>> you have been watching booktv on c-span to. we bring you 48 hours of nonfiction books people will public affairs, history and biography saturday morning at 8:00 for monday at 8:00 eastern. now bankers from russia, france and sweden examine market capitalism in the global economy from the world economic forum in switzerland. they also talk about the upcoming g 20 summit set for june in toronto. >> i am bill goerge from harvard business school and this session on the future of market capitalism and how do we rebuild market capitalism will prove to be a very interesting one with some quite different points of

viewdúfñ from a group of paneli representing diverse parts of view in diverse parts of the world. we can safely say after the meltdown of our economic system in 2008 that this is a crucial turning point from capitalism and there have been tense discussions about that in the last year but we arrive at this point with more questions than answers. george soros said we need a global sheriff. that is one of the questions. do we need a system of global regulation? and in january of 2010 we are at that crucial point. we have to ask ourselves question what is the global economic meltdown indication that unfettered market capitalism has been practiced in that time has failed us and are there better models emerging and some of the developing world

with more centralized control over capitalism, stronger government control, use of funds at high velocity of fund flow today in 24-hour markets with global regulatory body that can bring people together on short notice or set a framework for the long-term. the fourth question is for the panel is what is the impact of the shift from what has been predominantly a polar world, new york and london to a multi polar world where we have many financial centers these days and finally, the we at risk of putting in excess of regulations that overreact to what happened that might need to lack of investment or innovation, lack of creativity that might result in unemployment staying at the very high level that they are today. with that introduction i would like to ask each of our

panelists to comment on some questions to get it going and then we will move into the debate, discussion and at a certain point i would like to ask the audience did ruling with any questions you may have. ben, and would like to start with you. i would like to ask you what is your assessment of the root cause of the problems we got into because we do know the root crops before we could get of the problems and come in with solutions. >> this is the second year of davos that the majority of discussions about bankers and bonuses. i think it is time that we move beyond the bankers and bonuses because we have three crises. we have a financial economic crisis that is more than the bankers and bonuses. we're in a financial economic crisis. we are in an energy crisis.

the climate change crisis. we need to get on with that. we have a leadership crisis. we have a trust crisis. you could ask yourself why people have lost so much. we haven't seen more of a backlash on what is happening. we run the risk of that backlash unless we listen. capitalism is great. capitalism gives each and every individual the opportunity to move themselves to their maximum, to create value for themselves and their environment. if you add these individual capitalistic persons and put them into an organization it is simply not enough to challenge them to increase their earnings per share. you have to challenge them to contribute to society which they operate and that is what i call cohesive society. therefore cohesive capitalism. you have to contribute more than

just adding up the numbers and we need to do that against the background that i see, that we have delegated the negatives of this crisis that we have to the next generation. we have shamelessly borrowed from our grandchildren. i am a grandfather. we have shamelessly borrowed from you and by the way we have consumed it. we have not invested it, we have consumed at. if you look today to employment, what my colleague has to say, we protect those in jobs. we protect 50 years because they are organized labor and we have used the unemployment, in the middle east over 40% the unsustainable model. this is the picture we are in. >> that is the perfect starting point for you to stuffer

starting comments. the working people of the world represent $179 million and what are the implications for how we look at the financial world? >> two comments on your question. how is global capitalism affecting working people last 18 months, costs thirty four million jobs. 150 more million people into extreme poverty. it ruined other people's lives. over two decades, the model we are seeing an operation, create very lucrative returns to some people but it is basically growing in qualities in our society is that we have signaling for two decades. we believe that that, even in

the absence of the crisis in the last two years, should be cause for concern and it is a matter of deep regret that basically without much concern in debates such as this one. i thought you were going to say something and i was going to agree strongly with that he didn't. we don't just have a financial crisis. we have an energy crisis. i agree. we have a leadership crisis. i am going to steal your blind bill and we have a sub prime problem, some prime leadership problem. i thought what you were going to say we have a social and employment and job crisis and you didn't say it and that is what we have today. we have a major social crisis. yes, that does reflect in backlash and the crisis of confidence. are we going to react to that

crisis of confidence? people want to see, there has been a major >> in the last year, people want to see changed. they want to see a major change in the basics of capitalism. they want to see regulation. they don't want to see excessive regulation. nobody wants anything successive but they want to see things that work and make a difference. they want to see the building of consensus around desired outcomes. that would be a helpful debate and designing of machinery to bring those outcomes about. what they don't want to see is a burgeoning nostalgia for getting back to where we were three years ago. those of us who were here in davos were rather shocked by the type of language i was hearing from the business community. greed, access, we made a mistake. you couldn't find anybody who

