic power implies there
will be more foreign direct investment, more investment,
more growth in emerging market economies.
I think that probably the corporates, to do their own
thing at all, may have to have also sound economic policies.
You know, for the U.S. to become more competitive, we
need to have skilled workers.
We have to invest in education and skill.
We have to reduce, you know, healthcare costs.
We have to deal with unfunded liabilities.
We have to deal with having infrastructure that works.
So that's the role that the government can play to create
an environment where the private sector is going to
start hiring again, investing again, and do it both in the
United States and in emerging markets.
Chrystia Freeland: Okay.
We've run out of time, but I would just like to hear from
Jim: What can big multinational companies represented here with
their innovative best people, what can they do to
resolve this huge problem we're talking about?
James D. Wolfensohn: Well, I think there are --
Chrystia Freeland: Pay more taxes?
James Wolfensohn: I don't think that that's -- well, I guess our
government would like that to happen, but I think what is
more important is to build an international workforce that
understands the changes in the global economy and that allows
us to compete in Asia in a way that is maybe more effective
than we have done up to now.
This is not to knock American corporations, but the truth of
the matter is that we're confronting a very serious
competitive challenge in Asia by Asian companies and by Asian
individuals, and we need to change that, and I think
that we're going against a background where the countries
with which we are competing -- as I look down the list in
terms of their foreign exchange reserves, you've got People's
Republic of China with 2.4 trillion, Japan at a trillion,
Russia 450, Republic of China 348, India 287, South Korea at
270, Hong Kong 256, Brazil 241.
There are no G7 countries in that group and you're
down to number 10.
We just need to recognize, in a way that I don't think we have,
that we've got to take a good look at ourselves, training of
our people, and we've got to get out there and be able
to compete on equal terms.
And I hope very much that -- I know that companies like Google
already do so, but I hope there are many more Googles to come.
Thank you.
Chrystia Freeland: Okay.
Well, thank you very, very much.
Chrystia Freeland: I'm going to suggest that instead of going
to the party tonight, we all have a mandarin language
studying session and get up at 5:00 a.m. for hiking.
To, I think, cheer us up, we're now going to have a really, I
think, exciting session with Tom Brokaw, who is going to
show you how this moderating is done, and Ted Turner.
As I said, iconoclastic media pioneer.
Ted Turner: Where do you want to sit?
Tom Brokaw: Why don't you sit here.
Ted Turner: With you there?
Tom Brokaw: You're the skipper.
Ted Turner: Yes, sir.
Tom Brokaw: First of all, I'm very happy to be back at the
Google Zeitgeist conference.
The last time I was here, I was with Yvon Chouinard.
Many of you may have remembered his presentation, and they
asked me if I could match it and I said, "There's only one
guy in the world who could rise to that level and it's
my friend Ted Turner."
I want to just say at the outset that I sometimes have to
be a little careful about how I introduce Ted because we have a
strong personal relationship and I have such an
affection for him.
I was introducing him to a fusty New York audience one
time and I was trying to give him a hard sell and I got kind
of carried away and I said, "I just want you to know over the
time that I've known Ted Turner, I really have come
to love him in every conceivable way."
And he got up and said --
-- "That's not true that he loves me in every
conceivable way."
He said, "His wife wouldn't like that and my girlfriends
wouldn't like that, so I don't want you to think that."
The fact is that there is no more celebrated or accomplished
American in my lifetime than Ted Turner in so many ways.
We first knew him as a champion sailor.
He then, of course, was the inventor of CNN, which
reformatted American journalism and journalism
around the world.
A philanthropist.
An entrepreneur in sports and in movies, in entertainment.
He is, as well, one of the great philanthropists of his
time with his work with the United Nations Foundation.
I've always thought a metaphor for Ted really was the
1979 Fastnet race.
Some of you may not be aware of it, but it was 605 miles
through some of the worst weather in the North Atlantic.
Ted stayed at the wheel all night long of his sailing
ship and won the race.
Other ships went -- other yachts went down, lives were
lost, but Ted prevailed.
He stormed -- he's sailed through a lot of stormy seas
since then, of course.
So I want to begin, Ted: You've -- you've managed a lot
of risk in your lifetime.
You've given the world examples of enormous enterprises
and daring ventures.
Are you an optimist right now or a pessimist?
Ted Turner: Can't afford to be a pessimist.
