COPENHAGEN

2 days / 15 talks
Awesome and great blog

January 25-27


21. September 2022

Michael O’Sullivan is an economist, lecturer, and author. He worked as an investment strategist at UBS and was CIO (Chief Investment Officer) at Credit Suisse. He was professor at Princeton University and wrote “The Levelling. What’s Next after Globalization,” in which he analyzes the transition in world economics, finance, and power as the era of globalization comes to an end and gives way to new power centers and institutions.

Michael grew up in Ireland in the 1990s and experienced the dramatic change of that society as the Irish economy opened up and received massive foreign investment. That spurred his fascination about the effects of globalization on small open economies, and he has kept track of this topic ever since.

His thesis is that globalization is over and that the world order in the next 10 to 15 years is passing from this era of extraordinary peace and prosperity into a multi-polar world, in which old institutions have to be replaced by new ones.

“The positive factors associated with globalization – low inflation, low interest rates, and peace – have been violently reversed. In the course of 2022, we have had record-high inflation in countries from Germany to Sri Lanka across to the US, interest rates are rising, and we have the tragic invasion of Ukraine by Russia,” he says.

Being an “Anglo-Saxon phenomenon,” globalization was hard-tested by Brexit in the UK and Donald Trump’s election in the US. “The two big Anglo-Saxon countries that were the engines of globalization in the 19th and 20th century have actually done little to spread its benefits across societies,” O’Sullivan points out.

While Ireland and other small, advanced economies such as Switzerland, Sweden, Singapore, and New Zealand used their taxes and social welfare systems, in both the US and the UK, wealth and income inequalities are egregious. And “there’s been other tests, like the snuffing out of democracy in Hong Kong. And then Covid, which produced positives in terms of technological and medical advances. But its great failing has been the lack of collaboration between major countries. And then we saw the US, China, and Europe squabbling over masks and vaccines.”

According to O’Sullivan, we are at an interregnum, a period in which the old order is beginning to break down and the new order has not been constructed.

“Many of the institutions of the 20th Century: the WTO (World Trade Organization), WHO (World Health Organization), IMF (International Monetary Fund), and World Bank, haven’t done what they were supposed to do, and many of them have a leadership crisis. (…) We need new institutions for the 21st century: a new World Climate Institution, Cyber Security, and a new World Debt Conference,” he explains.

“The next 10 years will be driven by the reduction of imbalances, such as indebtedness (world debt level to GDP is as high now as after the World War Two) and Climate Change. I don’t think it’s a challenge of science or innovation, but a challenge of collaboration and getting the big cities, big governments, and big polluters to come together and agree on a really credible way to pare back climate damage.

“The new order is going to be based around three regions: the US, Europe, and China. And it’s not a simple question of these regions being big and powerful. But they have increasingly different values and ways of doing things. Globalization has come to an end. This period of interconnectedness and interdependence is beginning to unravel. Accepting that helps us to look forward to the next 10 to 15 years of this interregnum, during which imbalances need to be resolved and our attention needs to be directed away from old institutions and focused on building the new ones.”



21. September 2022

Stefan Brunnhuber graduated medical school and studied socioeconomics in Germany. He specialized in strategies for sustainable development and financial engineering for the Sustainable Development Goals (SDGs). He is the author of several books, the most recent being Financing Our Future. Unveiling a Parallel Digital Currency System to Fund the SDGs and the Common Good (Macmillan, 2021). He is also a member of the Club of Rome, the World Academy of Arts and Science, and the German Council for Sustainable Development.

In his presentation for the Global Goals Forum 2022, he will address the history and future of the Rio 1992 Conference, the current biophysical and social realities, and the need to readjust the monetary and financial system.

Brunnhuber talks about the 30-year timeline since the 1992 Rio Summit, which served as a starting point for the international sustainability agenda, up to the current Rio+30. “Thirty years before Rio ‘92 was the time when Silent Spring (1962, by Rachel Carson) and the Club of Rome report ‘Limits to Growth’ (1972) were published,” he points out.

On the ’92 Rio Summit, he says, “We would have had the chance to use the money which was blocked in the Cold War to create a better world. But we actually missed that opportunity. In the last 30 years, we have had a very ambitious (sustainability) agenda, but we are actually not performing,” he argues.

Biophysical and social realities

According to the Living Planet Index, one species is lost every 10 minutes. Incidences of zoonosis, which is one of the causal links of the current pandemic, has increased exponential since the 1970s. Every four months another incidence of zoonosis is recorded, thereby creating the possibility for another pandemic.

The income gap is increasing, but besides the negative stories, child labor has decreased, women’s rights have substantially increased, and smallpox has been eradicated. “There’s still a lot of work in front of us. But it’s better than in the past,” Brunnhuber believes. CO2 emissions in the Americas and the Eurozone seem to have reached a plateau. OECD countries are decoupling, but at too high a level. “Transformation from fossil fuels to a greener marketplace doesn’t come for free. It comes with potential instabilities in the political system, and with massive losses in welfare. And we haven’t paid the bill yet,” he warns.

The need for a new financial system

In his speech for the Global Goals Forum, Brunnhuber will also highlight the necessity for a transformation of the current monetary and fiscal system: “The volume of subsidies to the fossil fuel industry is 8 to 10 times higher than for renewables,” he says. “Fossil fuel dependency in the entire global value chain is still 79 percent. So 79 percent of all goods and services we are producing are dependent on oil and gas. And this value chain is growing by 2 to 3 percent every year on average.”

Financial markets could make the change, he says. “Central Banks have started initiatives, first in an experimental way, and now in a more public way, with what are technically called CBDCs: central bank digital currencies.”

If we had additional regulated liquidity to generate the $5 trillion necessary to fund the SDGs – in parallel with blockchain technology, distributed ledger technology, and a smart contract to enable those SDG or Green Deal scenarios – we would enter a new and upgraded monetary system, Brunnhuber believes. By doing so, “we would start to ride a bike with two wheels: the fossil and the green. And of course they interact with each other. The given value chain is pro-cyclical and unstable. By introducing two wheels in the financial system, it will balance out and become anti-cyclical. Anytime there is a crash in the fossil value chain, agents will swap over to the green sector to balance things out,” he explains.

The author of Financing Our Future concludes: “If you start changing your mindset, unlimited new forms of financial engineering will appear. By readjusting our monetary system, we can create carbon default swaps or new forms of funding WHO (World Health Organization) to be prepared for the next pandemic.”

“We can start funding our natural reserves, which have a return on investment of 1 to 10 to 1 to 15,” he explains. “And we can create very sophisticated credit default swaps that hedge costs for developing countries to install windmills. We can design new forms of state guarantees that enable startups to be involved in R&D. And we can create direct cash transfer systems through mobile phones and the ledger technology blockchain for the affected populations to overcome poverty and hunger.”


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