Managing the Real and Perceived Challenges Facing the World

Dr Robin Niblett CMG

So, ladies and gentlemen, welcome to Chatham House. I’m Robin Niblett, for those of you who I don’t know, the Director of the Institute. Welcome to all of you, welcome to our members who are watching this on the livestream. Delighted to see a packed house and delighted to welcome our new Chair, Lord Jim O’Neill, to Chatham House to give his opening address, his opening set of thoughts about this. I’m in a slight trepidatious position here because obviously, he’s not just Chair of the Chatham House Council, he’s my boss. So, I’m hoping that you’re going to ask some tough questions and I will follow them up. No, it’s great, Jim, that you would come and share some thoughts with us.

There’s great interest, as you can see, from everyone who’s here. I think you’ve picked a suitably broad title in Managing the Real and Perceived Challenges Facing the World. I think we came up with yeah, something of that sort, which is going to give you the opportunity to range widely and across all of the areas of great expertise and knowledge that you’ve built up.

I will say a couple of words of intro, though. You all know Jim O’Neill, I think, already, ‘cause obviously, we’ve announced his position here as Chair, but you don’t have many folks in the UK, who’ve sat in the private sector and in Government, which is something that Jim has had the opportunity to do. Did a bulk of his career at Goldman Sachs, there from 1995 to 2013, most of it as Chief Economist, though, also, as Chairman of Goldman Sachs’s Asset Management, and then after leaving, was lured in to do the AMR study and review a big study on the future of antimicrobial resistance and the huge impacts that could have on society and the global economy, then became Chief Commercial Secretary to the Treasury, through to September 2016.

As you said, two years ago almost to the day…

Lord Jim O’Neill

Not bad counting.

Dr Robin Niblett CMG

…that he stepped down and is now, in addition to being Chair of Chatham House, Vice-Chair of the Northern Powerhouse Partnership, a member of the social Shelter – Shelter social housing commission, and a crossbench Member of the House of Lords. Jim, there – I mean, I’ll be interested to see where you go because there’s almost no subject, at the moment, that is not – that we’re not going to want to talk about later on, given your areas of interest, and also, what Chatham House wants to do, and I’ve really enjoyed, I have to say, these last few weeks we’ve been noodling, and I’m as interested all as you to see where’s Jim’s ended up, on where Chatham House should go. So, without more ado, let me hand over to Jim O’Neill. Look forward to your comments.

Lord Jim O’Neill

Thank you [applause]. Good evening, everybody, distinguished guests and members. Thank you, those of you that are members for opposing or accepting me as your Chair. I hope I can rise to the challenge of this incredible organisation and carry on noodling, as Robin described it, with our Director.

I have to say, listening to Robin’s introduction and reflecting on whether I would try and make this opening witticism that I picked up from a very illustrious and experienced Chinese gentleman that I had lunch with last week, who said – he’d – we’d met each other many years ago in Beijing, and he said he was now looking very much forward to spending more time with the ruler of the Chatham House Rule. And I thought that was rather funny, but actually, maybe that’s you rather than me. But hopefully, together, we can navigate this remarkable thing at the centre of this fantastic brand at such an interesting time for global affairs, to take Chatham House to an even better place in the future than its illustrious past.

So, I have been set a very tight schedule, so what I am going to do is show you a few slides about some of the many issues in the world, but ones that I think link to what I’ve just said. I believe Chatham House needs to be at the centre of, if not guide, the world into a healthier place than it has been in the past and how many people are probably feeling about it today. And there are more issues than the three I’m about to summarise, but they all connect, in some ways, to these three. One is that the whole issue of equality and global equality, both the actual and perceptions of it, I think there is no private entity or think-tank that I’m aware of that owns persuasive influence at a time of such urgent need on that, and I believe passionately that with all the different areas of Chatham House and resources we need to do that. Linked to that, crucially, the remarkable challenges of global governance, and then, thirdly, bang in the middle of that, but also separately, what I like to call ‘profit with purpose’, and I’ll come back to that in a second.

There are ten issues I’ve highlighted that link to each of those three. Because of the time I’m not going to say what they all are now. Can you see clearly at the back? I’m going to go through aspects of each of them very quickly and then, at the end, I will come back to reflect on a summary about where I would like, with Robin, to guide the House and its members in taking us to this higher ground.

So, the first and second one, really, global economy and the issue of equality. Here is a picture of what’s been happening to the world economy, since the 1980s. I could probably spend the rest of the hour just on this, but there are three or four things I thought I would try to highlight. The top line across shows you world GDP growth by decade. The three decades that have preceded this one. The fourth column is what I had assumed, and with my old hat on, and what was the potential growth rate of the world this decade, and the last column is what has happened decade-to-date. I should say, as an aside, ‘cause I’m sure some people are already thinking, is life just about GDP growth? and of course it is not. But it does seem to relate to many of the issues that many people need to focus on and do focus on, but that is perhaps for a discussion Q&A, but – as to what is really means, but for what it is, let me just make a few observations.

The first one of which is that – and I remember saying – now that I’m stood here saying this, I remember saying a version of this, in a different guise of mine, at Chatham House a few years ago, but linked to many of the issues going on the in the world, I don’t think there are many people that really know what actually is going on with world GDP growth and in that regard, my opening of the four comments related to this.