I was on the Calypso underwriting one of Captain
Cousteau's programming trips down the Amazon and it was just
when Reagan had been elected president and he had just
called the Soviet Union "the evil empire."
And that will be probably the last thing that a person says
before the bombs drop will be calling somebody
an evil empire.
You've got to be very careful who you call an evil empire.
I don't think -- it's like burning the Koran.
That's not a good way to make friends and influence people.
And I believe that -- I believe, as an optimist,
that what you want to do in life is make as many
friends as you can.
And that's the reason why we should do away with war,
because now with globalization, we're doing business all over
the world and you don't want to bomb your customers, you know?
That's --
I found that to be the case with CNN.
I mean, we were doing business in every country in the world,
including North Korea.
I think we were the only company in the world that was
doing business everywhere.
And I just -- we couldn't go to war with anybody without
bombing our customers.
So I became a man of peace because I want to
protect my customers.
Tom Brokaw: Let me ask you about journalism and cable news
especially, 24-hour cable news, and the impact that it's having
these days on the domestic political discourse in this
country and the way Americans see the world as a result of
the prism that is presented to them not just through cable
news but the symbiotic relationship between cable
news and the Internet.
Ted Turner: Let me finish the first question
because I didn't get --
Captain Cousteau.
I said, "Captain Cousteau.
I'm getting discouraged."
He said, "Ted, even if we knew for sure that we were going to
lose, what could men of good conscience do but keep working
to the very end to save humanity?"
And so that's my look.
I cannot -- I hardly --
Every now and then I'll harbor a pessimistic thought, but
we've got to remember this -- this is -- this global climate
change situation and the nuclear situation, these are
the greatest problems that humanity has ever faced, and we
really aren't that -- we haven't had much time to
equip ourselves for them.
The Industrial Revolution only started 200 years ago.
The age of flight and nuclear weapons are just
a little over 50 years.
We really -- we're being asked to deal with the most
complicated problems and we don't -- we haven't had enough
time to get the social structure worked out.
So we're having to learn so fast.
I like us.
You know, I know we're hairless apes, but I still like us.
I mean, I -- you know, I think we're pretty cool.
Tom Brokaw: You like the big challenge.
Ted Turner: And I like gorillas, too, and bonobos.
I think it would be a real shame if we killed them all.
Tom Brokaw: We'll get to that in a minute.
Ted Turner: So anyway, basically I'm an optimist.
Tom Brokaw: All right.
But let me ask you about television news and the
Internet and the ability of people to --
Ted Turner: That's a big question.
Tom Brokaw: You're a big guy with a big view of the world.
Ted Turner: Yeah.
Well, I think -- I think because of the competition and
the fact that the news -- there's only so much really
important news every day, that -- and with the proliferation
of news channels all over the world, not just here in the
United States, there's tremendous pressure to get
people to watch these channels so they can sell advertising
for a higher price.
So they go to more sensational -- to me, trivial --
programming and I think it hurts us because we need
good solid information now more than ever.
And my greatest regret in life, other than the failure of my
marriages, was losing control of CNN, because if I still had
control of CNN, I would have the courage to stick with more
important news and more international news and try --
because we're not going to make it through this difficult time
without good information.
We're going to have to mobilize all of our institutions:
education, government, philanthropy, and business.
Our major institutions worldwide are going to have to
mobilize because these problems we have right now are global
problems and they can only be solved by everybody in the
world working together.
I mean, and if we don't -- if we fail, we're going to have a
hard time looking our grandchildren in the eye
because we do really have the information that we need to
handle these problems.
Tom Brokaw: Are we pandering to fear right now and some
people say we're dumbing down America, the way we --
Ted Turner: Yes, I think so.
I think so.
I think at a time when we need the best information, the most
accurate, that we deal with complicated issues in
a mature, adult way.
We're playing with the future of our existence.
Tom Brokaw: But there are economic consequences,
as you --
Ted Turner: There are.
Short-term economic consequences.
That's another thing.
I don't think -- I'm not -- the country with the biggest GDP
doesn't mean squat to me.
The country that does the most good is what counts
as far as I'm concerned.
Hell, I was worth $10 billion.
I've given myself almost into the poorhouse.
A combination of --
Tom Brokaw: Oh, no.
Wait a minute..
Ted Turner: -- of stupid business deals.
