Back To Work: Innovation, Investment and International Open Markets
One day after US President Barack Obama announced his strategy for cutting deficits and reducing debt, the Bertelsmann Foundation’s 3rd annual conference examines options for sustainable fiscal policies and job growth
The state of the world economy was again the focus of the Bertelsmann Foundation's largest annual event as 200 influential government representatives, business executives and representatives of the academic, think-tank and media communities gathered at the Newseum in Washington, DC to discuss options for spurring employment in a jobless economic recovery. Conference speakers included US Treasury Secretary Timothy Geithner, French Finance Minister Christine Lagarde, Singaporean Finance Minister Tharman Shanmugaratnam and US National Economic Council Director Gene Sperling, whose presence underscored the importance of the event for the US capital's spring calendar.
Secretary Geithner opened the day's proceedings with his first public appearance since Republicans and Democrats agreed to a fiscal year 2011 federal budget. The secretary expressed optimism about an increasingly strong economic recovery and bipartisan agreement on increasing the US debt ceiling. "They understand that you can't take any risk," Mr Geithner said of Congress and its required authorization of an increase, adding that the US must meet its financial obligations. He was equally confident about Washington's ability to bring about a sustainable fiscal position and reduce its debt.
But many speakers throughout the conference day noted that the bitter struggle between Republicans and Democrats about spending cuts versus tax hikes will continue. Congressman Henry Waxman (Democrat - California) expressed certainty that this debate will continue into the 2012 presidential campaign.
Singaporean Finance Minister Shanmugaratnam warned that precarious fiscal positions of Europe and the US and continued high unemployment rates are among the biggest threats to the global economy. ".the whole fiscal model particularly in Europe and, to a lesser extent, in the US needs remaking in a way that isn't so much about marginal changes. but a fundamental re-think of the whole social contract," the minister warned.
French Finance Minister Lagarde acknowledged that the Eurozone faces great challenges but noted that much has been done in the last year to confront them. She cited agreement on the Stability and Growth Pact and the Competitiveness Pact as evidence of a comprehensive approach to and unprecedented coordination for dealing with Europe's debt crisis. She conceded, however, that more oversight of the European banking system was necessary. Bertelsmann Foundation President and CEO Gunter Thielen, however, expressed concern about the euro and called for unity among the countries using the currency. "Stabilizing the currency requires all those in the euro zone to do their part. This means gradually shifting away from national budgetary, monetary, and economic policy."
Rensselaer Polytechnic Institute President Shirley Ann Jackson called for more debate on solution and less talk of problems. This set the tone for three panel discussions on innovation and investment in the BRIC (Brazil, Russia, India and China) countries, balancing the need for economic growth with maintaining low inflation, and options for jumpstarting job growth. Toronto Community Foundation President and CEO Rahul Bhardwaj urged politicians and businessmen to give a greater role to civil society when developing job-creation policies. But David Stockman, director of the Office of Management and Budget under Ronald Reagan, struck a pessimistic note, saying that policymakers in Washington continue to deny the US's desperate fiscal situation.
The conference also focused on the position of emerging economies, many of which emerged rapidly from the global financial crisis while maintaining solid fiscal balances. The Chinese Commerce Ministry's Wang Huiyao spoke of his country's efforts to lure back students who have gone abroad as an increasingly important component of Beijing's policy to promote innovation and investment. Carlos Ivan Simonsen Leal, president of the Getulio Vargas Foundation, noted that Brazil follows a similar policy.
The conference took place, as it has in past years, just prior to the World Bank and IMF Spring Meetings. Detailed reports on each session can be found here. Video of the conference by C-SPAN, the US broadcaster, is available at: http://www.c-span.org/Events/Bertelsmann-Foundation-amp-Financial-Times-Forum-on-the-Global-Economy/10737420903/