Will Europe need 50 million immigrants? How should bank executives be paid?

 I was in Madrid this week for a very interesting conference of the Campus of Excellence.

The Campus brings together Nobel prize winners in various disciplines and people   who have been involved in politics to discuss the problems of the world with students from a number of Spanish universities.

I managed to attend three sessions, one on the world political situation, another on  immigration, and a third on  the world economy.

I spoke in the  session on  world politics along with Rosalia Arteaga, a former President of Ecuador,  and  Michel Rocard, a former Prime  Minister  of France.

Rosalia  Arteaga was President of her  country in 1997.

Michel Rocard  is a member of the European Parliament  since  1994, and was Prime Minister  from  1988 to 1991 under President Mitterand.  He  also held various other  ministerial offices including   being Minister for Agriculture in the  1980s.

Rosalia Artega was concerned about the trend towards anti democratic populist politics in some Latin American countries.

Michel Rocard was disappointed at the progress in negotiations with Iran on the nuclear  question. He favoured bringing Turkey into the EU.

In the session on  immigration, it was claimed  that  8 out of 10 immigrant movements in the world are  from one  country in  the  less developed  country in the world  to another  similar country.  Immigrants tended to be treated as objects or as part of a category   rather than as human beings.

Policies to only admit skilled immigrants meant that richer countries were creaming off  benefits from educational spending by  much poorer countries than themselves. It was claimed, for example, that   90% of  doctors educated in Ghana  emigrate to better paid  jobs in  Britain, thereby  subsidizing  the British economy at the expense of  the Ghana.

The European Commission had calculated that  the EU will need  50 million  immigrants  between now and  2060 if it  is maintain current levels of  economic  activity  in  face of the  ageing  of the native  European population.

In the session on  the  world economy, it  was pointed  out that family owned businesses had been more prudent in their  borrowing policies  that had public  companies where management  had been able to  gamble  with  shareholders  funds.

The system of rewarding executives with stock options was strongly   criticised by Nobel  Prize winning economist, Robert Aumann.   He said it encouraged them to be imprudent because they faced a situation where it was a case of

 Heads I win, tails I do not lose”

It would be much better, he said, to reward them  with actual shares, where they took  the  downside  risk, as  well as the upside possibility of  gain.

I think he is right.  The  focus in reforming pay in  the banking system should be not be on the amount people earn, but on how their earnings are calculated and on  whether the  incentives are for  prudence or for recklessness.