>> rose: welcome to our r progr. i'm in san francisco and gordon brown, the former prime minister of great britain, is at my table in new york. we'll have a conversation about the economic collapse, economic recovery, and what he thinks should be next. >> i've always said the definition of courage is that you've got to have a strength of belief and you've got to have a strength of will power. and the greatest figures in history rf r those who've had both the strength of belief to do something and also the will power to see it through. and i think that's what leadership is about. and i think if you don't have the beliefs that make sense of the problems that people are facing at the time, if you can't interpret to people their problems and show them that there is a solution and then of course if you don't have the will power to see it through, you can't be labeled as a

courageous leader and i think courageous leaders do both. >> rose: a program note. our conversation with ryan gosling, michelle williams will be seen at a later date. tonight, gordon brown for the hour.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: xwlar blare and gordon brown dominated the political landscape of great britain for 13 years. gordon brown was prime minister for 2007 to 2010. before that he was the chancellor of exchequer. he became the most powerful chancellor in the modern times according to the bbc. his political life has been marked by disappointments and successes. his bailout plan for banks became a model for much of the world. he suffered a crushing defeat in the recent elections and resigned as head of the british labour party. he serves as a member of

parliament, he learned... wrote a book called "beyond the crash: overcoming the first crisis of globalization." i'm in san francisco and i am pleased to have gordon brown sitting at my desk in new york and it's a great pleasure to welcome him back to this program. thank you very much. >> it's great to be on the program, charlie. great to be here. >> rose: let me start with the student protest and the attack on prince charles' car. give me your take on that. >> i think any violence no matter what the cause in a democracy is completely unacceptable and has got to be condemned at all stages and i think those people who were responsible for this violent outgrowth has got to have the full weight of the law behind them. there is, i think, quite a fundamental issue at stake in britain at the moment and i think it's going to become the problem that other countries-- including america-- are going to have to deal with. in your fiscal consolidation plans, what do you do about education? what do you do about science? what do you do about technology?

what do you do about the universitys? i'm pretty clear from what i see happening in the future that you can't afford to cut education and the universities at this stage. if you're going to build for the future-- and i see a future where really there are consumer markets, particularly in asia, that are going to be twice the size of america and we have got to be equipped and prepared to capture these markets. so i couldn't recommend cutting investment in science or technology or investment in universities at the moment. i think that's the fundamental divide that has entered the debate in britain and it may be what's going to happen in other countries as well. people are going to have to make a decision that if you like distinguishes between the need for fiscal consolidation but also the need to ensure that when you do it you still have growth and you can make the investments necessary for the future. these balanced judgments and they've got to be made. but if i'm right about the future, this is not a normal economic cycle we're about to enter this is a massive shift taking place across the world. the biggest driver of growth in

the next ten years is going to be the growth of these middle-class consumers in asia, brazil, russia, and elsewhere and you can't afford to fall behind by having products that are not the technologically leaders of the world. >> rose: as you know, angela merkel and david cameron as well both say you can have growth and also have austerity and austerity is necessary in order to have the kind of economy that will be able to meet the challenge of the future. i don't disagree about the need for consolidation, but this is the language you're hearing. i'm not talking about angela merkel, but some of it's totally reminiscent of the 1930s. the expectation that you have an economic cycle that will be reactivated by cutting public expenditure and assuming that private investment is going to return in sufficient levels to

great jobs, i don't think that's where it's at at the moment. i think having a fundamental reappraisal as companies of where they are in the world economy, i think those companies that are export oriented that see the future will do very well. but they will be investing heavily in these products for the future. those countries as well as companies that ignore the importance of education and science and technology will miss out on a future where, let's be honest, the chinese have moved from being imitateors to being innovateors themselves. the indians are wanting to build a thousand universities in the next few years. around the world the competition is getting more intense if we give up or cut back on what is our best resource-- and that is the skills and technology and potential of our people-- then we will pay a very, very heavy price in the growth rates that we will be unable to be achieved unable to achieve over the next ten years. >> rose:. >> rose: as you know, china--

we'll get into this later-- wants to develop this middle-class and their spending capacitys to it will be a market for their own industry. can the united states and europe be competitive with those manufacturers who want to serve their market or are you saying there's enough for everybody? >> if you look at the development of the luxury good markets, for example, 25% of that is now in china. but if you look at the bigger change that's happening, for the last 200 years the west dominated industrial production, dominated investment, dominated manufacturing, dominated exports. since 2010 this year we're being outproduced and outexported and outmanufactured by the rest of the world. but at the moment we're not being outconsumed because china has got such a long way to go, india such a long way to go. the rest of asia, brazil, south africa, russia, such a long way to go to become big consumers in the world. that has happens, they will want the branded goods.

