Carrot Money

By Chad Galts / January / February 2000
October 24th, 2007
Depending on your point of view, George Soros is either a bit of a flake or the embodiment of enlightened capitalism. But one thing is certain: when Soros talks about money, people listen.

On a rainy afternoon in October, the international financier-turned-philanthropist gave a sampling of his worldview to a Salomon Center audience. Many of the world's problems, he argued, are due to the fact that "economics have been globalized, but politics is still local. And global capitalism," he added, "is badly in need of improvement."

Soros, who made billions speculating on, among other things, international currencies, cautioned that unfettered capitalism can't do it all, however. He said that even though "the mechanism of the state is defunct," allowing market forces to run amok is hardly an adequate replacement. The trick is to implement economic policies that encourage desirable social goals.

To effect change in the war-torn Balkans, for example, Soros would have the European Union implement a series of carrot-and-stick approaches to the region's countries. In return for ending hostilities, the E.U. could provide member countries with such unifying carrots as a common currency, a reliable and corruption-free system for customs and exchange, and probably some startup assistance. The result would have economic benefits for Europe, but more importantly, Soros argued, it would provide an incentive for the countries involved to resolve their differences peacefully. Using the European Union as an actively unifying force, he added, "would give a meaning to the E.U. that it currently lacks."

When a student asked Soros whether such ideas could lead to Americanization of cultures around the world, Soros responded: "That is a matter for people to accept or resist on their own. I personally do not eat in McDonald's."

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January / February 2000