If you look at the top-right, in terms of growth around the world, decade-to-date, 3.5%, are there many of you that know that’s actually stronger than it was in the 1980s and the 1990s? I think frequently, when I read lots of international Economists opining about these matters, they don’t even seem to be aware of that, but it is fact. The second thing to point out, in that regard, in this year, 2018, which we are now only four months left, we are going to get probably, close to 4% GDP growth, despite all the things going on that we all worry about everywhere, and if for some crazy reason that carried on for the subsequent two years, that would mean decade of this would be the same as the last decade. It would then average 3.7. So, the two points related together, insofar as the GDP means anything, world GDP growth is actually doing better than most people think and there may be lots of other things that relate to that.

Third thing to point out is that if you look in some of the individual places, look at the UK. Anybody have the slightest idea that the UK is actually doing better this decade than the last? Doesn’t feel like it, does it? Same in many places. Japan, actually, has not got very strong potential, but it’s done slightly better than its potential. The areas that have been really responsible for why the decade-to-date isn’t as strong as the world potential is, three places. It’s the Euro area and two of the BRICs, Brazil and Russia, which is why some people, a long time ago, were probably right to say to me, “Maybe I should have called it ‘ICs’.”

Last thing to point out, and I’m going to come back to reflect on this later, the reason why the world economy has continued to probably do better than most people think, seemingly, excluding some people close to Donald Trump, is because of China. And I calculated for something else I was doing recently, nearly 50%, 49.3% of all the global nominal GDP that’s happened this decade is just from China. 25% of all the nominal GDP growth that’s happened in the world this decade is the Chinese consumer.

Equality: do we mean income inequality? Wealth inequality? Inequality of opportunity? Do we mean all three at different times? There is so much said, understandably, about these crucially important issues to everybody’s lives. I believe there needs to be greater central evidence being provided and people’s thoughts being guided by something like Chatham House, in the context of what I’ve just shared about the way of the world.

This is a picture that I’ve stolen, from various sources, with the World Bank being at the centre of it, and very importantly, and important in some of the defensiveness that’s going, on in my opinion, that the – let’s call it the liberal international elite, don’t lose sight of the fact that actually, on the standard definition of what is poverty, we have had a pretty spectacular ride, the past couple of decades. Probably, today, on the definition of numbers below $2 a day, something around 10%. This is what is projected by these entities out to 2030, just over 5%, with virtually all this definition of poverty being eradicated everywhere, with the exception of parts of South Asia, a little bit in Latin America, and sadly, still far too much in Africa.

It is the job, or should be the ambition, of Chatham House, in my opinion, particularly the regional teams that relate to those, so our Africa Division, and our Asia and Pacific Division, to make sure that at least that happens, if not better. Because if we get to 2030, and this happens or it’s better, or if that big brown blob for Africa is less, then actually, the international liberal elite, in its role in helping that, should be proud about what it is helping to achieve for the world.

Linked to that, productivity. Here is the sorry picture of what’s happened in the UK, particularly the last decade, and I’m going to talk about other issues that relate to it. Chatham House, of course, is not positioned to wade into domestic issues here in the UK, but I show this because it’s reasonably reflective of what’s going on in virtually all the major developed countries. But I’ll say it in a UK context, and some of you may have seen some colourful references to things I’ve written in the papers here, in the past few days. But it is the case, in this remarkable emotion and complex challenge about Brexit, the weakness in British productivity, the last decade, is somewhere between 15-20% weaker than what its trend was before. That is worse than the most extreme estimates of what could happen to the UK, under a hard Brexit, and as I said in a piece I wrote for the Financial Times, it astonishes me that our policymakers, and I mean now the UK specifically, but more broadly, are not focused on issues that relate to that, not least because it might be why we end up with some of the peculiar things that some of us are struggling to deal with, such as Brexit and, in the United States, the interesting choice they have seemingly made for their President.

We need to do a lot more about all of these things, including the likes of Chatham House, in terms of leadership, in terms of idea generation. Right at the centre of that, in my opinion, is a greater purpose for business. I have the good privilege of being a partner from Goldman Sachs when it was a partnership. Not for very long, but I was. And it is clear, in my opinion, as a proud student and participant in the capitalist system that true risk-taking should be rewarded appropriately, but in my opinion, more and more signals, despite some of the things that have happened the past decade, suggest to me that far too much of modern business has lost the purpose of what it’s doing beyond its next reported quarter of P&L.

How come, at the centre of this, for example, and again, this applies for much of the Western world, we are seemingly in this position where there is constantly report – apparently, reported rising profits, quarter-after-quarter, but with it, no increases in private investment spending? When I was first studying economics, I think I remember that at some level of profits, it is supposed to result in new entrants coming into those businesses where – or industries where there is particularly strong profits and it’s certainly supposed to result in a significant improvement in investment spending. And there is a conundrum because that has not happened in this country, it’s not even happened in Germany, and it’s certainly not happened throughout virtually any other major Western economies.

And linked to those two points, I’m going to show an example for share buybacks. It often seems to me, in far too many publicly-quoted sectors, essentially, we have very sophisticated balance sheet management going on, but not a lot of genuine business, with greater purpose, including investment. That, in my opinion, probably needs to change and I can’t think of anywhere better than Chatham House to help lead some credible idea generation on that for Western policymakers, for non-Western policymakers, but also, to help business navigate.

To illustrate, here is a picture that I’ve grabbed from my old crowd at Goldman Sachs, showing the annual trend in repurchases of their own stock by companies. This year it is quite feasible that the to – this is just for the United States the total amount of share buybacks may exceed $1 trillion. In fact, I think I’m right in saying, and as I’m looking around the audience, realising I should have checked this more carefully ‘cause there’s a lot of people who I know from Finance sitting there, I think I’m right in saying, is the single biggest buyers of equities, the past 15 years, are companies buying their own shares. Something very odd about that, in my opinion, particularly at a time where there is such weak wage growth and apparent continuing rise of the share of profits in overall sharing of growth. And taking it right back to my first slide, maybe why so many people do say, “Who cares about GDP?”

