Christine Lagarde : A New Multilateralism for the 21st Century (Richard Dimbleby Lecture)

11 Feb

Christine Lagarde : A New Multilateralism for the 21st Century (Richard Dimbleby Lecture)

I would like to share this talk by very impressive Christine Lagarde, Managing Director, International Monetary Fund. I like to listen to Ms. Lagarde, whose views find persuasive and in someways feel she should be a fine role model for women and everyone generally. I guess Sheryl Sandberg has found wide penetration with her message and book Lean In (Incidentally saw the book at my sister’s place too) but guess my preference would be  Ms. Lagarde. There is surely lot of difference between a  corporate where you can drill down your views than working with countries and global leaders in a truly heterogeneous multicultural set up. Just a thought. Having said so, these days some  corporations are like tiny countries with their expansion and global reach. I will try and borrow Sheryl Sandberg book from my sister at some stage and read. Am sure it will be brilliant experience. 

In this Richard Dimbleby Lecture, Ms. Lagarde says ” I would like to talk about the future. Before looking ahead, however, I would like to look back—for the clues to the future can often be read from the tea leaves of the past.” She alludes to events in times of pre depression 1914 and Bretton Woods Conference that took place in July 1944 as the problem and panacea for world problems.

Ms. Lagarde says ” 1914 was the gateway to thirty years of disaster—marked by two world wars and the Great Depression. It was the year when everything started to go wrong. What happened?

What happened was that the birth of the modern industrial society brought about massive dislocation. The world was rife with tension—rivalry between nations, upsetting the traditional balance of power, and inequality between the haves and have-nots, whether in the form of colonialism or the sunken prospects of the uneducated working classes.”

She speaks of Bretton woods agreement,1944  “The 44 nations gathering at Bretton Woods were determined to set a new course—based on mutual trust and cooperation, on the principle that peace and prosperity flow from the font of cooperation, on the belief that the broad global interest trumps narrow self-interest.

This was the original multilateral moment—70 years ago. It gave birth to the United Nations, the World Bank, and the IMF—the institution that I am proud to lead.”

Ms lagarde belives this mulilateral framework of hard institutions like United Nations, the World Bank, and the IMF and soft frameworks like G 20 and other economic blocs helped in the global economic recovery and  says “Today, however, we are coming out of the Great Recession, the worst economic crisis—and the great test—of our generation. Thanks to their legacy of multilateralism—international cooperation—we did not slip into another Great Depression that would have brought misery across the world yet again. We all passed the test—rejecting protectionism, reaffirming cooperation.” I think my country was lucky with consequences of meltdown simply because we had not undertaken full financial reforms.

Ms. Lagarde in this important talk says ” I would like to talk about two broad currents that will dominate the coming decades—increasing tensions in global interconnections and in economic sustainability.” Her panacea remains same a case for multilateralism for the 21st Century. This is a good idea. Though one wonders how effective United nations is in the current milieu of peacekeeping ? Let’s take Syria as a case in point. Does NATO takes precedence? Does IMF aid really foster growth in a undeveloped or a developing country? Are the conditionalities to aid local?  May be this needs greater appreciation but multilateralism is a good idea, only way to go forward is to co operate and talk to each other.

Ms lagarde points two challenges in the talk. The first one is increasing tensions in global interconnections. She says ” world trade has grown exponentially. We are now in a world of integrated supply chains, where more than half of total manufactured imports, and more than 70 percent of total service imports, are intermediate goods or services. A typical manufacturing company today uses inputs from more than 35 different contractors across the world.”

Further ” financial links between countries have also grown sharply. In the two decades before the crisis in 2008, international bank lending—as a share of world GDP—rose by 250 percent. And we should expect this to rise further in the future, as more and more countries dive into the financial nexus of the global economy.

We are also living through a communications revolution. It has produced a starburst of interconnections, with information traveling at lightning speed from limitless points of origin. The world has become a hum of interconnected voices and a hive of interlinked lives.

Today, 3 billion people are connected to each other on the internet. Three million emails are sent each second. There are almost as many mobile devices as people on the planet, and the “mobile mindset” is deeply embedded in all regions of the world. In fact, the highest rates of mobile penetration are in Africa and Asia.”

Sometimes feel the biggest revolution is perhaps the mobile revolution. It has percolated to lowest rungs of society. I on a daily basis see poor women who clean the streets  with a mobile phone in one hand and a broom in another. This is real. Internet has still to percolate to have nots but mobile is deeply embedded.Ms. lagarde says this communication revolution can be a force to good in global context, say a Arab spring or world taking cognizance of Malala phenomenon.  However she also says “In such an interwoven labyrinth, even the tiniest tensions can be amplified, echoing and reverberating across the world—often in an instant, often with unpredictable twists and turns. The channels that bring convergence can also bring contagion.” This is true. I find social media in my country given to hyberbole and is  marginal for governance and development. May be as dissemination for information and policies. It can also lead to misinformation and rumors. Guess its’s easy to be Charlton Heston and Ben-Hur on social media.

She gives the example of financial meltdown ” Because of this, the global economy can become even more prone to instability. If not managed well, financial integration can make crises more frequent and more damaging. Consider, for example, where and how the recent global financial crisis began—in the mortgage markets of suburban America—and spread all around the world.” This is so true. May be it’s also because world is more integrated now and any movement in capital in one part has an affect on another state immediately.

She gives some startling facts in lecture  :

– In demographics ” In 30 years time, there will be about two billion more people on the planet, including three quarters of a billion people over the age of 65. By 2020, for the first time ever, there will be more old people over 65 than children under 5.”

– In Income inequality, ” In the US, inequality is back to where it was before the Great Depression, and the richest 1 percent captured 95 percent of all income gains since 2009, while the bottom 90 percent got poorer.”

-In Income inequality “In India, the net worth of the billionaire community increased twelvefold in 15 years, enough to eliminate absolute poverty in this country twice over.”

Can IMF or the new religion solve this ? I don’t know. Pope Francis has spoken about this. I always worry about income inequality.Capitalism needs to be inclusive and lacks soul.

At my own minor individuated level, every time that have lost a job or in  transition, may put a brave face ( tend to think like Bollywood star Salman Khan ” I don’t give a damn” 🙂 )  but it takes a toll on my family, my mom, my brother and honestly me and our health. This new age ruthlessness is also churlish, banal and personal. Growth must be inclusive. Individual. Nation. Regional Economic Bloc. Multilateral organization. World.

Hope you like this Richard Dimbleby Lecture by Christine Lagarde. I was looking for a BBC video link to same but could not find it.  I guess ” we must always think of the other, familial, local or global.”

Hope you have a lovely day. Thank you!

 

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