they will want the technology driven products. they will want the best innovation. america is still the home to the greatest innovateors and the greatest inventors. europe and america between them have the best science and the best technology. now that's an advantage. if we throw that away, then we've got a problem. yes this would be a decade of national decline for each country, but if we actually build on that, then i am sure that these markets in china and india and asia will be available to us. now, to make that happen you've got to do something about trade. let's be honest about that. you've got to open up trade and we should be the champions of open trade. i think our technology is still the best and will continue to be the best as long as we invest in it. >> rose: do you think we live on a level playing field between the united states, europe, india china? >> no, but i think a world trade deal would help us and i think the problem at the moment is that nobody has yet seen it's to their advantage to push to the final agreement on a world trade

deal and i think all of the efforts of the next ten years will include not just investing in the future and building greater global cooperation between the nation states of the world but actually making that level playing field more level. and i agree that there were trade practices of china and trade practices that india wants to enforce. but also trade practices in our own count these are unacceptable. but what we've got to do is to fight for freer trade and not to resort to protectionism. because the biggest loser in the protectionist game is not going to be china or india. the biggest loser in the next ten years will be america and europe because we have got a smaller market and we want to sell to the bigger market as it develops and we have, therefore, got to take the benefit of trade rather than become protectionist in either the way we deal with company takeovers or the way we deal with immigration and

anti-immigrant sentiment, or the way we deal simply with trade and currency. and i see these trade and currency wars that have happened over these last few months as being systematic of a retreat of the politics of the '30s and we should try to get beyond that because it's not in america or europe's interest. >> rose: do you believe that china should stay we are a stake holder in the world and therefore we have artificially depressed our currency and therefore we ought to change it in order to not have an unfair trade advantage? >> yes, but what's the bigger problem, charlie? the bigger problem is that china has a billion of consumers, many of whom are still in poverty, many of whom are not getting the middle-class opportunities that they want to see. and china has over many years not rewarded their consumers with the fruits of the production that they've had so successfully selling goods to the rest of the world. the big issue is whether we can

persuade china to consume more. that is the stated objective. that's s the... in the 19th century america and britain didn't say we're going to take people out of poverty. we said we'll have an industrial revolution and make the best of it. china's committed itself to taking millions of people out of poverty. we should be saying to china "let us help you do this. let us help you create a nation of consumers. let us help you raise people to the middle-classs. let us help you, therefore, be able to give consumer goods and consumer advantages to your population and let us trade with you success fly do so." and i think that's a bigger issue, if you know what i mean, than simply currency. i think it's a bigger issue than whether we have a target for balance of payments deficit which is was the subject of the g-20. i think the issue for the world is can we restore the balance in the world economy by america and europe producing more and by china and asia consuming more? and i know it sounds simplistic, but that's basically the problem of this decade, that china, asia

the rest of the world, is outproducing us but we are outconsuming them. and the balance has got to be shifted one way or the other. it can either by be us consuming less or by us producing more and i would like us to see... i would like us to see us producing more for the export markets. the chinese are considering more now, but i think we could move more quickly. if we did what we did with the g-20 in 2009, we met in london, we saw what the problem was, we underpinned the world economy with $2 trillion. nobody knew this is what we were going to do before we finished out meeting but we did that. what we need is the g-20 leaders to get together again. and they'll say what's the problem of this decade? it's going to be low growth in america. it will be high unemployment for the american people and the europeans. it's going to be slowness in reducing poverty in the asian countries as well. why can't we get a deal where we can persuade china to consume more and india and, of course,

the rest... indonesia and the other countries in asia, japan has got to consume more. and why don't we get a deal with them where we will have a fiscal reduction plan, deficit reduction plan, but we will invest more at the same time. now, that's the basis on which you can get the world economy moving faster again. and i think if i were sitting there at the moment, i would say we need something similar to 2009 where the world came together. but it's got to come together to say a growth plan for the next ten years possible, it's in the chinese interest to agree to it, it's in america's interest to agree to it and certainly it's in europe's interest to agree to it because europe is an economy that is slowing. so we need these agreements and this should be about trade, this should be about consumption and production and if necessary they could also be about dealing with currency issues. >> rose: what kind of rules and regulations should there will be with respect... and what should the international body of nations agree on in terms of rules having to do with capital requirements, having to do with

other rule making that might affect the financial sector of every country. >> rose: charlie, you're absolutely right. this is the second big issue. growth is the first issue, a financial system that works at a global level is the second issue. and i'm worried, because, you know, individual countries are having to deal with the problems of their individual banking systems. but if we don't have a coordination of that across the world, then we will still again have a race to the bottom. and i think what caused the biggest problems in the financial crisis where the people were able to adopt financial standards and practices that were below what is necessary for a financial system of integrity because they could always use different countries, different financial centers which were not applying the proper standards. so i would say you need an agreement that is at least all the main financial centers. you need to have an agreement on transparency because i think one of the things lacking in the past few years has been an ability to see within

