:00:00. > :00:09.Tonight, in the splendour of Guildhall, one of the most powerful
:00:10. > :00:15.people in the world, Christine Lagarde, Managing Director of the
:00:16. > :00:20.International Monetary Fund, delivers the Richard double by
:00:21. > :00:36.lecture. (-- Richard Dimbleby Lecture.
:00:37. > :00:46.APPLAUSE Good evening. Welcome to London's
:00:47. > :00:52.Guildhall and to this programme, the annual BBC lecture, which was named
:00:53. > :00:57.in memory of my father, the broadcaster Richard Dimbleby to
:00:58. > :01:01.honour his work as a pioneer on radio and television. The idea of
:01:02. > :01:06.this lecture is to give someone, prominent in public life, a chance
:01:07. > :01:12.to explain their ideas in full, in their own time, without being
:01:13. > :01:16.interrupted by interviews, dare I say it, it doesn't happen that
:01:17. > :01:23.often, but it does tonight. We've had speakers, ranging from President
:01:24. > :01:29.Bill Clinton, to Terry Prachett, Bill Gates, to James die son. --
:01:30. > :01:35.Dyson. We've had politicians, inventorsers -- inventors, lawyers
:01:36. > :01:39.and tycoons. Tonight's speaker is someone whose life is spent
:01:40. > :01:45.grappling with the global economy, how to help its prosper and prevent
:01:46. > :01:49.its imploding to the ruin of us all. She is the managing direct O of the
:01:50. > :01:55.IMF, the International Monetary Fund, Christine Lagarde. Now the IMF
:01:56. > :02:00.was set up at the end of the Second World War to try to ensure global
:02:01. > :02:05.economic recovery and long-term stability by using the strength of
:02:06. > :02:10.successful economies to help those that got into trouble. We ourselves
:02:11. > :02:18.went cap in hand looking for their help in the economic crisis back in
:02:19. > :02:29.1976. Christine Lagarde was born in Paris. She was brought up in, as a
:02:30. > :02:33.teenager she won a place in the national synchronised swimming team,
:02:34. > :02:38.which stands her in good stead for her role today. She sometimes says
:02:39. > :02:44.in times of crisis it's useful to know how to stay under water and
:02:45. > :02:49.hold your breath. She began her professional life as a lawyer. She
:02:50. > :02:54.was the first woman chairman of one of America's largest international
:02:55. > :03:00.law firms. Then ten years ago, she was tempted into French politics. In
:03:01. > :03:03.due course, scoring another first as the first woman Finance Minister of
:03:04. > :03:09.France. Then just under three years ago, she was elected to her present
:03:10. > :03:12.job as Managing Director of the International Monetary Fund. She
:03:13. > :03:17.took over in the middle of the global financial crisis from which
:03:18. > :03:23.we still haven't recovered and with some European economies on the verge
:03:24. > :03:27.of meltdown. She brought to this job of reconstruction the skills of an
:03:28. > :03:34.experienced practitioner of politics and of policy, someone renowned for
:03:35. > :03:39.her cool head and her persuasive manner. She is the first woman to
:03:40. > :03:45.head the IMF and perhaps it's worth just mentioning her own view of the
:03:46. > :03:51.role of women as leaders. She told the Harvard business review, certain
:03:52. > :03:55.characteristics are predominant in female leaders like the ability to
:03:56. > :04:01.listen, the desire to form a consensus, and an attention to risk,
:04:02. > :04:06.which is why, I think, women are good leaders in times of crisis.
:04:07. > :04:07.Would you please welcome Christine Lagarde.
:04:08. > :04:24.APPLAUSE Good evening to all of you. It is a
:04:25. > :04:30.great honour to be invited to deliver this year's Dimbleby
:04:31. > :04:34.Lecture. I would like to thank the BBC and the Dimbleby family for so
:04:35. > :04:39.kindly inviting me, especially you, David, for your very kind words of
:04:40. > :04:42.introduction. You didn't forget anything.
