Senior Fellow Barry Carin joined CIGI in its infancy (2004) and has been influential in shaping many of the major projects that CIGI has undertaken and contributed to the success of the organization on the international stage. After 14 years at CIGI, Barry is stepping down and has penned the following “valedictory” address encompassing his dossier of CIGI accomplishments, his own top-10 lists of key publications, videos, quotations and trends, and outlining the work that remains to be done in the global governance arena.
I joined CIGI in 2004, and have witnessed its growth from the germ of an idea to Canada’s go-to institution on global governance. Now that I am retiring from CIGI, it seems appropriate to share my insights from my long association with the think tank. In particular, several signal achievements stand out.
Beginning three years before its first meeting in 2008 in Pittsburgh, CIGI pioneered and popularized the concept of the Group of Twenty (G20) replacing the Group of Seven (G7). For several years, CIGI co-chaired a consortium of think tanks to explore the question of whether a well-prepared meeting of leaders from 20 countries could resolve international governance issues that the G7 could not.
Then, after the G20 was established, in February 2009, CIGI helped organize the predecessor of what would later become the Think20 by leading a prestigious group of international researchers in meeting with the UK’s then-Prime Minister Gordon Brown and his team, who were preparing the second G20 Leaders’ Summit. The result of that encounter was the acceptance of the consortium’s hitherto unconventional advice for a coordinated G20 stimulus package. CIGI, with its partners, led similar missions to France and Korea before their G20 presidencies. In 2012, in Mexico, the consortium organized the first official Think20 event and initiated the precedent for privileged dialogue between the Think20 and the ministers and officials of the upcoming G20 presidency.
In 2013, CIGI recognized the opportunity of influencing process, formulating the post-2015 goals to succeed the Millennium Development Goals (MDGs). Being first in the field, CIGI led a partnership with the International Federation of Red Cross and Red Crescent Societies and the Korea Development Institute, with a consortium of think tanks from China, India, Brazil and South Africa. This group arranged unique access to United Nations delegates, the Inter-Agency team and UN Development Programme staff that were preparing the post-MDG successor goals. We were successful in gaining acceptance of the unorthodox idea that the post-2015 MDGs should apply universally, and not just be prescriptive for developing countries.
Over the last decade, CIGI’s recognized expertise has grown to include international governance issues in several sectors, including the internet, trade, international finance, energy, the environment and climate change, the Arctic and intellectual property law.
Even as CIGI continues to work on global issues, it is clear that many challenging problems remain. There is a lot that my generation has left undone. This article discusses those yet unsolved international governance puzzles as well as being a salute to what I’ve learned (and what’s left as a something to ponder). This farewell essay is organized as a buffet of sorts: incisive cartoons, top-10 lists of apropos quotes, classic online videos, human failings that confound rational policy, trends that are changing the status quo, in addition to reminders of rival hypotheses and clever arguments to oppose change. Consider these lists — dotted with humour — as an appetizer in this medley of content, with the collection of 10 influential papers and six worthy puzzles for think tanks as the heavy main course.
Despite the perils of forecasting, it is important to base recommendations on future conditions rather than the past. I hope that this smorgasbord helps think tanks to look ahead to the that future, full of possibility for what they can contribute.
The 10 best video list captures a broad range of films, from The Best Stats You’ve Ever Seen to Taxing Carbon for a Greener Economy to Forecasting in the Past, Present, and Future.
Former Canadian Prime Minister Paul Martin is fond of explaining that the G20 (which was originally established at the finance ministers level) only has 19 member countries because finance ministers cannot count. In the same spirit, this list of “10” incisive quotations includes nine of my favourite observations.
On government expenditures:
“Government is like a baby: an alimentary canal with a big appetite at one end and no sense of responsibility at the other.”
— Ronald Reagan, former US President
On the limits of honesty and transparency:
“Of course there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?”
