Three reasons for new economic thinking

I believe we are at a turning point in the way we value, measure, plan and teach economic development. There are three reasons for this:

1. The global financial crisis has signaled us that our current economic system operates at a dangerous edge. In 2008 the world had an economic heart attack. Reinvigoration measures have worked, the patient is alive and on the way of recovery. But now it is time to understand the underlying reasons for the heart attack and how to avoid future, possibly deadly, heart attacks from recurring. A doctor would advise to evaluate one’s life style to avoid future attacks. This is what we need to do now rather than jumping back into the economic rat race. Otherwise the global economy may share the fate of the middle aged manager who has not understood the message of his first heart attack.

2. Climate change is a result of human economic activity. Some say that it is a symptom for the unsustainability of our current economic system. I agree. But we have to deal with climate change urgently, politically, technologically and through changing behaviors. The sheer dimension of the change needed will change our economic system. Only by adapting our economic system will we be able to successfully mitigate the impact of climate change.

3. The rise of China: A one2one translation of the Western economic system in China will lead to unpredictable political, environmental, social and cultural results. Because of resource scarcity, pollution, internal migration and climate change, the rise of China may become a crisis factor for China and the world.

That is why we need to rethink the basis, the theories, the teaching and the practices of our current economic thinking. This is not just an academic debate. This is a fundamental issue with relevance for our future well being. It needs to affect the way we understand economic well being, the way we measure it, the way we understand incentives and the way we teach.

It is not about central economic engineering. This has failed quite visibly in the Soviet Union, and I have myself experienced it. But we have to understand and mitigate the dangerous effects of our system.

The creation of the Institute for New Economic Thinking is a way of starting this conversation.

Andre Wilkens, welcome words at the Inaugural Conference of the Institute for New Economic Thinking 'The Economic Crisis and the Crisis of Economics', Kings College Cambridge, 8 April 2010

Thoughts before travelling to China again

I am sitting in Kopenhagen Airport waiting for my flight to Beijing. I have 4 hours wait, have read the newspapers, gone through my notes and found the report from my last visit to China 4 months ago.

It's a rather enthusiastic and positive report. I admit I was rather impressed. I wonder whether this is the same with all people on their first trip to China.

Now 4 months on, after the Chinese obstruction of the Copenhagen Climate Summit, the 11 year prison sentence for writer Liu Xiaobo, the announcement of further rearmement and the actual cold weather in Beijing, I wonder what I will experience this time.

More here after my trip. Below a summary of my thoughts after my September trip (in German).

Besonders beindruckt hat mich die proaktive Diskussion zum Thema Klimawandel und neue Energien. In China hat sich in den letzten zwei Jahren ein entscheidender neuer Ansatz in der Klimadiskussion durchgesetzt. China sieht die Klimadiskussion nicht durch das Spektrum der „Weltrettung“ sondern als strategische ökonomische Entwicklungsentscheidung. Wie Estland in den 90er Jahren die Vorreiterrolle zu e-Governance übernommen hat, möchte China die Vorreiterrolle im Bereich Green Economy übernehmen und sieht dies als sein Entwicklungs- und Identifikationsprojekt der Zukunft. „Grün“ ist der Wachstumsfaktor der Zukunft und China braucht Wachstum um seine internen Spannungen im Griff zu behalten. Gleichzeitig wird China mit dieser Strategie zu einem wichtigen und positiven, internationalen Akteur.

Die Diskussion um eine „Grüne Revolution“ ist nicht neu (siehe z.B. Friedman ‚Hot, flat and crowded‘ aber auch das Wahlprogramm der Grünen) aber in China spürt man, dass diese Grüne (Wirtschaft) Revolution tatsächlich umgesetzt werden kann. China bringt die Masse und Entscheidungsgeschwindigkeit.


Paradoxerweise kann China mit seinem autoritären politischen und wirtschaftlichen Regime zum Weltenretter werden. Oder anders, China wird zur Hoffnung der Welt nicht weil es mehr demokratisch wird, sondern weil es sich dem Demokratie- und Liberalisierungstrend entgegengestemmt hat.

Sicher klafft da noch eine riesige Lücke zwischen der Vision einer Grünen Wende und den mit Volldampf arbeitenden Kohlekraftwerken, aber China ist bekannt dem Denken auch recht schnell Handeln folgen zu lassen.

Für den Klimagipfel in Kopenhagen (07.-18. Dezember 2009) erwarten chinesische Insider keinen Durchbruch sondern eine allgemeine Vereinbarung eines politischen Rahmens für ein Globales Klimaschutz-Abkommen. Obwohl auch das für China nicht ideal, möchte China ein positives Signal aus Kopenhagen, insbesondere für die Sicherheit von internationalen und nationalen Investitionsentscheidungen in neue Energien.

Interessant war auch die recht präsente Auseinandersetzung mit der eigenen Geschichte, den eigenen Werten und dem Westen. Im Kontext der gegenwärtigen Krise wird die Angemessenheit des westlichen wachstumsorientierten Wirtschaftsmodells in Bezug auf das chinesische System offen diskutiert. Ministerpräsident Wen Jiabao sprach von der Notwendigkeit zu einem nachhaltigen Wirtschaftsystem zu finden.