Technology and equality, and I thought I’d do a risky experiment here. How many people are on Facebook here? We are an old crowd, right? I think I saw about a third of the room’s hands went up. So, the next part’s going to be slightly tricky. How many of those people, whose hands went up, would pay to be on Facebook?

Member

Not that much.

Lord Jim O’Neill

Not many hands went up. Very interesting.

So, last I heard, we don’t actually measure the amount of time, the third of you that put your hands up, spend on Facebook in GDP accounts. Is it actually useful? Ponder that yourselves. One way some smart Statisticians are starting to think that we get round this apparent measurement problem is to survey people as to at what price they would value Facebook. I think, from the random sample in here, not very high. Which actually leads me into thinking, “Once you get to that point, maybe actually, people should consider whether these things are that useful that they pay for them.” We need, I think, quite urgently, to help these technology companies, and I’ve highlighted Facebook, many others, think a lot more carefully about how they are engaging with us all and society, more broadly on this, not least, and it’s not just technology companies, the whole issue of their contribution more broadly to society in taxation. How many of these companies seemingly, are paying so little tax? Linked again to something I put in the Financial Times piece at the weekend, does it make sense to still have corporation tax in this day and age? Is there not a better way of trying to derive the appropriate revenue that these companies should pay? Those of you here, from our economic and financial area, you guys are going to own this topic, to help the world to a better place, and it seems to me it is pretty urgently needed.

Internal equality, and issues that go with it. I’ll give you two anecdotal examples. The day after the Brexit Referendum, I said to George Osborne, who was then my boss – well, I emailed him. He probably didn’t even read it, I wouldn’t have thought, given the probable mood he was in that day. I said two things. I said, “George, number one: if somebody would’ve started off the Northern Powerhouse ten years earlier, maybe there could have been a different result.” Maybe. “Secondly,” linked to something I’ve said already, but I’ll reiterate it here, “I’m shocked how much the elite are unconnected from most people in our society.” And he did answer me, ‘cause he thought I meant Politicians, but no, I meant, actually, me as well.

I often talk about the so-called ‘Sunderland factor’. Those of you who are not from the UK and don’t focus on these things, I apologise, but one of the first places to report that it was voting out was a town called Sunderland up in the North East, which, amongst other things, happens to be the home of the second most productive auto plant in the world. A lot of people, from the international elite, will think, “These guys just didn’t know what they were doing.” Possibly true. It might also be true that they did do it knowing what they were doing, but don’t think that they’ve been really getting that much out of how life has been going. And linked to our pursuit for a greater path of more sharing in the fruits of GDP growth and linked to a lot of the errors I think Government Advisors, of the past 20 years have made, we need to not lose sight of internal issues of equality.

The other big thing to really learn from that is the urban versus rural voice. I myself am very guilty of spending far too much time thinking about just urban places ‘cause that is where so much economic growth has come from, but as we saw, in the Brexit vote, and we see in other issues around other countries, you ignore the voice of rural people at your peril.

Linked to it all, the whole issue of education and skills and the interplay with each of those. It is vital because many of these issues, in my judgement, appear to cross boundaries that the likes of Chatham House have to have much more, let’s call it boldness and desire to bring the world to a better place on these things, and if we can, we won’t be as troubled in our minds as perhaps many of us find ourselves today.

Intergenerational challenges, including equality. Pension policy. I’m up there at that age as well, these days, so I apologise in advance, but is it not kind of ludicrous that we have this incredibly generous treatment of pensioners. From what little I read, these things were introduced in the days when we were all only living for a couple of years after we stopped working. But today, we are expecting more and more of our young people, with less stable jobs, to somehow have more and more of their earnings devoted to all of us who are living for ever and they only realise they have a vote after Brexit. Does this stuff make sense?

Housing policy: I met a Journalist here today, who was interviewing me. She lives 50 miles from London ‘cause she can’t dream of buying a house. Familiar story? In Auckland, in Sidney, in New York, common issue around the world, going back to income versus wealth inequality. Don’t we need to have some really thoughtful things about how to truly change housing policy, in so many different places? And, of course, it’s at the bottom, but it’s far and away nowhere near the least important of these, the whole issue of climate change, which is an intergenerational thing. We need to give young people a much bigger voice on all these things, and as Robin knows, and other of my new colleagues at Chatham House know, I am passionately of the view we need to make Chatham House more youthful, not just in terms of people that sit in audiences, but actually driving our agenda, particularly on these issues, and all the others as well.

Global governance: a whole load of numbers there that I shan’t bore you through going through them. Here is one of the few things that I’ve found myself having some sympathy with Donald Trump’s words. At that chaotic G7 in Canada, one of the vaguely sensible things he said, in my view, was “What are we doing having a meeting anyhow, without Russia?” Today, China’s GDP is bigger than Germany, the UK, France, Italy, and Canada put together. What are we doing having those kind of things as supposedly representative of the world? For all of Brazil’s utter chaos and disappointment of the past few years, today, it is still bigger than Italy. What is Italy – apologies to the Italians of you in here. It is a gorgeous country. Actually, the more I travel, possibly, it’s the most gorgeous country. But do you really need to be in this thing? And by having this thing, what kind of message are we sending to the world? And that’s just one tiny example. We need much more rational representation of global Governments, urgently.

