Present at the VI Astana Economic Forum, Christopher Pissarides, winner of the Nobel Prize in economics, offered an interview to caleaeuropeana.ro. The main topics discussed were the global economy, China’s and Europe’s role in it, Italy’s And Cyprus’ difficult situation and the solutions he thinks would get Europe out of the crisis.
Christopher Pissarides thinks that the EU institutions are not efficient and pleas for stronger central bank supervision and closer fiscal coordination, asking the governments to add vision to their decisions.
Q: We saw this morning that the Tokyo stock market fell down and even the European markets were affected because of China. (disappointing Chinese manufacturing data and signals that the U.S. Federal Reserve may cut bond purchases sent the Japanese market into full retreat, dragging down global stocks) What’s going on? There was no exit strategy for getting out so that it would not expand.
Christopher Pissarides: The main point is that there is alot of uncertainty in the world economy, still. The main reason for the uncertainty is Europe, I think the Europeans problems have not been solved yet. People are looking towards US to provide leadership to the emergent markets like China. And then, the slight negative news about recovering the expansion coming out those countries causes all this volatility in stock markets. I think this will continue until there is a new international order. We are still relying on the IMF too much, I think, even to what it can do and Europe doesn’t seem to have the political will to solve our problems so that small changes in the area of growth of China do not affect international stock markets.
Q: Do not affect?
Christopher Pissarides: if we sort out our problems within Europe, then, I think it will not affect international stock markets because the United Stated are on their way to recovery, which I believe will be robust. There shouldn’t be such a big reaction to what Bernanke said (US Federal Reserve chairman, Ben Bernanke). The main problem remains Europe. We are relying too much on Chinese growth in the world economy, which is dangerous to rely on a single country, especially on one that is growing for so long.
Q: So Europe should be more independent?
Christopher Pissarides: Yes, it should solve its own problems.
Q: Do you agree with the point of which states that there is not a debt problem, but a political one?
Christopher Pissarides: Yes, I think that is a symptom the political problems that we have in Europe, in the absence of having enough institutions that are needed to make a single currency area succeed and grow. We need to have stronger central bank supervision and we need to have closer fiscal coordination.
Q: So the economic problems in Europe seem to be more and more present in our lives and the unemployment rate is higher, especially in Southern Europe. How long do you think the society from this part of Europe is going to last? everybody is waiting for decisions to be made.
Christopher Pissarides: You have identified the most serious problems that Europe is facing on the medium-term and the unemployment is so high in the southern countries. So far, there’s been a lot of patience, waiting for progress from European institutions so that we can push forward on economy and growth, but now are dragging our feet in the delays. The longer the delays last , the more risks that the patience will run out. The EU will break on its own, will distorter, which is the worst possible outcome, so the European leaders need to come together and act quickly in setting up institutions that are needed for the economy of Europe to recover.
Q: the problem is that we have to be confident in these institutions that are not efficient and the political decisions that until now couldn’t get us out of the crisis.
Christopher Pissarides: The institutions we have now are not efficient because they are not enough, we need a common eurosupervisor in euro, we need common bonds, we need a institution who is able to dissolve a European bank, to capitalise them, we need to set up the European Stability Mechanism, all those decisions need European politicians that will care about the EU as a whole, or at least Euro zone as a whole in addition to their own countries, and this is what we don’t currently have in Europe. But we need it. If we don’t get it, we are in the risk of having several more years of recession, of high unemployment and the potential of strikes, demonstrations and social unrest.
Q: As an effect, the left parties are starting to win elections all over Europe. What about the courageous measures?
Christopher Pissarides: It’s true, they don’t have these measures. For example, France didn’t have major ideas for Europe as a whole, maybe in France they are doing things that would benefit them, but Europe needs decision makers as well, and they had great politicians interested in Europe as a whole, pushing the EU towards closer and closer cooperation. But now, if anything, European politicians are pulling them apart.
Q: are you afraid that it may not be a matter of decision, but a matter of lacking vision from the European leaders?
Christopher Pissarides: I think that is the key, in fact. They do not have Europe wide visions, where to go next. And therefore, they don’t take the political courage, the potential political costs within their country to do anything at a European level. We see the policies that Germany is following now are apparently very popular with the German voters, but they are not anywhere outside Germany and this is adding to a gap between Germany and the rest, which is very dangerous for the future of Europe as a whole.