A day at COP15

COP15, 10 December 2009, Felt like a giant conference, fair ground, party, airport, UN negotiation room at the same time. Probably quite a good combination. Lots of side talks, drinks, shoulder clapping, self important twads and frentic press stuff.

If you are there for the whole two weeks you will probably have Entzugserscheinungen.

I hope the mega Buzz there will create the context in which the big boys and girls will decide something useful at the end.

Surely something will come out, at least it should give a signal that the world will now seriously de-carbonize. And this signal should provide enough of direction for the private sector to switch investments from high carbon to low/no carbon.

And hopefully then, the (carbon) cost/benefit analysis of this big jamboree will be positive.

Count on the Unimaginable, Andre Wilkens, Berlin 9 November 2009

20 years ago, in the morning of 9 November 1989, most of the following would have been quite unimaginable for me (in no particular order of appearance):

I have returned to Berlin after nearly 20 years living in 4 Western European countries (Belgium, UK, Italy and Switzerland).

The country where I lived for 26 years does not exist anymore and was absorbed by its former enemy.

I am married to a British woman and have two kids whose mother tongue is English. Our language at home is English. I find it easier to write in English than in German (hence this article in English).

West and East Europe are united, almost border and visa free. Europe is a peaceful global power.

I travel freely, with ease and totally naturally between countries (this week I was in Budapest, Essen, Geneva and Madrid). I have travelled through most of Europe, as well as to the US, China, Africa, Australia.

China is a Super Power. Europe feels old fashioned in comparison.

I wear a suit most working days, but rarely a tie.

The Soviet Union has fallen apart. Russia has had a rollercoaster ride through poverty and then rapid economic development. A former KGB man from Dresden is now Russia’s prime minister and former and future president.

I moved through 7 currency systems (DDR Mark, D Mark, Belgian Franc, British Pound, Italian Lira, Euro, Swiss Franc, Euro).

The DDR government building is now a European Business School.

I still have my old friends in Berlin but my best friends are in Brussels, Copenhagen, Reykjavik, and Geneva.

Die Mauer ist weg. NVA and Stasi are gone.

I have worked for the EU, the UN, a global communications company, a Hungarian American billionaire philanthropist, and a German philanthropist from Essen. I was a UN Diplomat and gave it up to do something more worthwhile and fun.

There are doubts about the future of Capitalism.

I am a natural user of technology.

Twin brothers ran an EU country as President and Prime Minister (Poland). The richest man and owner of most media is the longest serving Prime Minister of Italy.

I have a car but it is not important to me. The Trabant is a cult car.

An East German natural scientist is the first female Chancellor of Germany.

I studied at the LSE in London and lived in Hamstead. I consider London my second home.

Berlin is the most interesting place in Europe. Some call it the cultural capital of the World. Berlin even became beautiful.

I am a house owner in Brussels. My favorite place is Italy where we are contemplating buying a family summer house.

FC Union Berlin plays 2 divisions above BFC Dynamo Berlin, neither play in the German top division.

One of the biggest global companies is called Google which makes hundreds of millions of dollars in a virtual reality called the Internet.

I am a co-founder of a pan European organization, The European Council on Foreign Relations to promote a united European foreign policy. The Vice Chair is a former German Foreign Minister who used to be a green radical wearing sneakers.

A bunch of terrorists crashed two airliners into the World Trade sky scrapers in New York. The Twin Towers collapsed and this marked the beginning of the decline of the USA .

My favorite daily newspaper is the Financial Times.

The Berlin Wall was build up again in 2009, as a temporary tourist attraction of giant domino stones. My son finds it quite real and hopes that we do not get stuck again.

Since 9 November 1989 I know that our imagination and dreams can never be big enough, really.

Andre Wilkens
Berlin, morning of 9 November 2009

The best job in the World

Much has been written about the successful PR campaign of the Queensland Tourism authority who spent relatively little money in advertising The Best Job in the World as a well paid ranger on a Queensland island having a good time and writing a blog about it. This became a truly viral marketing campaign with millions of followers, thousands of applicants and tons of media coverage. A great and innovative low budget campaign for Queensland Tourism.

Apart from the campaign, is a ranger job on an island in Australia really the best job in the world? It's a nice sabbatical and can lead to new thinking, but otherwise?
For me the best job in the world is the one which engages and challenges me, which has some sort of impact beyond myself and in which I work together with like-minded people. It should also be fun. Ultimately, the best job in the world should help to make this world a better place.

Do these jobs exist? Yes, they do. It could be running a locals bar in Italy, managing a volunteer sports club or working for a humanitarian organisation. All of those and many others could and should advertise jobs as 'The best job in the world, probably.' or 'One of the best jobs in the world, really'.

Let's learn from the Queensland campaign and use it to draw attention to the best jobs in the world, those which make a difference.