:04:43. > :04:47.LAUGHTER Including the sin conised swim --
:04:48. > :04:54.synchronised swimming. I would like to talk about the future. But before
:04:55. > :04:58.looking ahead, however, I would like to look back. For the clues of the
:04:59. > :05:04.future can often be read from the tea leaves of the past. So I invite
:05:05. > :05:11.you to cast your minds back to the early months of 1914, exactly a
:05:12. > :05:19.century ago. Much of the world had enjoyed long years of peace and
:05:20. > :05:24.giant leaps in scientific and technological innovation had led to
:05:25. > :05:27.path breaking advances in leading standards and communications. There
:05:28. > :05:36.were few barriers to trade, travel or the movement of capital. The
:05:37. > :05:42.future was full of potential. 1914. It was the gateway to 30 years of
:05:43. > :05:48.disaster, marked by two world wars and the Great Depression. It was the
:05:49. > :05:55.year when everything started to go wrong. So what happened? What
:05:56. > :05:58.happened was that the birth of the modern industrial society brought
:05:59. > :06:05.about massive dislocation. The world was rife with tension, rivalry
:06:06. > :06:09.between nations, upsetting the traditional balance of power and
:06:10. > :06:14.inequality have the haves and have notes. In the form of colonialism or
:06:15. > :06:21.the sunken prospects of the uneducated working classes. By 1914,
:06:22. > :06:26.these imbalances had toppled over into outright conflict. In the years
:06:27. > :06:34.to follow, Nationalist and ideological thinking led to
:06:35. > :06:38.unprecedented den gags of human dig -- dengration of human dignity.
:06:39. > :06:42.Technology was deployed for destruction and terror. Early
:06:43. > :06:51.attention at international cooperation, such as the society of
:06:52. > :06:57.nations, fell flat. By the end of the Second World War large parts of
:06:58. > :07:07.the world lay in ruins. I now invite you to consider a second turning
:07:08. > :07:11.point, 1944. In the summer of this year, the Economist, John Maynard
:07:12. > :07:15.Keynes and a delegation of British officials embarked on a fateful
:07:16. > :07:21.journey across the Atlantic. The crossing was risky. The sea was
:07:22. > :07:28.rough. The world was still at war and enemy ships still prowled the
:07:29. > :07:32.waters. Keynes himself was not in good health. But he had an
:07:33. > :07:41.appointment with destiny. He did not want to miss that. His destination
:07:42. > :07:45.was the small down of -- town of Bretton Woods in the his of New
:07:46. > :07:50.Hampshire in the United States. His purpose was to meet with his
:07:51. > :07:56.counterparts from other countries. Their plan was nothing less than the
:07:57. > :08:01.reconstruction of the global economic order. There were 44
:08:02. > :08:06.nations gathering at Bretton woods and determined to set a new course,
:08:07. > :08:12.based on mutual trust and cooperation, on the principle that
:08:13. > :08:16.peace and prosperity flowed from the cooperation on the belief that broad
:08:17. > :08:24.global interest trumps narrow self-interest. This was the original
:08:25. > :08:30.multilateral moment, 70 years ago. It gave birth to the United Nations,
:08:31. > :08:34.to the World Bank, to the International Monetary Fund, the MF,
:08:35. > :08:40.the -- IMF, the institution I'm proud to lead. The world we
:08:41. > :08:46.inherited was forged by these visionary gentlemen, Lord Keynes and
:08:47. > :08:51.his colleagues, men from his generation. They raised the Phoenix
:08:52. > :08:57.of peace and prosperity from the ashes of anguish and antagonism. We
:08:58. > :09:02.owe them a huge debt of gratitude. Because of their work, we have seen
:09:03. > :09:06.unprecedented economic and financial stability over the past seven
:09:07. > :09:13.decades. We have seen diseases eradicated, conflict diminished,
:09:14. > :09:19.child mortality reduced, life expectancy increased and hundreds of
:09:20. > :09:28.millions lifted out of poverty. 1914, 1944. Today, we're coming out
:09:29. > :09:33.of the great recession, the worst economic crisis and the great test
:09:34. > :09:37.of our generation. Thanks to their legacy of multilateralism,
:09:38. > :09:42.international cooperation, we did not slip into another Great
:09:43. > :09:48.Depression, that would have brought misery across the world yet again.
:09:49. > :09:54.We all passed the test. Rejecting protectionism, reaffirming
:09:55. > :10:00.cooperation. Test is not over. There'll be many more ahead. We're
:10:01. > :10:05.living through a time every bit as momentous as that faced by our
:10:06. > :10:09.forefathers a century ago. The global economy is changing beyond
:10:10. > :10:13.recognition as we move from the industrial age to the
:10:14. > :10:21.hyperconnected, digital age. Once again, we will be defined by how we
:10:22. > :10:25.respond to these changes. As we look ahead towards mid-century, toward
:10:26. > :10:29.the world that hour children and grandchildren will inherit from us,
:10:30. > :10:37.we need to ask the question: What kind of a world do we want that to
:10:38. > :10:44.be? And how can we achieve it? As Shakespeare says in Julius Caesar,
:10:45. > :10:47.on such a false sea we now float. We must take the current when we serve
:10:48. > :10:51.or lose our ventures. This evening I would like to talk
:10:52. > :10:57.about two broad currents that will dominate the coming decades,
:10:58. > :11:01.increasing tensions in global interconnections and in economic
:11:02. > :11:06.sustainability and then, I would like to make a proposal that is
:11:07. > :11:11.built on the past and fit for the future, a strengthened framework for
:11:12. > :11:21.international cooperation. In short, a new multilateralism for the 21st
:11:22. > :11:25.century. I will start with the first major current, tensions in global
:11:26. > :11:30.interconnections between a world that is simultaneously coming closer
:11:31. > :11:38.together and drifting further apart. What do I mean by coming together? I
:11:39. > :11:43.mean, the break-neck pattern of integration and interconnectedness
:11:44. > :11:47.that defines our time. It is really the modern counterpart of what our
:11:48. > :11:53.ancestors went through in the fateful years leading up to 1914.