About Cyprus’ bailout:
Christopher Pissarides: The only source of savings that Cyprus had were where they put their money, the deposits in the major banks. So most of the holders of those big accounts were retired or close to retiring, and they suddenly take all their money from them except the 100.000 euro to recapitalise, but it doesn’t also have a system of comprehensive pension coverage so how will these people cover their consumption in retirement? The lifetime savings which you had there to finance your retirement are now going to recapitalise banks and you are left with nothing to spend but 100.000 €. So we have a lot of social problems produced from that policy, apart from that, I think, because of the bad economic policy. When banks do very well the shareholders and managers will take the extra profit and do well, not depositors, but when the banks are doing very badly, the depositors have to pay. So there is a reverse moral hazard. This discourages people to invest in the future in big sums of money because you know that if the times are good you are not going to benefit from it but in times of bad, you will suffer .
Q: I also wanted to ask you about your great scientific career. You are one of the youngest Nobel prize winners, I think. What are you must proud of from your scientific work?
Christopher Pissarides: The big concern I had throughout my career was the big unemployment, how we can deal with it and I realised that when I started there was no theoretical foundation, no framework in which to think about unemployment and what I am most proud of is that most people in the profession are using the framework that I developed sometimes in collaboration with my colleagues. We studied unemployment and tried to come up with good policies to fight it. Unfortunately the current policies are not following exactly what we said they could be doing. If you ask me about my scientific activity, what makes me most proud is providing this framework very spread used in dealing with the unemployment problem.
Q: Can it be used in this current situation?
Christopher Pissarides: It can be used at anytime.
Q: How has the way you do research changed? The economics have developed a lot nowadays and some people say the reason why we got lost is because we only look at the numbers. How do you see this change?
Christopher Pissarides: The change is good, actually in many ways because quantity is important in a complicated economic world. Both in the economy models, and also in the economy as a whole they become too complicated to be solved piece by piece. It is good to have the whole picture.
About the political and economic situation in Italy:
Christopher Pissarides: The government can’t do very much, Europe has to coordinate it and they really have to come together and say that this situation cannot continue. It’s been five years since it started, the rest of the world are coming out of it, especially the US, in Europe they say maybe 2 years, maybe 3 years. There has to be coordinated action, a single country cannot do it, even if we’re talking about Italy. And Germany is the leader, the key country that should coordinate and if we put pressure on them, they would have to do it. We need to get France, Italy and Spain together, also. If those three countries put pressure on Germany to sit down around the table and discuss what should be done, then there must be some kind of improvement, much better than Germany deciding on their own.
Christopher Antoniou Pissarides is a Cypriot economist. He is the Norman Sosnow Professor of Economics at the London School of Economics. His research interests focus on several topics of macroeconomics, notably labor, economic growth, and economic policy. In 2010, he was awarded the Nobel Prize in economics, jointly with Peter A. Diamond and Dale Mortensen, for his contributions to the theory of search frictions and macroeconomics.
Svyatoslav Anatolyevich Timashev. Collective Nobel Peace Prize 2007 – Honored Scientist of the Russian Federation
Svyatoslav A. Timashev is a member of the Interstate Council on the issue of “heavy reliability pipelines”, a member of the Scientific Council and the Dissertation Council, the American Society of Mechanical Engineers (ASME), the editorial boards of domestic and foreign journals and a founding member of the International Association for design reliability and safety.
Svyatoslav A. Timashev, a Russian citizen, was awarded a collective Nobel Peace Prize for developing methods of CO2 sequestration from the earth’s atmosphere and its disposal, together with a group of scientists of the Intergovernmental Panel on Climate Change, who together formed the International Meteorological Organization and the United Nations Department of Environmental Protection in 2007.
For his achievements, Svyatoslav Anatolyevich was awarded the VSNTO (All-Soviet Union Council of Technical Society) (1969), the medal “For Valorous Labour” (1970), the Expert Public Education Badge (1984), a COMADEM Magazine prize for the best publication in 2000, and was dubbed Knight of Justice – Commander of the Sovereign Order of the Orthodox Hospitaller Knights of St. John of Jerusalem.
S.A. Timashev shaped a new direction in the theory of reliability of large mechanical systems, solved the problem of optimization of the critical systems operation in multi-level governance class. He is the holder of nine copyright patents and author of more than 250 publications, including 19 monographs.
Svyatoslav Anatolyevich created software systems for the optimal management of the operation of oil and gas pipelines, three generations of industrial electronic systems of vibration protection, vibration diagnostics, tribodiagnostics and monitoring of energy machinery and equipment and is the founder of a new section in the theory of reliability monitoring.