Looking for the coal and steel for global governance

Monnet's lessons for global governance
By Hakan Altinay and Andre Wilkens

Could a global emissions-trading system serve as the European Coal and Steel Community of our times?
Extraordinary times call for extraordinary ideas, like the creation of the European Coal and Steel Community, which later became the European Union. That idea transformed a continent of conflict and hatred into a haven of peace, stability and prosperity.
Jean Monnet conceived of it becoming even more. In his memoirs, he wrote that “the Community we have created is not an end in itself. The sovereign nations of the past can no longer solve the problems of the present; they cannot control their own future.” The European Community should only be a stage on the way to the organised world of tomorrow, he wrote.
The London G20 summit was a success in global crisis management, but it failed to show a direction for the climate crisis. These are extraordinary times that demand extraordinary ideas about how we can organise the world. Those grappling with global challenges such as climate change and globalised finance should learn three lessons from Monnet.
Firstly, Monnet and the other founding fathers seized on the yearning for a new order. Europeans pooled sovereignty only after having exhausted all other options and paid overwhelming costs. There is a growing understanding now that the forces that influence our daily well-being are not restricted to national borders. Securitisation practices in the US's financial sector affect economies half-way around the world. Carbons released in China influence crop yields in Africa. An epidemic in Africa may well depress air travel in Europe. Something better is needed, an increasing number of people believe.
Secondly, big ideas need a pragmatic foundation. Monnet had a big vision for Europe but he started very pragmatically by pooling sovereignty over the issues of coal and steel. Might it be that a truly global emissions-trading system, which addresses the most fundamental global issue of today, climate change, could become this century's equivalent of coal and steel?
Thirdly, the European project highlights the risk of overshooting. In 2005, two of the EU's founding members – France and the Netherlands – voted down steps considered vital by their political elites. Decades after the pooling of sovereignty began, European societies continue to view the nation state as their primary medium of participation. Enthusiasts for global governance should accept that few people will opt for an abstract world government over nation states, that most of us feel allegiance primarily to others who are like us. That is no bad thing. Nor does that spell trouble for better global governance. One needs to be multilateralist to be patriotic precisely because you cannot achieve the outcomes desired by your nation state by acting alone.
Monnet had the wisdom to view the EU as a step towards better world co-operation; he also had the pragmatism needed to roll out his vision in manner that outlived him. Advocates of enhanced global governance should learn from Europe's experiment.

Hakan Altinay is executive director of the Open Society Foundation (Turkey), and Andre Wilkens is a member of the European Council on Foreign Relations.
http://www.europeanvoice.com/article/2009/04/monnet's-lessons-for-global-governance/64593.aspx

How the UN bureaucracy can make the world a better place?

What have the UN bureaucracy, climate change and the global automotive crisis have in common? By linking them, they can help making the world a better place. And here is how:

1. Insights

The UN is seen by many primarily as a big bureaucracy. While thedre is of course more to the UN, there is no doubt that it is big and slow.
The UN is not in best shape. Even though the US hardcore attitude towards the UN has changed, it has lost much of its relevance and central stage.
For many the UN is also associated with a fleet of big, fat, white SUVs. While this is good for visibility, protection and often important in difficult terrain, big SUVs are now also a sign of the past, throw-away society. The latest car shows in Detroit and Geneva are a clear sign that the dominant colour of the automotive industry will be green.
Climate change is the biggest global challenge of our times and so far the UN has played an important role in putting the issue on the global agenda by trying to set targets and monitoring them. However, success in the real world has been meagre and where it happens it is difficult to credit the UN for it.
The global automotive industry is in crisis and is now going through a major transformation. Carmakers need to reposition themselves as providers of sustainable mobility.

2. The idea
The UN and its agencies/affiliates can use its global procurement power to commission the World Car of the future, helping to fight climate change and accelerating the transformation of the automotive industry. Doing this will also help reposition the UN as a foreward looking organisation with tangible impact in the real world.

3. How?
With a fleet of tens of thousands of vehicles the UN is one of the biggest owners and buyers of vehicles worldwide. Rather than buying what is on the market, the UN procurement experts should sit together with aid workers, engineers, car designers and environmentalists and draw up the specifications for the global UN car of the future. Car makers would then have to design a car with the incentive of winning the biggest global supply contract. The car itself can then also be produced in mass production after the UN initial orders have been filled. And all those car makers which did not get the UN contract will still be able to get their car design into production.

4. What are the benefits?
A better vehicle fleet will reduce CO2 emissions of the UN and make the UN lead by example. UN member states and donors will be confident that their contribution is used in a good way.
The action will positions the UN as a doer not just talker. It will also position the UN as innovative and relevant in the real world, and will turn the outdated UN SUV image into a proactive green image.
And the car industry will have a first global client who commits to making a big first mover order. This first big order will fund part of the development and production costs of the winning global car of the future.

And this is how you turn a difficult image (big, fat bureaucracy) into an advantage (big customer power) and help to make the world a better place. Sounds too easy, but let's try.