figure 31
The idea is to make resource rationalization more profitable than labor rationalization. This has certainly been the philosophy behind the ecological tax reform which has been introduced in most European countries, including Germany. The ideal scenario is one in which prices for energy, water and raw materials increase slowly, for instance by four percent annually, so that technological progress can approximately keep pace. If, for instance, petrol becomes four percent dearer every year while the car fleet, going towards hypercar, becomes three percent more efficient every year, then the marginal price to be paid by car users is only one percent of petrol prices, which is only a very small part of your daily expenses. So there is no social problem involved. And yet after 15 or 20 or 25 years the car fleet will be twice as efficient, so your imports of Saudi crude oil can be cut in half, which is excellent for your economy. Also, if you use the revenue from these eco-taxes to reduce indirect labor costs, then for the employer it becomes more profitable, more attractive, to maintain the labor force. Compared with today, it is more reasonable to lay off kilowatt hours and barrels of oil and to hire people. This is exactly what we want in most OECD countries. Of course, many other measures can be added. For instance, tradable permits of carbon dioxide emissions could be a reasonable tool on the international scale. Eco-audits have become very popular in Japan, in Germany and a few other countries, and there are voluntary agreements with industry and many other such measures. This morning I had a chance at the United Nations University to address a second huge challenge, if redirecting technological progress is not large enough a challenge. Namely, the second challenge is reinventing democracy. Democracy, in its modern form, was developed for the nation state. Now that ecological challenges are global and strategic decisions in the public and private sectors mostly relate to the global economy, we have to rethink the role of democracy. Democracy is meant to defend and represent the public domains and protect the weaker ones against the overwhelming power of the strong. Markets, on the other hand, are meant to encourage the strong to beat the weak. You shouldn't blame markets for doing that. This is how they are meant. Contrary to typical American perceptions, markets and democracy are not the same. To the contrary, they are rather complementary with each other, and the real objective of democracy is to balance these two principles. Globalization means a systematic weakening of democracy and the public domain to the advantage of markets and of accumulation of private goods. Reinventing democracy, therefore, means to rebalance private and public goods. It implies that all people's interests, including, in particular, the interest of the less fortunate and of future generations, will have to be represented somewhere. They will never be part of the markets, almost by definition. Time is much too short today to dwell on this additional similarly huge program. Of course, in my new capacity as the Parliamentary Chairman of the Committee on Economic Globalization, I have to work on this question. But what I want to convey to you in the end is that our efforts on redirecting technological progress are likely to fail unless we undertake efforts in parallel for reinventing democracy, and I hope that all of you in this room and all of you involved in the Takeda Foundation will be part of this additional fascinating game. Thank you very much.