:11:54. > :12:02.Just look at the great linking of the global economy over the past few
:12:03. > :12:05.decades. For one thing, trade has grown exponentially. We are now in a
:12:06. > :12:09.world of integrated supply chains, where more than half of total
:12:10. > :12:19.manufactured imports, more than 70% of total services imports are
:12:20. > :12:23.interimmediate goods or services. Any manufacturing company today uses
:12:24. > :12:31.input from 35 different contractors from across the world. That's for
:12:32. > :12:38.trade. Financial links between countries have also grown sharply.
:12:39. > :12:45.In the two decades before the 2008 crisis, international bank lending
:12:46. > :12:51.as a share of world GDP rose by 250%. And we should expect more of
:12:52. > :12:59.that as many more countries dive into the Nexus of global economy.
:13:00. > :13:04.Trade, financial links, we are also living through a communications
:13:05. > :13:08.revolution. It has produced a star burst of interconnections within
:13:09. > :13:13.formation travelling at lightning speed from limitless points of
:13:14. > :13:21.origins. The world has become a hum of interconnected voices and a hive
:13:22. > :13:26.of interlinked lives. Today, three billion people are connected to each
:13:27. > :13:33.other on the net. Three million e-mails are sent each second. There
:13:34. > :13:37.are almost as many mobile devices and people on the planet. The mobile
:13:38. > :13:41.mind set is deeply embedded in all regions of the world. Actually, the
:13:42. > :13:52.fastest and deepest penetration is to be found in Africa and Asia. Back
:13:53. > :13:56.in 1953, when people tuned into the coronation of Queen Elizabeth II,
:13:57. > :14:03.the experience was mediated essentially by one voice, the
:14:04. > :14:09.masterful Richard Dimbleby, whom we honour today. But in contrast, when
:14:10. > :14:19.Prince George was born last summer, his birth was heralded by more than
:14:20. > :14:25.25,000 tweets a minute. Ha. With such diying pace of change --
:14:26. > :14:28.dizzying pace of change we can sympathise with Victoria Crawley,
:14:29. > :14:35.the countess, who wondered whether the telephone was an instrument of
:14:36. > :14:42.communication or torture. This brave new world, this hyperconnected world
:14:43. > :14:46.offers immense hope and promise. Stronger trade and financial
:14:47. > :14:50.connections can bring tangible benefits to millions of people
:14:51. > :14:56.through higher growth, greater convergence of living standards. The
:14:57. > :15:02.dream of eliminating poverty is within our reach. The communication
:15:03. > :15:07.revolution can also be a potent force for good. It can empower
:15:08. > :15:13.people, unleash creativity and spur change. Think about tweeted messages
:15:14. > :15:20.helped galvanise the participants in the Arab Spring. Or how social media
:15:21. > :15:26.carrying the message of Malala in Pakistan pricked the conscience of
:15:27. > :15:34.the entire world. But this is not all bright skies, however. When
:15:35. > :15:41.linkages are dense and deep, they become hard to disentangle. In such
:15:42. > :15:47.an interwoven labyrinth, even the tiniest tensions can be amplified,
:15:48. > :15:52.reverberating across the global in an instant, with unpredictable
:15:53. > :15:58.twists and turns. The channels that bring convergence can also bring
:15:59. > :16:03.contagion. Because of this, the global economy can become even more
:16:04. > :16:07.prone to instability. If not moneyaged well, financial -- managed
:16:08. > :16:12.well, financial integration can make crisis more frequent and more
:16:13. > :16:18.damaging. Consider, for instance, where and how the global financial
:16:19. > :16:22.crisis actually was triggered. In the mortgage markets of suburban
:16:23. > :16:34.America. To then spread around the world. The communications revolution
:16:35. > :16:39.also has a dark side. It can sow dischord and spread confusion,
:16:40. > :16:44.instead of an online forum for ideas and expression, we could have a
:16:45. > :16:49.virtual mob or a global platform to promote intolerance or hatred,
:16:50. > :16:56.instead of a beautiful similar fob yip, we could -- symphony, we could
:16:57. > :17:02.have an ugly cacophony. The challenge is to magnify the good and
:17:03. > :17:07.reduce the bad. If the coming together were not difficult enough,
:17:08. > :17:10.it will be further complicated bit other current, the tendency of the
:17:11. > :17:18.world to grow further apart, even if it draws closer together. It's a
:17:19. > :17:29.para-Dom, but what do I -- it's a para-Dom but what do -- paradox, but
:17:30. > :17:32.what do I mean? Unlike with integration, our forefathers
:17:33. > :17:40.experienced nothing like this. It's a defining feature of our
:17:41. > :17:45.hyperconnected age. One of the major megatrends of our time is the shift
:17:46. > :17:52.in global power from West to East, from north to south, from a few, to
:17:53. > :17:55.a handful, to a myriad. 50 years ago, the emerging markets and
:17:56. > :18:00.developing economies accounted for hardly a quarter of the world GDP.
