Statement by Bob Harris to the OECD Liaison Committee, Paris on 13 November 2009

published 23 November 2009 updated 23 November 2009

Mr Secretary General, Ambassadors, Colleagues,

The OECD’s message for a stronger, cleaner, fairer global economy sounds great. The problem, of course, is how to achieve it. The G20 framework for strong, sustainable and balanced growth might be the beginning of a march leading to that goal. But for the moment it remains essentially a slogan, rather than a plan. The OECD proposal for an observatory, or mechanism, for policy coherence among the organizations included in the framework makes sense. But for it to work, it has to be determined from the outset that the “observatory”, and all six of the organizations in it, will be setting out to get the best and widest possible information and advice. Actively seeking the critical (in both senses of the word: critical input is necessary, and it is critical to have it) input of representative labour, as well as industry. OECD is well-placed to ensure this through TUAC, BIAC and their partner organizations, just as ILO is through ITUC and the IOE, for example. The key to the “stronger” and “sustainable” is “balanced”. Much has been written and said about the global imbalances underlying the onset of the crisis. There was a conjunction of several imbalances. Together with the global imbalances in trade consumption, savings, and debt, we now know that the financial economy was completely out of balance with the real economy. We had a huge and growing imbalance in wealth and revenues, linked with imbalances in bargaining power. Essentially, the imbalances made it possible for some to reap huge benefits, while the majority of people struggled to hold on to diminishing jobs that provided more and more precarious returns. And we had, for a quarter of a century, another imbalance – an imbalance between the private and the public sectors, driven ideologically by the notion that government was the problem, not the solution, and the populist politics of tax cuts. Getting balance between the market and the public sector as provider and as rule setter, and between resources for common public purpose and benefits for private gain, is one of the challenges. As Joseph Stiglitz says: “we need a massive rethinking of the role of governments and of the market”. The imbalances all interact – like the components of a weather system – and we were hit by a global storm. TUAC colleagues will address one of the fundamental imbalances – growing inequity – in the next session. A year ago, when the storm hit, we talked a lot about paradigm shift. Well, there has been paradigm shift. But not in the way we expected! We have not in fact shifted into a new and more balanced paradigm. On the contrary, we have shifted into a paradigm were the paradox of jobless recovery can actually occur, where financial markets can move into a new cycle of massive profit-taking. Worldwide monetary-easing and stimulus packages have created new opportunities for speculative profit-taking, while the motors of our economies splutter as they try to get going again – some more successfully than others. (Imagine a line of vintage cars starting up for a rally – some better than others!) Roubini explained (last week in the FT) the mechanics of this new paradigm. It is clearly not sustainable. Dominique Strauss-Kahn said in Rome a week ago: “there is no recovery until there has been recovery of jobs!” Slow recovery of the real economy means immense ongoing economic and social costs in each community. It also means diminishing public revenues, even while finance ministries and some international officials talk of “exit strategies” which will put more pressure on public resources. This new, and I submit, unwanted paradigm, (let us agree on that) actually enables a further massive shift of resources from the many to the few, from future generations to the present – the very opposite of what makes sense for a stronger, clearer and fairer global economy. What to do? Our message today goes to the governments represented around this table. Standard finance ministry responses will not get us out of this. There has to be collective rethinking of the role of governments and of the market, and a combined macro effort to achieve better balances, equitable productive balances. In that macro effort, ethics and economic good sense lead in the same direction. And our message goes to the OECD. Your paper refers to previous work in “Going for Growth” . We’ll be frank. “Going for Growth” will neither give OECD added value in its contribution to the global effort, nor help to change the unwanted paradigm. “Going for Growth” which also drives the OECD country reviews, will not help countries to achieve the balances that are crucial to sustainable recovery. OECD has built a reputation on indicators. But number crunching alone won’t do it, especially if you’re crunching the wrong numbers. GDP per capita as a benchmark does not give us the information we need, as you said Mr Secretary General. It does not give the same information as the median wage, which actually reveals growing inequality in the USA (the GDP benchmark) over time. But OECD does have a major contribution to make because it is one organization that could lead the way in a whole of government approach. OECD is the only agency taking that approach. Your work on education, on labour and employment policy, on migration, on health, and on many other areas, gives OECD added value in the endeavor for policy coherence. OECD and ILO can work together to respond to the G20’s call for a new surge of education and training. Human development is the key to strength, fairness and sustainability. It’s going to need new and open thinking, and the contribution of actors like us. Postscript Allow me take another minute to share a personal reflection. Last evening, the retiring Director General of UNESCO was kind enough to invite my wife and myself to join him for a farewell concert given in his honor over at UNESCO. At one point, along with the music, there was a diaporama of world heritage sites along the ancient Silk Road from Europe to Asia. There, rolling across the giant screen, set to beautiful music, were the vestiges that remained as witnesses to the rise and fall of civilizations. They also faced paradigm changes. Usually there were warnings. Usually they were ignored. Occasionally systems were enlightened enough to anticipate, adapt, and survive. Most didn’t! Makes you think, doesn’t it? Thank you. [END] Bob Harris is Senior Consultant to the General Secretary Education International, and Chair of the OECD TUAC Working Group on Education, Training & Employment Policy. He also represented Public Services International (PSI) and the Australian Congress of Trade Unions (ACTU).