Speech by H.E. Yves Leterme, Prime Minister of Belgium at the Asset Congress

Speech by H.E. Yves Leterme, Prime Minister of Belgium at the Asset Congress

• Toespraken

29/09/2011

Ladies and Gentlemen,

A long time ago, when the United States of America were still young, there was an exhortation to young people: Go west, young man, go west. At that time, there were still enormous open spaces to be conquered and settled and developed.

Today, I’d like to say to young Europeans: go east, young lady or young man, go east.  Go east, not to conquer and settle and develop large open spaces, but to watch what is happening there.

Go to a small city state like Singapore or a giant like China, and watch the energy, the drive, the hard work of their people. Go and meet your counterparts, students, and watch their ambition, their pursuit of excellence, their willingness to work hard and take risks. Do that so that you’ll know what is coming to us, what we are up against.

And when you come back to Europe, you will, I think, be struck by two things.

First, you will realise how lucky you are to have been born in Europe. I say this without any feeling of superiority, but with gratitude towards the generations who have built the Europe we live in, a continent at peace, a continent where many of our countries have created what we call the Rhineland model, a very humane system of government which combines personal, political and economic freedom with social solidarity and ecological responsibility.

Do not think it is a cliché to say those things. At a conference in London on Afghanistan last year, a representative from that country had a very moving phrase. He said that his compatriots aspired to ‘the modest miracle of a normal life’.

Now, that may not sound heroic, and it may not be the stuff on which ballads are written and epic movies made. But it is the aspiration of the majority of the people on this earth, and only those who do not know what war is, or deprivation, or tyranny, or forced exile, only those would look down upon this modest miracle.

Likewise, talking about a Europe that has become whole and free, a Europe where, for the largest part, war among its nations has become unthinkable, talking about this Europe is not a timeworn cliché. Go to other continents and you will see how exceptional our democratic Europe of ever closer union is.

As I have said in a speech to the General Assembly of the United Nations, the worst international disorder is not the current financial and economic turmoil. The worst international disorder is the fact that today, still millions of people are killed, maimed, raped, driven from their homelands in violence between and within states. The worst international disorder is that still millions of people do not get a chance to a minimally decent existence, because of war, civil war, inter ethnic violence or savage repression. For them, the modest miracle of a normal life is a totally inaccessible dream.

So yes, you are lucky, we are lucky



But – and there is always a ‘but’ – if you go to a small and highly developed city state like Singapore, or a fast developing country like China or India, you will, when you return, also be struck by the slower pace in Europe, and by a certain complacency. This complacency is something we very much have to guard against.

Yes, we have a social and economic model which is the envy of a large part of the world. But the world does not owe us a living. The rest of the world is rapidly catching up with us. If we want to be able to go on financing our Rhineland model, we will have to work harder and we will have to work differently.

We will have to work harder, and keep people at work longer, under socially acceptable conditions of course. And we will have to work differently. In the nineteen nineties and the beginning of this century, the battle cry, the recipe for success was: make money, get rich. The sum of the individual efforts to get maximum profits would lead to a better life for the whole of the community, it was said.



We have seen the opposite happen. The greed of some bankers in North America, the lack of due diligence of many other financial institutions in America and Europe, plunged a large part of the world in the worst financial and economic crisis since 1929. Even if some people got very rich by doing so, this cannot be called success.

A number of our EU countries have weathered this crisis without too much hardship for their subjects. In Belgium and other EU member states, governments managed this with policies which softened the blows of the crisis for their populations without mortgaging the future too heavily.

But, as you all know, we are still confronted with the crisis of the Eurozone. It is obvious that the governments of the countries of the Eurozone must do a lot more than stitch together rescue packages.
 
It has been very clearly demonstrated that a common currency also needs a convergence of the macroeconomic and fiscal policy of the countries concerned, that a common currency needs economic governance.


The fact that there are weaker and stronger economies in the Eurozone is not a problem in se. In the United States, there are similar differences. States like New Jersey and Connecticut have an average median income of almost 65.000 dollars a year. In Mississippi, the average household earns a median of just 36.000 dollars per year, which is more than 40 per cent less, and one in five households live below the poverty line. The essential difference is that, in the United States, there is one president, one Congress, one Treasury, one budget.

So, the countries of the Eurozone have to be prepared to transfer more sovereign competences to central economic governance.

