have an opportunity to reshape our policies. we have an opportunity to craft a new global system for a 21st a new global system for a 21st century of respo . . " it means expanding the benefits of open market trade, investment, innovation, trade, entrepreneurs and, information and debates on ideas have must be inclusive and sustainable. yet, it will not happen by itself. at the g-20 summit in april, leaders stared at an economic abyss. today, it is not a free fall, but complacency. it will be harder to press

countries to cooperate and bill back better. . . it will be harder to press countries to cooperate. it was a good start. it will require a new level of cooperation, including a new willingness to take findings seriously. peer review would need to be peer pressure. climate change poses an early test. a clear test will be able to create incentives for developing countries to participate in low carbon growth. we will need to cut greenhouse gases while encouraging technological change and growth. we need a system of international political economy that reflects a new multi polarity of growth. in these two in a grade rising powers or recognizing these countries are still home to

hundreds of millions of poor and they face staggering challenges. it needs to engage the support of developed countries whose public faces competitive anxieties and will feel that new powers must share responsibilities. it needs to offer a hand to the poorest and weakest countries, the 1.6 billion people still without electricity, and the bottom billion trapped in poverty. global finance in currency, the trading system, climate change, states struggling with conflict, and a host of other security issues -- each topic is important on its own. the countries of the poor old whenever deal effectively with this agenda unless they cooperate. it does not reflect today's realities. we need to modernize a multi

laterals and in markets. the g-20 should become the premier forum for international cooperation among the advanced countries and rising powers. it cannot be a stand-alone committee. it cannot avoid the voices of the country's left outside. the g-20 should operate as a steering group. it could recognize interconnections among issues and foster points of mutual interest. it should not be bureaucratic. if given a push, the topics could be pursued through other negotiating groups or global institutions. the imf, the wto, financial stability board could alert countries the issues, provide analyses, build solutions, and

then help execute the policy is. the international institutions must also evolves. they're voting shares should reflect the new responsibilities of emerging powers will still assuring a voice for the poor. they need the transparency to work with networks or private businesses, foundations, as well as with one another. the order was struggling to keep up with change before the crisis. today's of people has revealed the compelling needs. it is time we caught up and moved ahead. the question is whether the leaders can cooperate. there will be drawn to the interest of those there represent. it will be challenged to recognize and build common interests, not only case by case, but for institutions reflecting a responsible globalization.

brentwood's is being overhauled before our eyes. this time, it will have more participants. it is just as necessary. the next of people is taking form now. shape it or be shaped by it. thank you. >> mr. zoellick has agreed to take a number of questions. if you have a question, please wait for the microphone to come around. please identify yourself briefly. the floor is open. yes. >> thank you.

my name is pamela ashburn -- my name is emma ashburn. you talk about peer pressure. can you elaborate about what forms that it take? >> fred is in the audience. he may be the only person old enough to recall this. when i worked at the treasury department in the late 1980's, james baker had the idea that the g-7 and there was a need for greater cooperation and coordination, but it needed to start with the recognition. you have sovereign states. part of what i was talking about in the speech is, you will not change the fundamental aspect, but you can try to create a structure that puts pressure on people. the idea that we had sent in

which you see evolving now was the first step would of countries to put out their own forecast of what they expect with growth. one could simply look and say, even if they're doing what they said they would do, would be the effect on the international economy? we will have and east asia that recovers more quickly? that is the starting point. on top of that, you would like to bring in a neutral player, in this case, most likely the imf. the world bank could also help. what are independent forecasts? and also, what is the likelihood that what you're saying is will happen? there was an early effort at this at the spring meeting we had four or five months ago because the leaders had said they wanted an early warning and monitoring system.

it was indicative of the nature of the challenge. after the imf produced its early effort for a closed meeting of finance ministers, the general response was, you cannot publicize that. opposes all these troubles. that is what we have to get beyond. it gets to the point i made about the risk of complacency. everything i have said today recognizes the need to cooperate. if one points to where there are opportunities for metro corp., where you can now win-win interests, that is the starting point. but where there is difficulty, you can hope to push people to the messy process by compromising or adjusting. it does not mean to say they will. the other thing is that this is where the international

institutions can play a role. when you. of these issues, you can -- creative minds can come up with other solutions. i will give you one to reference the speech. i was concerned early in the crisis about the affects in central and eastern europe. we work closely with some of the european institutions to try to get a greater recognition of all of europe to deal with all the banking issues in central europe. it appears to work. it was not always pleasant. it made some people unhappy. but it prodded the system to go forth. but you got a win-win venture. there is often more opportunities to find overlapping interests.

but now and then, it is not easy for busy ministers to try to do. it's a combination of vehicles you try to use. i come back to the basics. ministers or prime ministers or presidents and chancellors will respond to their domestic public. part of this is shaping the institutions that cut across the domestic public's. this is where private businesses and others can play a role. you're shipping and overall public debate that they have to respond to. >> up front. >> i used to be an executive director at some years back at the bank. capitalists are always count words. one of the most important part in any development -- capitalists are always count

wordwards. by lowering the capital requirements, by empowering the credit rating agencies, to put up signs that point to green valleys have stimulated and imploded risk adverse of this. it is bringing serious consequences. in the middle of the crisis, there is a tremendous role for someone to go out and be a champion of prudent risk taking again. what can the world bank do in the sense of being a champion for risk? if we do not have risk, we do not have the oxygen that the development needs. >> the world bank, a rather developed sector. part of what we do with developing countries is helped across the full are array of