particularly the shadow banking system. you need agreements about liquidity as well as about capital. you probably need an understanding about how the global revenues, if you like, the revenues of the global banking system are going to be dealt with, because there was insufficient capital and there was too much remuneration at the expense of capital. and we've got to sort that out so that banking is not seen to be a system that can operate effectively as it was doing capitalism without capitalists. it's just not right. i think you can get an agreement around the world. i think there's a mood to do that but it needs political leaders and not just the regulators and bankers to force that through. and i think if we're going to avoid the next crisis, we're going to have to take pretty determined action over the next few months to show that we have made a difference to all these issues relating to standards. >> rose: do you think the dollar will remain the reserve currency of the world? >> i think for the foreseeable

future that is, of course, what's going to happen i don't really think an argument about that at the moment is going to help us. i think there are issues about how the reserves of the world are held by a number of countries holding very substantial sums of reserves, and i think that they're doing so because they feel we need a safety net against the possibility of a run on their banks. and i think that's a product of the asian crisis. so a lot of money is being held in reserves by countries that don't need these levels of reserves because of a fear that there is no insurance policy built into the world system. i would say that the i.m.f. should be developing some sort of insurance policy that would protect countries if there were financial difficulties, runs on the currency, and enable them to release these resources that are now held in really quite inefficiently invested through the reserves and allow them to use them for productive efforts. so i think looking at the reserves is one thing.

i think the issue of currency is a long way down the line and it's not my priority. my priority is jobs and growth and i think what america feels at the moment, the insecurities that people feel in britain and in europe are related to growth and to jobs and i think we could do a better job of moving... >> rose: and there comes the debate. there is a debate in terms of... jorge osbourne has said, your successor after the election as chancellor of the exchequer, and we'll talk about your successor in just a moment, but george osborne has said that he thinks the recovery has to come from the public... the private sector. do you agree with him on that thaw that somehow we have to create añr means which n which e private sector can breaux ride is the jobs and engine of growth for the future? >> of course. but this is the dilemma presented to people in the 1930s. what happens after the initial crisis you retrench in terms of

your public involvement in the economy, remove the stimulus measures and the private sector doesn't invest and that's what happened in the 1930s. and all the indications i've seen of people's estimates about future investment suggest that is investment levels will not return to the 2007 levels in real terms for quite some time. so the assumption is that automatically if you cut public expenditure, investment will return. i don't think that's true and i think keynesian... keynes, showed that in the 1930s. and when i saw a document where they'd written on keynes' proposals to stimulate the economy. it was how to conquer unemployment and the treasury's leading financial expert had written "inflation, extravagance bankruptcy" and released them out of hand. >> rose: is it fair to say that

in the recent election in great britain david cameron took a political risk to reduce the size of the public sector? you argued the other side of that argument with respect to economic growth and voters of great britain chose him as prime minister so is that a rejust of your ideas about growth and an affirmation of his ideas? >> well, i think it's about the insecurity that people felt at the moment. it was our inability to explain properly-- and i take responsibility for that-- what we were trying to do. we have stage one, stage two, and stage three. stage one was rescuing the banks and getting the economy moving. stage two was dealing with the financial system for good. and stage three was getting growth into the british and world economies. and look in the heat of an election it was very difficult to be able to talk about the future. but i would say that the conservative argument is, indeed similar to that of the 1930s, expecting private investment just to return. and i would say they're underestimating in britain and other countries in europe the

role that public investment will have to play in that recovery. let's be honest. if the issue of economic policy is not about dogma and theory, it's about jobs, then in america and europe at the moment, with 10% unemployment, the possibility that unemployment will stay at that level for some time and that you've got a large amount of long term and youth unemployment, that's simply an unacceptable situation. and there's no argument about high inflation that should prevent you from taking action to deal with that problem. in the '70s and '80s and '90s people were prevented from taking action because of high inflation. that's not the problem at the moment and we're in a similar situation to what keynes described in the 1930s. so i accept my views are not orthodox. i accept that i'm not part of the current orthodoxy in economic opinion across europe. but i think sometimes the great economic orthodoxies fated during the course of the day

become the great misjudgments of history. >> rose: do you think history will prove you right because there will be some kind of inability toll move to stage 2 and the economic recovery will stall and that great britain in a sense will make a political judgment that it made a mistake? >> look, history will have a verdict on all these things and i don't want this to happen. my fear, however, is not just britain but europe and to some extent i think this is true also of america. that we are in for a low-growth decade unless we take action to deal with that. you see, i don't see this as a normal economic cycle that you've had a recession and things will return. i see huge shifts at work in the world where we have lost some of our productive power to asia and where we've got to be there with the products and the investment therefore to benefit from the next big shift in the world, which is the consumer...