But that is not enough. As I have said, we have to work differently. Remember the criticism which was levelled at the so called European model during the heydays of financial capitalism, of deal making and of record gains on the exchanges.

The most developed EU member states, we heard, are overregulated. Our systems of social protection and our bureaucracies eat up too large a part of our gross national product.
Our social protection tends to smother personal initiative and risk taking, audacious entrepreneurship and bold R&D work. Our economic growth is sluggish, compared to other parts of the world.

I am willing to acknowledge that there is some truth in all this. We have to remain vigilant to find and keep the right balance between the protection of our social model, to which we are attached, and the personal free initiative which is needed for the creation of wealth.

But let us look at the other side of the medal. We may not have known double digit yearly economic growth. But growth is not enough. As the rising giants in Asia experience, what is also needed is a fair distribution of the new wealth amongst the citizens, because otherwise social harmony is threatened.

In Western Europe we have grown more slowly, but we started from a higher base, and we did it in a context of political stability and social harmony.

And there is more. We see now that those so called overregulated countries have weathered the crisis much better, in a socially much more acceptable way, than the ‘laissez faire’ systems.


Even a number of American economists have come to that conclusion. In a March paper for the New York based Council on Foreign Relations, Nobel laureate economist Michal Spence focuses on Germany’s successes, and argues that they are largely a result of -  I quote - ‘a broad agreement among business, labour and government’ - end of quote. The system of Mitbestimmung, in which the labour unions participate in the corporate governance, was once decried in what we call the Anglo-Saxon type of capitalism. It was seen as a slow and cumbersome procedure which threatened to hold German companies back.

In reality, the paper says, the system has allowed Germany to retain a large and booming manufacturing sector, thanks to the tripartite system that kept wages competitive and production with high added value at home.. I was very much struck by this analysis, for I think that it is indeed essential for our countries to maintain a strong manufacturing base.

Equally, the influential American columnist Harold Meyerson pointed out - I quote - ‘the crucial distinctions between a between Germany’s stakeholder capitalism, which benefits the many, and our shareholder capitalism, which increasingly benefits only the few’ - end of quote.
He also praised a system where companies are less dependent on shareholders and the short-termism of quarterly reports. And he wrote -  I quote: ‘They make things, while we make deals, or trades, or swaps’, - end of quote.

A stakeholder capitalism which benefits the many, a capitalism which creates things, not deals, that is not a bad definition of success. It equally is not a bad definition of our Rhineland model. Yes we are totally in favour of free enterprise, but of a socially responsible free enterprise, which benefits the many, not just some happy few.

To adapt this socially responsible capitalism to the globalised world, we have to invest heavily in education and innovation. Only in this way will our companies find the specific niches, create the high added value necessary to compete on a world wide scale.

We also need to educate our future businessmen and women differently. These last years, sustainability, green ways of doing business, so called ‘ecopreneurship’ were the leading new themes in the business schools and the political debate. They are indeed important, for we do not own this planet, we are its stewards and have to leave it in good shape to the future generations.

Speech by H.E. Yves Leterme,
 Prime Minister of Belgium,
Asset Congress
Tilburg 29 September 2011

Ladies and Gentlemen,

A long time ago, when the United States of America were still young, there was an exhortation to young people: Go west, young man, go west. At that time, there were still enormous open spaces to be conquered and settled and developed.

Today, I’d like to say to young Europeans: go east, young lady or young man, go east.  Go east, not to conquer and settle and develop large open spaces, but to watch what is happening there.

Go to a small city state like Singapore or a giant like China, and watch the energy, the drive, the hard work of their people. Go and meet your counterparts, students, and watch their ambition, their pursuit of excellence, their willingness to work hard and take risks. Do that so that you’ll know what is coming to us, what we are up against.

And when you come back to Europe, you will, I think, be struck by two things.

First, you will realise how lucky you are to have been born in Europe. I say this without any feeling of superiority, but with gratitude towards the generations who have built the Europe we live in, a continent at peace, a continent where many of our countries have created what we call the Rhineland model, a very humane system of government which combines personal, political and economic freedom with social solidarity and ecological responsibility.

Do not think it is a cliché to say those things. At a conference in London on Afghanistan last year, a representative from that country had a very moving phrase. He said that his compatriots aspired to ‘the modest miracle of a normal life’.