Tom Brokaw: My beating heart.
I know.
Ted Turner: Well, if I had the $10 billion that I had for a
few moments 10 years ago, if I had that, I mean I would have
put another billion dollars in the United Nations Foundation
by now, at least.
Anyway, you know, when Gates and Buffett came out with this
thing and said, "You know, we should all give half our money
away," hell, I did it 10 years ago.
You know, been there, done that.
Where do we go from here?
Tom Brokaw: You gave it to the market, however.
You gave it to Time Warner AOL, not to social causes.
Ted Turner: Right.
Ted Turner: I've seen it from both sides.
Ted Turner: I've had the most interesting life.
I really --
Tom Brokaw: No one here will dispute that.
Ted Turner: I'm not going to say any more than that.
Tom Brokaw: What are you and Boone Pickens up to?
Ted Turner: Well, we hit it off together.
We agree about the energy situation on most points.
And although natural gas has kind of taken it on the chin in
California, it turns out these old fuels like oil -- well, the
problems we have in the Gulf of Mexico and the explosion there,
I mean, it's even -- it's not safe to deal with coal, and the
miners are getting killed all over the world.
I mean, nobody's ever been killed by solar
power, I don't think.
And I'm building a 250-acre, $100 million -- I'm partners,
junior partners, with -- and we're building one of the
largest solar arrays in the world in New Mexico.
It's going to power 9,000 homes.
And I'm excited to finally get into alternative
energy in a major way.
And I intend to make a little money, too.
Tom Brokaw: What do you think of the people who just refuse
to believe that, if not global warming, even global
climate change?
There are prominent members of the United States
Senate, for example --
Ted Turner: Yes.
Tom Brokaw: -- James Inhofe from Oklahoma --
Ted Turner: But, you know, there are people who
don't believe in God.
You've got to go -- you've got to hope that you can convince
the majority to go along with what's intelligent.
And if we can't, then we fail.
And if we fail, we'll pay the consequences.
And already, a billion people go to bed hungry tonight in
this world, out of our 7 billion people that are here,
and they're paying the consequences of our mistakes.
We've got to stop doing the dumb things and start
doing the smart things.
Tom Brokaw: What are the principal dumb things
that we're doing?
Ted Turner: We're not stabilizing the population.
Half the women in the world still don't have equal
rights with men.
We need to -- if we're going to stabilize the population, the
best way to do it is to educate the women and give them equal
opportunities with men.
It's the half -- the population is only growing in the half of
the world where women don't have equal rights with
men, where women are treated as slaves.
Now, you can look back.
In 1900, only a hundred years ago, none of the women in the
world had equal rights with men, and today half the
women in the world do.
That's huge progress.
A hundred years ago, we abolished slavery.
We do not -- you know, not on any kind of scale,
we do not have slavery.
We have -- you know, we can pat ourselves on the back for a lot
of good things that we've done.
On the other hand, we have not abolished nuclear weapons yet.
We're working on it.
I mean, one way to end the whole thing in an afternoon
is push the button in Moscow or Washington and --
Tom Brokaw: Or Pakistan.
Ted Turner: -- we could blow ourselves up.
I mean, we already have designed, built, implemented,
installed, and armed a situation where within 30
minutes the majority of the people in the world are dead.
Now, is that smart?
Ted Turner: Is that real -- why -- and we refuse to -- at the
United Nations, the presidents of all the countries at the
U.N. agreed unanimously that we should get rid of
nuclear weapons.
Well, why aren't we doing it?
That's what I call dumb.
Because we know what we want to do.
And everybody wants to do it.
The Chinese have figured it out.
The Russians have figured it out.
We've figured it out.
I mean, these things don't make us safe, they make
us more dangerous.
These things are to blow ourselves up.
Why do we want to blow ourselves up?
I mean I know some people might want to, but I don't
think the majority do.
Ted Turner: God help us if we do.
Then let's go ahead and do it.
Hell, I --
Ted Turner: It would be less work.
Ted Turner: This going around trying to save the world,
boy, is a big job.
Tom Brokaw: Well, you're the man for it.
Ted Turner: I'm not saying be pessimistic, but, you know,
don't -- get good odds, you know, if you bet.
The trouble is, who's going to be there to collect
when the bombs go off?
Tom Brokaw: So share with this audience your exchange with
President Obama when he was just a candidate.