:18:01. > :18:07.Now it's 50%. In 2020, it's very likely to be two thirds. The
:18:08. > :18:11.diffusion of power also goes beyond country relationships, extending to
:18:12. > :18:17.a whole host of networks and institutions that inhibit the fabric
:18:18. > :18:21.of global society. Think about the rising Nexus of nongovernmental
:18:22. > :18:25.organisations which can use the communications revolution to extend
:18:26. > :18:31.their reach and amplify the voice of civil society. In just 20 years, the
:18:32. > :18:36.number of these groups associated and recognised bit United Nations --
:18:37. > :18:45.by the United Nations, rose from 700 to nearly 4,000. It applies to those
:18:46. > :18:55.organisations, it applies to nations as well. In Bretton Woods in 1944,
:18:56. > :19:00.there were 44 countries. Nowadays, 188. That's not it. Think about the
:19:01. > :19:07.power of multinational corporations, who now control two thirds of world
:19:08. > :19:12.trade. According to some good research, 12 multinational
:19:13. > :19:21.corporations now sit among the world's top 100 economic bodies in
:19:22. > :19:28.terms of sheer size. Further, think about cities. 31 of them are also on
:19:29. > :19:32.that list of the top 100. They will continue to grow. By 2030, about 60%
:19:33. > :19:40.of the world's population will live in big cities. Think about the
:19:41. > :19:46.rising aspirations of citizens who feel increasingly part of our
:19:47. > :19:53.connected global village and yet, not quite well adjusted to it. By
:19:54. > :19:58.2030, the global middle class could top five billion from two billion,
:19:59. > :20:02.where we are today. These people will inevitably demand higher living
:20:03. > :20:08.standards, as well as greater freedom, dignity and justice. Why
:20:09. > :20:15.should they settle for less? So this will be a world that will be more
:20:16. > :20:20.diverse, with increasing demands and more dispersed powers. In such a
:20:21. > :20:24.world, it could be such a -- it could be quite difficult to get
:20:25. > :20:29.things done, to reach consensus on issues of global importance. The
:20:30. > :20:35.risk is of a world more integrated, economically, financially,
:20:36. > :20:41.technologically, but more fragmented in terms of power, influence and
:20:42. > :20:48.decision making. That can lead to more indecision, more impasse, more
:20:49. > :20:53.insecurity, not to mention, the temptation of extremism. It requires
:20:54. > :20:57.new solutions. We also need solutions for the second broad
:20:58. > :21:02.current that will dominate the next few decades. Tensions in economic
:21:03. > :21:09.sustainability between staying strong and slowing down. Of course,
:21:10. > :21:12.the immediate priority for growth is to get beyond the current financial
:21:13. > :21:18.crisis, which began six years ago and is still with us, as the markets
:21:19. > :21:20.remind us, these days. It will require sustained and
:21:21. > :21:26.coordinated effort to deal with problems that still linger, a legacy
:21:27. > :21:31.of private and public set, weak banking systems, in some corners,
:21:32. > :21:37.and structural impedestrianiments to competitiveness and growth, which
:21:38. > :21:43.have left us with unacceptably high unemployment in many countries. This
:21:44. > :21:48.is usual IMF recommendations and talk. But tonight, given the luxury
:21:49. > :21:58.I'm given, I want to set these issues in the context of longer term
:21:59. > :22:03.impedestrianiments -- impediments. Demographic shifts, environmental
:22:04. > :22:06.degradation and income inequality. As with global interconnections some
:22:07. > :22:12.of these problems would look very familiar to our ancestors, that
:22:13. > :22:17.would be the case for inequality, for instance. But others are new.
:22:18. > :22:23.Such as pressures on the environment. Let me start with
:22:24. > :22:28.demographics. Over the next three decades, the world's population will
:22:29. > :22:33.get much larger and much older in. 30 years, there will be about two
:22:34. > :22:38.billion more people on the planet. By 2020, for the first time ever,
:22:39. > :22:42.there will be more old people, over 65, not sure that actually my
:22:43. > :22:46.definition of old people... LAUGHTER
:22:47. > :22:52.But I'll think about it. But more over 65 than children under five.
