WORLD SOCIAL SUMMIT 2008
'WSS: Becker, there won't be a Great Depression'

The winner of the Nobel Prize for economy, Gary Becker, during the Wss of Fondazione Roma, recalls the higher education boom in industrialized countries between 1970 and 2000. Becker compared the "50 countries with the highest income and the 50 countries with the lowest income". It is "interesting", notices Becker, "that the level of education increases remarkably in countries with very high income". "Women's education - explains Becker - increased more than men's education because women have more possibilities to receive education" and this phenomenon is "universal". With regards to Italy, it obtained the black shirt compared to Ocse countries, Japan, and USA concerning the quality of higher education. This is due to the fact that the Italian system "is too strict and not open".

Becker compares the two phenomena: education and development of new technologies. "Education leads to a greater demand of advanced technologies". And this occurs, explains the winner of the Nobel Prize, because "we can dispose of more information thanks to technologies".

And then there is the relation between education and health. "The value of higher education increased in Europe and it is applied to health". An example: "graduates boast lower mortality because educated people can manage everything better" says Becker. Education allows us "to absorb shocks" says Becker, who reminds that "one of the greatest fears is that we are facing many unforeseeable shocks that generate incredible fears". "Education - says Becker - interacts with technologies and can mitigate the most significant fears". With regards to terrorism, which causes fear, Becker reminds the "continuous battle between terrorists and those who defend society": both categories use technologies for opposite purposes. The former conceive "remote explosives, communicate with sophisticated systems between each other to give instructions". On the other hand "other technologies have been born that can help reducing the impact of terrorism".

The "contribution to the economic progress" of technologies can be evaluated starting from the "numerous positive effects on the management of risk". Stating financial instruments as an example, Becker reminds the "unexpected consequences": panic, the current fear. This is due because many investors did not realize very well the assets that they were disposing of. "And this is because a series of stages occurred, of which control was lost". Many of these activities, says Becker, "would have worked well within a portfolio, if converted into liquid activities, but on the contrary a very strong financial lever occurred".

Despite the fact that we are experiencing the "most serious crisis since 1929, this will not lead to a Great Depression". And this because back then, America had been subject for many years to an "unemployment rate of 25% that won't exceed 10%" today, according to Becker. In addition, in 1929, "central banks subtracted liquidity to the system". And this is not taking place today.

In conclusion, Becker says: "straightened circumstances will be present, we are not at the end of the crisis, but this will not lead to depression, we will recover: I have no doubts on this".