Ted Turner: I talked to him.
Tom Brokaw: And tell us about it.
Ted Turner: Well, I told him I'd help him any way
I could and I wouldn't ask anything in return.
He said, "Well, you don't need anything."
Ted Turner: He was right.
Tom Brokaw: You just heard your friend Jim Wolfensohn and
Professor Roubini talk about the position of the United
States in this global economy, especially against
India and China.
Ted Turner: I don't see it that way.
Tom Brokaw: All right.
Ted Turner: I see India, China, and the United States all
in the same basic boat.
If we don't deal with the survival issues, stabilizing
the population, feeding everybody, working together,
doing away with war and conflict, getting rid of
nuclear weapons, if we don't do those things, the rest of it
is not going to matter.
You know, when you're dead, it doesn't matter whether you're
a Chinaman or an Indian.
Ted Turner: What I want to do is see everybody be alive.
And what we just need to do is start acting like intelligent,
educated, decent, kind-hearted human beings.
Tom Brokaw: You see much evidence of that in the
political culture in this country today?
Ted Turner: Ah, um ...
Ted Turner: There are some things that -- there seems to
be a lot of trivialization and not a spirit of
working together.
I think we -- I'd like to see the parties try and work
together to deal with our common problems instead
of being so polarized.
I think we're getting nowhere.
And the fact that we have gone nowhere as far as, at the
federal level, as far as our energy policy, I mean, it is
just very disheartening for me to see us in the position,
basically, we were after Kyoto 10 years ago.
We haven't learned.
That's one things that Boone Pickens and I do
definitely agree on.
And that's why we've done this sort of program
four different times.
It's kind of like Mo and Joe and Curly, the Three Stooges.
Tom Brokaw: Ted, I know of your personal commitment to energy
and rearranging consumption practices in this country
and where we go from here.
But at the same time the two of you live very large.
You've got homes, airplanes and other things.
And that's become kind of the model for this country for a
lot of people, which is who's got the most money, who's got
the most toys at the end of their lives, they win.
Does that fight against the idea of trying to have a more
conservative-minded country when it comes to energy
consumption and proportion in our lives?
Ted Turner: Yes.
Tom Brokaw: But you're not prepared to change?
Ted Turner: Yes.
I'd change.
But I -- for instance, I couldn't have come down here
if I didn't have a plane.
Tom Brokaw: You could have been with me running through the
Salt Lake City airport and getting on terminal D9 and
getting on the last flight to Phoenix, but that wouldn't have
turned out too well probably.
Ted Turner: You know, It's -- overall, I'm sequestering more
carbon than I'm creating.
Tom Brokaw: But how do we get the country to think about
proportion and use and appropriate size --
vehicles, housing --
Ted Turner: Well, in all fairness, appropriate is
defined to some degree by who's defining it.
You know, what might be appropriate for -- that's
one of the problems.
We don't all want to live in exactly the same size --
Tom Brokaw: Oh, of course not.
Ted Turner: -- apartment and whatnot.
They tried that in Russia, and it was pretty boring.
Tom Brokaw: But the dialogue about what's appropriate and
whether you can live --
Ted Turner: There were no individual houses built
in Russia during the Soviet Union time.
Tom Brokaw: I understand that, but --
Ted Turner: All just flat, all the same size,
all the same shape.
Tom Brokaw: But to be perfectly wonkish for just a moment, in
France and in Germany 20 years ago and in the United States
the average size of the house was about the same, about
1400 square feet or 1500 square feet.
We went up to 2500 square feet.
McMansions populated --
Ted Turner: 60,000 square feet.
Tom Brokaw: And all the way up.
And now they're beginning to come back down again.
Ted Turner: That's because of the economy.
People would -- and you -- you've been all my houses.
Tom Brokaw: Not all of them.
I'm trying to work my way through as many as I can.
A lot of them.
Ted Turner: I haven't been extraordinarily
wasteful in the size.
Tom Brokaw: No, no.
They're appropriate homes.
There are just a lot of them.
Ted Turner: Appropriate for a billionaire.
Tom Brokaw: Right.
Ted Turner: Barely.
Tom Brokaw: One of the essential truths in the
military culture is that you don't want to
fight the last war.
But we always are fighting the last war on the same terms.
If you apply that to where we are in the world --
Ted Turner: It's time for the last war.