— Jean-Claude Juncker, President of the European Commission
On drafting government proposals:
“To give and not to give: to be weak while appearing to be strong: to be obscure while appearing to be forthright: to be inconsistent while appearing to be infinitely reasonable. The hallmarks of a successful Memorandum to Cabinet.”
— Douglas G. Hartle, former Deputy Secretary, Planning Branch, Treasury Board Secretariat
On forecasting:
“Economists have allowed themselves to walk into a trap where we say we can forecast, but no serious economist thinks we can. You don't expect dentists to be able to forecast how many teeth you'll have when you're 80. You expect them to give good advice and fix problems.”
— Tim Harford, British economist and journalist
On inequality:
“While rising tides may lift all boats, those without boats [or whose boat has a hole in the hull] are left to sink or swim.”
— David Rothkopf, visiting professor at Columbia University's School of International and Public Affairs
On globalism’s threat to democracy
“It disenfranchises the vast majority and empowers a technocratic elite. It’s a telling paradox that the most ardent supporters of a 'borderless world' live in gated communities and channel their children toward a narrow set of elite educational institutions with stiff admissions standards that do the work of 'border control.' The airport executive lounges are not open and inclusive.”
— R. R. Reno, Editor of First Things
On the G20:
“What you now have as a result of the G20, with all of its imperfections, is a situation where a wider group of people, developed and developing, are regularly meeting and having a dialogue. Now, we won’t always get the results right and there’s a bit of criticism about where the G20 is going, but I’ll tell you what, it sure as hell beats the G7.”
— Wayne Swan, Australian Treasurer
On climate change
“The bottom line is that we do not accept climate change because we wish to avoid the anxiety it generates and the deep changes it requires. In this regard, it is not unlike any other major threat. However, because it carries none of the clear markers that would normally lead our brains to overrule our short-term interests, we actively conspire with each other, and mobilize our own biases to keep it perpetually in the background.”
— George Marshall, Author of Don't Even Think About It: Why Our Brains Are Wired to Ignore Climate Change
"In theory, there is no difference between theory and practice. In practice there is."
— Yogi Berra, baseball player, manager and coach
Anosognosia
Anosognosia refers to unawareness or denial of a neurological deficit, when someone is unaware of their own mental health condition or they can’t perceive their condition accurately. Policy makers suffer from this condition when they ignore the “Theory of the Second Best." The theory holds that near-optimal conditions will not necessarily produce near-optimal outcomes. Assuming that two or more requirements for achieving the optimal economic outcome cannot be satisfied, then a concerted attempt to satisfy other requirements that can be met is not necessarily the second-best option, and may not be beneficial. Imagine a car with only five percent lining left on both front brakes. Replacing the brake on only one wheel will lead to even poorer performance. In economic policy, the implication is that if marginal costs do not equal prices in two or more markets, it may make things worse by setting the price equal to the marginal cost in one of the out-of-equilibrium markets.
George Carlin’s Observations on Americans
We must convince a population with wide variations in capacity to understand and assess information. George Carlin, American stand-up comedian, actor, author and social critic summarized this in two famed quotations: “The IQ and the life expectancy of the average American recently passed each other going in opposite directions” and “Think of how stupid the average person is, and realize half of them are stupider than that.”
Self-serving Bias Assessing Fairness
A prevalent phenomenon is the conflation of what is fair with what benefits oneself. Estimation of the value of the alternatives to negotiated settlements in self-serving ways can rule out any chance of settlement by eliminating the set of agreements that both sides prefer to their reservation values. Disputants “interpret the other party's aggressive bargaining not as an attempt to get what they perceive as fair, but as a cynical and exploitative attempt to gain an unfair strategic advantage.” Bargainers care not only about what the other party offers, but also about the other party’s motives. People are strongly averse to settling even slightly below the point they view as fair, caring so much about fairness that they are often willing to sacrifice economic well-being to enforce it. “Behavioral economists have shown that a sizable percentage of people are willing to pay real money to punish people who are taking from a common pot but not contributing to it. Just to ensure that shirkers get what they deserve, we are prepared to make ourselves poorer.”