:22:53. > :23:00.The geographical distribution will change. Young populations regions,
:23:01. > :23:07.like Africa and south Asia, will increase sharply, while Europe,
:23:08. > :23:14.China and Japan will age and shrink. In the coming decades, we expect
:23:15. > :23:21.India to surpass China and Nigeria to surpass the United States of
:23:22. > :23:26.America. , in terms of population. Both China and India will start
:23:27. > :23:31.ageing in the near future. This will probably cause problems on both ends
:23:32. > :23:36.of the demographic spectrum. For the youthful countries and for the
:23:37. > :23:41.greying countries. Right now, the young countries are seeing a youth
:23:42. > :23:45.bulge with almost three billion people, half the global population,
:23:46. > :23:57.under the age of 25. This could prove a boob or a bane. -- boon or a
:23:58. > :24:03.bane. A youthful population is certainly fertile. Fertile ground
:24:04. > :24:08.for innovation. Dynamism, creativity, yet everything will
:24:09. > :24:15.depend on generating enough jobs to satisfy the aspiration of the rising
:24:16. > :24:20.generations. This calls for a single-minded focus on improving
:24:21. > :24:26.education and in particular, on the potentially massive effects of
:24:27. > :24:30.technological change on employment. Looking ahead, factors as the
:24:31. > :24:35.internet revolution, the rise of smart machines, robots, if you want
:24:36. > :24:38.to call them that way, and the increasing hi-tech component of
:24:39. > :24:44.products will have dramatic implications for jobs and the way we
:24:45. > :24:47.work. Yet, today, governments around the world are not thinking enough
:24:48. > :24:55.about this and they're not thinking about it in a sufficiently strategic
:24:56. > :24:59.and pro-active way. Ageing countries, on the other hand, will
:25:00. > :25:03.have different problems. Of course, they will face slowly growth,
:25:04. > :25:08.precisely at a time when they need to take care of a retiring
:25:09. > :25:15.generation. People, like us, many of us, who have contributed to society
:25:16. > :25:20.and expect a part of a social contract to be provided with decent
:25:21. > :25:25.Social Services as they move into their twilight years. This can
:25:26. > :25:29.create tensions too. Well, you will say migrations. Migration from young
:25:30. > :25:38.to old countries might help release pressure at both ends. Yet, it could
:25:39. > :25:43.also inflame tensions. The brain drain could sap productive potential
:25:44. > :25:51.from source countries and a sudden influx of people could erode social
:25:52. > :25:56.cohesion in host countries and potentially fuel nationalism. Yes,
:25:57. > :26:05.migration can help. But it has to be managed creamily well. -- extremely
:26:06. > :26:10.well. Demographics is one potential, long-term obstacle. The other is
:26:11. > :26:15.environmental degradation, the newest and greatest challenge of our
:26:16. > :26:20.era. We all know what is at stake, more people with more prosperity
:26:21. > :26:26.will stretch our natural environment to the limit and beyond. We can
:26:27. > :26:32.expect growing pressure points around water, food, and energy
:26:33. > :26:37.scarcity as the century progresses. By 2030, almost half of the world's
:26:38. > :26:44.population will live in regions of high water stress or shortage.
:26:45. > :26:51.Hovering over this is the merciless march of climate change. Because of
:26:52. > :26:54.humanity's hubris, the natural environment, which we need to
:26:55. > :27:02.sustain us, is instead likely to turn against us. Let's make no
:27:03. > :27:06.mistake, the most vulnerable people who will suffer from the convulsion
:27:07. > :27:12.of climate will be the poorest. Let me give you an example. Some
:27:13. > :27:18.estimates suggest 40% of the land currently used to grow maize in
:27:19. > :27:25.Sub-Saharan Africa will no longer support that crop by 2030s. And this
:27:26. > :27:32.will have huge implications for the life of African populations. A few
:27:33. > :27:38.years back, Prince Charles gave this very Dimbleby Lecture. He used the
:27:39. > :27:42.occasion to make an impassioned plea to respect the law of
:27:43. > :27:50.sustainability. He said, "In failing the earth, we are failing humanity."