Why don't we make the war in Afghanistan the last war?
Let's get out and get out and stay out.
Of everywhere.
Ted Turner: And what do you think about Islamic rage?
Do you think it's real as a threat to this country?
Ted Turner: I'll tell you one thing.
I try to make friends, not enemies.
And the best way to make friends is to be friendly.
And I've been all over the world.
And, for the most part, I made friends.
I made from Fidel Castro to Gorbachev and Vladimir Putin
and, you know, the Chinese.
Tom Brokaw: Do you have any friends in the Islamic world?
Ted Turner: I do.
I do.
We have representation on both the board of the Nuclear Threat
Initiative and the United Nations Foundation from
the Islamic world.
You bet.
You got to have.
Tom Brokaw: But how would you deal with the objective reality
that there are, in the Madrasahs in India or in
Pakistan, especially, and in Afghanistan and other areas of
the Middle East and Somalia, a very narrow view of the world
about how a young Muslim, for example, should live his life,
primarily, which is to join Jihad against the
western world?
Ted Turner: And every one of those countries, those
groups, none of them are for equal rights for women
either, are they?
I don't think so.
Not a one.
Tom Brokaw: No.
Ted Turner: And the rest of the world is heading towards -- so
we're headed towards a world where women have equal
rights with men.
The question is will we get there before we
destroy ourselves?
Because I think, when women do have equal rights with men --
I've been advocating for years that only women should be able
to serve public office anywhere in the world for 100 years.
And if we did that, we wouldn't -- war would end.
There would be a lot more money spent on healthcare
and education and a lot less on the military.
And it would be a much better, more peaceful world with women
running it for a while.
And men could do everything else.
You know, they could be in education and science and
business and -- just politics.
Let the women -- give them something to do.
Let them deal with it.
I -- I would rather have my mom run the world than my dad.
Tom Brokaw: That's a whole other subject that we probably
don't want to get into here.
If you were starting over now as an entrepreneur, given
all the technology --
Ted Turner: What would I do?
Energy, my man.
30 years ago I would have said plastics.
But --
Clean renewable energy because everybody's got
to have it and quick.
That's one of the things that we fail to do it at our peril.
And every day that we wait -- the sunshine is right there.
It's just waiting to be tapped.
All we got to do is capture it and distribute it, and our
energy problems are over.
You can put solar panels on top of a little hut in Africa and
give people lights so their kids can get educated.
That's -- you know, we got to -- everybody's got to be
educated, too, in the new world.
Tom Brokaw: You and I once talked about this one night
after a day of fishing.
I asked you about what made you the greatest sailor in the
world when you were sailing.
And you told me I thought a fascinating story.
You said that you lost more races than you won when
you were a young man.
You lost a lot between the time when you started sailing
competitively until what?
You were at Brown when you were a freshman?
Ted Turner: Right.
Broke through.
Tom Brokaw: And then you began to win.
Ted Turner: Yes.
Tom Brokaw: Is that a lesson for life for you?
Ted Turner: Absolutely.
Keep trying.
Keep working at it.
Never give up.
Quitters never win.
Winners never quit.
In the first five years I had the baseball team, we came in
last every single year in our division, setting a record that
stood for all time for the most consecutive losses
in divisional play.
And then after that we turned it around.
And we won, like, 19 straight divisional titles, which set
a record in all sports for the most wins of anybody.
You bet your ass, buddy!
We weren't losing in the beginning.
We were just learning how to win.
The trouble is you got to live long enough to
start winning, you know?
Tom Brokaw: Well, you were the most successful sailor
this country's ever had.
And then you walked away from it.
Ted Turner: I did that because I was neglecting my family.
And CNN had just started, and I figured if I wasn't there to
work hard with CNN, that I'd go broke.
And that would not be good.
Tom Brokaw: And you almost did go broke.
Ted Turner: I came within a gnat's hair.
Tom Brokaw: You're going to go Newport tomorrow to
sail for the first time.
Ted Turner: In a long time.
Tom Brokaw: What's the race?
Ted Turner: It's the 12-meter race.
They invited me to come back, kind of like
an old-timers deal.
Tom Brokaw: The boats will be different now because they'll
be wired in a way that they weren't when you were sailing.
Ted Turner: Yeah, but it's the same old boat that I was racing
in -- the American Eagle, which I owned in '69 and '70.