middle-class consumer revolution in these emerging market countries. and if i'd write... if i'm write, you've got to invest for the future. if i'm write you can't become protectionist and there's a protectionist sentiment. and if i'm right you've got to have global cooperation. so if i'm right, then the strategies that are being pursued at the moment have got to be reexamined and although that's not the orthodoxy of the moment, i think when people look at what the challenges ahead are i think they'll come to the view that i'm taking about the need for action and not simply waiting for things to turn up. >> rose: tom fried man said the politics of the future will be about taking things away from people rather than giving things to people. you would disagree with that? >> i proposed and also sister darling, our chancellor, suggested that we had to cut the deficit by 50% over four years. and i that i think is on balance about the right approach to this

crisis. you cut the deficit, you give a long-term deficit reduction plan you therefore deal with the debt and get it down over a period of years. but we've been dealing with the biggest shock to the world economy and i think that is a balanced approach means you can grow and that your fiscal consolidation does not derail growth, but it also means that you create jobs and you don't destroy jobs. and so getting this balance right between the fiscal consolidation that's necessary to show that you're not going to have a debt at unacceptable levels forever but equally the growth that you need to show that you can keep people in jobs and get people into jobs. now, economics is about getting the balance right and i feel that the proposals we put forward to cut the fiscal deficit by a half, bigger and more ambitious set of proposals than america at the time or japan at the time is the right course. but, of course, you've got to continue to review it, because

the purpose of economic policy is not what happens just to the deficit, it's what happens to jobs and growth and what happens to the prospects for growth, therefore low inflation and the continuing ability of the economy to function well. >> rose: are we looking at a new normal in terms of unemployment and we will not go back in the foreseeable future to in this country, say, 5% or 6%? >> a lot of work coming out of the emerging markets proves the point i'm making that this irreversible shift is taking place. but i'm more optimistic. i think you can do something about it. yes if you look at things objectively at the moment it's quite likely we'll have high unemployment for many years. if you look at what can be done, however, and the things that we've been talking about, stimulating the world economy, a growth pact between the big countries, opening up trade, investment in education, i think you could get back to growth pretty quickly. and i've looked at the i.m.f. proposals and i... and they're

suggesting save oar create 50 million jobs between the worst-case scenario or the best case scenario by 2014. in other words, there are choices available to us and we're not taking the right chases at the moment. >> rose:. >> rose: talk a bit about ireland and spain and what's happened to greece and whether the problem of sovereign debt is just beginning to have a kind of deleterious effect on europe's economy as well as the world. >> charlie, you're absolutely right. the euro area has gone from a succession of crises to really a point at which the it's got to make a decision. and there are three problems in the euro area. one is the fiscal deficit which is you mentioned, particularly, of course, the biggest problem is greece which cannot get the tax revenue it needs and equally has mad to make major public spending cuts. then you've got this problem of

bank liabilities. almost the whole of the irish problem is about property development and about bank failures and in spain you've got bank problems as well. and i think you've got to deal with the problem of fiscal deficits, bank liabilities, and the impediments to growth, because the euro does make it more difficult for countries to grow out of recession or to grow sustainably. and you've got to deal with these three problems in one. you need the euro leaders to come together again like we did over 2009 in the g-20. they need to formulate policy that deals in one fell swoop that deals with three issues. and i would suggest the problem of bank liabilitys is not simply a problem of ireland and spain. you've got to deal with what's happening across europe because basically a lot of the debts are owed to some of the poor countries in europe and that's an issue that's got to be resolved as well. so if you can not do these three things together, if you could have some growth but still have deficits or you could have

deficits with no growth and you've got to deal with these three problems together. and my suggestion for the euro area is that they bring together the leaders. they do so as much as possible in private that they agree that they will deal with the three problems and then seize the initiative from the markets. the markets have been picking off one country after another. >> rose: just take ireland, for example. would ireland have been as safe as it is today if it was not within the euro zone and if, in fact, it had not change its lending practices? its financial institutions hadn't changed lending practices? >> well, ireland, let's be honest, you have to put your cards on the table here. ireland had interest rate that were 3% or 4% lower than it should have had for many years. so because of the similar interest rate that was applied across the e.u., the european union, then ireland had a lower interest rate than it should have had to deal with this inflationary problem. and particularly to deal with

