The world would like to think that it has put behind it the worst of the biggest financial crisis in 70 years. And yet derivatives, a chief culprit behind the financial meltdown that threatened economies, continue to account for a sum that is 10 times the world's gross domestic product (GDP). A major $8.5 billion takeover has analysts speculating about a new Internet bubble. Some emerging economies are showing classic signs of overheating, with property prices, consumer credit and bank profits hitting an all-time high.
Has the world learnt anything over the past few years? Is it unwittingly preparing the ground for the next big slump?
If the international institutions do their job and live up to their purpose, there is a good chance that the mistakes of the past could be avoided. The crisis has brought the roles of bodies such as the Organisation for Economic Co-operation and Development (OECD) into sharp focus. As never before, the OECD is coordinating its efforts with the International Monetary Fund, the World Bank, the World Trade Organization and the International Labour Organization.
But much more needs to be done. The governments of the G20 countries, civil society actors and citizens around the world now have higher expectations of the OECD. Since the OECD was founded 50 years ago, it has provided a unique forum where leaders and decision-makers meet to discuss which policies work and which do not. It has had a solid track-record in freeing people from economic and social wreckage, starting with the Marshall Plan in the aftermath of the Second World War. Helping governments and countries understand the interdependence of their economies and societies paved the way for an era of cooperation.
In seeking to address the latest emerging crisis, the OECD has sought to ensure some concrete results. One of these involves closing down tax havens worldwide so taxpayers and tax collectors can be certain that everyone is making a contribution to clear up the mess. OECD standards to fight international bribery now have a global reach: Russia is set to be the 40th country to sign up. Bribery takes money out of people's hands and food out of people's mouths, and undermines development.
In an effort to bring a renewed focus on the need for robust corporate governance, the OECD has fundamentally overhauled its International Guidelines for Multinational Enterprises. It continues to push for the separation of risky business investments such as derivatives from high-street banking. And it is making efforts to address the deficit in citizens' financial education and protection so that any crisis is revealed. It is leading the efforts of the G20 countries to enforce proper consumer protection so that people are never placed in a position where they sign a mortgage document that they do not understand. In regions such as the Middle East, the OECD can bring its experience to bear to help rebuild societies and economies — as it has done throughout Western Europe and Eastern Europe.
The OECD is pushing the boundaries of knowledge and understanding by questioning conventional wisdom. After working for seven years to better measure societal progress, the launch of Your Better Life Index (www.oecd.org/betterlifeindex) is designed to respond to a pent-up demand the world over to move beyond GDP as the means to measure well-being and gauge progress. By giving ordinary people an instrument to measure their well-being, the OECD is changing the face of public policy-making, helping them to aid the best public policies to improve their lives.
The pre-crisis system let the world down. There is a need to restore trust and make good on what people want most — growth and jobs. The best way to do this is to start from the facts, the evidence, the numbers, to share best practices, and to make an honest assessment of what works and what does not. And to develop standards that can ensure that the global community can benefit from the accrued wisdom of experience. Good public policy is about good ideas. There is no political monopoly on them. They should be formulated not in competing corners of the policy landscape, but rather at the point where economics, the government, the private sector, and the lives of ordinary people meet.
The world is clearly not out of the woods. It is all too human to indulge in wishful thinking and end up back where things started, with a business-as-usual approach. But it will be a temptation that humankind will never forgive itself for falling to.
(Angel Gurria is the Secretary-General of the Organisation for Economic Co-operation and Develop- ment)