:27:51. > :27:54.We are a few years later. The bad news is that we are getting
:27:55. > :28:06.perilously close to the tipping point. The good news is that it is
:28:07. > :28:08.not too late to turn the tide, even with rising seas. Obviously
:28:09. > :28:14.overcoming climate change is going to be a gigantic project with
:28:15. > :28:18.multitude of moving parts. I would like to mention one component of it,
:28:19. > :28:26.that we at the IMF care about. Making sure that people pay for the
:28:27. > :28:31.damage that they cause. Why is this aspect getting the prices right, so
:28:32. > :28:37.important? Because it will help to reduce the harm today and spur
:28:38. > :28:44.investment in the low-carbon technologies of tomorrow. It's a
:28:45. > :28:50.double win. Phasing out energy subsidies and getting energy prices
:28:51. > :28:54.right is part of the solution. Think about it, we are currently
:28:55. > :29:02.subsidising the very behaviour that is destroying our planet and on an
:29:03. > :29:07.enormous scale. If you take together direct subsidies and the loss of tax
:29:08. > :29:15.revenue from fossil fuels, you end up with a total of about 2 trillion
:29:16. > :29:22.in 2011. That is about the same as total GDP of a country like Italy or
:29:23. > :29:26.Russia. Now the worst part of these subsidies is that they mostly
:29:27. > :29:32.benefit the relatively after fluent, not the poor. So reducing subsidies
:29:33. > :29:42.and properly taxing energy use can be a win-prospect -- win-win
:29:43. > :29:47.prospect for people and the planet. Let me turn to the third one, it's
:29:48. > :29:54.an old issue which has come to the fore yet again, inequality. We are
:29:55. > :29:58.keenly aware that income inequality has been rising in most countries.
:29:59. > :30:04.Seven out of ten people in the world today live in countries where
:30:05. > :30:09.inequality has increased over the past three decades. Some of the
:30:10. > :30:15.numbers are stunning. According to Oxfam, the richest 85 people on the
:30:16. > :30:22.planet own the same amount of wealth as the bottom half of the world
:30:23. > :30:28.population. In the US, inequality is back to where it was before the
:30:29. > :30:36.Great Depression and the richest 1% captured 95% of full income gains
:30:37. > :30:42.since 2009. While the bottom 90% got poorer. That's for the US, you'll
:30:43. > :30:47.say. No. In India the net worth of the billionaire community increased
:30:48. > :30:53.12-fold in 15 years. Enough to eliminate absolute poverty in this
:30:54. > :30:58.country twice over. So it's facts like this, it is not surprising that
:30:59. > :31:03.inequality is increasingly on the global community radar screen. It is
:31:04. > :31:10.not surprising that everyone from the CBI to Pope Francis is speaking
:31:11. > :31:18.out about it. Because it can tear the precious fabric that holds
:31:19. > :31:25.society together. What has the IMF got to do with it? Let me be Frank.
:31:26. > :31:29.In the past, eeconomists have underestimated the importance of
:31:30. > :31:34.inequality. They have focussed on economic growth. They have focussed
:31:35. > :31:38.on the size of the pie rather than its distribution. Today we are more
:31:39. > :31:45.keenly aware of the damage done by inequality. Put simply, a severely
:31:46. > :31:50.skewed income distribution harms the pace and sustainability of growth
:31:51. > :31:55.over the longer term. It leads to an economy of exclusion and a waste
:31:56. > :32:01.land of discarded potential. Easy to diagnose the problem. Very difficult
:32:02. > :32:08.to find the solution. From our work at the IMF, we know the fiscal
:32:09. > :32:12.system can help to reduce inequality through carefully-designed tax,
:32:13. > :32:17.careful spending policies, think about, for instance, making taxation
:32:18. > :32:21.a bit more progressive, improving access to health and education, and
:32:22. > :32:27.putting in place effective and targeted social reforms. Yet, these
:32:28. > :32:34.policies are hard to design and because they create both winners and
:32:35. > :32:43.losers, they create resistance and they require political courage. Yet
:32:44. > :32:47.we need to get to grips with inclusion and we need to make sure
:32:48. > :32:52.that inclusion is given as much weight as growth, in the design of
:32:53. > :33:00.policies, because it's also the way to deal with cronyism and
:33:01. > :33:08.corruption. Now, there is one more dimension of inequality that I wish
:33:09. > :33:12.to discuss here, one that is close to my heart. If we talk about
:33:13. > :33:19.inclusion in economic life, we surely must talk also about gender.
:33:20. > :33:25.As we know too well, girls and women are still not allowed to fulfil
:33:26. > :33:30.their potential, not just in the developing world, but in rich
:33:31. > :33:36.countries as well. The international labour organisation, the ILO,
:33:37. > :33:40.estimates that 865 million women around the world are being held
:33:41. > :33:46.back. They face discrimination at birth, on the school bench, in the
:33:47. > :33:54.boardroom. They face reticence of the marketplace and of the mind. And
:33:55. > :34:01.yet, even if I were not a woman, I would say that, the economic facts
:34:02. > :34:05.of life are crystal clear, by not letting women contribute, we end up
:34:06. > :34:10.with lower living standards for everyone. If women participated in
:34:11. > :34:15.the labour force, to the same extent as men, the boost to per capitala
:34:16. > :34:19.incomes would be huge. Varying depending on places around the
:34:20. > :34:29.world. But 27% in the Middle East and north Africa. 23% in south Asia,
:34:30. > :34:36.17% in Latin America, 14% in Europe. We simply cannot afford to throw
:34:37. > :34:39.away these gains. Daring the difference, enabling women to
:34:40. > :34:46.participate on an equal footing with men can be a global economic game
:34:47. > :34:50.changer. We must let women succeed, for ourselves, but also for the
:34:51. > :34:59.little girls and the little boys of the future. It will be their world.
