For a first-hand view of what has produced the current crisis in Europe and its likely denouement, Dr. Frank-Jürgen Richter, a former director of the World Economic Forum and chairman of Horasis, is the right person to speak to. Excerpts from an interview with Sanjay Kumar Singh:
Germany often comes across as being reluctant to contribute more money for bailouts. Why is this so, since it is one country that has benefited the maximum from the formation of the European Union?
This is a viewpoint of the Anglo-Saxon media, and maybe of the Indian media also, since you are very much influenced by the Anglo-Saxon media, mainly the Brits. The Brits sit on an island and they don't really support anything. They say: we will keep our money and let the Germans do everything. And then they blame the Germans. It is amazing how this kind of a mindset is rampant. Germany is doing a lot. Germany is bailing out the whole of Europe. And yet people blame Germany and say it should do more.
Germany is benefiting because its companies are exporting to Europe. But why? That is because work ethics in Germany are better than in other countries. People there are relatively more hard-working. So why should they be punished for what is happening in other countries?
Today there is lack of global governance. Institutions like the World Bank and the International Monetary Fund (IMF) were created after the Second World War. They are not adept at dealing with an economic crisis. We need to have an institution that can intervene directly. That institution must enjoy the trust of the global leadership. And the Bric countries must have a big say in that institution. In the past, a European led the IMF while an American led the World Bank. Why don't we have an Indian or a Chinese leading those institutions in future? That will reflect the new realities of the current world.
We also need to revive the United Nations (UN). Within the UN also there is a lot of bureaucracy. It too does not reflect present-day realities.
We also need to re-think the model of capitalism that is practised, especially the Anglo-Saxon model, which is very much short-term oriented. Is Germany's model any different?
The German or Rhine model has a more long-term orientation. On the typical board of a German company, you have union representatives. The unions try to preserve workers' interests, but they also share with management a long-term orientation in decision-making. German companies are not into firing employees at short notice and boosting share prices through speculation. Unions have a positive role to play in German society. In the US or the Anglo-Saxon model, usually the company's chairman decides everything. Unions don't play a big role.
You also find long-term orientation in Asia - in China, Japan and Korea. In a typical family-owned Indian company also the thinking is long-term oriented. I believe that the Asian and the German models are the models of capitalism in the future. The heydays of the Anglo-Saxon model are over. What is the message of your latest book, Six Billion Minds?
Thomas Friedman had written the book, The World is Flat. In my book I say that the world is flat but it has mountains and valleys in between. There are always difficulties in transactions between countries. If a Chinese wants to do business with an Indian, there is always a language barrier, so he needs an interpreter. In reality the world is not as flat as it is made out to be.
The other important message is that we must not forget those who lose out in the game of globalisation. There will always be those who do not have the power to compete, especially those who lack education. Earlier we thought that globalisation would benefit everybody. The pie would grow and the benefits would trickle down to the poor. This approach is not working out. In India, for instance, there are millions in the countryside who are not benefiting from the boom in IT and outsourcing. We need an economic model that creates jobs for such marginalised people. I believe education is the key for the uplift of such people.
Tell us about the summits that Horasis organises for Indian CEOs abroad.
I was a director of the World Economic Forum and I started Horasis in 2005. We organise events for Indian CEOs. We also have a lot of foreign CEOs attending these meetings. We put people from different regions together, and give a topic. The participants come up with ideas, debate, and suggest solutions.
We always hold these meetings outside the country. The last India meeting was held in Italy and the next one will be held in Antwerp, Belgium, on June 24 and 25th.
Has there been any positive economic fallout of these summits?
The first India meeting was held in Munich in 2009. It was attended by the minister, Anand Sharma. One evening he gave a speech on India's long-term goals and he invited German CEOs to invest in India. The next day there was a panel discussion and Rahul Bajaj was on it. During that discussion, some of the Indian CEOs questioned Sharma. They said that you speak of globalisation but India is still closed to foreign retailers. I feel Sharma was certainly influenced by that panel discussion.
This kind of interaction helps leaders make better economic decisions, rather than just sitting in ministries reading white papers. The foreign venue also has an effect: if the same discussion was held in India, it would not be as free and frank.
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