said i was greedy or i made a mistake but everyone was agreed that it had happened. an interesting logical conundrum. that is gone. i am not hearing that language here. now we are hearing we are pulling out the worst. we can survive. survival is no longer the issue and the back to business as usual is being developed as an option strongly defended by some. that has to be put aside or else the backlash and a crisis of confidence will only deepen. >> next i would like to turn to prince salman of bahrain. i would like to ask you have we gone too far in focusing on free-market capitalism? are there other systems that need to be thought through in the world? >> let me start by asking a simple question. from what i am hearing i don't think we are deciding whether it is capitalism versus another system.

it is what kind of capitalist system we would like. growing up in a world where three million people were disadvantaged because we relied on inefficient means of department resources to projects or endeavors the personal i can not but be strongly in favor of a capitalist model, however, we have certainly seen a crisis of regulation that has put us in these dire straits. fundamentally it revolved around the accurate pricing of risk and without accurate pricing a risk of lot of people made mistakes they shouldn't have. how do we protect ourselves in the future? what are the new ideas that are emerging? if we talk about a crisis of energy or a crisis of -- financial crisis, we must

recognize that for 40% of the world's gdp is either energy or financial recovery. this is a very significant sector. it is not one that we can just assume we can magic away with magic cures. we fundamentally need to sit down and decide some important issues. do we need a global regulator? do we need a global regulatory framework? do we need better national regulation? how do we handle state power versus global responsibility? fundamentally, if we are to return to the level of the individual and the worker, how do we empower people who are affected by upturns and downturns for a capitalist system to rise above and succeed and reinvent themselves in ways

we hadn't thought possible. it is a very fundamental thing that is hardly discussed. if you lose your job you are expected to find another one. are there enough programs to help retrain? are we putting enough resources into these programs? at the end of the day, i must come out in defense of capitalism. it is the one system that has consistently driven standards of living and productivity which is key in all of these issues. but unfettered capitalism without any ethical or -- let's say prudent controls, becomes -- invariably leads to ruin. i would be happy to hand it over and delve deeper into those subjects. >> the chairman of investor as

a, maybe you can pick up on that. how do you look at the system? do we need a systemic framework here? where should we go to deal with some systemic risks we have seen out there? >> let me take a broader approach and ask what have we learned from the global problems that would suggest changes in their system of market capitalists. there are a few things i have learned. market fell your of the financial markets has led to unprecedented -- which i think is great and should be applauded. i applaud the government's over work. and depression was averted. and that the recession have

caused a lot of jobs as we heard. ultimately the politicians are under severe pressure to address all the issues of incomplete and will and all of us listening, we can conclude that politics mastered right now. another thing we have learned is market capitalism is generally under threat for various reasons. on a philosophical level we have the anglo-saxon model, the basic market capitalist system is losing popularity. there are lots of fingers being pointed. it allows such successes before the crisis. on a more economic level state capitalists and government intervention, this is a hugely important to crete replace pure market capitalism and major companies are owned and governed by states. on that basis if that is what we

have learned what are some of the reflections on what happened? the first question is should we redesign market capitalists? if we define market capitalists as free trade, open markets, transparency, the rule of law and property rights, obviously we should not change. without change in the system, that leads me to my second point which is the question of trust, we in business don't have a clear issue we trust. business has to learn to communicate a lot more and lot better. i think we should not fool ourselves. we have to do a much better job and we have to be seen as

socially responsible participants in society and i would like to underplan that i think generally businesses, my third point is from the shareholder, was expected to come. i represent that we have been in business for 150 years, happens to be very fashionable today which is long term. i look at quarterly reports but don't like to only look at and focus on quarterly reports but performance over a longer times over business cycles for us. on bonuses, i very much agree that they are more of a symbol of the crisis.

i agree that some of the sums are extremely hard to justify. but in the overall scheme of things it should be side issue in the debate. i agree wholeheartedly with the g 20 principal and the shareholder, also like to indicate i never had an interest to pay any one more than necessary. on bank bashing, another popular game, bank bashing i believe the 5 the purpose. we need to deal with systemic risk but i believe we will pay a price on economic growth. to find a balance without overregulation is key. just to conclude and give a sense of perspective, this year in davos we all focus on the market capitalism.