And I raced it, so it will be like coming home.
It's even the same color.
Tom Brokaw: And the crew will say: Ted, the computer printout
says this is what we ought to do." And the wind direction,
according to the computer is --
Ted Turner: Yeah, I'll do it.
Tom Brokaw: You're going to do it that way or the old way?
Ted Turner: Combination of the two.
But I'll be rusty.
And I'm racing with guys that have been sailing all the time.
So I probably won't do too well.
But I'm going to be out there anyway.
Tom Brokaw: I heard from a mutual friend of ours, Tom
McGuane, who covered sailing for "Sports Illustrated" at one
point, described when the computer began to take over
sailing and people were measuring the wind and where
they should tack and so on, you instead would walk in and look
at the charts and say, "We're going to tack right there."
And one day you said to me there was something that you
had when you were on the wheel that you could be 20 seconds
ahead on a given course, and then one of your crew members
would take over, hold the same course and they would catch
up until you got back on the wheel again.
Is that about life as well, the touch that you have and the
intuition that comes with a lifetime of training and
something that is just, if you will, codified in you?
Does that make sense?
Ted Turner: Hmm-mm.
Too complicated.
Tom Brokaw: Are there things that you do that you know
that are just intuitive --
Ted Turner: Yes.
Tom Brokaw -- that grow out of your life experiences
and who you are?
Ted Turner: Yes.
I think a lot, and I spend my time with intelligent people.
I don't spend my time with a bunch of dumb dumbs.
You know, I want to get smarter all the time.
And because I think it's really important for our survival for
us to be just as smart as we can possibly be right now.
And that means we got to be thinking all the time.
And I'm thinking all the time.
Tom Brokaw: We want to bring on stage now a friend of yours,
Mikkel Vestergaard, who has an eponymously-named
company in Switzerland.
Come up, Mikkel.
Mikkel's company produces products that are not
only profitable but socially responsible.
For example, how to avoid malaria, how to make water
cleaner in a simple fashion.
And he works in the free market.
But also he has a very strong association with a lot of
the NGOs around the world, including one with which I'm
closely associated called the International Rescue Committee.
Mikkel, share with this audience, A, quickly, your core
business and, B, how it evolved into a company that is
doing well by doing good.
Mikkel Vestergaard: Thank you.
And let me start by just mentioning what an honor
it is to be on stage with both of you.
It actually reminds me of the first time I met Ted, he talked
me into racing sailboats.
And I'm learning now what an expensive hobby it is.
But, to answer your question, we've really built the entire
company around the opportunity that there is in making
the world a better place.
And in the rising understanding that there's neither
controversy nor conflict between doing business
and doing good.
For us it means, in practical terms, that we have, for one,
built our entire innovative platform around developing
technological breakthroughs for the most vulnerable people in
the most extreme situations.
You mentioned malaria.
What we've done there is developing fiber technology
that kills the mosquito on impact when it lands
on a bed net.
The opportunity to save millions of lives is easily
understood, but is also a huge economic contributor when
malaria would otherwise rampage through African villages
leaving survivors too sick to work or too sick
to go to school.
The water filters, as you mentioned, is something I'm
very passionate about.
The world seems to have sort of dropped disease eradication
since small pox was eradicated in the '60s and '70s.
So we, together with the Carter Center, teamed up for the
Guinea worm eradication program and developed a water filter
that has become so successful that the guinea worm is the
second disease to be eradicated and the first to be eradicated
without the use of a vaccine.
We have only four countries left.
So we're doing all these innovative technologies.
We're also very much involved in assisting and getting the
products out there by integrating infectious
diseases, communicable diseases like cancer and diabetes and
climate change and food security.
So the point is this really: That there is a huge
opportunity for private companies to get
involved and to invest.
90% of all health investments today benefit only the 10%
wealthiest on the planet while, obviously, only 10% of
all health investments is available for the other 90%.
And, as a result, the -- to give a good example, the drug
available for river blindness was developed for chlamydia.
And that's just one example.
The larger picture is that the average -- the best measure of
human welfare is average life expectancy.
That's 80 years in the richest countries and it's 40 years
in the poorest countries.
That's an intolerable gap.
But it's also an opportunity for companies to get involved.
