Re: What is the world's greatest challenge in the coming decade?

Description: Planning for panic.

Transcript:

In relation . . .  If I had to choose one, let me choose it in the area in which I have written, you know, quite a bit and taught quite a bit.  It’s not about . . .  I mean it’s about globalization.  There is a weak underbelly as it were.  And that has to do with capital flows.  It’s in my book “In Defense of Globalization”.  I have a separate chapter on capital flows.  Capital flows, we still really don’t know – in an interdependent system where capital can move very fast – what we can do if suddenly panic materializes.  Right now – in fact as we talk – there’s still we’re on edge, right, as a result of the subprime lending and so on.  In international capital flows, there’s always this continuous anxiety – no matter what people say in public who are involved in it – as to whether one day something will break up the system.  And there’s no way to . . . to feel completely secure about it.  And that is something I wrote at the time of the East Asian financial crisis in foreign affairs.  It was called “The Capital Myth”, and I was simply saying that with trade, of course there can be problems; but they’re minor problems.  Like if I exchange my toothbrush for your toothpaste . . . you know _________.  And if we remember to brush our teeth, we will both look rather good, right?  And the probability of our teeth being knocked out in the process of exchange is rather small.  There’s nothing _________ life.  But with . . . with the analogy for capital flows, it’s like with fire.  Fire can be used, you know, to turn raw meat into a wonderful steak or something.  But it can also burn your house down.  And that is the worry.  And I think we really haven’t scorched that.  I don’t know whether one ever can, and that remains today with very rapid flows of capital __________; with people continuously playing, and with people unscrupulously ________ advantage.  I mean like for instance George _________ was asked, you know, why did you bet against the Malaysian currency.  You remember Malaysian . . . you know ________ was mad as hell, so mad that he made some anti-Semitic slurs which are totally uncalled for.  Because I don’t even know if George _________ is a practicing Jew.  But _______, and it was such a crazy thing to say.  But he had a point about George ________ himself.  You know leave my currency alone.  And so George _________ eventually said look, I believe there should be control. _________capital flows are a problem.  But as long as they are possible, I’m going to make money out of it.  Now there are many people who don’t care.  George cares; but you know if there is money to be made he will make it (laughter) until the system changes.  (Laughter) And then there’s the rest of us.  So I think this is . . .  This I do worry about, and this is the most important problem because multi-national investments; trade; even migration we are beginning to learn how to handle that.  And I think some of the evolutionary thinking there, we want to manage it between _________.  I think it’s moving in the right direction in my view.  And international patents and so on, and you know letting generic drugs develop, that has also moved along the way.  So the only place where I don’t really . . .  I don’t think anybody can reassure me actually, because it’s not possible right now. All we can do is whistle in the dark and hope nothing will happen, which is exactly where we are on the emerging crisis which I hope will disappear.  But it’s only a hope.  It’s not an expectation. 

 

Recorded On: 8/14/07