let's be bold and predict that next year we will be focusing on state capitalism and its impact on business and business practices. with that, thank you very much. >> our next panelist is dr. tony sand, head of singapore investment corp.. represented an interesting point of view and one of the observations one might have is the asian financial institution, the asian banks did not seem to be affected nearly as deeply as western winston's to solutions. is there reason for that? anything we can learn? over the age and experience over the last 18 months. >> i would like to look at this issue of market capitalism in the light of the event on which we are to rely. we ran into a very difficult

period. there was -- if it had not been for the unprecedented stimulus by many governments and quantitative easing by central banks we could have eased the economy to another great depression but fortunately that was done. we didn't suffer the worst consequences. the point was this great recession in 2008/2009 did not affect all parts of the world equally. the most severe impact was can we observe in the united states and in europe loss of jobs, slowdown, economic growth. asia, by and large, had an impact, was not affected as much. economic growth did slow down.

on employment growth in some countries, but not to the same extent as in europe and america. more important, asian banks remain healthy throughout this crisis and emerge from the recession in 2009 in a stronger position, in effect able to withstand their market share for banking. one obvious example is china, the growth did not go down to zero. that is manageable. put into the economy. in light of these events it must be expected that asian

governments and central banks and regulators must ask themselves what other type of anglo-saxon market capitalism has been around for the last 40 years. free-market, deregulation, allowing minimal -- is this a model going ahead? one must expect them to see some of the model where the state creates a roll. this will probably continue. it will be the case.

3 examine some of the tenets of market capitalism which they had previously accepted as being practices. this is a great challenge for asian regulators, asian banks. in essence you're questioning those principles. it has been the case which we have not done. they will completely reject all of the practices, and all the policies which have indicated -- i do believe they were reexamined again. that automatically accepted what

was advocated in western governments. all they of will advance. we have a profound impact on economic growth. >> we have very high velocity movement, in many sectors, very high leverage. do we need some form of global regulator or some framework for global regulation? >> i think generally speaking, i

would like to see a global regulator because otherwise we will see -- if we can find the correct way of dealing with it and develop in that direction, it would serve us well. >> i would like to say there is also our baggage between countries and within systems that use to be looked at. there is banking and shadow banking. hedge funds in the united states are not regulated. we need to think about what works, not just on how we do it or what we need. what are we going to do? which models work? in order to do that the g 20 needs to sit down and have a serious discussion about their own experience and see where we

go from there. >> you think the g 20 is capable of bringing together some form of regulatory framework and anticipating crises that may come? the bigger question, capitalism has always been an imperfect science. the goal must be to make it less than perfect. the reason for this economic crisis are different from the ones that were in the past. let me give you an example. in my country, when we pursued the anglo-saxon model our growth jumped from 3% to 8%. and we didn't suffer from the effects of the global financial meltdown because our banks had not moved in to many of those complex instruments of the largest financial institutions

of the world. there are good solutions, there are right ways of doing fingers. it takes a downturn to figure out what you were doing wrong. the trick is not allowed to be as big as it was. >> ben is the chairman and ceo -- >> two interesting things. we talk about regulation and less regulation and who should regulate. perhaps we should talk not about regulation but desired outcomes. regulation by itself is just a way to get to desired outcome. there are two things we need to realize. we live in a global environment. there is no way crisis or no crisis, you can turn it back and to put passports on every aspect of our economic life, i am not sure is a great help. the second thing is we are

interdependent. we were in a reality where you could have a sector that was totally not linked to the other sector or not linked. we are all linked. whether we like it or not we live in an interdependent global environment. the choices we are going to make will be choices that drive behavior. the thing we talk about today is behavior. we bring it on the system level but the reality is it is not the system. is the behavior that is driven by the system. >> do you have a comment? >> i would like to join the consensus on regulation. everyone is in favor of that. the question is doing -- how do we get there? i agree that the g 20 -- >> how did it get there? how did it get where? >> we don't have it. we have the beginnings of the

dirksen senate office building 0, some opportunities to build. is the g 20 a sufficiently strong foundation to build that framework? that needs to be explored and we need some determinations on that. is very healthy to be reminded that this anglo-saxon model is not universal. others have done better. ratio went for crisis and some things were learned. sweden went for its crisis in 91/92 and a lot of lessons might have been learned from that experience. to what you are saying i agree we need to decide what to get to. we need to decide what the desired outcomes are. i agree with that and we need to set our sights on that. one of the desired outcomes from a labor perspective that i would like to put into the mix is that we need to have the financial

