Take Back the Future
Brown, Gordon, Newsweek
More financial crises are on the way, says a former U.K. prime minister--unless we get serious about a global deal for jobs.
In 2008, when we were hours away from ATMs running out of money, small businesses being unable to pay their staffs, and schools and hospitals closing down through lack of cash flow, it felt as if the crisis of the century was upon us. But if the world continues on its current path, the historians of the future will say that the great financial collapse of three years ago was simply the trailer for a succession of avoidable crises that eroded popular consent for globalization itself.
Those who believe that the world has learned from the mistakes that led to the crash are mistaken: on the contrary, Prof. David Miles of the Bank of England now predicts not just one further financial crisis but three in the next two decades; and Andrew Haldane, also of the Bank of England, is already charting the volatile and unsustainable wave of speculative capital flows that are still not fully monitored and operate with no early-warning system, no global financial standards, and no consensus on capital and liquidity requirements for banks.
Yet what happens to the world's economy is not random--it's about the change we choose. Globalization may have unleashed change of a scale, scope, and speed unprecedented in human history--but it has also given our species an unprecedented opportunity to act in concert in order to master the forces that buffet us.
The truth is that the world has seen a shift in productive power over the last two decades that is more dramatic than any since the Industrial Revolution, with more than 2 billion men and women joining the ranks of industrial producers, trebling the size of the world's industrial economy. This year--for the first time in history--both America and Europe are being outproduced, out-manufactured, out-exported, and out-invested by the rest of the world. The corollary of this change is that the next 20 years will also see another worldwide revolution, this time in consumerism, and it will be dominated by Asian workers, who will treble the world's middle class. This second wave of change will turn all the old certainties on their head: America, once the biggest consumer in the world, will face an Asian market twice its size. Germany will be just 4 percent of the world's consumer spending and the U.K. just 3 percent--but Asia will be 40 percent. Asia's spending potential will be a staggering $25 trillion.
This transition, to a world with multiple poles of growth, will be directly felt on nearly every Main Street, shop floor, and kitchen table. So, too, will the risks associated with a globalized financial system that remains perilously unregulated. The global flows of goods, services, and capital create global problems that can be answered only by global solutions and by a consensus between world leaders to reach binding agreements for the good of all nations.
First, we need to support the growth of the world's new middle class and foster agreements that allow American and European companies to compete in Asia's booming consumer markets. …