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This new economy will be geographically different, driven more by the dynamic emerging markets and developing countries. But it will also be generationally different, shaped by different values and principles. What we need today is a “new moment in history” that embraces the values of a new era—more openness and cooperation between nations, more inclusion and solidarity among peoples, and stronger accountability of those responsible for the global economy. In the final analysis, there are no easy answers to the big burning questions like the sources of future growth and the harnessing of technology to benefit the entire planet. But we can at least say that, together, we are grappling with the right issues—with our intelligence, goodwill and courage
As I have said recently and it bears repeating: we have avoided collapse, but we need to guard against any relapse. 2013 will be a make-or-break year. We all know the imperative—keep up the momentum on the policy actions needed to put uncertainty to rest. What does that mean? For the euro area, it means making firewalls operational; pushing ahead with banking union; continuing with the difficult but necessary fiscal adjustment at the country level; and supporting demand, especially with further monetary easing.
Perhaps we can lay the groundwork for future success by embracing some of the emerging values of this new generation. Let me touch on three of these in particular: greater openness; stronger inclusion; better accountability.
Greater Openness
In fact, this principle is more important today than ever before. In this era of globalisation, cooperation needs to be hardwired into the psyche of policymakers. Why? As we saw clearly during the crisis, this is a world where economic jitters in one region or market can have instant repercussions all across the globe. In a flat world, there is no room for economic silos.
Possibly the greatest integration of all comes from Europe. If you look behind the daily headlines related to the eurozone crisis, you see a region in the midst of a historic process of integration. It is really the culmination of a centuries-long search for peace and prosperity, with the understanding that by linking arms you are unlocking swords—and also unlocking a million avenues for mutual gain. Yes, the European economy faces serious issues that need to be addressed—deeper banking and fiscal union, for example. But destiny beckons through the smoke and the fog. And I, for one, am optimistic about Europe’s future, especially if it stays on the path of reform, integration and renewal.
Stronger inclusion
At its core, it relates to growth. Surely we have all learned by now that it is no longer enough to focus on growth alone. We need all people to share in rising prosperity—and, by the same token, share fairly in any economic adjustment needed to achieve or restore prosperity. What is less clear is how we achieve more inclusive growth in practice. Certainly, universal access to decent education is the non-negotiable starting point. Beyond that, I believe policies such as robust social safety nets, extending the reach of credit, and—in some cases—minimum wages can help. Above all, inclusive growth must also be job-rich growth. This is really a symbiotic relationship—we need growth for jobs and jobs for growth. Right now, 202 million people are looking for work, and two in five of the jobless are under 24. Relieving this sense of desperation must be the over-riding goal of everything we do.
Better accountability
Accountability is really a two-way street—institutions must be accountable to citizens, but citizens must also have the knowledge, education and training needed to hold them accountable. It is mutual responsibility.
What does this all mean for economic life—in the public sector, the private sector and international institutions too? Beginning with the public sector, we have learned that good governance is the bedrock of economic success. Without strong institutions, good policies cannot be developed and implemented. Zero tolerance for corruption must be foundational. The state must be the servant rather than the master of the people—meeting their basic needs and providing an enabling environment for the private sector to thrive.
But the private sector also needs to be accountable. The goal of the private sector cannot be only profit; it must also be to add value, create jobs, develop the new ideas that drive an economy forward. Vested interests and arbitrage typically hinder the accountability principle.
One has in mind the financial sector, which turned out to be insufficiently accountable—to its clients, its shareholders, and to society in general. As we all know, the global economic crisis was, in many respects, a governance crisis originating in the financial sector. It hid too much activity in murky and dark corners, and put its own short-term gain ahead of supporting the real economy.