activities. your. about risk is an important one for another reason. it would be a tragedy if the lesson people learn from this is how you closed down financial markets. a former president of mexico has said that for all but as often not too much in the way of markets, but not enough markets. how do they save? how can that be part of the set of financial network? there are some great innovations to help these technologies, phone technology, for example, to increase people's access to these symptoms -- to these systems. you want to deepen the market capability in developing countries so they could have access to savings. i referenced the bond markets. if you looked at the performance of many of the countries in this

crisis, very different than in the 1990's. they had more to develop markets where they could handle some of the financing issues. one of the big risks is if you borrow from a foreign currency and land in your own currency, you help manage their risks. part of it is that development. there is also the supervisory side. i think the new financial stability board that came out of the forum that is chaired by the bank of italy is doing a good job by identifying and some of the lessons to be learned without taking an overreach, trying to overcome the last war and be less prepared for the next crisis. this is a. the latria to touch on. when a crisis -- this is a point

that i tried to touch on. there is an argument about the degree to which you have capital standards and risk-based capital standards and more of a central banking said of capital standards. you need more tier one capital, which is better equity. talk about leverage ratios. these are complex subjects. one should not assume this all went wrong because people were stupid or evil. these are not easy issues. the other. those trying to make is that -- the other point that i was trying to make is that one of the harsh lessons is that market theory alone will not tell you how to deal with these issues unless you include organizational theory, psychology, and different disciplines. i am sure for many of the

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two years before the crash, the imf was morning about the inflation. there was a forecast that the back of the attention of the u.s. fed. it is true that a collegial group of people who are respected may be able to begin to persuade their congresses to take action. it is hard for them to generate this report. american leadership is so important. i do think one of the anxieties that is out there for all to see is the anxiety of the american work cruces the globalization of supply of labor -- i just came back from india. lawyers, doctors say that the

american middle class sees its future as being down in a madoff newseum way -- n/a malthusian way. >> i have to compliment you on under faculty. i know professor wedgwood because be used to work together at the justice department. the short answer is there is no guarantees in life. there is no formula on your point about warnings from the imf will lead people to take different actions. my own personal suspicion is that in the aftermath of this crisis, there will be more caution so people might actually take steps to "remedy" it said. i hope they built into a stronger system.

i hope there will be lessons learned about inflation. at the end of the day, in a democracy or in non democracy, it still requires people to use judgment and trying to remedy that. the role of the imf or the world bank can be to alerts and to warn. in this case, i do not think it depended so much on the u.s. congress. it depended on some of the other u.s. institutions. so part of what i'm trying to say is that you can create things that can help you manage risk. they can help create institutional alerts and warnings. you clerked on the supreme court. the constitution is a framework for governing policy. one is talking about in the larger in varmint, one thing one

can know for sure is one can be more alert to the interconnected these about some of the things i talked about in trade and finance. your second part, i think, is a critically important issue. i do believe that everything does not move to another country. it should be a win-win discipline. there is a tremendous amount of manufacturing capabilities. the united states has some advantages. you see an awful lot of people with potential employment. it is not all going to move to india. you have to help people adjust to change. i have been a long believer in the fact that this starts from everything from the types of education policies. i think when you look at how

much money the united states spends on worker adjustment -- i forget if it is $21 billion. it is a huge sum of money. in my view, is not effectively deployed. i've suggested to people look it something even like a wage insurance policy which is a little different than many people from some of my political economy backgrounds. but like a earned income tax credit. you can see -- the idea of the policy is that somebody making $50,000 a year. they lose their job. they can get a job at $3,000 a year. but it is said they will wait to get a job at $50,000. it says to take the job at $30,000 and we will make up some percentage of the difference between $30,000.50000 dollars. is based on the logic that the

best way to get trained is back at the private sector -- which make up the difference between $30,000 and $50,000. the construction of this in different ways. it is like the earned income tax credit will give additional support to people at lower incomes. it uses the notion of markets and incentives in the private sector to try to help people adjust to change. the debate -- one of the debates about health insurance is that there is a system where everything is dependent on health concerns linked to your job. if you lose your job, it is dramatic enough. i am a proponent of something that vote would allow people to about a tax credit and more competition to buy health care policies by removing some of the barriers at the state level.

i think a lot of the social protections that have evolved in the u.s. system over time are ones that you have to adapt to create the ability to be any more flexible job and training in varmints. i say this as someone who feels that if you do not do this, you'll get these forces of anxiety trying to reduce what i think is the u.s.' s primary trump card. if you say the response is, let's put up trade barriers or let's be fearful of foreign investment, that is what will really close off the united states in these development possibilities. .

that, but in many countries, taking kids out of school, you lose a generation. there have been lessons learned over the last 10 years, first with things like conditional cash transfer policies, like mexico has with the programs. but even for poor countries, there's the possibility of trying to put in relatively efficient safety nets. the program is about a half of

one per sent of g.d.p. in some african programs, we do feeding programs, nutrition programs. one reason we cry to emphasize effective safety nets. this isn't just tossing money away. it's trying to use it in a way that in the heart of the crisis you don't lose funds that again will lose productive young people for a life. or for affect the healths of their mothers. these are the types of areas where you have to have effective and efficient interventions. coming out of this crisis, maybe coming back in a way to your first point is that there's an awful lot that one still needs to learn. this isn't a question that everybody has the answers and you can apply them. that's one of the roles that i hope interdiscipline anywhere schools can work with at the time. >> well, we're unfortunately out of time. i would like to thank bob for an

extremely stimulating spe