Global Economic Symposium: “Nations Must Co-operate More”

Kiel; –The eighth Global Economic Symposium (GES) under the slogan “Values to Guide Economies” is coming to an end. Around 300 participants and 100 speakers discussed solutions to global problems. They came up with about 60 concrete proposals – including some to ease the refugee crisis and stabilize the financial system – that will be circulated among decision-makers in business and politics. GES 2015 guests included Economics Nobel Laureate George Akerlof, Turkish Finance Minister Mehmet Şimşek, Deputy Governor of the Deutsche Bundesbank Claudia Buch, and religious leaders, such as Muslim Grand Mufti Emeritus, Mustafa Ceric.

Dennis Snower, president of the Institute for the World Economy, the organizer of the GES, stressed the need for shared values to ensure peaceful coexistence and prosperous economies. “The more global and interconnected our world becomes, the more global and networked our problems become,” he said. Only agreement on common values could open the way for true cooperation and collaboration. The refugee crisis was a “unique opportunity” to work together at global level. Only collective action rather than individual national measures could solve the crisis.

Looking for solutions to the refugee crisis was one of the priorities of the GES. Matthias Lücke, a senior researcher in the field of poverty reduction and development at the Kiel Institute, proposed that responsibility for dealing with the refugees flooding into Europe should be bundled at EU level. As a result, member states would need to submit to the EU's decisions. Financing a centralized policy could cost the EU tens of billions a year. To keep the EU’s efforts on a solid footing, tax rises or spending cuts might be needed medium term, Lücke said.

Christian Kastrop, director of economic policy studies at the OECD, used the GES to propose ways of consolidating government budgets without undermining economic growth. “Without fiscal consolidation, there is no sustainable growth,” said Kastrop. But government had to make sure that they raised the right taxes and cut the right spending to avoid hurting growth. Raising inheritance taxes was advisable, as were cuts to pensions and subsidies. To be avoided were increases in social security contributions and cuts in education and health care.

However, Economics Nobel Laureate George Akerlof stressed that debt per se was not a problem. There were ways “in which debt is a good security,” Akerlof said in the opening session of GES, entitled “Is Debt Poisonous?”

Turkish Minister of Finance Mehmet Şimşek addressed the GES about the economic and political challenges facing his country and pledged more structural reform. We’re not in good headlines at the moment,” he said. “But the picture isn’t as bad as perceived,” he said. “We’ve had a rough ride over the last two years,” Şimşek said about problems Turkey has faced. “That’s usually a good time to convince people of accepting reforms.”

The Global Economic Symposium 2016 will take place in Istanbul. “Next year’s GES will give us a unique opportunity to assess global challenges in which Turkey has a key role – and to do this with local and regional experts,” said Snower. For example, he said, the refugee crisis, and conditions in Syria and Iraq could be major issues, next to the question of how emerging-market countries like Turkey can be fairly distribute wealth.