Global health: I deliberately picked something from antimicrobial resistance. This was a chart that managed to scare a few people into taking notice as to what that review of mine said, and as some of you know, I probably found that to date, until this opportunity, probably the single most interesting things that I’ve done in my professional life. And what it shows is that if we don’t do something about it by 2050 there will be ten million people, possibly a year, a year dying around the world. More than the number of people that die from cancer.

What we discovered, if we want to avoid this sort of thing happening, there are some interventions one could undertake, and we recommended 27 different interventions that over a decade, would cost $42 billion to invest in. I deliberately say ‘invest in’ as opposed to ‘cost’. That is a lot of money, but it is less than the combined amount of the top three US pharmaceutical companies have spent buying back their shares this decade. That is not a big cost. As a very smart Investment Manager friend of mine said, irritatingly the week after we published this, “$42 billion to save ten million lives, which translates into $100 trillion over 35 years is a return of 2,500%.”

China, very quickly. Single most important thing in the world economy, in my opinion, today, the Chinese consumer. I’m not in markets any more, so I should be very careful about what I’m saying, but rather intriguing to me that, starting last week, I think I see Michael Hintze is sitting there at the front, he’d know more than me, Chinese shares last week had their best week for six months, at least, starting the day after the announcement of the tariffs going on. Was that because not being given any attention in much media, from what I can see, Chinese Government announced a fiscal stimulus aimed at tax cuts for the Chinese consumer?

As I often say the following anecdote: the last business I invested in before I had to set up a trust to go into Government, was a Beijing-based business. The guy that ran that came over last Christmas and I saw him for a quick drink. He said to me he reckoned that about 20% of China’s population today earning $40,000 a year, 20% is 260 million people. That is four times as many people as the UK population earning the same as us. These horrible ‘commies’. We don’t like it, but there’s something going on well there, in terms of those as consumers, which is probably somewhere along the line going to be helping other countries. We need to find the right way to integrate them and their thinking and our thinking with them and about them into a more rational way. Who better than Chatham House?

Linked to it, and particularly opportune, One Belt – the famous One Belt, One Road. President Xi’s signatory thing. As I said to that Journalist I mentioned and two others that interviewed me today, if the Chinese get that right, if they did, doesn’t look like it is at the moment, to me, I’ll come back to that in a second, it would mean that what Donald Trump is trying to do with his tariffs would be meaningless. If we could somehow help China, India, and Pakistan to just start trading with each other, rather than wanting to fight each other, that would possibly transform international trade for the next generation. And it’s particularly interesting, in my judgement, at this moment in time, because, as we can all read every other day, there are a number of countries around the world, not just us ones that don’t get it in the West, that don’t like the first rollout of One Belt, One Road and I smell that Chinese policymakers are wanting some help about how to make this work.

I’m not wanting to overload our Asia and Pacific Division here, or our Global Economics and Finance but, as I’ve discussed with others, of those ten million deaths with AMR, one million is in China, one million is in India, so it links to a lot of other things, including our Global Health Division.

This is the centre of great 90-year historical thinking about the world. It sits right in the middle, even with Brexit, of the most international modern city out there. As I frequently used to say, particularly to Boris in his days when he was London Mayor, it is the BRICs capital of the world. Best time zone, best language, this place has got, not the best, the central time zone might be the best. A staggering convener, look how many people are – actually, I meant to say at the start, you guys got nothing better to do on a Monday night? Yeah, an incredible convener, as we see every day of the week. The world has got enormous complex issues that I’ve just given a tiny, tiny snapshot on, and we want all of you to help us take the world to a better place. Thank you very much [applause].

Dr Robin Niblett CMG

Jim, I think you’ve earned a short break, at the very least, after those remarks and you really did take us on a world tour.

I’m sure my colleagues here in the audience will also have been taking notes like I was, furiously, about finding all the things that we’re going to have to be at the centre of, not just London, in terms of the topics, but seriously, I think it’s an exciting agenda. It’s an exciting agenda because it is a risky time, but I think it’s also a time of great opportunity, if people can get things right. And at the moment, we dwell enormously on the risk. It’s inevitable and maybe it’s part of the role that think-tanks play, but I agree with you that I think as an institute and with partners around the world and here in London, hopefully, we can look for the opportunities and not just help avoid the risks.

Look, we’ve only got half an hour or so, 25 minutes, to take some questions. I’m definitely going to take maybe – I think I might take packages, to be frank, because I think – and I’ll keep track of them, otherwise, I’m really going to make a lot of enemies, over the course of the time we’ve got left. And I do want to – I’m going to throw in one sort of techie question to you because it’s an advantage to have somebody with your background to think about this question. I did mention it earlier, as well.

There is, as you put out to that shift in the importance of the Chinese economy, its scale, its size. We’re still living in this world in which the US dollar is the currency of the world, in which it is increasingly, being used as a tool of American foreign policy, either with the support of certain Governments or to the great frustration, and we’ve seen, from the Chinese in particular right now, getting dinged in the middle of this debate of whether they should be buying Russian weaponry or not, it has huge potential extra-territorial effect, and we’ll see it later in November with the added sanctions on Iran coming into play.

As you look ahead ten, 15 years, as you think of things that Chatham House should also work on, not that I want to add more to the list, but it does strike me that this world in which we’re still living in a dollar-led world or at least a dollar-strength, a duo economic-strength world. Do you see that changing if you do, how, why, what timeframe? Is it beyond the control of people? Where would you put that?