Confirmation Bias
People are generally pigheaded. Most people suffer from the tendency to search for or interpret information in a way that confirms one's preconceptions, leading to statistical errors. We develop an irrational loyalty to our beliefs, and work hard to find evidence that supports those opinions and to discredit, discount or avoid information that does not. An interesting phenomenon is the misperception of income inequality pictured below.
Data sources: Michael I. Norton, Dan Ariely
Dunning Kruger Effect
Relatively unskilled individuals suffer from an illusion — they assess their ability to be much higher than is accurate. In other words, unskilled people lack the skill to rate their own level of competence.
Unskilled people rate themselves higher than more competent people rate themselves (Goode 2000). Conversely, highly skilled individuals suffer from an external misperception — they underestimate their relative competence. Bertrand Russell, the British philosopher and Nobel Laureate, observed that “the trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.”1 The policy analyst must work with political masters and must accurately take their measure. To quote Russell again, “great democracies still tend to think that a stupid man is more likely to be honest than a clever man, and our politicians take advantage of this prejudice by pretending to be even more stupid than nature has made them.”
People Are Irrational
We don’t know our preferences well enough to make rational choices. Dan Ariely, author and professor of psychology, has demonstrated that people are “predictably irrational.” In making decisions, they systematically repeat certain mistakes again and again. Examples are the “decoy effect,” black pearls, human reaction to the words "free" and "zero," the “endowment effect,” the effect of expectations, consent based on default options, and the power of placebos. People do not act based on expected probability — the same person buys insurance and lottery tickets. The British cosmologist and astrophysicist Martin Rees argues that we are in denial about catastrophic risks with low probability. His observation is apparently inconsistent with Kahneman and Tversky’s Prospect Theory — that people generally do not look at the value of probability uniformly between zero percent and 100 percent. People are overly concerned with the outcome of low probability, while medium to high probability is under-weighted. But not yet, it appears, with respect to concern for the catastrophic tail effects of global warming.
Disregard of Arrow’s Impossibility Theorem
Too many options are provided. Kenneth Arrow’s theorem holds that when voters have three or more distinct alternatives, no ranked voting electoral system can convert the ranked preferences of individuals into a community-wide ranking while also meeting a specified set of criteria: unrestricted domain, non-dictatorship, Pareto efficiency and independence of irrelevant alternatives.
Short Attention Spans
Logical argumentation will fail to convince if the authors ignore the seventeenth-century French philosopher Blaise Pascal’s advice. He apologized for writing a long letter because he did not have time to write a short one.
Propensity to Duck Difficult Choices
David G. Victor has written “When society confronts really hard problems there are strong pressures on policy makers to avoid making costly decisions. The result is symbolic policy – that is policy ventures that look serious but have no real impact.”
Propensity to Measure the Wrong Things
It is always easier to measure irrelevant inputs and outputs rather than relevant outcomes (for example, school enrollment — bums in seats — rather than learning outcomes).
There is no doubt that the world is transforming rapidly with the explosive rate of population growth, rising levels of national debt, human migration on a large scale, climate change and technology.
Population
The global population is growing at an unsustainable rate. Zero population growth will happen, whether we like it or not. In 1986, the world’s population was five billion, growing at 1.7 percent per year. In 1999, the population was six billion, adding 88 million people, growing at 1.3 percent per year. If 1.3 percent persisted for 780 years, the arithmetic of exponential growth is that the world’s population would reach a density of one person per square meter on the dry land surface of the earth. Source: The New Yorker. Used here with permission.
The growth rate is currently down to 1.13 percent per year, adding 83 million people this year to the current world population of 7.6 billion. If this positive growth rate continues, challenges in terms of resource depletion and dignified employment may lead to unfortunate results.