the escalation of property, market speculation. and ireland has you know had banks that run enormous debts and problems. we took action earlier in britain to effectively seminationalize our banks. we took huge public stakes in our banks. in ireland they've done that. in one case they probably meant to do it in another but i think there are decisions that are made in different count these might be looked at now to see if they're the best decisions that have been made for the future. you need the euro to come together. this is not just ireland's problem now. this is a problem of the euro area and the euro area has dropped got to find a way of resolving this problem and keeping the euro moving forward. i didn't support joining the euro as you know and britain did not join the great arguments... >> rose: and you took some pride in making the arguments that you did. >> well, i felt the euro was too inflexible for britain and ireland paid the price at having

a low interest rate when it should have been tougher in its interest rate policy. and at the same time no country can adjust its currency at a time when they need to export more and therefore they need to a better means of adjusting to the rest of the world. so the euro has to find other ways of doing that. i think it can be done but it's difficult and it needs european leaders to come together to agree. >> rose: do you think the euro will survive and do you think the euro zone will survive intact or will it be certain count these will withdraw? >> well, charlie, i didn't support joining the euro so i see its difficulties but i want the euro to survive. i want the euro to flourish. i think politically and economically for europe it would be such a huge setback that it would take generations to recover because what you're talking about is not just economic cooperation but political unity, what you're talking about is the countries of eastern europe if they do the right things they will be part of this community. what you're talking about is a

stage in progress that is really... has really got ramifications for how we deal with problems globally as well as in europe and therefore for me it would be a huge setback and something we would take a long time to recover from if we couldn't make the euro work. but that does mean that different policies have got to be applied. >> rose: let me just turn to what many people consider your shining moment. it was during the financial crisis and you've basically made a decision that rather than following the suggested pathway of extracting the tarp access, those troubled assets, that what great britain would do would be take a significant financial interest in the banks. and many people think that that was the right call. and that they imitated what you did. do you consider this sort of the highlight of your prime ministership?

>> (laughs) i don't know about that. i think for me the g-20 meeting when we mansioned to get the world moving in the same direction was something that was a high point of international cooperation. but as far as the banks are concerned it was a very difficult decision. because i knew that if one country went out on its own it could have the full weight of market forces against it. and if we'd got this wrong, i don't think i could have survived in office very long. but we had decided the problem of the banks structure. we hadn't made up our mind in these last few months before we made that decision that there was nothing that the banks could do by us simply giving them liquidity or just helping them through tomorrow that would deal with this fundamental problem that they had built up these liabilities but they didn't have the capital to be able to be strong enough to withstand the difficulties. so we found that no other private source and no private source at all would come in to

invest in the banks. we looked at wealth funds, we looked at private sector investments, we looked at previous issues that had not done well. so we decided the only thing possible was for government to take a stain. and it was better to do that and deal with the problem of capital than just to simply hope that you could buy up the diseased assets and the problem would go away. the problems were absolutely fundamental and we've got to avoid that happening again. >> rose: does that suggesting that if, in fact, there were private money or huge sovereign wealth funds from the middle east or norway or wherever they might be, china, that if they had been prepared to step in and rescue the bankings you would have said that's a good solution and there's no need for great britain to do it? >> absolutely. and we didn't want to semi-nationalize. we didn't want to have public money involved in the banks but we looked at the sovereign wealth funds, actually qatar wealth fund came in for

barclay's and... a bank that could have been in great difficulty was helped through by that intervention so we had to take the action ourselves and luckily other countries followed. because if we had been left isolated for too long i don't think the british financial system would have come out of this very well. because other countries would have found a better solution but they didn't. >> what are the lessons of politics and what is your either praise or criticism of the way politics works in this 21st censurely. >> well, you know, charlie, i've had time to think about it. a lot of times on my hand to consider these issues. and i think there's one phrase that sums up what i feel now. global problems need global slugss. in the 19th century, countries like britain and america could

solve all their problems by looking at what they could do about national institutions and national policies so building roads, or dealing with your banking system or getting a welfare system into place. you did that at a national level. in the 21st century most of the decisions that we made have got interinternational ramifications. so you can't have a financial system working in america if it's not working in the rest of the world. it's in the interest of america that that financial system is working in parts where americans are investing. you can't solve the climate change problem, of course, without common agreements across the world and i've been seeing you can't solve the problem of growth and trade without having international action and one of the problems is that we are treating protection as a shell because countries think the only solutions that lie in national policies are going to be complemented by international action. so you've had the kosovo over your diplomats and what they've been saying in telegrams back

home. but you know you're going to have to have more international contact and communication, not necessarily publicly, and not necessarily leaked but all of us are going to have to talk more to the chinese, brill brazillians, south africans, russians. >> rose: we ought to have a full discussions, i think, of how you saw the political landscape you're operating within both in terms of relationships with other countries but also the relationship within those political parties that shape the events, that shape the creation of those policies. and we can't get you to say much about prime minister blair who has paid you a very high tribute in his book by saying that you were extraordinarily good during the events that we just talked about. i mean, can i expect the same of you, in a sense, to give some sense of how you see him and to respond to the idea that he thinks that you were behind a conspiracy to force him out.

