Gordon Brown on what went wrong with globalization
Front pages of a selection of British national newspapers featuring headlines about Prime Minister Gordon Brown in May 11, 2010.
TEXT OF INTERVIEW
Steve Chiotakis: Gordon Brown thinks the world can head off another financial crisis by operating together. In his new book, "Beyond the Crash," the former British Prime Minister, who also served as the country's Treasury chief, says the world's banks should adopt global standards for capitalization and regulation.
He's with us now to give us his thoughts on the crisis and what can be done to thwart another one. Mr. Prime Minister, good morning.
Gordon Brown: Good morning Steve.
Chiotakis: If you had to sum up what it was that started the economic spiral, what was it?
Brown: It was mainly a problem in the banking system, and the financial system crashed -- it froze. We've got to make sure this doesn't happen in the future. I would say that we need a global financial supervision and not simply national financial regulators.
Chiotakis: Give me an idea of how crazy things were right after the collapse of Lehman Brothers?
Brown: What we had to do was try to get some agreement about what the coordinated response of the world was going to be. Because this is not a national crisis; this wasn't simply subprime in America, this was banks freezing up across all parts of the world. But it was touch-and-go because basically every country had a different analysis of its own problems. In Europe, it was felt that the problem was American, and therefore it was difficult to persuade the Europeans to act as quickly, because they felt that they were only dealing with the consequences of something that was peculiarly an American problem.
Chiotakis: You've said already there should be a certain global financial standard. But if that's the case, doesn't that make critics nervous about a so-called "new world order?"
Brown: Well, when it came to 2009, people were happy to come together and take the action that was necessary. I'm saying in 2011, that we've got the prospects for Europe and America of a low-growth and a high-unemployment decade, if nothing is done about it. And there for, it makes sense to come together. It's a sort of new Marshall plan that would bring the world together.
Chiotakis: You call the debate over keeping government stimulus programs one of free market versus government, in terms of living standards and morality. And you used the term, "moral imperative." Do you think the free market lacks morality?
Brown: I think the global financial institutions have got to recognize that they need to be underpinned by balancing off the need for enterprise and competition with being fair, being trustworthy, having integrity and showing responsibility. And you know, it does come back to people's savings, and whether they can get money out of the cash machine, whether you're going to be paid at the end of next week, what your house is worth and when you can be sure about what your jobs prospects are. These are the big issues that a banking failure can raise for millions of ordinary people around the world.
Chiotakis: Mr. Prime Minister, thank you for your time.
Brown: Thank you.
Chiotakis: By the way, there's more information on Prime Minister Brown's new book on our website, marketplace.org.