Lord Jim O’Neill

Don’t know.

Dr Robin Niblett CMG

That’s fair enough. Fair answer. I use that answer sometimes, as well.

Jim O’Neill

Oh, gosh. I mean, ultimately, Robin, I think if the Chinese economy broadly carries on, on the path that its potential and its demographics and its productivity ordain, then it’ll be pretty hard for the dollar to stay as dominant as it is. And I have to say I find my mind wondering, in the past few months, whether some people with Trump’s ear, actually, thinking if they try to make it a bit more difficult for the Chinese in that regard, they’d make it a lot further out than otherwise can be the case. Because, as we see, to the positives in the short-term the US can achieve, I think – I suspect they were shocked about the impact they had on Russia when they started to get tough with the dollar. So, I wouldn’t underestimate that in their mind.

And the other thing, and I could talk about this for ages, but the other thing which I think shouldn’t be ignored and another thing, I hope that Chatham House can influence Chinese thinking about more, is part of the reason why we are in this situation is, of course, ‘cause the Chinese have not wanted to have the renminbi developed too much. And I don’t spend as much time there recently, as I used to, but it was always quite clear to me that Chinese are not eager to rush, to have the renminbi freely convertible. I think, in that regard, they took some big lessons from the 98 crisis and that, in particular, and I think this is crucial, until Chinese domestic financial markets are, and let’s – to use – and I’ll use the word ‘liberalised’, although quite what I mean by that I don’t know, but unless they’re a lot more developed, I think it would be dangerous for China to rush to have the renminbi much more widely used.

Dr Robin Niblett CMG

So do we. By default, we remain in the current situation. For a non-answer, I’ll definitely take that as an answer. Right, let me take two or three. I’ve got a gentleman here and there’s a lady back there, I think, I can see a hand up, or is it a guy, is it? No, I can’t. Who’s got their hand up in that row? Okay, thank you. Two there. Yeah, start there. Okay. Sorry, gentleman here. Or take the – you’ll want the microphone first. Yeah, please.

Peter Marshall

I don’t really need a microphone.

Dr Robin Niblett CMG

Well, no, no, you do, because otherwise, no-one else can hear you, or on the – you’ll just go second, hold on one second.

Lord Jim O’Neill

We have it online as well.

Dr Robin Niblett CMG

Online as well. Yeah, you go first.

Charles Oliver

Hi. Hi there. My name’s Charlie Oliver and I’m a Member. Thank you for referencing youth in your presentation and also, intergenerational issues ‘cause I think these are sometimes kind of not prioritised ‘cause they’re not maybe as shocking, in the immediate sense. I’m just wondering if you had any further thoughts on how you think the young membership can contribute.

Dr Robin Niblett CMG

Yeah, why don’t you take that one ‘cause you won’t get a parallel question on that, necessarily, so…

Lord Jim O’Neill

Yeah.

Dr Robin Niblett CMG

How could we contribute?

Lord Jim O’Neill

Maybe we could introduce a law now for the rest that after the first next two ques – no other person, over the age of 30, can ask a question.

Well, I’ve got lots of ideas that – you know, we, like every other business, has important need to think better about the use of technology in our research delivery and our whole daily operation. One of the ideas, I keep saying to Robin and some of his colleagues, is why don’t we just hand over our technological development to people under the age of 30? A bunch of interns next summer. Guide us to the Holy Land. You know, why don’t – you know, we have dinners probably, here every other night. I would love to see – I’m not one for these quotas or numbers, but I would love to see people under the age of 30 being the guest host of those dinners, as opposed to it being people that look a bit more like myself, for example.

Dr Robin Niblett CMG

That’s enough examples. I don’t want any more. These examples could become something else, if I’m more careful. I just want to make sure I get a good mix here. First here, yeah. Anne, if you could stand up a little bit and I’ll give Adam, yeah. Stand – oh, sorry. Are you next? No, well, there, yeah. Sorry, here we go. I was trying to do a mix.

Peter Marshall

Peter Marshall. I’m a live member of 54 years’ standing and on that basis, I think this is the most ambitious and wide-ranging subject for discussion we’ve ever had here, and fascinating, for that reason. The one thing that you didn’t mention on global Government is G20, the G20, but surely, that is the cradle, the possibility, for doing what you’re talking about.

Lord Jim O’Neill

Okay.

Dr Robin Niblett CMG

And I think again, there’s somebody else who’s asked a G20 question. I’ll let you take that one because – and Jim, can I just piggyback on the back of that because also, in your remark when you said, “Look, China’s the biggest economy in the world. Why is it not there?” there is something about the G7 that is meant to represent large economies that are democracies. And the G20 of course, is an inclusive large – now, you might say it’s not the right democracies and that the balance is wrong, you could put a Brazil versus a Canada, or Australia versus Italy, but as we talk about the G20 versus the G7, could you say something obviously, about the role of the G20, but how this fits with the belief systems, if you see what I’m saying, and should there be clubs or not?

Lord Jim O’Neill

Yeah, yeah. So, I think – and I didn’t talk about it ‘cause at the time, but I think the G20 was a fantastic consequence of the crash and it was much more representative. Its dilemma is really twofold. One is the one that Robin’s just said. It’s a truly representative group of the coun – with the exception of perhaps Africa, or parts of Africa, I often think it should be G21 and have Nigeria in there, actually. But it includes a lot of people that aren’t easy bedfellows, but you’re right to push because we’ve got to deal with that and link to when I highlighted about the fact that this strange place China has created 260 million people worth $40,000 a head, no other country in the world has done that except the United States. So, I know a lot of Chinese people and most of the ones I know don’t sit round and say, “I wish we could have what you guys have got.” They kind of enjoy their lives and they don’t stress about how they’re run. Maybe at some point they will, but if we want to run the world in a more optimal way, I think the G20 is a central part of it.