I think, if I can end the response to your question on
more provocative note, I think that companies who don't
understand how to get involved in an opportunity like this,
one way or the other, probably won't be around in
20 years from now.
Tom Brokaw: The U.N. Foundation
which you're a principal patron of, has
a relationship with the Vestergaard Company as well
and providing these kind of materials around the world.
Is that a model for the future do you think
of public/private--
Ted Turner: Certainly a model.
It's a model of cooperation.
I think we're going to -- the problems are so great today
that it, whenever we can, cooperate with each other and
work together, we can many times have economies of scale
that make it work better.
That's why I gave the billion dollars to the United Nations
instead of the Red Cross.
I believed that the United Nations is the hope for the
future because that's all of us working together.
At least that's the objective.
And that's what we do.
And we work together with dozens of corporations, dozens
and dozens of NGOs and with the majority of the countries in
the world we have projects with.
Tom Brokaw: Let me, Mikkel, ask you about some
political realities.
One of the kind of undertold stories in the world today, in
my judgement, is the presence of China and Africa and in
the extracted industries.
I mean, they're everywhere in mining and forestry and taking
advantage of the extraordinary natural resource riches
of that country.
There's not much evidence, however, that the state-run
Chinese economy in Africa has a big social conscience
about what they ought to be doing for the population.
Is that an overstatement on my part?
Let me start by just answering the first question that
you also asked Ted about the role of U.N.
Because I think there's something that the U.N.
Foundation does very well that I just want to mention.
And that is the partnering with the private sector.
For us it's the epicenter of where the private sector
partners with the U.N.
I gave the example of a long-lasting net that was
invented for malaria control.
What the U.N. Foundation
brought to the table was understanding
the value of integration.
That was the second thing that came together that made us have
these big strides in malaria.
By integrating measles vaccination with bed net
distribution, we were able to distribute mosquito nets not
$5 a net but $1.30 a net.
That was really a brain child that came from the
U.N. Foundation.
And with those two we are now, together with United Nations
Foundation and other partners, sending out more than 100
million mosquito nets to Africa in 2010, which will -- which
we're confident will reduce the malaria burden to less
than half in more than 20 subsaharan African countries.
So massive breakthroughs there that has happened with the U.N.
Foundation as the epicenter with the linking of the private
sector and United Nations.
To answer your other question on China and Africa, I think
there are great parallels with what Europe and U.S. has done
in the past in Africa and what China is doing now.
I think we remain optimistic that a more long-term
sustainable partnership attitude can be developed from
China that is less about extraction and more
about investment.
Tom Brokaw: Are they open to a dialogue on that?
Mikkel Vestergaard: That's my impression.
Tom Brokaw: Ted?
Ted Turner: When we started the U.N.
Foundation just a little over ten years ago, there had never
been a private donation from a corporation or NGO to
the United Nations.
And, in fact, when I tried to give the billion dollars to the
United Nations directly, they had to say, "We can't take it
because we can only" -- "our charter only allows us to get
money from other sovereign states." Only governments could
fund the United Nations.
And so we went ahead and created the foundation
to work parallel.
We didn't know whether it was going to work or not either.
It was an absolute billion-dollar experiment.
But it did work, and it is working.
And after only ten years, we have dozens of partnerships
all over the world.
And I think it's made -- it's making the world a little
better place because the more we learn to work together,
the better we feel.
You know, if you have ever been married -- and I have many
times -- [ Laughter].
It's -- when you are getting along with your wife or your
husband, when you are working together in a positive
way, you feel so good.
While you're fighting, it is miserable.
You know, how many people would rather fight with their wife
than get along with her?
Nobody, right?
And how many people want to bomb somebody?
I never find anybody -- we're bombing everybody.
But we can stop, and maybe we will.
I mean, it is a possibility.
Tom Brokaw: Final note, this audience I'm sure is curious,
do you carry a cell phone, Ted?
Ted Turner: Not personally but I have friends close
by that have them.
[ Laughter ]
Tom Brokaw: On that note, thank you all very much.
[ Applause ]
That was very good.
Thank you.
Time for a break now, right?
Chrystia Freeland: Yes.
Thank you very much.
And how can we resist someone who suggests that for 100
years only women should run governments?
I love that.
Thank you very much, Mr. Turner.
Please come back at ten past 11:00 when one of my favorite
writers, Jim Fallows, will be leading a session
on leadership.
Thank you very much.