>> i wasn't and, look, for 20 years, probably longer than any relationship in politics in modern times, tony and i worked very, very closely together. i don't know a time in britain history or any other country's history where you have the same prime minister and same finance minister for ten years. we broke records in that because we managed to work together on these great issues for these times in government over ten years. what i don't want to do-- and i do praise his great achievements this which are not simply on the economic front on northern ireland, they're on diplomacy in relation to the rest of the world, but look, what i don't want to do is spend the time that i think is more usefully spent learning the lessons so that we can apply these lessons to the future reminiscing on the past and really relegating the study of history to the study of

intrigues or the study of personality conflicts. i don't think it helps us. i think in the end people will want to know are you going to sort these problems that you've identified out? have you learned lessons that will change policy in the future? so that's how i see the study of history. >> rose: can i make one comment on that? the bible is about personalities. >> yeah, but it's also about the building of a nation. it's also about big decisions related to moral issues. it's also about how you run your lives in a way that is respectful of your neighbors and your friends and the leg sons i learned from the bible. remember, my father was a presterian minister and i... >> rose: i understand. >> i spent a lot of time and still do in talking about religious things that really matter to me and matter to my family. and i would say that, you know, go beyond the personalities and the intrigues and think about the big issues that really matter and, you know, one way of

describing religion is... >> rose: but may i make this point with you? you have said the thing that you... your greatest regret in response was not winning the election and why? because it did not allow you by not winning the election the opportunity to put in place... >> absolutely. >> rose:... policies that you believed were in the best interest of great britain. >> absolutely. yeah. and i've tried to explain why i feel i didn't do enough to win that election, that we were basically dealing with an insecurity in our country and other countries which it's very difficult for us to explain in detail the things that we need to do to sort it out. so i take responsibility and i've really been thinking hard about what's been happening in america, what's been happening in other countries as well because there are trends around the world where insecurity, people respond to it by liking inwards when we want to persuade people that the only answer to these problems is to lookout

wards. >> rose: you also talk about the need for moral compass. >> yes. >> rose: and a consideration of how economies are run. >> yup. >> rose: what do you mean by that? >> i mean that the relationships that we think are important in our everyday life, in our family, in our communities, in our neighborhoods where we value trust and integrity and responsibility and working hard and not being reckless but being enterprises but not being... taking reckless risks, these are the qualities we need to find in business as well. and there are good businesses who exhibit all these qualities. but let us be honest, the developing view that the global financial system was somehow outside these requirements, that it could operate in its own dimensions without these moral imperatives and i think we've learned a lesson, a very heavy

lesson that unless there is trust and integrity and unless people operate according to principles that require not just enterprising competition but responsibility and a sense of duty and integrity then things go wrong. and so, you know, adam smith was... he came from the town that i was brought up in. >> rose: i know. he was the father of modern political economy. you know, and his famous book was "the wealth of nations" but he always considered his most important book to be "the theory of moral sentiments." how moral rules have got to underpin the working of a market system. and i think we've got to relearn that lesson today. and some of the behavior that i chart in the book by some of the companies involved in the financial crisis is simply unacceptable and is simply something that we cannot allow to tolerate... to be tolerated in the future. >> rose: you considered a dam smith the most important influence on the way you think about the way the world works? >> i think adam smith tells me that a moral sense has got to influence the way that both institutions work and the way

that families and communities operate. and i think we're rediscovering, if you like, that economics doesn't work simply towards a sort of efficient market model. markets can implode as well as deliver very successfully. and unless you have a moral underpining to the market system and unless people are prepared to operate with integrity at all times and be able and capable of being trusted and that means they've got to act responsibly then the system is itself at risk. adam smith taught that lesson and adam smith is one of the philosophers... keynes, i think, in the 30s showed how economic systems would work better by recognizing we don't always have markets moving to equilibrium. but it's political economy that's going to be resurrected as a result of this crisis. not behavioral economics just but political economy. and i think people are going ask what are the moral values that underpin the development of the chinese, indian as well as american and european economic systems in the future.