The second dilemma, however, it’s a lot of people and in fact, as the – I’m sure there’s some G20-type Diplomats in the room that would put me right on this, unless I said it. I think, actually, it usually involves at least 29 countries at every meeting, so it’s a very unworldly total and within it we need a better sample – and I really think the G20’s a fantastic thing to have come around. But within it we probably need a smaller group, for certain issues, particularly to do with global monetary and financial affairs. So we need a better G7 or G5 or something.

Dr Robin Niblett CMG

Okay. I’ll take one more single question and then I must start grouping. Yeah, please. Anne, you’ve got the microphone.

Anne Deighton

Thank you very much. Anne Deighton, University of Oxford. Thank you very much for the breadth of your presentation, which was indeed refreshing, although I did feel that it’s not such a big corner that Chatham House has to turn. It’s got a very fine record, up to and including today. I’d just like to make two very quick points, well, questions. The first is that Chatham House, like most of the British elite, has been institutionally obsessed by leadership. I think that to take too much of a top-down view about the problems of the world and the role that the UK actually can play in changing it, I hope that we won’t fall into the hubris that other bits of our fine country are experiencing at the moment.

More specifically…

Lord Jim O’Neill

Point taken.

Anne Deighton

…I was upset that you did not mention, although you were very good to mention equality, you did not mention either gender or race, and I think that if Robin and his team were to think that through, we would be able to have new perspectives at looking at the world, which isn’t just problem fixing, but is actually taking on the gender – the generational issues in a very new and novel way. Thank you.

Lord Jim O’Neill

It’s two very well made points, but I don’t think they really require an answer. But on your second one, my – you know, in my own head, partly ‘cause of the life I’ve led, yeah, the gender and race ones go without saying, but the whole re – amongst the other reasons why I emphasised the generational thing, it’s quite clear to me that young people think way better about both those issues that you raised than mine. So, that’s amongst the reasons why we need to give more of a voice to young people. I think that will take much greater account and influence on the things you’ve raised there.

Dr Robin Niblett CMG

And I would just add in one little call for my colleagues here at Chatham House. We’ve had now, for a good five years, a gender-inclusive growth initiative, which is particularly actually targeted in on trying to get the gender issue into the W – into the G20 process with the institution of the W20 concept. So I would definitely try to think as closely as we can about this at this time.

Right, in order, I’m going to do groups, yeah. Question here, gentleman on the right here. Right in the front row and then, could you also give a microphone first here and then you, sir. Yeah.

John Wilson

John Wilson. I’m a Journalist and a Member of Chatham House. One of my friends, who’s a Member at Chatham House and an important man in Bangladesh, was boasting that their GDP had increased by 7% in the year. He then conceded that they needed an increase of 10% per year to service the population growth. Therefore, the country was getting poorer at the rate of 3% per year because of the population explosion. This obviously doesn’t just apply to that country. Would you comment on the problem of population growth in the world and its effect, obviously, on the economics?

Dr Robin Niblett CMG

Could you just hold that thought for a second? Question at the front?

Trisha de Borchgrave

Yes, my name’s Trisha de Borchgrave. I’m a Member of Chatham House. I just wanted to ask you, based on the title Managing the Real and Perceived, how worried and how alarmed should we all be by China’s social credit system, in terms of also having that sort of roll-on effect? It’s very busy selling its surveillance systems and will do so more and more. Should we be worried about that or are we being unduly alarmed by it?

Dr Robin Niblett CMG

So, let’s just take – let me take one more, so I’ll give you a chance to think about some of these as well, as an opportunity. If you pass the microphone just straight behind you and then straight behind you, because – yeah.

Dr Leslie Vinjamuri

Hi, I’m Leslie Vinjamuri. I’m Dean of the Academy here and Head of the US and the Americas Programme. Not to pile on with the number of people who have said, “And what about, but, and what about,” you do – you have had a very, and I should say it by way of caveat, I don’t think race or gender can ever be taken for granted and do need to be said. But my question is really, Managing the Real and Perceived Challenges, you’ve staked up a very broad agenda, but of course, the one thing that can get in the way of progress on anything that you’ve mentioned is conflict. Violent conflict, either on a very large scale or problems with human security on a very micro scale. This cross-cuts pretty much everything you’ve talked about and drives a wedge through any kind of progress, so I just wanted to get your thoughts on managing violent conflict.

Dr Robin Niblett CMG

Yeah, and let’s just take those three ‘cause I’ve got at least one more three after this, so…

Lord Jim O’Neill

So, I put broadly, the first question about population growth and conflict in the same bucket. If I would have had more time, I would have talked particularly about the conflict issue, when I showed the chart, about poverty reduction. And linking it to your point, if you – I don’t – I guess these are available for everybody?

Dr Robin Niblett CMG

Yeah.

Lord Jim O’Neill

If you have a chance to look at that slide, by 2030, most of the places that have got people sadly left under the $2-a-day definition of poverty, are the countries that have got really powerful demographics, but from a very low starting base, in South Asia and Africa, primarily. And as I think I did say, it’s a really important task for, let’s call it the ‘current model’ or the ‘fraying current model’, to make sure that at least that happens, if not better. And that means, by definition, we’ve got to get better at helping manage conflict at the centre of that, so of course, both things are true, but I see them as central issues of broader things to do with equality.