economy better serve the real economy. we need to evolve the catastrophe of the last few years. it is very clear in the success that brought it about but we believe there has been a rather alarming decoupling of the role of the financial sector, finance capital for want of a better term for the needs of the real and productive economy. we need to glue those things together and it is something referred to at the beginning. we need to get out of this short term that demands immediate short-term, 20% returns from a real economy which is growing at 3%. something has to give. those are the design outcomes. >> how do we get away from that? it is a fact of life that there are enormous short-term pressures and the velocity of money and trading is taking place all the time. how do we get to longer-term

investment perspective? >> as i said, we have been practicing this for a while. we are not the only ones. i don't have a great answer to the question. the socialist evening tabloid, once a month we run a list of the best performing -- obviously we have a right to move them. what is the irrational behavior? to move to the best one. so you have this short-term coming into the system for all kinds of angles and political angle. we really have a significant issue on our hands. what we desire to move towards long-term? >> the assumption was an historical performance the personal best predictor of

future performance. that is not necessarily backing up. >> the reality is we will be asked every quarter how we are doing and we will be judged on performance per quarter. that will not go away. i am not asking for that. ..is.. it has to do with the value proposition that you make. we live in an environment where we said to young people whether

you study economics, science, engineers, go to investment banking. they got the best of the house. so what was the story at that we told the world, the young people. we told the young people the only thing that really matters is next quarter. >> uh-huh. >> so i think it is about us lookingç in the mirror and not asking regulators to help us and redefine as business leaders, as community leaders, as politicians, the definition of success. >> so just to follow up on that. as of a very successful companies are you ready to take the shareholders on. >> this is not either/or. i just have added a little bit to the tasks that i think i need to do. i need not to go to shareholders and say, give me a breezier because i need to do all those other things. that would be ridiculous. some of the decisions will be for the benefit of the corporation because they are somewhat longer term. if i can't defend it, they should get somebody else.

and i think jacob was 100% right when he talked about transparency. we need to come out and talk about it. >> it's general consensus that asian companies and asian companies tend to have a much longer perspective building, investing in 10, 20, even 50 -- the japanese used to talk about a 100-year plan. what's your perspective on this question? >> the organization which i represent, singapore, invests throughout the world. we have to study the trends in the various countries. essentially we have to try and discern what the world is and in this instance, it would seem to us, that the world will be a very different place after the

events of 2008/2009 in the sense you willsaccentuate and accelerate a process which actually has been going on for the last 20 years.w3 moving from a unipolar world which is the united states setting the rules and on the economic field. basically determined by the group of seven developed countries. after what happened in 2008/2009 i believe that we will move into a more multipolar world. power, influence, wealth will be more distributed throughout the world. this is symbolized in a sense the g20.ç i think they are going to assume a more prominent role in determining how economic rules are set in world trade, in world finance.

does this mean that -- what type of world does this mean? one must expect that in such a situation, there will be more consultation. but it will be more difficult to arrive at any consensus on what to do. therefore, economic growth throughout the world will in my view slow down. we will not experience the type of economic growth which the world experience in a period of the '80s and the '90s. there will be difficulties possibly with more protectionist measures. generally from the investment point of view, we must expect to have lower returns.

it's not a very optimistic prospect. but i think it's our duty not to see the world as what we would like it to be. but a world as we see developing in the context of what would happen. and there will possibly be more geopolitical conflicts because in one sense, most of the countries in the world still have to depend on the united states doing the heavy lifting particularly with regard to taking measures to resolve conflicts in hotspots around the world.ç the u.s. is still, despite all its difficulties, the single largest, strongest military power in the world with the ability to protect these forces on an unprecedented scale. but to sustain this military capability, it increasingly has

to rely, for example, on some of its strategic rivals continuing to provide finance to the treasury in a sense when you have a situation like that when countries are rising, developing. it's not a stable situation.re and i think that the world will be forcibly a more uncomfortable place in the years ahead. >> thank you. sober point of view. i'd like to come back to ben verwaayen's opening statement because you were challenging whom does capitalism serve. and i think, you know, in the united states, at least, it's been almost an order of belief

the friedman school of economics are there to serve your shareholders are. are we there really to serve society and serve our customers and in turn serving our shareholders? or is capitalism really there to serve shareholders? do you have a point of view on that? >> well, i think capitalism. i've said it before and againht capitalism without social responsibility creates unsustainable situations that lead to either an economic collapse or a social disorder. no, i think we must be responsible to people greater than just shareholders. >> uh-huh. jacob? >> i'd like -- >> you represent a big shareholder and many holdings. >> i very much echo the prince's view here. i think -- at least in my book it's very clear, if you cannot deal with the different stakeholders, be that your employees or shareholders or society at large, you're going to -- one, you're going to take a very significant risk.

