Before becoming prime minister in 2007, Brown had served as Chancellor of the Exchequer for ten years and presided during a remarkable 15-year economic expansion. Before 2008, England's last recession occurred in the early 1990s.
The man known as a dour Scotsman joked that there were two kinds of finance ministers-those who fail and those who get out just in time. Brown became PM just in time to get walloped.
Brown went into some detail about why, after 15 or 20 studies, he refused to recommend that the U.K. use the euro, much to the chagrin of his boss, Tony Blair. The euro, he concluded, was conceived as a political project without the underlying economic logic to support it. There was no flexibility and no crisis prevention mechanism.
All the centralized EU institutions lack the power to iron out various problems. "No one is sure who is accountable to whom," he said.
Brown was replaced by a Conservative government that dealt with their financial and debt crises with the formula recommended in the 1990s by the IMF to emerging nations. They raised taxes and cut spending. England's economy is now sputtering.
Severe new regulations on the banks and special taxes on excessive bonuses for bankers has sparked lots of grousing among Britain's financial set. According to Brown, Barclay's has threatened to move to America-maybe Dodd-Frank could have been worse-HSBC has talked about going to Hong Kong and Standard Chartered has mentioned Singapore as a new home. The Swiss must feel unloved.
Over the long term, Brown sees globalization as a huge opportunity for America and Europe. Over the next 20 years, the world economy will double in size. Right now there is a huge consumption-production imbalance between the developed western nations (including Japan) and the emerging, developing nations.
By 2025, Asia will account for 40% of the world's consumption, the U.S. will represent only 20%, German 4%, France and the U.K., 3% respectively, Brown projected. But those Asian consumers will start demanding Western goods and services.
Among India and China, serious differences will need to be resolved. He told the story of an Indian big wig who forgot to bring his overcoat to China and walked off the plane to find an unseasonal Manchurian chill. The first thing he did was go to a store to buy a warm coat. After finding a coat that seemed to work, the Indian gentleman asked the salesman what brand it was. According to Brown, the salesman responded, "What brand do you want? Burberry, Armani?"
Brown noted that Western nations aren't generating enough economic growth or jobs, but eventually they will and the result will be lots of new job opportunities in America and Europe.