Gordon Brown: 'Sometimes a Crisis Forces Change'
For more than a decade, Britain's Prime Minister Gordon Brown has been urging an overhaul of the world's financial regulation and institutions in response to increasing globalization. The global economic crisis, which has hit Britain hard, has given him a rare chance to get his message across. In the midst of intensive preparations for hosting the G-20 meeting in London, he sat down with TIME at 10 Downing Street to discuss his hopes for the summit. (See pictures of Brown.)
What are your expectations for the G-20 meeting?
We've got a quite unprecedented global crisis, but there is going to be unprecedented global cooperation. In 1933 a world economic conference took place in London. It was designed to deal with the problems of that particular crisis and to stop the drift toward protectionism. The conference was a total failure. [Now] we see so many countries who want to be part of a global set of measures that can help.
We're hearing about stresses and strains between the U.S. and Europe.
The big issue here is that we have a globalization that has brought 4 billion people into the world economy, where 10 or 15 years ago there used to be only about a billion. So you have this enormous change that has taken place in the world economy, but we have a global financial system without an effective form of supervision. We've got huge climate-change and energy problems that can only be addressed at a global level. And we've got problems of poverty that need some international response. On these very big issues, you've got agreement that the world has got to work together so that global financial flows are in some way supervised beyond simply national regulators. Every other crisis has been dealt with by countries taking action to solve their national problems. This crisis can be dealt with only by us acting internationally. Over the next 20 years, if we can solve these problems, you'll see another big spurt of growth in the world economy. I'm very confident about the future. (Read "Europe's Economic-Stimulus Message: Enough Already!")
Is it difficult arranging a meeting like this when the Obama Administration is only just getting up and running?
The conversations we've had about the world economy have shown an Administration totally focused on these problems. America is leading many of the debates about how the global economy should respond.
What about protectionism? We've seen it in the past. We saw it in the 1930s.
When I spoke to the U.S. Congress [on March 4], I said that protectionism in the end protects no one, because if trade falls, then more businesses collapse and more jobs go. You know, I come from the town where Adam Smith was born. Trade is the engine of so much of the growth we've had in the last few years. I believe protectionism is the road to ruin.
There's popular pressure for punishing people responsible for this mess. How important do you think it is to restore accountability?
What I find really interesting about the public response is that the values that people hold to be important — like working hard and taking responsibility — are the values that not only underlie a good society but are necessary for a good economy as well. People have felt for some time that you've got this vast global process at work, and somehow the rules that govern [it] have got different from the rules you practice in your everyday life. [But] the rules that make for a successful community are also now necessary for the banking system. We have to build our banking system for the future around stronger principles of accountability and transparency and integrity and sound practices. Americans are shocked by what they see happening on Wall Street. People in Britain look at what happened with RBS [Royal Bank of Scotland] or HBOS and are angered by what they would call irresponsible risk-taking and excessively irresponsible behavior. But what people want more than anything else is that these banks and institutions work to the principles and values that they believe are important. (See 25 people to blame for the financial crisis.)
There's understandable skepticism that the developing world may be left out of the new paradigm.
I had a meeting today with a group that is worried that 250,000 more children will die as a result of this crisis and that more children will be forced into poverty. We have to have as part of our G-20 conclusions help for the most vulnerable people. The crisis didn't start in Africa, but we've got to make sure it doesn't hurt the poorest people.
So why do you think you can be successful?
Sometimes it's a crisis that forces change. The world that emerges out of this crisis won't be the same. The banking system will be based on sounder principles. Countries will be more willing to cooperate not just on the environment but on other issues. I believe people looking to the future — and I'm looking to the future all the time — will see that our economies can be built as low-carbon economies, highly skilled economies. There's a huge opportunity over the next 10 or 20 years.