>> rose: who do you want to see the leader of the labour party? >> well, i just kept out of it because i was the former leader and it was up to the labour party to make up its mind. i didn't support any particular candidate. but i do say that edmund is a very good leader. he's gob to be give an chance... it's very, very difficult being the leader of the opposition in britain. it's a very difficult job and you're not able to show what you can do in government. you can't even bring legislation like a senator or congressman in the states and say this is the law that's been passed by the senate or congress. and he's a good man and he's got the right values and i think he's got a great deal of intelligence and he's one of the younger generation of labour leaders, of which there are many many very talented young men and women in the labour party. >> rose: but it's said that he's more like gordon brown than he is like tony blair. >> i don't know if you can say that. tony blair and i worked together very well and we're both very different. but i think ed has got qualities that i would say tony blair had

and if he has any qualities that i have that you think are qualities, fair enough. he has qualities tony blair had as well. >> do you believe for example that this... that the crisis of dealing with the kinds of cuts that the coalition is recommending and the cuts that george osborne and david cameron are recommending will somehow split the coalition between liberal and tori? >> i'm not sure that's the biggest issue. i think liberals made a decision the. they decided the first time a hundred years outside wartime they decided to join a coalition with the conservative party. so the map of british progressive politics has changed. when tony and i were leaders they always had the liberal party saying they were more progressive than labour, that they were to the left of the labour party.

never can they say that anymore. so i think what's going to happen is there is a progressive majority in britain. it's going to reform not around liberals and labour but around the new labour part yea. a lot of liberals i think will desert the coalition as supporters of it because they voted for the scooter libby ral party at the last election not expecting a coalition government. so there was a huge opportunity for progressive politics in this country. i want us to succeed in building a nation that is economically stronger but i also see that you've got to balance economic growth with fairness and a strong sense of social justice. and so you need a strong progressive party in our country and i think the labour party will take from the liberals a large proportion of their support and this is the opportunity for what is really going to be a decisive shift in the way british politics is seen in the future. >> rose: to hear you say that suggests that you believe some new progressive labour party is a better idea than what new

labour was personifyed by tony blair and you. >> no, because what tony and i tried to do was to adjust the labour party to the times that we faced then. and it's really a continuation of the argument i put right at the beginning. this is a new world, charlie. you know, we've not seen the rise of asia so dominant until now. and equally we haven't seen the next stage,s chs the rise of this consuming power in asia which is our opportunity industrially. so britain will be different in ten year's time. so will america, so will the rest of europe as asia also will be different. and i think you need a party that can understand what's happening around the world. the need for global and international cooperation. the need for free trade and not protectionism. the need for markets to be underpinned by ethical values. >> rose: and do you believe that's an outgrowth of the policies of new labour... >> yes, it is. >> rose:... when tony blair was prime minister, you were chancellor and then you were

p.m.? >> yes, but if i say that it's not meant to be a criticism of anybody but i think new labour was built on an accommodation between the economic system and our commitment to social justice. and so we wanted markets and governments to work together for common purposes. but i think we found as a result of this economic crisis that both markets and governments can become vested interests. markets can be dominated by institutions that are not operating in the public interest. governments can be dominated by people who in the end are not operating to the best interests of the public. and so both of them have got to be underpinned by strong value systems. you see, in the 20th century the battle was between markets and state. you had parties representing markets, parties representing states. that is the power of government. now the 21st century i think it's the values that people hold, the culture that we have, the principles that people are prepared to endorse and how they can be applied to running markets and running governments

that is going to be the dominant question. and therefore you do need a new kind of progressive politics and you do need a new sense of what can be achieved. and i think you do need a stronger ethical basis for politics. and i think anybody who's seen what's happened in the last two or three years with the economic crisis but also sees the climate change problems ahead of us and also sees the need for greater cooperation to deal with poverty and inequality will want to see ethical values and a stronger moral sense underpinning the way we do things. >> rose: my argument is that the future belongs to two kinds of people. one, big ideas but also leaders who are capable. and therefore that the leadership component of that is very important. that's my argument. >> i do agree with you. >> rose: and i... >> i do agree with you. but i think a leadership that is not founded on strong values... i've always said the definition of courage is that you've got to have a strength of belief and you've got to have a strong of willpower and the greatest figures in history are those who

both have had the strength of belief to do something and also the willpower to see it through. and i think that's what leadership about. and i think if you don't have the beliefs that make sense of the problems that people are facing at the time, if you can't interpret to people their problems and show them that there is a solution and then, of course, if you don't have the will power to see it through, then you can't be labeled as a courageous leader. and i think courageous leaders do both. >> but that's exactly argument tony blair made about iraq. and would you define him in the way he approached iraq as a courageous leader? >> well, iraq was really three problems in one. let's be honest. the reason there's a dispute over iraq-- and this is why it's still an issue and there's a commission in britain-- is not that the action wasn't justified. action was justified. saddam hussein had broken every international resolution that you could name and done so quite consciously in knowing what he did. and people are agreed that the... after the invasion there was a failure of reconstruction. there's no doubt about that.