He developed the scientific bases of the theory and a fundamentally new method for optimizing the operation of a complex object by the criteria of reliability and safety, as problems of multilevel governance of stochastic processes of degradation and recovery. These systems are used successfully in the Russian oil and gas industry, aviation, heavy engineering, metallurgy and other industries, as well as in university educational laboratories.
All these works have received wide domestic and international recognition, as evidenced by the election of S.A. Timashev as a member of the RF Academy of Quality Problems, a member of the Washington Academy of Sciences (USA) and the Fulbright Academy of Science and Technology (USA).
On July 26 the laureate S.A. Timashev celebrates his 79th birthday and the 58th anniversary of the start of science teaching career. He was born in Harbin, northeastern China, one of the main transit points for trade with Russia. He graduated with distinction from the Ural Federal University (formerly the Ural Polytechnic Institute).
From 1987 to the present time Professor Timashev has been the head of the Reliability Laboratory of the Engineering Complex Problem Division at IMET UNC AN SSSR. He is also Director and Academic Advisor at the Science and Engineering Center “Reliability and service life of large systems of machines” at UNC AN SSSR.
VIDEO Astana Economic Forum. Interview with Eric Maskin: Kazakhstan can be a force for modernization in the Eurasian region
Interview taken by Razvan Buzatu, from www.caleaeuropeana.ro, with Professor Eric Maskin, PhD, Nobel Laureate for Economics, Adams University Professor at Harvard University.
He is renown at international level for laying the foundation of mechanism design theory. During his career, he contributed to game theory, contract theory, social choice theory, political economy as well as other areas of economics.
Razvan Buzatu: Professor Maskin, thank you very much for accepting this discussion for Calea Europeana. First of all: why Astana?
Eric Maskin: Well Astana is now holding one of the big economic forums in the world so it’s a natural place for people who are interested in issues of our time to meet. So, I’m glad to be one of the many participants.
RB: Well, Astana these three or four days is becoming the center of the world, right, and speaking about economics and how the world works at this moment, how do you see Kazakhstan involved in the global economy?
EM: Kazakhstan has an interesting position economically and geographically. It’s close enough to Europe so that it has close ties there, but it’s also close to the Far East and given its pivotal location we can expect great things from Kazakhstan in the future.
RB: Do you think that it can play a regional role in the Eurasian region?
EM: I hope it does. Kazakhstan seems to be forward looking, progressive country and I think it can be a force for modernization in the Eurasian region.
RB: Professor Maskin you’ve designed a well known design mechanism theory, and I was wondering if you can share with us a little bit of your thoughts on how can design mechanism theory, involving also Kazakhstan, can have positive implications on the European Union economy and Eurasian economy.
EM: Well, mechanism design theory is all about how do you create the institutions for aligning incentives. Of course, each country has its own goals which are not necessarily exactly in alignment with other countries’ goals and it is the function of international institutions to reconcile possible conflicts, this could be done through international organizations, through treaties, through political unification, but mechanism design teaches us that is not enough to, say, write a treaty, say, to promote trade, but the treaty has to be written with care to make sure that all the countries who are going to be signing this treaty actually benefit from it and that may involve a series of concessions on both sides, concessions about giving something up but the benefits from conceding is that now you have an international institution which enables you to take more from other countries.
RB: Very interesting, I was talking a little bit earlier with the Deputy Director General of the World Trade Organization, and he said that the new Bali Package that they established in December last year was a negotiation and was a break through, it was basically a new step forward for the WTO in terms of negotiating between India and China and also Cuba and USA, and also USA and India, so they reached to some sort of an agreement, some sort of compromise so that they can benefit economically; in this sense it resembles a lot with the design mechanism theory.
EM: It does in deed and in fact I think that the principles from the theory have now permeated people’s conciseness enough so that when these treaties are hammered out mechanism design theory plays a role.
RB: I will go now to the other side of the world: I believe you know very well what happened in Ukraine at the end of last year and the begging of this year. How do you see mechanism design theory, using mechanism design theory, in establishing a balance in the actors that are involved and are interested in what the path of Ukraine will be in the future.
EM: That’s a very difficult question, if I knew how to solve the problem of Ukraine I would be able to perform miracles so I don’t have any magic bullets for solving the Ukraine problem. All I can say is that we know from theory that the answer to conflicts is not typically the way of isolation and I would be worried if as a result of the tension in the Ukraine, if Russia for example became more isolated from the rest of the world and from Europe in particular to the extent that the countries continue to communicate with one another, continue to trade with one another, continue to cooperate with one another, that’s the way that the international tensions are resolved. Breaking of communication, breaking of trade I’m afraid that’s the risk of heightening tensions even further so I very much hope that the isolation doesn’t occur.
