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Conferences & Lecture Series

2003 G8 Pre-Summit Conference

Governing Globalization:
G8, Public and Corporate Governance

Tuesday, May 27, 2003
INSEAD, Fontainebleau, France

Hosted by the Research Group on Global Financial Governance, the Guido Carli Association, the G8 Research Group, the EnviReform Project, INSEAD, the Club of Athens-Global Governance Group, le Comité pour un Parlement Mondial, Futuribles and the Académie de la Paix

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The Needs and Challenges of World Governance
Olivier Giscard d Estaing, INSEAD

Transcription of remarks delivered at "Governing Globalization: G8, Public and Corporate Governance," INSEAD, Fontainebleau, France, May 27, 2003.

It’s rather striking that the chiefs of state and government of the eight economically dominant countries of the world have chosen, under the influence of Jacques Chirac, the problem of world governance, both public and private. This is of course often the domain of academics, economics, business people, NGOs – everyone is involved. But to see the chief of state making it the main issue is striking, and you may wonder why. The answer is that the main problem facing of the world today is lack of confidence. We must restore confidence in our corporations, in our politicians and governments, in unions, in public opinion. The fact that we lack confidence is the source of the economic decline – people do not invest, consumers do not consume. They go in the street and demonstrate against our organizations. When we speak about globalization, which for many of us is a wonderful challenge, they worry that it will destroy their jobs, their cultural specificity, their traditions in their own countries by being invaded by world populations, ideas, products and money. These are fundamental issues. If we are able restore confidence in the whole world, in our structures, to influence our governments to make the necessary changes in order to restore the confidence, we are dealing with a great hopeful future.

I propose two answers. One is the legal answer. We have to define who’s doing what, what kind of transparency exists, what type of control, who makes the decisions, what are the processes of decision making, how is it being shared by the community. It could be written in books and by law, to say when you start company you must register and have bylaws, and we need legal framework. I have been very impressed by what happened in the Soviet Union and the eastern communities – the complete lack of legal structure for corporations. They had a certain type of government control, of course, but no legal infrastructure to operate with the control and responsibility required. Legally, the decision each country must make is a proper balance between what is legal and reinforced and what is free for action and initiatives for the partners in that society. The borders between the two varies for historical reasons. I am in favour of legal organizations, because when government comes in it means control, sanctions, fears and other things we don’t like. We like creativeness, so we can go around the world to sell our products. We need entraves.

The second answer is, in my view, more important than the legal. It is human behaviour – the ethical approach. The fact that people have digne de confiance, and you can trust them because they do the proper things. I’m not so naive to believe that you can do whatever you like – there have to be taxes, good salaries, fair prices, systems for managing companies in the interests of all the stakeholders, the inclusion of all the citizens, protection of the environment. If you list all the responsibilities that leaders of state or even state actors have, then it is a long list of responsibilities. We have the great task at the Caux Round Table, to establish the Caux Round Table principles of behaviour. I founded the Round Table with Fritz Phillips about 15 years ago, to get French, German and other business people together to avoid war among ourselves and to find common values. We started meeting twice a year, travelling around, and finally said we should write down a code of behaviour. We presented it to the United Nations, and it has now inspired a book that will be soon published – I have the proofs – called Moral Capitalism. I think the capitalist system does not work if people do not behave in a moral way, if they cheat or are corrupt. Sooner or later the system collapses, not only at the level of the company but for people’s jobs and lives. Enron was a company that did not behave well, and the results were disastrous. There is a moral behind this scene. We have to be involved in such negative results of misbehaviour.

Now, let me turn back to the G8. You will have different reports today, and we have so many good presentations that I’m not going to expand on the problems of WTO and sustainable development and all those topics, which will be approached by various distinguished people here today, which I’m looking forward to. But I’d like to leave you with two leading objectives.

The first objective involves education and media in creating a world of confidence. These are not something a chief of state can decide, but their influence is such that they should say that the world will not function if people do not understand how it works. This is why education and media play such a big view. We criticize both – we criticize everything – education doesn’t adjust to modern society, media emphasizes wrong things and values. But this is too simple. But to make sure that we expand those functions to reach the illiterate people as well as highly educated people, to get rid of barriers of understanding.

Second: structural changes in our world system. The G8 started only dealing with economic problems and have now moved to political problems. Each chief of state comes to the table representing the views of his or her country and expects the other countries to do the right thing. We need a global structure to deal with global problems. This must be a democratic process. People in the European Union, in the interest of the community, need to have high-level politicians not to defend their privileges but to make sure their problems are solved. I’m promoting the concept of world taxes, because we need financial resources to deal with world, global problems. The UN has contributions from each government, of course, and we have public aid organized by the OECD. We are far from the goals set at the Copenhagen Summit in 1995, to allocate a certain amount of GDP as aid, so we should have taxes with a parliament that controls them.

There should be three taxes. The first should be on oil production. If we charge $1 per barrel produced, that’s $70 million a day and $30 billion a year. The amounts to more than half of public aid for the world. What’s the difference of adding a dollar to the price, in a market that may vary from $25 or $30 because of labour protection? Nothing. No one would feel this increase, but it would produce much income. Also, in terms of oil transportation, which pollutes. Another tax would be on the export of arms. It’s fair to have arms, to buy and export them, even to prevent war, but there should be a commission on them to help keep world peace. Again, this would bring in billions of dollars. The third tax should be on intercontinental transportation. Globalization is the passage of international relations to intercontinental solidarity.

This is my initial message, and I think my time is up. I look forward to hearing your comments.

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