there's some serving in the circumstance. if you deal with them well, you're going to be well respected. you're going to have a good chance of being out there and be competitive if you have the right products. and the rest so to speak up to you. if you have a problem with your different stakeholders, one of them can destroy your business quite easily. i mean, look at the beginnings of the csr discussion. look at the shell semi disaster or nike's problem taking the well-known examples used in that context. they both learned, they both changed. and went into better future. >> uh-huh. >> has complexity ever reduced in a free system? i ask the question because i think we have to learn to live

with the fact that these new ideas, these new instruments may be around for a while. >> uh-huh. >> in one form or another. >> yes. >> but on the other hand, and regulation is well and good. that determines what kind of instruments can come in to play and how they're managed but god forbid another economic crisis or another cycle. what have we put in place to help make the problem less severe? today as was mentioned earlier, we have sort of passed on theç problem to future generations by expanding massive amounts of government spending. the result of it ending, i guess, some time in this year are yet to be discovered.xd but is there something, for example, president obama's plan that has just been tabled? i'd be curious to hear what the panel's view is on that. >> any point of view? ben? >> so one of the things that i

think that they are favored for we have to bring together not just one segment or society but everybody. and a theme to have a global redesign initiative is about how we will make it in a bipolar world and how are we going to make decisions. if the view is that we're going to uncertainty and that we go to a world that is basically more unpleasant than we have seen before and we have to -- to rel on that, what we need most is not just concepts but it's a concept of how we're going to make decisions. >> uh-huh. uh-huh. >> the g20 was, of course, great. if you read pittsburgh it was a fantastic declaration. it was the end of the world war ii. it was the shift of power to the new reality but since then it's a prettyw3 silent around what te of mechanisms do we have. i think that a global redesign

is something that we need to haveç in order to deal with th uncertainties that you have brought forward.i] you have brought forward a truckload of uncertainties that i really don't like. >> uh-huh. >> guy, let me ask you the last question that i'll ask and then we'll turn it over to the audience. and i think ben commented on this earlier. but there's been a tremendous crisis of confidence here, a confidence in leadership. every poll you see it says people don't trust our leaders anymore. there's clearly huge outrage against the bankers. but part of that there's also tremendous frustration, pent-up frustration. people don't have jobs. i come from an old fashion view people who don't have jobs they're not going to be happy no matter how strong the welfare systems are. how do we restore confidence in people that are actually going to have to run organizations that create, if you will, cohesive capitalism and successful capitalism? >> well, i think it relates to

the comments that have just been made. i think everyone on the panel has saidç that capitalism real does have to demonstrate responsibilities beyond shareholders. and i absolutely agree with that. i think the problem that we've had -- and again it's not simply over the last two years. it's that capitalism has not distributed its benefits in any way which i think the majority of the population would regard as fair or acceptable. look at your country. >> uh-huh. >> what's happened to ceo remuneration compared to medium pay. >> school teachers. >> school teachers. pay -- united states worker pay has flatlined -- i think it peaked -- the medium pay peaked in 19 -- >> it declined in real terms in the last decade. >> and has since then gone down. so, you know, there's clearly no -- how can i put it. there is no buy-in into that

type of model and that's where bonuses do matter. i mean, you can argue that bonuses -- you know, this is purely the populist, you know, banging out of excesses. it really is a side issue.-9 it isn't a side issue. you can argue, of course, about the type of<  irrational or irresponsible behavior that bonus-based compensation produces. that's not my main point. my main point is that when -- and we're seeing it again. the banking community is deciding this is appropriate and reasonable to award itself these types of bonuses. we're representing people who are bargaining away what they struggled for a very long time to get. we're dealing with people -- and they're responsible individuals -- who are actually accepting pay cuts to keep the enterprise going. to keep jobs in place. to keep communities afloat. >> uh-huh. >> now, i think -- look at the bonus culture through their eyes.

