ECONOMY

'Economic crises can only be solved as a whole'

This week, the Global Economic Symposium in Rio de Janeiro is taking on the world's financial problems. Symposium founder Dennis Snower has called for a holistic approach to solving the ongoing financial crises.

DW: We've had a worldwide crisis for five years now - a financial crisis, a world economic crisis, a eurozone crisis. The Global Economic Symposium also started five years ago. That might be a coincidence, but to what extent will the crisis play a role at this year's Global Economic Symposium?

Dennis Snower: It will play a very large role. One of our panel sessions will deal with fiscal rules that might provide a solution to this crisis. A major problem today is that countries cannot make promises. When a country makes a promise regarding its debts, it cannot be a long-term pledge.

That's because in a democratic system, the next government can overturn everything. Thus, it's very difficult to guarantee that the debt ratio – debt relative to national product – does not get out of hand. How to solve this problem is one of the topics we will discuss.

The symposium is putting a strong emphasis on establishing a relationship between society, politics and the economy - in other words, holistic approaches to a solution. Wouldn't such a holistic approach also provide a solution to the eurozone crisis?

Yes, of course. And that is just our weakness. How are governments structured? According to disciplines, areas of activity, departments and so on, and that forces you to lose sight of the whole. We have a crisis that has many different aspects - part financial crisis, part economic crisis, debt crisis, monetary crisis, fiscal crisis. Then there's demographic change and the different social problems that play a role, and a financial system in which incentives are not working well. There are many elements that must be managed together. But we don't have the instruments to do so.

So it's really good to have a symposium that opens up a free, creative space in which you can deal with these big systematic connections.

When the symposium in Rio is over, the next European crisis summit will begin in Brussels. Do you think there will be a relapse to haggling between countries?

Yes. A big problem today is that our problems are becoming more and more global. We see that in Europe - the financial crisis is not confined to one or a few countries. But most instruments of economic policy and politics are generally aimed at the country level. And international organizations, such as the European Commission, are often places where national conflicts are perpetuated instead of smoothed out.

The symposium also puts a strong emphasis on young people. There are the Global Economic Fellows, people at the start of their careers who want to make the world a bit better through good ideas. Why put so much effort into this program?

This is an especially important program. Here at the symposium, we want to imagine the world of the future. We have many famous participants who have already accomplished a lot in their careers. But we don't know whether this world, which we are trying to make better, is a world in which the next generation will really want to live. That's why it's important to listen to the voice of the next generation and to involve their ideas in the symposium's mindset. This intergenerational dialogue must remain at the center of the symposium.

Dennis J. Snower is an American economist, president of the Kiel Institute for the World Economy since 2004 and professor of theoretical economics at the Universtiy of Kiel. His areas of expertise include employment policy and unemployment. He founded the Global Economic Symposium in 2008.                                          DW DE