At last, the first plenary session of the second day began.
Discussing the theme, "Moving Forward: Coping with the Financial Crisis," the panel included Professor Laura Tyson; Stephen S. Roach, Chairman, Morgan Stanley Asia Limited); Lou Jiwei, the chairman and CEO of the China Investment Corporation (CIC), a Chinese sovereign wealth fund; Shengman Zhang, the President & COO Hong Kong, Citi; and Marc Lasry, Chairman and CEO of a hedge fund with \2 trillion in assets.
Mr. Roach's presentation was easy to understand. "For the financial crisis, three bubbles burst: first, the real estate bubble, second, the credit bubble, and third, the consumption bubble."
At a lunch meeting the previous day, Ryutaro Kono of BNP Paribas Securities also pointed out the consumption bubble. The ratio of consumption to GDP in the US has risen above 70% to as high as 72%. This represents 20% of global GDP. Although the US population is less than 1/30 that of the entire globe, American consumption alone accounts for 1/5 of global GDP. Since a reasonable ratio of consumption to GDP is said to be around 65%, the excessive portion has started to deflate, leading to what can be called the collapse of the consumption bubble.
Mr. Roach continued by saying, "Asian economies are export-oriented, and consumption accounts for around 45% of GDP. It is not clear whether this is due to cultural differences or anxiety about the future; however, the savings rate is high and consumers are not spending money.
"It is said that the global economy has been shifting its focus to Asia. However, given Asia's current economic structure, in which domestic demand does not expand due to excessive under-consumption, can this really be the era of Asia?" asserted Mr. Roach, raising his voice by the end of his presentation.
I mulled over this point. Speaking from the perspective of economics, consumption is good. Increased consumption activates capital investment, stabilizes employment, and encourages raw material procurement and production. For production and other business activities, funds are raised and profit is generated, leading to prosperity.
On the other hand, there are circumstances in which these same economic activities can negatively impact the global environment. They dry up crude oil and underground resources, and generate CO2 and incombustible materials.
In short, the economy and the global environment may to a certain extent be at odds with each other.
I'm not saying that people shouldn't be wealthy and should only care about the global environment. However, from the viewpoint of traditional Japanese values, thrift is good, and it is best not to be wasteful. At the same time, since co-existence with nature is important, I have wanted to give due consideration to the global environment.
I then concluded that we should be satisfied with a modest level of wealth within the range that protects the global environment. The term, sustainability, has recently been used for this concept. Excess wealth is not good.
While the financial crisis is certainly a major blow to the economy, it may afford an excellent opportunity for achieving a sustainable society. I believe that low-energy consuming societies created by Japan's concept of "mottainai" (Japanese expression commonly used to express a feeling of regret when something is put to waste without deriving its value; "what a waste!") could provide one example for the world. I hope we can realize sustainable development on global scale by shifting from mass production and consumption to responsible levels of production and consumption.
For some reason, however, the discussion does not usually take that direction and winds up concluding that getting over this economic crisis will require stimulating consumption through fiscal action. No doubt the stimulus package currently planned by the Japanese government is just such a policy. However, thrift is perhaps the best strategy for individuals to consider under the current circumstances. I don't think it's necessary to encourage consumption that much. Meanwhile, I believe companies must be nimble and quick enough to cope with any situation.
During this session, the top person from a hedge fund presented his optimistic views, which were groundless. Perhaps because he was concerned about his own portfolio, he insisted, "Stock prices will hit bottom by the end of December. We should all act in unison and buy shares. If everyone buys stocks, prices will rise."
The fact the conference was held in Hong Kong naturally enhanced the Chinese presence. The CIC chief spoke in Chinese and every time he said something, participants put on head phones to listen to the interpreter.
Several things came to mind. In regard to this economic crisis, the Japanese government is being a little naïve and provided the IMF with foreign currency free of conditions. But the governments of other countries seem to think owning foreign currency strengthens their right to speak out. In addition, the governments and companies of other countries are taking advantage of this situation to get their hands on underground resources. What should Japan do?
While I was deep in thought about various things, the panel discussion came to an end and Professor Laura Tyson delivered the following concluding remarks.
"Human beings can definitely surmount this financial crisis. But it is uncertain that we can reverse the damage to the global environment." This comment had a deep message and I found it refreshing. The audience at last applauded.
I left the main hall in the middle of the next session and headed to the working session venue, where I was to appear as a panelist. I participated in the session titled, "Alternative Higher Education." This session was arguing that new types of education will be needed to replace universities—the perfect theme for GLOBIS.
CGI working sessions have an interesting format. The 90-minute session is divided into three parts. The first 30 minutes is comprised of a panel discussion, providing an overview of the subject. In the next half hour, the audience is divided into group discussions by table. In the last 30 minutes, panelists return to the stage and sum up the opinions of each table.
This is an easy-to-understand format. As for the content of discussion, I stated my own theories; but for now, I would like to delay sharing details until the opportunity comes up. Let me just say the discussion was exciting, substantive and interesting.
After the working session, it was already time for a closing speech by former US President, Bill Clinton. As usual, he appeared 30 minutes late even though he was hosting the event., However, all of us ended up greeting him with a standing ovation.
This was the third time I had seen Mr. Clinton in person. This time, he looked a little tired. He didn't seem to enjoy speaking as much as he had before. Following the overall pattern of the event, Clinton began his remarks after presenting four commitments on stage.
His speech was moving. "I'll never forget a woman I met when I visited Aceh, Indonesia. She told me she had lost nine of her ten children in the tsunami. But she would continue to live with a positive attitude, thinking of the one surviving child, rather than mourning the nine who had been lost. We must never use this economic crisis as an excuse for letting up on our efforts. As long as there are people who need our help, we must continue to actively promote education, public health and the global environment." This was his main point.
After the speech, he left the stage to a standing ovation.
Although I had only participated for a short time in this CGI conference, this was the scene at the CGI that, I, a person brimming with curiosity, saw. Where will my curiosity lead me next? I would like to share what I see in this blog, giving free rein to my curiosity.
The pilot has just announced that we are preparing to land, and flight attendants are bustling about. The seat belt sign has been turned on, and the aircraft has begun its descent. At the urging of a flight attendant, I quietly close my laptop.
December 4, 2008
Inflight, bound for Chubu International Airport