Debt
Imagine the consequences of rising interest rate on three trends – unfunded pension obligations, household and corporate debt, and government debt-to-GDP ratios. The debt-to-GDP ratio is growing, as is household and corporate debt. (See https://www.mckinsey.com/global-themes/employment-and-growth/debt-and-not-much-deleveraging. ) Discussions of debt generally focus on government borrowings and household debt, but ignore unfunded liabilities. A 2016 Citibank report indicated that Organisation for Economic Co-operation and Development (OECD) countries face US$78 trillion in unfunded pension liabilities (150 percent of total GDP), above and beyond their national debts. Pension liabilities are growing faster than GDP in most countries. The arithmetic is that these obligations simply cannot be paid without significant tax increases or a decrease in benefits (see the Economist compilation of data at http://www.economist.com/content/global_debt_clock).
Sources: Haver Analytics; national sources; McKinsey Global Institute analysis. Used here with permission of McKinsey Global.
The Canadian picture is not pretty. Unlike government debt, private debt is much higher than average for major economies. Of course, the picture is incomplete without reference to the growth in asset values. But the undeniable fact is that impending increases in interest rates from their historically low levels will have very painful consequences for borrowers of all stripes. The international macro-economic question is whether growing debt will suffocate growth to the extent that new arrangements will have to be devised for sovereign debt resolution.
Climate Change
Climate change is a classic example of the “tragedy of the commons.” The burning of fossil fuel has increased the concentration of greenhouse gases in the atmosphere. There is significant evidence that the global temperature is rising. But there are many who doubt the conclusions; there is wide disagreement about the appropriate policy responses. Trends are uncertain given the unknown future of world population, growth in the per capita demand for energy resources, the availability and costs of different power technologies, the emissions of various technologies and the carbon uptake from the oceans and forests.
There are other uncertainties regarding temperature increase due to higher carbon emissions and the impacts of temperature increase on ecosystem productivity, the sea level, extreme weather events, as well as the impact on future economic activity of carbon taxes or cap-and-trade systems. But the emerging consensus is that shrinking ice cover, ocean acidification and potential feedback effects, combined with the inexorable rise of emissions, will result in very costly consequences.
Inequality
“In most OECD countries, the gap between rich and poor is at its highest level in 30 years. Today, the richest 10 per cent of the population in the OECD area earn 9.5 times the income of the poorest 10 per cent; in the 1980s this ratio stood at 7:1 and has been rising continuously ever since.” Federico Cingano, economist at the Bank of Italy.
Source: World Economic Forum. Used here with permission.
The Stanford Center on Poverty and Inequality posted an informative report titled 20 Facts About U.S. Inequality that Everyone Should Know. It provides an analysis of many dimensions to enable a comprehensive analysis, including trends in wage ratios of different income percentiles (see the graph below), comparing the wage of a 90th percentile earner to one in the 50th percentile, compared in turn to an earner in the 10th percentile. The Stanford report reminds us that a sophisticated analysis should examine trends in variables such as CEO pay, homelessness and the education wage premium comparing growth in median weekly earnings of college graduates relative to high school dropouts. To complete the picture, analysis should account for gender and racial gaps, discouraged workers and wealth inequality, among other dimensions.
Source: Economic Policy Institute. Used here with permission.
Migration
Migration to Europe is mainly driven by poverty, conflicts and wars in the Middle East and Africa. In the Pacific, people may be displaced by 2050 due to rising sea levels. Natural disasters will displace tens of millions of people. By 2050, adding in “slow impact” effects of climate change such as drought, the United Nations estimates that climate change refugees could number 250 million. The issue in dealing with such mass migration is the gaping legal and institutional holes. The UN Refugee Convention does not include people fleeing climate change or natural disasters. A refugee is defined by the United Nations as a person who “has a well-founded fear of persecution because of his/her race, religion, nationality, membership in a particular social group or political opinion.” The lack of effective international machinery will be complicated by trends in nationalistic tendencies due to inequality and underemployment.
Disruptive technology
McKinsey Global Institute examined trends in 12 “disruptive” technologies that “have the potential to dramatically change the status quo [by 2025]…or change comparative advantage for nations
