“We need to make globalisation work better for people!”
Mathias Cormann (53) is the 6th Secretary-General of the Organisation for Economic Co-operation and Development (OECD). Prior to his appointment to the OECD on 1 June 2021, he served as the Australian Minister for Finance, the Leader of the Government in the Australian Senate and as Federal Senator representing the State of Western Australia. Sven Lilienström, founder of Faces of Democracy, spoke with Mathias Cormann about democracy, globalisation and artificial intelligence.
OECD Secretary-General Mathias Cormann | © OECD
Mr. Secretary-General, for seven years now, our opening question has always been: How important are democracy and democratic values to you personally?
Mathias Cormann: For me, democracy and key democratic values like individual freedom, equality of opportunity, respect for the rule of law and human rights, combined with market based economic principles, are all central pillars for peaceful, prosperous and socially cohesive societies, in which everyone has the best possible opportunity to get ahead.
Importantly, in a democracy, the separation of powers provides for important checks and balances in relation to the exercise of state power!
Democracy facilitates citizens’ participation in policy decision-making, fosters transparency and accountability of governments and the peaceful resolution of differences in views and opinions, thereby ensuring the responsiveness of policy decisions to the evolving needs and aspirations of citizens and the pursuit of the broader public interest. Where a government is no longer performing effectively in the public interest or is no longer in tune with the evolving views of its citizens, democracy facilitates the peaceful transfer of power through free and fair elections. Importantly, in a democracy, the separation of powers provides for important checks and balances in relation to the exercise of state power, which is key to the preservation of our individual liberties.
You have been Secretary-General of the Organisation for Economic Cooperation and Development since 2021. Precisely how does the OECD improve people’s lives? Why do we need the OECD?
Mathias Cormann: In any country the quality of policy settings matters. Good, well considered, evidence-based choices, whether on economic, social or environmental policy related matters, create better opportunities for people to optimise their potential and enjoy better living standards. They allow for higher productivity growth, successfully navigating the green and digital transformations, dealing with the structural impacts of population ageing, ensuring well-functioning global markets with resilient supply chains and the achievement of many other policy goals.
Our core mission at the OECD is precisely that, to help our members and partners around the world deliver better policies for better lives.
Bad decisions, based on policy prejudices, short-term thinking or the influence of special interests, invariably result in slower economic growth, fewer opportunities and lower living standards.
Our core mission at the OECD is precisely that, to help our members and partners around the world deliver better policies for better lives.
We do that through a combination of different approaches:
- We help governments identify what works and what doesn’t by providing comparative data on a wide range of economic, social and environmental policy issues;
- We facilitate evidence-based mutual learning and provide best practice policy advice;
- We provide a platform for multilateral dialogue to support improved global cooperation to tackle shared global challenges; and
- We work as a global standard-setter.
The OECD is unique in bringing together within a single institution in-depth knowledge on a wide range of different policy areas!
In pursuing these efforts, we rely on our strong multidisciplinary expertise. The OECD is unique in bringing together within a single institution in-depth knowledge on a wide range of different policy areas. This allows us to effectively address the very complex policy challenges that governments are facing today, from population ageing to climate change to lacklustre productivity growth, as these require multipronged approaches spanning various different policy domains.
Autocracies are on the rise. The “Change through trade” narrative appears to have failed. Do we need – purely from an ethical perspective – a new value-driven foreign trade policy?
Mathias Cormann: Over recent decades, the rise in globalisation through more open trade and financial flows and the freer movement of people has significantly contributed to increased incomes and living standards around the world, helping to lift hundreds of millions of people out of poverty. This has been achieved through a massive increase in both global trade overall and the share in global trade achieved by low- and middle-income countries.
Where there are obvious problems, we should of course have a sensible conversation about how things can be improved. However, I would very much caution against throwing the baby out with the bathwater.
Globalisation and open markets demonstrably drive growth and prosperity by strengthening productivity and efficiency, fostering innovation and technology transfer, and boosting resilience. More trade and more investment means stronger growth, more jobs, higher incomes and lower costs for consumers.
De-globalisation, decoupling or economic fragmentation would lead to the opposite and make us all poorer.
De-globalisation, decoupling or economic fragmentation would lead to the opposite and make us all poorer. It would mean lower growth, fewer jobs, lower incomes and higher costs for consumers and producers.