Now, that may not sound heroic, and it may not be the stuff on which ballads are written and epic movies made. But it is the aspiration of the majority of the people on this earth, and only those who do not know what war is, or deprivation, or tyranny, or forced exile, only those would look down upon this modest miracle.

Likewise, talking about a Europe that has become whole and free, a Europe where, for the largest part, war among its nations has become unthinkable, talking about this Europe is not a timeworn cliché. Go to other continents and you will see how exceptional our democratic Europe of ever closer union is.

As I have said in a speech to the General Assembly of the United Nations, the worst international disorder is not the current financial and economic turmoil. The worst international disorder is the fact that today, still millions of people are killed, maimed, raped, driven from their homelands in violence between and within states. The worst international disorder is that still millions of people do not get a chance to a minimally decent existence, because of war, civil war, inter ethnic violence or savage repression. For them, the modest miracle of a normal life is a totally inaccessible dream.

So yes, you are lucky, we are lucky



But – and there is always a ‘but’ – if you go to a small and highly developed city state like Singapore, or a fast developing country like China or India, you will, when you return, also be struck by the slower pace in Europe, and by a certain complacency. This complacency is something we very much have to guard against.

Yes, we have a social and economic model which is the envy of a large part of the world. But the world does not owe us a living. The rest of the world is rapidly catching up with us. If we want to be able to go on financing our Rhineland model, we will have to work harder and we will have to work differently.

We will have to work harder, and keep people at work longer, under socially acceptable conditions of course. And we will have to work differently. In the nineteen nineties and the beginning of this century, the battle cry, the recipe for success was: make money, get rich. The sum of the individual efforts to get maximum profits would lead to a better life for the whole of the community, it was said.



We have seen the opposite happen. The greed of some bankers in North America, the lack of due diligence of many other financial institutions in America and Europe, plunged a large part of the world in the worst financial and economic crisis since 1929. Even if some people got very rich by doing so, this cannot be called success.

A number of our EU countries have weathered this crisis without too much hardship for their subjects. In Belgium and other EU member states, governments managed this with policies which softened the blows of the crisis for their populations without mortgaging the future too heavily.

But, as you all know, we are still confronted with the crisis of the Eurozone. It is obvious that the governments of the countries of the Eurozone must do a lot more than stitch together rescue packages.
 
It has been very clearly demonstrated that a common currency also needs a convergence of the macroeconomic and fiscal policy of the countries concerned, that a common currency needs economic governance.


The fact that there are weaker and stronger economies in the Eurozone is not a problem in se. In the United States, there are similar differences. States like New Jersey and Connecticut have an average median income of almost 65.000 dollars a year. In Mississippi, the average household earns a median of just 36.000 dollars per year, which is more than 40 per cent less, and one in five households live below the poverty line. The essential difference is that, in the United States, there is one president, one Congress, one Treasury, one budget.

So, the countries of the Eurozone have to be prepared to transfer more sovereign competences to central economic governance.

But that is not enough. As I have said, we have to work differently. Remember the criticism which was levelled at the so called European model during the heydays of financial capitalism, of deal making and of record gains on the exchanges.

The most developed EU member states, we heard, are overregulated. Our systems of social protection and our bureaucracies eat up too large a part of our gross national product.
Our social protection tends to smother personal initiative and risk taking, audacious entrepreneurship and bold R&D work. Our economic growth is sluggish, compared to other parts of the world.

I am willing to acknowledge that there is some truth in all this. We have to remain vigilant to find and keep the right balance between the protection of our social model, to which we are attached, and the personal free initiative which is needed for the creation of wealth.

But let us look at the other side of the medal. We may not have known double digit yearly economic growth. But growth is not enough. As the rising giants in Asia experience, what is also needed is a fair distribution of the new wealth amongst the citizens, because otherwise social harmony is threatened.

In Western Europe we have grown more slowly, but we started from a higher base, and we did it in a context of political stability and social harmony.

And there is more. We see now that those so called overregulated countries have weathered the crisis much better, in a socially much more acceptable way, than the ‘laissez faire’ systems.


Even a number of American economists have come to that conclusion. In a March paper for the New York based Council on Foreign Relations, Nobel laureate economist Michal Spence focuses on Germany’s successes, and argues that they are largely a result of -  I quote - ‘a broad agreement among business, labour and government’ - end of quote. The system of Mitbestimmung, in which the labour unions participate in the corporate governance, was once decried in what we call the Anglo-Saxon type of capitalism. It was seen as a slow and cumbersome procedure which threatened to hold German companies back.

