Date – 10th October 2017, 17:00-18:00
Location – Committee Room 4, House of Lords, London, SW1A 0PW
Speakers – Gabriella Ramos (Chief of Staff and Special Counsellor to the Secretary-General, OECD & Sherpa, G7 and G20
Event Chair – The Viscount Waverley and James Rogers (Director of the Global Britain Programme at the Henry Jackson Society)
Gabriella Ramos has her name on some very important flagship documents in relation to both her activities and activities in relation to OECD and I’m delighted by your work on gender. So Gabriella is going to speak about her work with the OECD and the policy response. She will also outline the need for more inclusive growth and increasing productivity and what that might mean for governments and governments of course should be in listening mode. They need to move away from the current economic [inaudible] and distribute later, and the need to avoid a damaging retreat from economic openness.
Thank you very much and thank you for joining us – it’s always an honour to be in the parliament – it’s amazing so thank you James and the Henry Jackson Society for inviting us.
The fact is that we have been facing a backlash against the growth model that we have followed for the last 30 years. A backlash against compensation, a backlash against [inaudible], a backlash against migration, a backlash against anything that is different from a country’s identity and a way of being. This might have been triggered by the global inter-connectiveness with our policies of open trade and investment. The problem with this is that of course we will always be dependent and we went to this extreme where we thought trade was going to solve the [inaudible]. You just let the markets manage themselves and people will be okay. But now we are at the other part of the question where we are blaming open trade and investment for everything. And we actually are being reminded that our people do not believe any more in those promises related to economic reform. We are seeing this reflected in the political processes and people being more open to extreme choices, not only in terms of Brexit – Brexit was the first manifestation of people wanting to pursue another path – but you can also see in the elections in other European countries that there is a great part of the population that are opting out for extreme choices. This shared view of where our countries should go or this shared view of where our economies should go is no longer ‘shared’ – actually it is quite divided. For people like you that need to provide solutions, it becomes very complex. It becomes very complex for the challenges we are facing, the capacity for governance to deliver and form coalitions and form majorities [inaudible].
It is also interesting because this backlash is happening when our numbers (outputs economically) is showing a more broad base recovery. In Europe we see growth starting to strengthen and the US for a longer time but this is there so the emerging economies we are also seeing this. The reality is that whilst the numbers show that we are growing at around 3.5%, we cannot forget that there has been a ten year period of crisis. A period in which output loss was significant, a period in which investment has not yet picked up, a period in which although trade growth is picking up, it’s not yet near the trend growth of before the crisis. We are also seeing that as a result of political choice, countries are disengaging with this global interaction. For the very first time we are seeing what analysts are calling the ‘globalisation phenomenon’ which means there is less trade and value added meaning that globalisation is not pursued in the way it was before.
So this is the context and of course the UK is not viewed as it was before – let’s say it’s a challenging picture. It is predicted that there will be slowing growth rates with economic output (inaudible) and we are seeing that growth will be 1.6-1.7% this year and 1% in 2018 and this is not something new because of the lack of certainty about how we are going to be delivering on this great challenge that is Brexit. Therefore what is happening is that investment and trade and all of the factors are growth are waiting to see what happens.
The context is important because this is the explanation as to why people are not buying into this model before. With increased inequalities, the OECD, established to rebuild the construction of Europe after WW2, are gathering the economies of the world to try and challenge this. There is a group of countries that want to address the challenges that we are facing and the most advanced welfare systems (USA, UK, Canada etc) are even seeing inequality of income and opportunity and wealth all expanding. Every time we talk about the bottom 40% and every time I say the bottom 40%, it is like it is no longer a bottom. In my country it is 60% – the majority of the population! The reality is that when you look at how growth has been distributed over the last few decades is that it has been at the top. The fact that those that are at the top have more leverage to get into financial [inaudible] they have more possibilities to increase their wealth. This is bringing another aspect of this [inaudible] which is that inequality has an intergenerational profile to it whereby you see in Europe that youth unemployment is higher and even within the younger generations, those at the bottom of the income distribution probably will have less access to quality education/health etc. You need to grow first and then redistribute but the reality is that it doesn’t work like that – what is happening is that the growth benefits are captured by the top and that’;s why you have all these people, who don’t not have the means to live a nice life, but they don’t consider it fair in terms of how the distribution is behaving.