Dr Robin Niblett CMG

And on the – yeah, the China model…

Lord Jim O’Neill

Oh, on the China model?

Dr Robin Niblett CMG

…I mean, in a way there’s – yeah, of the political model, shall we say, one that is yeah, trying to make sure that things stay as absolutely stable and predictable as possible.

Lord Jim O’Neill

So, I had a particularly interesting conversation, this is sort of approaching your question at a tangential way, with a British official about global governance and we started off with the G7, G20 thing, but it morphed into a broader con – discussion about the broad set of global rules, and he raised what I thought was a very sensible idea, of which this particular challenge sits in the most complex passes, that for certain global rules, there has to be a very rigid framework, in my suspicion. And then, for some others, maybe not so rigid. And quite where this one sits possibly, depends on what particular aspect of that system that you mean.

If it indeed is a case where the Chinese are trying to export this to the rest of the world, then I think that comes up to the rigid system. But insofar as it’s what they’re doing back home, I’m not sure, personally, that they should be constrained just by what the rest of us might think be better. Because if it is something that’s going to upset 1.4 billion Chinese people, I think there’s other stuff that we’re going to see along the way. But I think this is at the centre of a better set of – a more flexible, imaginative approach to the global rules system that everything doesn’t have to be as rigid in the way that we think about it, partly because – and the G7 thing is here an example, ‘cause our standard setting is this presumption that the world’s biggest economies are all similar democracies to our self and it just isn’t the case and we’ve got to deal with it.

Dr Robin Niblett CMG

Right, as we – we’re going to go over time, but I’m going to take the last five questions that I’ve got. So, Jim, you – I know you can be very disciplined if you want on how much time you take. Can we take a microphone down here first? It might be six, ‘cause I just saw one of my Council put their hand up, yeah.

Member

A very quick one, Jim. How do you intend or hope to involve the membership in all this, beyond paying for it?

Dr Robin Niblett CMG

Okay, hold on. I think that was something about money. Right, if you take the microphone, yeah, to the lady just behind you there.

Kate Gibbons

I’m Kate Gibbons from Clifford Chance, and a Member of the Chatham House Council. I wanted to thank you for such an engaging and provoking presentation. I totally endorse your point about youth, even though I’m old. And I was just thinking, if Chatham House stands for Western liberal values, do you think that one problem is that liberalism has been illiberal in the way that it’s pressed home its agenda on those who don’t agree with it, and I wondered how you were going to assist Chatham House in engaging with a wide spread of people to persuade them of the liberal agenda that it possesses.

Dr Robin Niblett CMG

Well – and if you just pass the microphone actually, right next to you to Matthew.

Lord Jim O’Neill

Is it that time already?

Dr Robin Niblett CMG

Yeah, I know, it’s time for a drink.

Matthew Goodwin

Matthew Goodwin from the Europe Programme. If you could start a project on just one challenge facing Europe, excluding Brexit, what would it be?

Dr Robin Niblett CMG

Okay, hold that. This is going to be a whole – I’m keeping a list of most of these, but not all of them ‘cause I’m pointing the microphone around and I missed that one, so have you got that one, Jim?

Lord Jim O’Neill

I have.

Dr Robin Niblett CMG

An important question, I think, to see who it is.

Professor Victor Bulmer-Thomas

Victor Bulmer-Thomas, Member of Chatham House.

Dr Robin Niblett CMG

And former Director.

Professor Victor Bulmer-Thomas

When I was Director, before Robin, one of the…

Dr Robin Niblett CMG

Nicely put.

Lord Jim O’Neill

In the good old days.

Professor Victor Bulmer-Thomas

One of the things I wanted to do when I came in, but I never succeeded, overwhelmed with other things, was to try and get Chatham House a presence outside of London, either in the rest of the UK or in the rest of the world or, ideally, both. And there were several hints in your remarks, which made me feel that maybe this is the right approach to take and also, possibly, the right moment, with the centenary coming up in two years’ time. Any thoughts?

Dr Robin Niblett CMG

And the lady there, waiting very patiently, right in the middle. If you keep your hand up and the microphone will come to you.

Member

Thank you, and I’d like to thank you for the work that was done by you and your team on antimicrobial resistance. It made a huge difference to pushing the debate forward. But I’d now like to ask you what’s your thinking on – we’re now moving – well, we already done quite a lot of work on human health, reducing antibiotics in the human side, what about food? And as you know, the Codex is looking at antimicrobial resistance in the food chain, and that takes us to a very contentious area. A very political area.

Dr Robin Niblett CMG

One person has been waiting very patiently at the front here and I will have to – I’m so sorry for everyone else, I’m going to have to stop it there. So, the microphone might get to you? Brilliant. I apologise to the hands, almost got to the back. Yeah.

Brunello Rosa

Thank you. Brunello Rosa from Rosa & Roubini and London School of Economics. On the 10th anniversary of the global financial crisis, how likely is, you think, the new one is perhaps developing already?

Lord Jim O’Neill

Okay.

Dr Robin Niblett CMG

Well, there you go. That’s – it’s always the last question that one wishes one didn’t get, but I think there were a few tough ones there.

Lord Jim O’Neill

Such commonality in those six questions. So, I can’t resist, and facetiously saying on questions three or four, so one – the prime challenge on Europe is how Manchester United can win the Champions League, and out of London, when are we moving to Manchester?

