Dr. Frank-Jürgen Richter has been monitoring the changing dynamics of
business, economics and politics for long now. Here he shares his
views on the issue that have engulfed our world in these contemporary
Itīs not an easy task to act as an interface between developed and
emerging economies, but Dr. Frank-Jürgen Richter, Chairman, Horasis:
The Global Visions Community is cutting no corners to ensure that the
world sits up and realises what nations like India, China & Brazil
have to offer. His stint at the World Economic Forum has put him in a
unique position to understand and decipher the state of global
economy, business & politics. In an exclusive conversation with B&Eīs
Amir Moin, Dr. Richter speaks at length about responsible political
leadership, the ongoing economic crisis and how world leaders can fix
B&E: How important is responsible political leadership for sustaining
growth? How will you define it?
Frank-Jürgen Richter (FJR): It is extremely important. If a country
does not have the right leaders, it can get in to a lot of trouble.
Look at your neighbour Pakistan. Not just this government, but many
before this did not have the wherewithal to come up with a leader who
could take the country forward. Another example is Spain. We have an
unemployment rate of more than 20%. Among young people, every second
person is unemployed. Something was wrong and the leaders didnīt see
it. As a result, it has ended up rendering a lot of people unemployed
B&E: We live in one of the most uncertain times. Crises have become a
part of day to day life. So where did all this start and where are we
headed? How much is the ruling class responsible for this situation?
FJR: I think all this started not with the fall of Lehman Brothers but
long before. We managed to live beyond our wealth and means. We just
spent money and financed everything. We started thinking that anything
is possible. We started believing that there is no risk any more and
the western way of capitalism is taking over. In fact, I think this
crisis might have happened much earlier. May be a decade back, but
then 9/11 happened. And that, I think, is one event which overpowered
the imbalances in the economic world. But then, with the Lehman
crisis, the loopholes came out in the open. Now, as we started
thinking that we are coming out of it, the second crisis started. To
be honest, the Eurozone crisis is much more severe than the US
financial meltdown and 2012 could well be an apocalypse. Countries
like Greece, Spain and even Italy for that matter are having a hard
time repaying their debt. This means that Europe is in very bad shape,
meaning that it will also impact the rest of the world. On the other
hand, US is also not going thorough the best of times. This is having
a direct impact
of economies which are somehow connected. For instance, Chinaīs GDP
has shrunk because it is dependent heavily on exports. India, on the
other hand, is doing much better. Since the Indian economy is largely
driven by domestic consumption, not being dependent on exports has
come as a blessing in disguise. However, you might see Indiaīs GDP
shrinking by around 1% in the aftermath of what happens in Europe.
B&E: The European crisis cannot be attributed to miscalculations.
There were intelligent people out there making decisions and
implementing policies. What went wrong and who do you think is
FJR: I think one issue which really contributed to this mess is
leadership. In Europe - and Iīm very blunt on that - we donīt have the
best leaders. People who get into politics in Europe are usually the
ones who have failed at business. And I am not pointing at someone in
particular, I believe that there is no consensus among the leaders.
Say for example, in Brussels and the
commission, youīll notice that there are a lot of compromised
candidates. Itīs not the strongest person who is the commissioner but
someone who was appointed because some influential countries in Europe
agreed to it. When the Prime Minister of India goes to Europe, who
does he meet? Is he meeting the head of the commission, head of the
council or is he going directly to the leaders in London, Paris and
Berlin? Maybe he has to see all of them. So at the end of the day, he
gets 10 different opinions, but not one single European opinion.
Therefore the issue of malaise in Europe is the failure of leadership.
And we donīt show an urgency for change. There is a lot of complacency
B&E: What are you views on democracy as a political system?
FJR: The beauty, and in a way, the failure of democracy, is that we
are always debating and there is not enough action. But then, there is
no choice. The alternative to democracy is an authoritarian system
like that in Russia and China. In India, things take a lot of time to
happen. Itīs sometimes very tedious. But at the end of the day, I
think India can only win by improving upon this decision making
process because you have open dialogue and intellectual exchange, even
sometimes too much of exchange. India produces great entrepreneurs.
They are not the ones who come out with huge IPOs but the ones who
actually contribute to the over all economy. The politicians are also
great. But the problem lies two to three layers down. Bureaucracy is
the bottleneck. In my personal opinion, you have too many people. The
government should do something to streamline the governing machinery.
B&E: As you just said, India is at one extreme of the spectrum - a lot
of bureaucracy. But donīt you believe that power is very much
centralised in the US and that is not acting in their favour?
FJR: You know in US, itīs a different system indeed. It is a two party
system. The Europeans and Americans usually blame others for
corruption. But if you look at how party
financing happens in the US, itīs not so much different from India.
When you want to run for President, you have to first put together a
lot of dollars to finance your campaign. And in Washington, there are
a lot of lobbyists. So I think the American system is not maybe the
best system. I think the fact that there is no concept of coalition in
the US is really bad. Compromise is always good for the political
system. Further, the US system works on the foundations of a strong
President. He is in charge of the army, foreign policy, the economy.
Basically everything. Thatīs too much of a burden on one single person
I must say.
B&E: Do you think the fact that lobbying is legal in the US has been a
FJR: Yes. Absolutely. In US today, we donīt talk about lobbying
anymore. We call it corporate advocacy (which is a little better). But
at the end of the day, itīs about pushing through your corporate
interests in Washington DC. I think itīs a bad practice and if the
corporate world can be so decisive on regulation, then it undermines
the entire concept of democracy. Wall Street
might hate me for this comment but I think we need more regulation.
B&E: What do you think is the way out of this imbalance?
FJR: What we really need to do is rethink the current form of
capitalism. The Anglo Saxon form of capitalism should be done away
with because it is always based on arms length, short term spot to
spot transactions and has no substantive link to the economy. Itīs all
very temporary. One way is to bring an Asian element in our approach
to capitalism. While capitalism in
US is all about boosting the share price, in countries like India,
Malaysia and Singapore, it is about long term sustainability and
giving back to society.
Horasis is a global visions community committed to enact visions for a sustainable future. (http://www.horasis.org)
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