[Applause] the main political disconnects that affects us all is this if we want to avoid war or the collapse of democracy just small things we need to address global problems with global solutions not national solutions addressing a global problem with a national solution would be like trying to face global warming by installing more air conditioners which might make the problem worse all of us have needs and problems some of us may connect better than others to the needs and problems of others but none of us knows how to solve them all and disconnect between needs and solutions depends greatly on whether the type of problem can be resolved with one individual solution or else we need a sort of collective effort to resolve it so when starting from the simplest case when they need the disconnect between needs and solutions depends or at least this can be resolved by one innovation the elimination of the gap is just a matter of time everyone has recognized that we would contribute to the solution of environmental problems if we switch to electric carts and the gap in that case was just a technological one so that if a company manages to find a way to produce an electric car at a reasonable price the demand will be there for it profits will appear and all the other companies will have to follow suit or else lose the entire market but the same type of environmental deterioration problem has other dimensions where one innovation cannot suffice think of the extinction of tunas or whales that we may face in a few years it's pretty difficult to imagine a solution by one company that would overwrite the incentives to our fish tuna barring of course the some smart invention of a substitute for sugar sushi that would equally satisfy chic urbanites many of the problems we face in real life are of this nature namely one individual solution does not suffice and we need a collective effort and you would think that in this type of situations politics can help doesn't always help you know if you think of the last one of the current world leaders reaction to global warming he said quote I was elected to represent the citizens of Pittsburgh not Paris isn't this nationalistic attitude a bit like buying more air conditioners or throwing a tuna party and now I come to my bread and butter example of this type of problem that has to do with globalization and tax competition Ireland Luxembourg and other tax havens or heavens are overfishing how do they do it they are obtaining huge benefits from offering almost zero capital taxes that attract multinational companies and no individual decision by any other country the Thurston this overfishing type of problem will create a big problem that is that countries all around the world will have not enough money to face the needs of their own people and much like for tuna overfishing to solve this problem we would need consensus or unanimous agreement no deviations no cheating no free riding and this is hard to obtain and for this reason the widening disconnect also helped by some political leaders to be sir white is a problem that emerges and it's it's especially when consensus and coordination are technologically necessary so let's give a concrete example consider the typical worker Joe and his typical employer Bob so if a man like Joe the worker is not worried about his job but mostly worries about his salary then his political alignment is likely to be against the excessive profits above the boss if you think about the political conflict in Italy in the 1960s and 1970s it was basically class conflict or Jewish political conflict between the representatives of Joe on one side and the representatives of Bob on the other and in the 1930s in the US again it was mostly distribution conflict what the National strikes and union fights brought about was a readjustment of the worker and priory relation towards a redistributive New Deal which brought about the solution so politics their work because it just needed to take a stand on the distribution conflict which Roosevelt did but jumping forward to today Joe does not fight with Bob that much anymore Joe fights with Pedro the immigrant and or Don the Chinese competitor and and you know Joe could maybe also worrying about another woman given that fortunately culture has changed and women compete too so faced with all these new fears the fear of pedro of dong and ana joyce becoming more conservative to protect himself from ana perhaps he wants to build a wall to protect himself from Pedro or vote for someone who will build it and wants to want more protectionism against dong and see all these three forms of reaction to fear are on all France bringing us towards one word nationalism and as I argued national solutions are not the way to go to solve global threat global problems the gap may actually be widened by national solutions and the biggest gap widening threat for Joe is actually bet based the robot you know Bob loves bit why because Bob knows that bit is productive is uncomplaining doesn't need social security never has bad breath probably unless you build it that way and above all bit is easy to transfer to another country and of course Bob would prefer to move bit to a county that has tax laws that are favorable to Bob this is important because it relates a tax competition with this so what's the problem Joe is now risking much more after the entry in the picture a bit why does Joe risks more because Bob by all those features that I mentioned is happy to have bit because he pays less taxes per unit over of about and now Joe if he loses his job he will have he will be in a country that at the national level will have less money to support his needs and indeed that the risk of losing his job is not negligible technological changes are allowing the Bob's to replace more jobs win bits and if technology indeed as some say is going to make it possible to replace 40% of existing Joe's with bits then we could experience situations even more dramatically than now with revolutions with revolutions of people with yellow jackets red jackets what-have-you conflicts like in a sense fishermen fighting for the last remaining tuna so let's see this in a economic context there are fewer and fewer Joe's to pay labour dependent taxes and there are less and less taxes that Bob is willing to pay or needs to pay a given tax competition so the total tax revenue to face growing welfare cost is going to shrink this widening gap now takes a clear economic form you have a larger and larger number of people who need a larger and larger help in the future in terms of welfare and at the same time the described technological and market trends are making the national budgets the national budgets shrink right now most countries are taxing only labor income and consumer goods whereas they don't tax almost at all capital and wealth because of the tax competition problem and with this technological and economic trend as I said we have a shrinking labor labor income for the fewer Joe's we have shrinking tax bills for the Bob's so all these things determing a smaller and smaller pie whereas unemployed and pensioners are more and more who need a surviving slice clearly this is unsustainable unless we abandon the national route this type of global problems need global solutions but which type of global solutions can go in the right directions what can we do to guarantee that some of the Bob's extra profit generated through bid will actually go to supporting the social programs for the Jews in need what can we do to make the large the rich the extra reach the multinational companies pay their share through capital taxes or corporate sales taxes rather than just simply noticing that Amazon in 2018 made 11 bill dollar profits and paid zero taxes well ten percent capital tax on all multinational companies according to some estimates could be enough to actually pay for most of unemployment insurance and welfare costs throughout the world but even a ten percent capital tax guaranteed on all possible on all such players is very hard to obtain and so what could be a way to do it and I want to insist on this and this is an addition I'm making here because the multinational companies are not only those who benefit from capital taxes capital tax reduction from tax competition but are also those who benefit from international trade because multinational companies constitute eighty percent of international trade therefore the solution has to go straight to trade and this is why I say that one solution could be capital tax imposed indirectly by the World Trade Organization where in a sense the World Trade Organization could ask each country to apply a capital tax in his own fiscal policy in its own fiscal policy as a precondition for renewed WTO membership in a sense the WTO would be saying hey country you like right the benefits of being an exporter protected by WTO yes so do put a capital tax in your fiscal policy so that some of the some of Bob's extra profits generated through bit can be channeled to the jaws otherwise you are out now Ireland in in such a context for example would be forced to suspend its loopholes that so exacerbated tax competition and for some countries this would be easier for somebody from some other countries would be harder enforcement in general of these things is very hard like monitoring all fishermen really but the difficulty students because this is the only way to go we have to go global so it's very important we need to learn this from the mistakes of the past before World War two all countries retreated into no trades there was no cooperation there was no coordination towards solving global problems the result was war only after the ravages of which country leaders found it necessary to sit together and find global solutions the United Nations the IMF the World Bank WTO and even Europe our eminent examples of crucial attempts to go for global solutions so global solution is not an empty term but we might take these things for granted which we might take not only the importance of these institutional solutions that emerged after World War 2 for granted but often even their very existence because such institutions in the 1930s would have been considered utopian so where does this existence come from comes from the realization after World War 2 you know what World War 2 brought to the realization that national solutions can only bring us into painful walls so this time we need to move before the disaster the political and economic disconnect I've described is widening and acknowledging that national solutions are not the way to go is the key first step towards or to working towards global solutions [Applause] you