Very quickly, more seriously, I think on – possibly, reflective of my background on Europe, I think trying to make sure that this EU thing does deliver more growth is central to so may of the other issues. When I reflect back on that slide about global growth, the – as weak as growth has been in the Euro area this decade, it’s just as weak the previous decade and you look at the chronic youth unemployment in so many parts of continental Europe, it’s a social disaster. So, in that sense, it’s not surprising that many of the other sensitivities crop up that we see today, but I think central to them all is that.

The issue of going out of London is something Robin and I have touched on already. I can see both sides. I certainly can see the case for a sort of touring show. Again, link – here, in the UK, as somebody that spends so much of their life in different parts of the North these days, I think it would be a really interesting thing to explore. But, you know, we have to consider that with all the other priorities that I’m not entirely convinced about the benefits of having fixed offices elsewhere. I see one or two of my ex-Goldman partner colleagues around and we used to be very wary of opening offices because they’re harder to close down, once you’ve done that, and so – but to explore aspects of that, I think, a good idea.

On AMR, on the food thing, I have to just say, here in the UK, I think, actually, there is some surprisingly better progress on aspects of policy on AMR in agriculture. Sadly, it’s not a lot of evidence that that’s going on elsewhere in the world. Here, we desperately need more serious focus on it in the United States. It’s in – when I – I never forget soon after I started that review, talking to a huge – one of the biggest private equity firms, linked to my old life, and I said I’d only do it if I could talk about this new thing I was doing on AMR, and everybody I spoke to just assumed it was an issue in agriculture in the States and not in humans. And how can we expect India and China to do the right thing if the US – the US is a terrible abuser of antibiotics in animals, so yeah, we need to do so much more on that.

Last one first, and I’ll come back to the first two. The crisis, is there going to be another crisis? Of course. Crises, in my judgement, happen because human beings have many inherent tendencies, but greed and fear are two of them and they’re close cousins, in the world of finance. So, at some point we will have another financial crisis. I think the issue is to try to be alert to manage it as best one can when it happens, but the idea that we can devise some perfect harmonious state of the world, where there’s never ever another crisis is for the birds, in my opinion. It’s just not realistic, and naive.

On the membership, how can we involve the membership more? Don’t tempt me. You can help us, you know, I feel I’ve been very fortunate, professionally, and otherwise, in my – all my life, but particularly, in recent years, with the things that I’ve done, I said earlier that the AMR review, arguably the most interesting thing I’ve ever done in my life and it was very exciting. So, at the core of a number of things I will reflect on about what the membership can do more is make sure that this is an exciting place and a place that more people, particularly young people, cannot afford not to be part of, I would say is the key thing that the membership can make us do. And, you know, if you do, we might charge more, too.

And then on the very difficult question about Western liberal values. We have a Council meeting tomorrow where the revised mission statement will be discussed and I’m trying to – I’m making an error in saying this, I’m trying to make sure we don’t spend too much time on that part of the mission statement because I think it’s tricky. I link to the interesting question about the rules and order for us all living together in some collective beneficial way around the world, and I nearly sent Robin an email about this over the weekend and I thought, no, I won’t, it’s the weekend. But I think we have to be careful about trying to ram down a phraseology or a small sentence to many people around the world that otherwise might want to listen to Chatham House, if we don’t do that, if you see what I mean, because a lot of people look at the past 20/30 years and they, from not so liberal as we’ve all been brought up being lives, are they’re like, “Actually, you guys don’t have as much to teach us as you think you do.”

So, I – and I say that being somebody that’s very – been very fortunate and very proud of being brought up in the middle of this liberal elite. But I think we have to be really careful and find a better phraseology, as to how to foster what I think is at the core of it, a better life for ten billion people. And it relates partly to this complex thing about where do you want very rigid rules and where do you want more flexible ones? But I think we have to be more careful in throwing around phrases that were so easy to throw around, when Italy was one of the top seven countries of the world economy.

Dr Robin Niblett CMG

Hmmm hmm.

Lord Jim O’Neill

But it’s tricky, but I think it requires some subtlety and not so much table thumping passion for when the benefits of doing so probably won’t be so strong, is my hunch. But what would I know?

Dr Robin Niblett CMG

We’ve gone a good ten minutes over. I apologise for those of you who had to get to something else, but I think, Jim, you gave us a large menu. The menu was then expanded by our members. You talked about the priority of making Chatham House an exciting place to be at. I think you’ve done your little bit for that this evening, so for that I think we’re all very grateful, and my colleagues will be looking at their in-trays after this, in terms of work.

But just not to be too flippant, I think your answer to this last question, yeah, deserves some really careful thought and I think the way you phrased it reminds all of us here in the room that as an institute that wants to use London as a place from which to bridge to the rest of the world and connect, I know bridge is a word we’ve got to be careful with, but to connect to the rest of the world, we have an additional challenge ahead of us and to get the balance right, we will be discussing it tomorrow at Council, and the very fact that we’re discussing it in our Board, I think is a reminder of how seriously we take it. And I know that’s something my colleagues at Chatham House take very seriously as well, as do you. So, I don’t want to take more time. I just want to say a big thank you all of you for coming this evening, for asking a lot of tough, great questions, for being members of Chatham House, for hearing about some of the new items we hope to be undertaking, we will be undertaking, I suspect, over the coming years, but also, appreciate your support for helping us get to where we’ve already been, and the very strong platform from which we have to push. So, a big thanks to our new Chair, Jim O’Neill [applause].