now, that isn't a diversion from your question. the question is, how do you actually get to make capitalism overcome the crisis it finds itself in. you got to have -- and i know it sounds rather hackneyed you have to have the sentiment on both sides of the industry and the financial community can work together to some type of mutual benefit. we don't have that right now because the benefits are so unevenly and unfairly distributed. so that's the hump we have to get over and it brings in many elements of the conversation that we're having. >> thank you for that. let me open it up to the audience now for any questions that you may have. we have microphones. people roving. i have a little trouble seeing. who would like -- yes, there's a question right here. [inaudible] >> can you speak as loud as you can -- >> can you redesign capitalism

and redesign -- industrial capitalism intact? >> comments, response from the panel.çó you want to redesign financial capitalism and leave industrial capitalism intact or do we have to redesign the whole system? >> just my point from before. i think capitalists, market capitalists, in its basic sense is sound and good. and then, of course, there are excesses that we have to deal with the excesses. i mean, today we talk about banks andmy we talk especially e compensation system in the banks and in some compensation of industrial compensation. but other than that, i think the basic notion of market capitalism -- it works as long as as it's supplied correctly. from time to time, yes, we will have issues. and yes, we will to have deal with them. no system is perfect. but i think this is the least bad system you can find if you wish. >> so it's not redesigned.ym

it's maybe a little bit of maintenance. and it is very important that what we do is recalibrate the definition of success. you don't need to change the system. because if you change the system, you also say -- you're poking the eyes of those hundreds of millions of people that came from nowhere. and by globalization and by capitalism are now in middle class positions. are developing themselves. so i think it would be pretty arrogant from us to say -- and the capitalist system will be at the garage level. that will be totally unfair and unrealistic. >> uh-huh. prince, you want to comment on that?ç >> again, i'd like -- forget what -- let's say for a moment g20 can do as a regulatory body. why don't we look at market mechanisms that make the system more stable. the obama idea of taxing based on levels of debt. that would be very market-specific. you could very quickly identify where there was overexposure. and there would be a way of

paying back governments for their increase in risk. that's one model. the other model, is there a way to trade securities in a manner that accurately gauges what people perceive the risk to be? is there a way of containing certain securities within certain groups, certain classes of shares that could be traded by owners? i mean, let's not just think of this general philosophical element is capitalism good or bad. we all agree capitalism is good. the question is, how do we make in this complex environment we live in it more accurately reflect the picture that is actually going on and that is where we fell down in the past. >> very good. any questions in the audience. yes, sir. >> thank you very much. i'm just wondering how on a practical level this global

regulation will be designed? is the mechanism within the g20 or is it beyond the g20? how will eventually the national legislative process pick this up in different countries at different paces and make sure that obviously this particular design of this global regulation actually gets implemented over a period of time? and then in the end, who would police this? i mean, what is the entity that would actually ensure that these different patchwork of regulations that are coming in -- and i'm sure every legislator would add its own flavor to this global regulation -- how would you actually try and police the entire activity to actually get a practical solution in the endç >> well, that's a good question. do you want to pick up on that, panelists? do we need a global regulator like the world trade organization. is it the g20, the g2?af

>>ç isn't thisç one of those t moments in davos where you can fall back on the notion to think very freely.q% so we brought forward a few ideas here about global regulation. but in all fairness, do we have answers to the exact practical callities of course we don't. yes, all the questions we asked are extremely relevant and you have to find solutions to them. but is that enough for not at least embarking on the road and testing it? is this something that could be ãthere's a lot of good things that could come out of it. but in all fairness, no, i have not -- i don't have answers to those questions. >> okay. thank you. >> guy, you have answers? >> none at all. in fact, we had precisely this conversation when we came out before we told the truth before we came out in the meeting room when we sort of had the same embarrassed silence in our premeeting as we do here but i

agree with the sentiment here.w3 i think the point is i think most political process goes in this direction. you identify the need. you identify the type of outcome you're aiming for. and then you start or you try to set yourself up with ambitions that takes the eternity to do.

