Pessimism, hope and a new sense of balance
When CNBC’s Maria Bartiromo asked Mexican telecoms leader and philanthropist Carlos Slim where he’d choose to start out if he could do things over again, he just laughed and replied, “Mexico.” Bartiromo insisted he take his native land out of the equation, so he cited Chile, Brazil, Uruguay or Colombia. His response seemed a pointed statement of how things have changed, further evidence, if any is needed, that the U.S. position as the global center of innovation is no longer secure. The final plenary session of The New York Forum had its share of pessimism and of hope. It placed U.S., European and Latin American perspectives side by side and brought some different philosophies into sharp relief.
Edmund Phelps, Nobel-winning economist, was aghast at Slim’s claim. “I’m scratching my head in puzzlement. It speaks volumes that Carlos Slim would say there are bigger careers ahead for people in Chile than in the United States,” he said. “It just shows you where we are in the US economy now.” Phelps lamented the current US plight. “There’s been a tremendous loss of dynamism in the US economy.”
Yet when he put Europe in the same boat, the French Minister of Economic Affairs, Christine Lagarde, took issue. “As much as we would like to paint Europe as this old-fashioned, half-asleep, dozy area, and the U.S. going in that direction, I really think he’s wrong.” Lagarde said she saw a benefit in the turmoil, a rebalancing of the world’s financial ecosystem. She welcomed the arrival of emerging and underdeveloped nations on the ladder. “Clearly there is a lot of catching up that is needed and it’s more than welcome and it should happen.”
The distinguished members of the panel agreed that banks need to do a better job, and to focus on funding new enterprise and business, instead of creating complex financial instruments that they trade amongst themselves. Government may have a role to play here.
Government could also introduce measures that spur innovation. But when Lagarde spoke of a French tax credit President Sarkozy granted for research and development, Phelps was unconvinced. “I have to be very skeptical about this idea that you can create more dynamism artificially by stepping up the tax break.” Grassroots innovation and an innovative culture are what’s needed, in his view.
Yet examples of U.S. innovation are not all that hard to find. Slim praised companies like Apple, Microsoft, Google and Twitter. For Latin America, too, the future is digital. As technology becomes global, the next challenge for that region will be to cater to the wireless and broadband needs of a growing middle class, he said. Nor will the future be easy: gaps between rich and poor remain. Slim’s fellow Latin American, Luis Alberto Moreno, President of the Inter-American Development Bank, noted that despite the rosy picture there are challenges ahead.
With the G20 financial taking place in Toronto next week, this may be a time for optimism, rather than despair. As Nobel Peace Prize winner Elie Wiesel put it at the end of the event. “A society could live without love, but not without hope.”