:35:00. > :35:02.Let us give it to them. So, I've talked tonight about the main
:35:03. > :35:06.pressure points that will dominate the global economy in years to come,
:35:07. > :35:10.the tensions between coming together and drifting apart and the tension
:35:11. > :35:14.between staying strong and slowing down. I've talked about pressures
:35:15. > :35:19.that would have seemed familiar a century ago, and some that are
:35:20. > :35:27.entirely new. But how do we manage these pressure points? Overcoming
:35:28. > :35:32.the first tension really boils down to a simple question: Do we
:35:33. > :35:38.cooperate as a global family or do we confront each other across the
:35:39. > :35:43.trenches of ins larity? Are we friends or are we foes? Overcoming
:35:44. > :35:49.the second tension requires us to face common threats that are not
:35:50. > :35:56.bound by borders. So do we face adversity together? Or do we build
:35:57. > :36:00.yet more borders and Maginot Lines that will be mere illusionary
:36:01. > :36:05.protections? The response to both tensions is therefore the same - a
:36:06. > :36:11.renewed commitment to international cooperation to putting global
:36:12. > :36:18.interests above self-interest, to multilateralism. As Martin Luther
:36:19. > :36:24.King once said, "We are caught in an inescapable network of muchuality,
:36:25. > :36:29.tied in a -- mutuality, tied in a garment of destiny, whatever affects
:36:30. > :36:35.one affects all indirectly." That's an old lesson for a new era. At such
:36:36. > :36:42.a momentous time as this, we need to choose between the ethos of 1914, or
:36:43. > :36:47.1944. And it's a no brainer. It is 1944. We need to re-Kindle the
:36:48. > :36:51.Bretton Woods spirit that has served us so well. It doesn't mean we have
:36:52. > :36:56.to go back to the drawing board and start over again. Thanks to the
:36:57. > :37:00.inheritance of history, we have specific, working forms of
:37:01. > :37:05.cooperation at hand. Again, think about the United Nations, the World
:37:06. > :37:11.Bank, World Trade Organisation, and of course, the e-IMF. We might call
:37:12. > :37:15.them concrete or hard forms of global governage. We have a number
:37:16. > :37:20.of -- governance. We have a number of soft instruments, the G20 at one
:37:21. > :37:25.end and not works of nongovernmental organisations at the other. These
:37:26. > :37:29.entities have no formal mandates generally, no legal powers of
:37:30. > :37:33.enforcement, about you they do deliver value. They can move
:37:34. > :37:45.quickly. They can wedge open the doors of dialogue. As Winston
:37:46. > :37:51.Churchill famously said, "To jaw-jaw is better than to war-war." We have
:37:52. > :37:57.seen multilateralism in soft and hard. Soft cooperation, we need look
:37:58. > :38:00.no further than here in London, when the G20 countries rallied to turn
:38:01. > :38:06.back the tide of crisis and make sure the world did not slip into a
:38:07. > :38:12.second Great Depression. And for a more concrete forms, I invite you to
:38:13. > :38:16.consider the historic role played by the IMF through the years, helping
:38:17. > :38:20.Europe after the war. The new nations of Africa and Asia after
:38:21. > :38:27.independence, the former Eastern Bloc after the iron curtain fell in
:38:28. > :38:36.Latin America and Asia after crippling crisis. During the current
:38:37. > :38:47.crisis, we made 154 new lending commitments, zbersed 18 -- disbersed
:38:48. > :38:53.$182 billion to those in need need . Beauty of this new multilateralism
:38:54. > :38:58.is that it can build on the old but go further. The existing instruments
:38:59. > :39:01.of cooperation have proven extremely successful over the past decades,
:39:02. > :39:06.they must be preserved and protected. That means that instugss
:39:07. > :39:10.like the -- institutions like the IMF must be brought up to date and
:39:11. > :39:13.made fully representative of the changing dynamics of the global
:39:14. > :39:22.economy. We're working on that. We have to continue to work on this.