>> it's like after 9/11. we need to do something to coordinate and to do something with new institution. and two years later we discover when there's another guy who wants to bomb a plane, actually what happened was we have a new institution on top of other institutions. and the so-called coordination didn't happen. >> uh-huh. >> so if we go back into an institutional answer, i don't think that we are going to do the right thing. it is much more how are we going to make decisions than what whether we create a new institution going forward in so maybe the question to the g20 is a question we should ask ourselves as well. is it up to the g20 or is it up to us to provide the type of discussion platform and passion around it to come forward with suggestions made by ourselves. we have been extraordinarily passive. and then we have looked to those who react and say it's all wrong. so perhaps it is something that

we need to do in a much more basis. >> maybe the global redesign that others have started here can actually bring people together to actually come forward with those in the framework. >> why don't we ask. >> uh-huh. >> instead of saying will it happen. let's write a letter, this panel and see. >> good. i'll take you up on that. >> one final question. yes, sir. >> hi. thank you for your prospective. i have a slightly different point of view. excuse my naivete if it shows. i'm a professor of a business school, very capitalist-oriented. however, russ akoff, someone preceded my work a long time. the purpose of business is to improve the lives of their employees. and so if capitalists would commensurate with their provision of capital and consider that most of the risk

is actually bourne by employees would spend a large amount of their lives getting ready to do specialist tasks which may actually one day go away and be jobless while capitalists can be fungible and moved from one task to another very quickly as we know from velocity of capital. so we were asked the possibility of role of the business is not maximize it on shareholders but, in fact, try to improve the lives of employees. i was wondering if the panel -- >> quick reaction from the panel on that. i can see guys agreeing. >> look, we know that productivity is what drives rising living standards. >> right. >> and surely governments, corporations, and individuals want to have a better life for the people so that they can continue to grow, develop and invest in new technology, new products. and new instruments that make things better than where they

were before. now, if we assume that we can only hold public companies responsible or bankers responsible but we forget that capitalism also means the small business owner and the sole proprietor and the inventor and the doctor and all the people who we live and interact with, then we're doing capitalism a great disservice. we must be committed to the system. we must make it more responsive and we must fine-tune it. that's the bottom line. >> and i think we have seen your suggestion and action. it's called general motors. [inaudible] >> that was an organization to keep happy employees. >> that's 2006. >> i might just add to this that in my former company, medtronic we had a sole goal of improving the lives of the patients we served and we found that did very well on behalf of the employees as it did with the

shareholders. so let me just ask each of you, starting with dr. tan for a quick wrap-up comment if you would. >> this meeting in davos, in the last few moments, the topic is very much about regulation how to transform regulation, what the new regulations are needed to improve the financial system, to improve market capitalism. i think all of these require serious study. it is very difficult questions. i am always wary of the sentiment one has to do something. and perhaps one principle which regulators and those who advocate changes should keep in

mind is i think the first principle is you should do no harm. >> thank you. jacob? >> well, i think what is it that we're experiencing? we're experiencing a cycle. and sometimes in cycles the regulator and the governments will come in to play. that is just the nature of the beast. i think that this will change. i believe that the pendulum will swing back. and then we will be back in the more normal fashion. i'm very much looking forward to next year's discussion on state capitalism. [laughter] >> prince salman? >> i agree wholeheartedly on that comment. >> guy? >> i think the message from the panel is that those who are interested in making capitalism work is the best option available. those who are interested in maintaining an open global economic system.

and i would join in on both of those views. have an interest enacting expeditiously regulation as regulation is required to make the type of major changes in mind sets. the types of political initiatives that are now required to ensure that capitalism and globalization can endure. it does not lie by going backwards looking over your shoulder saying how quickly can we get back there? that's not the nature of the cyclical type of nature that we've been talking about. >> ben? >> i wonder what most people will have thought listening to this discussion. i wonder whether or not most people have said this was quite interesting for a bunch of men. middle-aged and up sitting in a podium in davos. what does this have to do with my world? i think it is the reality of my

world that will drive the discussion of next year's davos more than state capitalism or whatever phrase we have. i'm afraid that we need to do -- we need to do something. doing nothing is not an hospitalization if you have 42% youth unemployment, it's not to protect what those who have. it's to create opportunities for those who have not yet. >> uh-huh. well, i think that's a good place to conclude our panel. i think that's a good summary that we have seen. i think we've agreed that we've seen -- in fact, we had a lot more agreement than i thought we would coming from such diverse perspectives. despite of the fact that we're all men. but i think, you know, that we've seen it -- market capitalism has done enormous good for the world and brought many people out of poverty. i think we pretty well agree that we're operating in a global world. i don't think there's anyone here moving to a more protectionist or a more state-centric model. that