Big themes go hand in hand with big-time gatherings of big shots. The recent annual meeting of the World Economic Fonim, where about 1,200 top executives and political figures gather each winter in
Hans Tietmeyer, president of the Deutche Bundesbank, and Larry Summers, undersecretary of the U.S. Treasury for international affairs-who opened the annual meeting attended mostly by European and North American leaders-defined the macro challenges: Restore growth in the industrialized world, maintain monetary stability in the transition economies of Eastern Europe/Russia and Latin America, and ensure stable finance for the world’s emerging markets. Once uncorked, however, Summers poured the old wine of Keynesian demand stimuli. If such measures didn’t work for Jimmy Carter in the 1970s, one wonders why this would succeed today, when demand forces are internationally, not domestically, driven.
Interestingly, one of the major challenges facing business leaders in
Recession is only partly to blame. European CEOs privately complain that the high cost and low flexibility of labor markets have seriously impaired competitiveness. German chief executives particularly see the productivity trade-off when they compare output at home with that of their operations in
The issue is not high wages per se, but lack of flexibility, limitations on working time, rigid work rules-in short all the attributes of the nanny state that EC president Jacques Delors had codified in the Social Charter. Does anyone remember that it was over this element of EC union that Margaret Thatcher tussled with Delors and continental leaders? At the time, she was criticized both at home and throughout the EC for being “anti-Europe” and “out of touch.” (It is not widely reported, but the commission has quietly stopped implementing remaining elements of the Social Charter. British chief executives now are said to rib their continental counterparts by asking, “Why haven’t you completed the charter?” As in, “Go ahead, make our day, make yourselves less competitive.”)
But technocrats, whether in