RB: Thank you very much. The theory is that the trade, at the trade level, in the Ukraine nothing has stopped but at the political level there are tensions. How do you see these things going hand in hand because some of them said “listen, it’s a real crisis” and at the trade level they say “we know it’s a crisis but we are still functioning”.
EM: “still functioning” for the time being. I think that unless they improve politically there is bound to be an economic cost in a longer term. Eventually, there can be lags either way. Economics lead politics or the other way around but not indefinitely, ultimately the two go together.
RB: Can we use the game theory and the Nash equilibrium with your theory, integrated? Is that possible?
EM: Well in fact, my theory, mechanism design, is part of game theory and uses game theoretic tools like Nash equilibrium as part of its analysis.
RB: And do you think they should be used integrated?
RB: How do you think we can do that?
EM: How can we apply them to…
RB: a certain event around the world, any kind of event?
RB: Use the 3 theories integrated to find a possible solution, not the solution, to an event in the world.
EM: Well, the first thing is to try to make precise what the goals of each of the parties are, but to recognize that there will always be some uncertainty about that. In games theoretic term these are games of incomplete information “I may know my goals, but I will never know your goals completely so I have to recognize that I’m operating in a situation of uncertainty. But game theory has developed tools to study interactions under uncertainty. On top of that, one way of resolving uncertainty is through a mechanism which is just an institution for international interaction. So that I think is the integration that you are calling for. Looking at the initial situation which involves a conflict of interests which is not completely understood because of the incomplete information, but layering on top of that an international mechanism, a treaty, for example or a trade agreement which brings the various parties closer together in agreement in their interests.
RB: One last question if I may? Do you see the European Union as a global actor? Like becoming the United States of Europe?
EM: I hope it will move in that direction. The European Union has successfully integrated some of its economic policy, namely the monetary side, if it can work on its other side of economic policy, namely the fiscal policy, and integrate that, I think it has a chance of having a comparable force with the USA on the global scene, but without that kind of fiscal integration I’m afraid that it will never quite have its act together.
RB: Well professor Maskin, thank you very much for taking the time to talk to us. I’m Razvan Buzatu, for Calea Europeana, from Astana.
“Journalism education: from theory to practice” – I International Summit of Journalism “G-Global: World of the XXI century”
In the course of the VII Astana Economic Forum and the II World Anti-Crisis Conference “Eurasian Economic Club of Scientists” Association and “Success K” media agencyorganized a panel session on “Journalism education: from theory to practice” as part of the I International Summit of Journalism “G-Global: World of the XXI century”.
The session discussed the issues of how to organize cooperation between journalists and experts in other fields such as IT, statistics, graphic and interactive design in education, and how to transfer this experience in journalism.
The event was attended by Co-Director of National Security Journalism Initiative & Medill School of Journalism, Northwestern University, Timothy McNulty; Director General of the Channel 7, Aziza Shuzeeva; Professor, Head of the Media Communication and history of Kazakhstan Department,Aygul Niyazgulova; Managing editor of Caspian Publishing House, Charles Van Der Liu; Director of the media school at “Kazmedia center”, Dana Rysmuhamedova; Editor-in-chief, “Finanz und Wirtschaft”, Martin Gollmer; Director of Radio “Astana”,Gulmira Karakozov. The session was moderated by the Chairman of the Board RTRC “Kazakhstan” Nurjan Mukhamedzhanova.
Most people think that it is not necessary to get a special education to become a journalist. As in case that no one will be able to do the surgery except a surgeon, no one can know better the professional tricks of historian, economist, lawyer and journalist, – shared an opinion Gulmira Karakozov, Director of Radio “Astana”, in the course of the session. Therefore, I strongly against this majority opinion. In 2005, Kazakhstan had 19 high school faculties, branches and departments that prepared professionals in journalism, and half of them belonged to the philological and historical faculties. I would like to say, the capability of journalists who were trained by linguists or historians, and taught in accordance with tutorials on journalism will not be high. This is a stumbling block in the preparation of professional journalists. Students must be taught by a person who has experience practicing in the field of journalism, – she stressed.
Recall, a purpose of the I International Summit of Journalism “G-Global: World of the XXI century” was creation of an information platform for interaction of economics, global journalism and latest technologies.
First, in Astana well-known media persons, bright bloggers, leaders and representatives of the world’s largest media holdings, website developers, website editors, newspapers and magazines editors, scientists, who demonstrate their achievements in the media, media tools and technologies, tried and tested skills in building information business and economic knowledge in the field of journalism brought together.
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