so we've all got to accept blame for that. and we didn't reconstruct iraq and therefore the conflict was prolonged. the question, of course, the inquiry is n britain is looking at and others will look at over time is whether saddam hussein would have backed down without there being international intervention. our judgment was that we had to intervene because he wasn't going to back down. history will tell us more clearly what was happening within iraq and what was happening within the major powers at that time. and therefore that's why such a dispute, iraq. because there is a debate about not whether intervention was justified, i think that is beyond doubt the case. and there's a debate about reconstruction and people know that we didn't do well enough, the americans, british, we were not properly prepared and that's a criticism that's valid for dealing with reconstruction. but this question about whether saddam hussein would have backed down and whether blix was right and the united nations and

negotiators were right a question that's still with us. but these were very difficult times after september 11. tony blair and george bush had to take incredibly difficult decisions to deal with terrorism and i think history will be kinder to them than perhaps it is at the moment. >> rose: in the end you think that it will be not only kinder but the decision will be seen as a wise decision because the way iraq ends up? >> well, i hope from my experience... i've been involved in the reconstruction of basra, which is the area that britain is responsible for and i've seen huge progress in the sense that you've got an army that's working, priests that are working. the this was an area that was subject to a lot of iranian influence, as you probably know and you've got economic and social development taking place and basra has got a future as a strong industrial region with great reserves. so in my view the reconstruction is working in iraq but i do say that the judgment of history will be looking at these three

separate issues. was action justified? yes, undoubtedly so. was the reconstruction badly dealt with in its origins? i think people will know that to be the case. now would saddam hussein have backed down if there had been greater pressure for longer without military action? our judgment at the time was he wouldn't. of course all the papers will become available and people will see what actually was going on at the time. >> rose: you remain a member of parliament. you are seen in your district. your predecessors, tony blair has gone on to sort of not only continue and be involved in the middle east but also to have a lucrative career as a speaker and consultant to major financial institutions. john major did the same thing. you have elected not to go that route. you've maintained your place in parliament define for us finally-- last question-- the future of gordon brown. does he want to be at the

i.m.f.? does he want to run the world bank? does he want to be prime minister again? what? >> (laughs) i'm out of national politics. i can tell you that definitely. you've got to accept we didn't... the opposition didn't get a majority but... we were defeated at the election. i can't say what's going to happen in terms of anything i do internationally in the future. i'm involved in a number of different things and i'm doing a great deal of teaching as well, at new york university, something at harvard as well. i'm enjoying that very much and i like representing a constituency where i grew up, was at school, with my friends, it's home, our children stay there, we don't stay in london. so that's a good thing to do. what the future holds i can't tell you because i don't think anybody can be sure about what's going to happen next. i enjoy being a member of parliament and as you know, one of the uniquenesss of the british system is that you can be the prime minister and you can be a member of the legislature and when you cease to be a prime minister you're still a member of the legislature and stay in the

house of commons for the time being. >> rose: i thank you for your time. it's always good to have a conversation with you. the book is called "beyond the crash: overcoming the first crisis of globalization." gordon brown, former prime minister, former chancellor of the exchequer for the hour. thank you, again. >> thank you, charlie. what a pleasure. >> rose: on the next charlie rose, a conversation with ryan gosling about the movie "blue valentine." >> when i was a kid i had two nightmares, one about nuclear war and one was that my parents would get a divorce. when i was 20 they split up. it was a confusing and bewildering time for me and i felt like i had to confront those fears i had as a kid with a piece of work because i was like entering my young adulthood then and i thought i need too old move forward and confront those things that scared me as a

kid. so it felt like the film i was born to make. and for all those 12 years it kept getting rejected or ignored and we'd get it set up, nansing would fall through. crazy things would happen and i think it's important to finish what you start you know? so i just stubbornly stayed the course and tried to will it into action. and i felt cursed for all those years. i felt like the movie was cursed i was cursed for all those years but the first day we started shooting and i had ryan and michelle who i couldn't have dreamed of having, two better more generous, cape able actors on set with me and we had spent so much time working on it that when we were on set it was just meant to be. >> i know there's something else. tell me. >> stop! no, stop! stop! >> you gonna tell me? >> stop. come down! >> are you gonna tell me?

>> come down, i'm not kidding you. >> are you going to tell me what it is? >> please come down! >> you want know go over the edge? >> no, i want you to come down. >> tell me what it is. come on! it's dangerous. >> are you going to tell me? >> no! no! stop!

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