It is not easy as I said because you will need to have tools to redress the situation – you will need to invest more, particular in the UK where inequality has a regional aspect – you will need to invest more in schools, but the political and economic issues are not allowing for this.
We are also advancing the gender aspect. When you think about the growth potential of our economies, and this [inaudible]. In Latin America and Africa there has been massive investment in [inaudible] and they have made great progress. But everybody has increased their school attainment and part of that progress has been of girls going to school and now the OECD which is also the place that produces the report (Programme for [inaudible]) which looks at the performance of math, literacy and science performance – it tells us that girls all over the world are reaching the levels of boys in terms of education. There is no valid judgement here, it’s not good or bad, it just that it’s happening. Of course they are not choosing those basic things [inaudible] and then because of the uneven distribution. They have more participation in the labour market now.
The countries that have invested have a better participation in the economy. This required the men to share the burden and also to take more parental leave which is very effective. It therefore requires more education centres but it will also require a change in the mindset in terms of the stereotypes that we have in terms of the roles we have in society for women – allowing women to go for areas that are male dominated. So this is another angle that we take.
In general the whole point here is how we build a group model that will deliver better in terms of informing how the economy works but also the dimensions of wellbeing for people in terms of making progress. It is not only about GDP per capita. This has been discussing for years – how do we integrate the resource based assets into the national accounts? We need to deliver on the climate agreement [inaudible] but it’s not because we continue to measure growth in traditional ways – it is a means to an end. WE need to look at more dimensions and we have launched a third life initiative which is looking at eleven dimensions that matter people – some aren’t easy to measure, as they are to do with social connections – security, high quality jobs and the expectation that your children will do better than you – something that families don’t think will happen these days. This is fueling the sense of discontent. We launched the new [inaudible] and we are trying to advance some new thinking and solutions to these challenges, trying to look at inclusive growth in a different way, not just social policies, but to think about investing in the bottom 40% and their kids.
This is where we want to take the discussion going forward but it’s not an easy task. We compare ourselves with GDP metrics so to bring something more complex is a source of [inaudible]. We need to capture the wealth of information and analysis that we need to use to define better solutions. What kind of impact will we get at the bottom of the distribution? What will the impact be on the environment and the social [inaudible] – these things matter and I think that our societies are telling us that it matters because they are showing a backlash against the economic model that we use.
As usual, we don’t have all the answers and actually the organisation likes to be seen as an evidence based organisation, sharing experiences of states because the secretariat were very smart, but no so smart, to have all the answers. It is better to sit around the table and see who is best at health issues, who’s best at innovation…
There are lots to be learned. I think that in terms of the UK, we will be presenting things so I can’t go through all the details. But next week the secretary general and the chancellor are going to present the economic survey of the UK and they are going to be [inaudible].
The reality is that the secretariat [inaudible] and you need the 32 countries to agree to the report.
There is a sort of aspect that, because of the lessons of the crisis, we know our economies are highly inter-linked. I remember the start of the mortgage problem in the US, us Mexicans were very used to a financial crisis. For me, when the crisis hits in Europe, I knew people that were so nervous but I was telling him it would work out. The reality is that what we learn is that the problem originating from the unsustainable credit in the US, the French or the Italians have all said the same about how poorly they managed it. The financial sector and the banks elsewhere were said to be fine. But then it became a global catastrophe. We need to understand this because the emergence of China in the global economy will also have an impact internationally and therefore at the OECD we are also looking at global standards and how we can make sure that all countries meet global standards in the different areas of the economic agenda.
We talk about taxes – this is one area that we consider. We are looking at responsible business conduct and questions of anti-bribery/corruption strategies. All of these issues need to be tackled globally though as we are so connected we must have standards delivering better outcomes world-wide. Everybody must play by the rules and this is another aspect that international institutions such as the OECD is trying to build. If we want to recover the trust that we once had with both organisations and people in general, then we must have this on the agenda so that people see that we care.
At the OECD we care and we want to be part of the solutions. We need to work together during this challenging time.
Unfortunately the Q&A session during this event was inaudible.