In reality, the paper says, the system has allowed Germany to retain a large and booming manufacturing sector, thanks to the tripartite system that kept wages competitive and production with high added value at home.. I was very much struck by this analysis, for I think that it is indeed essential for our countries to maintain a strong manufacturing base.

Equally, the influential American columnist Harold Meyerson pointed out - I quote - ‘the crucial distinctions between a between Germany’s stakeholder capitalism, which benefits the many, and our shareholder capitalism, which increasingly benefits only the few’ - end of quote.
He also praised a system where companies are less dependent on shareholders and the short-termism of quarterly reports. And he wrote -  I quote: ‘They make things, while we make deals, or trades, or swaps’, - end of quote.

A stakeholder capitalism which benefits the many, a capitalism which creates things, not deals, that is not a bad definition of success. It equally is not a bad definition of our Rhineland model. Yes we are totally in favour of free enterprise, but of a socially responsible free enterprise, which benefits the many, not just some happy few.

To adapt this socially responsible capitalism to the globalised world, we have to invest heavily in education and innovation. Only in this way will our companies find the specific niches, create the high added value necessary to compete on a world wide scale.

We also need to educate our future businessmen and women differently. These last years, sustainability, green ways of doing business, so called ‘ecopreneurship’ were the leading new themes in the business schools and the political debate. They are indeed important, for we do not own this planet, we are its stewards and have to leave it in good shape to the future generations.

But sustainability is being construed in too narrow a way. It cannot be just a matter of preserving or attaining harmony with nature. What is lacking in the debate is the main factor, that of harmony with humanity.
 
It is not sufficient to turn issues of sustainability into industrial processes which respect the environment. It is even more important to examine the human impact of business decisions in a global environment. We already saw many cases where so called green decisions led to very unwanted results. For instance, it became green and trendy to produce biofuels from foodstocks. But diverting so many crops from food to fuel production has created global food insecurity.
 
Therefore, investing in education means preparing the leaders of tomorrow for a morally complex future in which companies will also be expected to create social value. We have seen that maximising profits, that greed are not a motor for healthy and sustainable growth. Companies must learn that there are enormous opportunities to be uncovered by including poverty alleviation and other social needs in their growth strategies. Political leaders must encourage them to go that way.


To sum up, big challenges await us. We must stabilise the Eurozone by bold new steps to economic governance. We must adapt our Rhineland model to the globalised world by investing in education, by innovating, by working more. And, most importantly, we must strengthen world economic growth and world harmony by stimulating a form of growth which is in harmony not just with nature, but with humanity.

I wish you, the students who are assembled here, the ideals and wisdom to see success not as only personal advantage, but to seek fulfilment in work that benefits the many, not the few. I wish you the energy and ambition in your future lives to help the world grow to the common benefit of humanity, this one humanity we are all part of.

I thank you for your attention.

ility is being construed in too narrow a way. It cannot be just a matter of preserving or attaining harmony with nature. What is lacking in the debate is the main factor, that of harmony with humanity.
 
It is not sufficient to turn issues of sustainability into industrial processes which respect the environment. It is even more important to examine the human impact of business decisions in a global environment. We already saw many cases where so called green decisions led to very unwanted results. For instance, it became green and trendy to produce biofuels from foodstocks. But diverting so many crops from food to fuel production has created global food insecurity.
 
Therefore, investing in education means preparing the leaders of tomorrow for a morally complex future in which companies will also be expected to create social value. We have seen that maximising profits, that greed are not a motor for healthy and sustainable growth. Companies must learn that there are enormous opportunities to be uncovered by including poverty alleviation and other social needs in their growth strategies. Political leaders must encourage them to go that way.


To sum up, big challenges await us. We must stabilise the Eurozone by bold new steps to economic governance. We must adapt our Rhineland model to the globalised world by investing in education, by innovating, by working more. And, most importantly, we must strengthen world economic growth and world harmony by stimulating a form of growth which is in harmony not just with nature, but with humanity.

I wish you, the students who are assembled here, the ideals and wisdom to see success not as only personal advantage, but to seek fulfilment in work that benefits the many, not the few. I wish you the energy and ambition in your future lives to help the world grow to the common benefit of humanity, this one humanity we are all part of.

I thank you for your attention.