Yes, we need to make globalisation work better for people. We need to ensure we have, to the greatest extent possible, a fair global playing field for trade with well-functioning global markets based on a rules-based trading system. We need to ensure that everyone can participate in and benefit from an expansion in global trade and that the environmental and social implications and indeed all the risks, including those that have become apparent during the COVID pandemic and recent conflicts, are better managed.
There is nothing wrong with de-risking – any business facing risks will assess its risks and develop strategies to better manage those risks and governments need to do the same – but let’s do so in a sensible and balanced way that doesn’t unnecessarily put at risk the upside benefits that come with expanding global trade.
The Houthi attacks are already threatening global trade. What would a naval blockade of the Taiwan Strait mean for global trade, the digital transformation roadmap and the energy transition – keyword here: TSMC chips?
Mathias Cormann: Geopolitical tensions and conflicts are having many negative impacts. Inevitably this includes presenting a significant downside risk for the global economy. Peace and stability are better for global growth and allow people all around the word to share its benefits/participate in it. With maritime trade accounting for about 80 percent of global merchandise trade, the safe passage of goods across the world’s oceans is a central part of delivering the benefits of expanding global trade to businesses and consumers around the world at the lowest possible cost.
The OECD has not estimated the economic impact of a blockade of the Taiwan Strait and it would be difficult to do so!
The OECD has not estimated the economic impact of a blockade of the Taiwan Strait and it would be difficult to do so. However, we don’t need to know the precise impacts to know that it would be a very bad idea all around. The economic impact would be substantial and widespread. Few sectors and countries would be spared and the disruption to the global economy would be significant.
In Germany, the term “remigration” – coined by right-wing networks and parts of the AfD – is being bandied about. What would large-scale deportations mean for Germany’s economy?
Mathias Cormann: A well-managed migration system is a very important economic and social policy tool to help drive economic prosperity and wellbeing. As a consequence of population ageing, Germany is suffering from sizable skilled labour shortages. These do not only risk becoming a severe bottleneck for necessary investments, for instance in green, digital and housing infrastructure, but also pose a significant challenge to the provision of high-quality services in education, health and long-term care.
Keyword artificial intelligence: In your opinion, what are the opportunities and risks when it comes to the use of artificial intelligence – or AI for short? What do you think of the “AI Act” in terms of regulating AI?
Mathias Cormann: We all know about the many upside benefits of the digital transformation and AI which are significant. From boosting productivity, to accelerating scientific progress to cure diseases, improving the quality of health care or education, strengthening food security, mitigating climate change and more. We need to harness all those opportunities to improve outcomes for our citizens.
At the same time, there are also risks that need to be addressed through good public policy.
We need to ensure that the benefits are widely and fairly shared. Without wide-spread diffusion, for instance, AI may lead to increasing market power and reduce the dynamism of AI developers and users, limiting the welfare and productivity gains. AI may also increase inequality and hamper social inclusion. And of course, there are significant risks and concerns related to privacy, safety, security and human rights that need to be well tackled.
Generative AI tools, in particular, will not only shift labour market and skills needs, they will also risk turbocharging levels of mis- and disinformation across our societies on an unprecedented scale.
We need good public policy to ensure that the accelerating innovation that will come with AI benefits all citizens and is safe, secure and trustworthy.
We need good public policy to ensure that the accelerating innovation that will come with AI benefits all citizens and is safe, secure and trustworthy and that is where the OECD has an important role to play. The OECD Recommendation on AI for example provides a set of agreed principles for promoting a values-based approach to AI. They are currently being updated to ensure they remain fit for purpose in the age of generative AI.
Mr. Secretary-General, you are a private pilot. What fascinates you about flying? Is flying – especially flying small private aircraft – a good idea considering its negative CO2 footprint?
Mathias Cormann: Yes, I obtained my private pilot’s licence in Australia some 25 or so years ago. In a country the size of Australia, flying a small aircraft can be an effective way to get from A to B over very long distances.
At the OECD we are doing everything we can to help the global community find the most effective ways to meet our global emissions reduction objectives!
Since moving back to Europe three years ago I have not had the opportunity to fly myself, though inevitably, I have taken commercial aircraft to get to the places I need to get to as part of my job. The bottom line is that in aviation, as in all sectors of the economy, we need technological innovation to significantly reduce the carbon intensity of the activity as we persist with our efforts towards achieving carbon neutrality. At the OECD we are doing everything we can to help the global community find the most effective ways to meet our global emissions reduction objectives.