What the World Needs Now: An Economic Timeout

09/26/2011 04:18 pm ET | Updated Nov 26, 2011
  • Erik Rasmussen Erik Rasmussen, founder of Sustainia and CEO of Monday Morning

What do successful coaches do, when defeat threatens? They take a time out. For long, both football and basketball coaches have had great success turning critical situations and impending defeats into great victories by taking a timeout -- at the exact right moment. The timeout has proved itself winning strategy.

It could become the same winning strategy for the global economy.

The world economy is facing a downfall. Several countries are confronted with a gloomy economic reality and are moving fast towards searing economic defeat. Last week France's two top banks were hit by credit rating downgrades -- yet another example that Europe's -- but also the global -- financial crisis continues to worsen. This instantly made the Chinese premier Wen Jibao urge that the European countries put their "own houses in order". But so far the Euro and the global economy seem greatly at risk of collapsing.

The reason: our economic game is not working. We are too defensive, and we haven't been able to switch strategies and tactics.

The politicians have tried all the known solutions. But old strategies are getting really old and traditional models for growth seem to have lost their power. After more than three years of global crisis alertness, the cure still seems immensely unclear. Meanwhile the problems facing the world economy seem to be growing bigger and more complex by the minute. Never has the term failed governess been so relevant and looming. A stinging defeat threatens.

What could help save the world economy would be if the world's leading politicians had the courage and the boldness to take a global time out. If they agreed to eliminate quick fixes and short-term plans and instead created a unique time warp for looking at the underlying reasons for why our current economic growth model isn't working.

Twenty world leaders will come together at the upcoming G20 in Cannes this November 3-4 to discuss the state of the global economy as it emerges from the financial crisis. Together the members of the G20 represent over 85 percent of the world economy, so they have the power to push for solutions that can secure our future global economy. The G20 leaders have presented some economic initiatives and collaborations, among others the "Framework for Strong, Sustainable, and Balanced Growth" that was launched at the Pittsburgh Summit in 2009 . But so far they have made limited progress and their efforts have proved far from enough.

The G20 leaders could use the meeting in November to introduce the global time out -- to take a break to identify the next practice in tackling the world's economic crisis. In practice it would mean, that they should spend the time until the next meeting in Mexico in 2012 to identify and agree on a new model for growth. That would change the agenda of the 48 hours in Cannes. Instead of debating short term economic rescue plans, they would have to focus on initiating, discussing, and planning how the process of the timeout could be orchestrated.

The timeout might sound naive and unrealistic, but it is necessary to fundamentally rethink our global growth policies, if we are to secure our future economic prosperity. The world leaders cannot keep ignoring that the current model for growth is unsustainable, that we are faced with the impacts of climate change, the serious energy security concerns, the material scarcity and the global food and water shortages -- all of which changes the international economic game fundamentally and thus should animate to new strategies and new tactics.

The idea of the new sustainable economy isn't new or surprising. For long the world community has been advised to initiate a more sustainable transition of the global economy by a long line of the leading thinkers and organizations including the Stieglitz Commission and the Pathways Project at UC Berkeley "Shaping the Green Growth Economy" .

But the problem is that no one have yet dared to take the first step in the transition and thus the necessary action is still absent. The timeout gives the world leaders a unique window of opportunity to start a joint shift to the new global reality -- for the world leaders to team up and initiate a fundamental and extensive turnaround to a new sustainable economic model. If they do this, the meeting in November will not just be remembered as 'just another meeting', but as the starting point for a whole new economic era. And it would give the G20 a chance to live up to its own motto for 2011: "New world, New ideas" .