:39:23. > :39:32.More broadly, the new multilateralism must be made more
:39:33. > :39:38.inclusive encompassing across the world but working with the
:39:39. > :39:42.coalitions embedded in the community. They must be able to
:39:43. > :39:47.listen and spobd to the new voices. It must be agile making sure soft
:39:48. > :39:50.and hard forms of collaboration complement rather than compete with
:39:51. > :39:54.each other. It needs to promote a long-term prospective of the global
:39:55. > :40:00.mentality and be decisive in the short-term to overcome temptation
:40:01. > :40:03.towards ins larity and muddling through. It needs to instil a
:40:04. > :40:06.broader sense of social responsibility on the part of all
:40:07. > :40:11.players on the modern global economy. It needs to instill the Val
:40:12. > :40:17.use a global, civil market economy, a global Guildhall, as it were. All
:40:18. > :40:25.right. Well said, about you what does that mean in practice? Well, it
:40:26. > :40:29.means many, many things. Starting with all global stake holders taking
:40:30. > :40:35.collective responsibility for managing the complex channels of the
:40:36. > :40:42.hyperconnected world. For a start, it means a renewed commitment to
:40:43. > :40:48.openness, and to the mutual benefits of trade and foreign investment. It
:40:49. > :40:51.also requires collective responsibility for managing an
:40:52. > :40:57.international monetary system that has travelled light years since the
:40:58. > :41:04.Bretton Woods system. The collective responsibility would translate today
:41:05. > :41:11.into all monetary institutions cooperating closely, mindful of the
:41:12. > :41:17.potential impact of their policies on others. In turn, that means we
:41:18. > :41:24.need a financial system for the 21st century. What do I mean by that? I
:41:25. > :41:31.mean, a financial system that serves the productive economy rather than
:41:32. > :41:34.its own purposes. Where jurisdictions seek their own
:41:35. > :41:38.advantage, provided that the greater good prevails and with the
:41:39. > :41:44.regulatory structure that is global in reach. I mean financial oversight
:41:45. > :41:48.that effective on clamping down on excess while making sure credit gets
:41:49. > :41:51.to where it is most needed. A mean a financial structure in which
:41:52. > :41:56.industry takes responsibility for the integrity of the system as a
:41:57. > :42:00.whole, where culture is taken as seriously as capital and where the
:42:01. > :42:07.ethos is to serve rather than rule the real economy. I suppose it has
:42:08. > :42:11.special resonance here in the City of London. As a financial centre,
:42:12. > :42:16.with global reach, it must be a financial centre with global
:42:17. > :42:21.responsibility. With all due respect, and huge admiration for
:42:22. > :42:27.him, that goes, of course, beyond hiring a Canadian national to head
:42:28. > :42:36.the Bank of England. I'm so pleased to see you, Mark. We also need the
:42:37. > :42:40.new 21st century multilateralism to get to grips with big ticket items
:42:41. > :42:45.like climate change and inequality. On those issues, particularly the
:42:46. > :42:50.former, no country can stand alone. Combatting climate change will
:42:51. > :42:54.require the concerted resolve of all stake holders, working together,
:42:55. > :43:00.governments, cities, cooperations, civil society and private citizens
:43:01. > :43:03.as well. The same goes for inequality. It needs to be
:43:04. > :43:08.addressed, just to give an example. If countries compete for business by
:43:09. > :43:19.lower taxes on corporate incomes, race to the bottom, this will
:43:20. > :43:25.increase inequality. Overall, the kind of 21st century cooperation I'm
:43:26. > :43:28.thinking of will not come easy. It might get even harder as time
:43:29. > :43:34.passes, when the curtains fall on this crisis, when complacency sets
:43:35. > :43:41.in, even as the seeds of the next crisis perhaps are being planted.
:43:42. > :43:46.Yet given the currents that will dominate the coming decades, do we
:43:47. > :43:51.really have a choice? A new multilateralism, in my view, is not
:43:52. > :43:56.negotiable. On that note, let me end by going back again to the
:43:57. > :44:03.beginning. To Keynes, and his famous appointment with destiny. Referring
:44:04. > :44:09.to the great multilateral moment, he noted, "If we can so continue, this
:44:10. > :44:14.nightmare in which most of us here present have spent much of our
:44:15. > :44:21.lives, will over. The brotherhood of man will have become more than just
:44:22. > :44:25.a phrase." History proved Keynes right. Our forefathers vanquished
:44:26. > :44:31.the demons of the past bequeathing to us a better world and our
:44:32. > :44:36.generation was the main beneficiary. We are where we are today because of
:44:37. > :44:45.the foundations laid by the generation before us. So now it's
:44:46. > :44:52.our turn to pave the way for the next generation. Are we up to the
:44:53. > :44:54.challenge? Our future, their future, will depend on the answer to that
:44:55. > :44:58.question. Thank you very much.