Inter Press Service » Financial Crisis http://www.ipsnews.net News and Views from the Global South Wed, 31 Aug 2016 15:34:49 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.12 Youth Key to the Success of the SDGs in Kenyahttp://www.ipsnews.net/2016/08/youth-key-to-the-success-of-the-sdgs-in-kenya/?utm_source=rss&utm_medium=rss&utm_campaign=youth-key-to-the-success-of-the-sdgs-in-kenya http://www.ipsnews.net/2016/08/youth-key-to-the-success-of-the-sdgs-in-kenya/#comments Fri, 12 Aug 2016 13:52:23 +0000 Siddharth Chatterjee and Werner Schultink http://www.ipsnews.net/?p=146531 Siddharth Chatterjee (@sidchat1) is the United Nations Resident Coordinator a.i for Kenya and the UNFPA Representative. Werner Schultink (@janwerners) is the UNICEF Representative to Kenya.]]> Elected national Children’s Government of Kenya for 2016. Photo credit: UNICEF Kenya\2016\Gakuo.

Elected national Children’s Government of Kenya for 2016. Photo credit: UNICEF Kenya\2016\Gakuo.

By Siddharth Chatterjee and Werner Schultink
NAIROBI, Kenya, Aug 12 2016 (IPS)

Consider this: in 1956 Sweden and Kenya’s population was roughly at 7 million. Today Sweden has about 9.8 million, while there are about 44 million Kenyans.

Fertility levels are declining gradually and Kenyans are living longer. It is estimated that there will be 85 million people in Kenya by 2050, with three quarters of these being below 35 years. While Kenya’s median age is 19, Sweden’s is 42.

Kenya’s mushrooming population presents an extraordinary opportunity and several challenges. The opportunity lies in the potential for a so-called demographic dividend of sustained rapid economic growth in the coming decades. There is reason for optimism that Kenya can benefit from a demographic dividend within 15 to 20 years. It is estimated that Kenya’s working age population will grow to 73 percent by year 2050, potentially bolstering the country’s GDP per capita 12 times higher than the present, with nearly 90 percent of the working age in employment. (NCPD Policy Brief: Demographic dividend opportunities for Kenya, July 2014.)

But Kenya’s demographic dividend is not guaranteed by its changing demographics alone. Key actions are required if children of today – who will be entering the labor force a decade’s time – are skilled, dynamic and entrepreneurial.

Unemployment among Kenya’s youth is now estimated to stand at 17.3 per cent compared to six per cent for both Uganda and Tanzania. A World Bank report says mass unemployment continues to deny Kenya the opportunity to put its growing labour force to productive use, thereby “denying the economy the demographic dividend from majority young population”.

Investment in children is Kenya’s best hope to set the right pre-conditions for this potentially transformative demographic dividend. Properly harnessed, the potential of the youth could propel the country forward as a dynamic and productive engine of growth in all the 17 Sustainable Development Goals (SDGs) set out last September.

At the beginning of this year, UN member states started the long journey to implement the SDGs and they all have 169 targets to achieve by end of December 2030. Some countries have already made good progress on the localization and mainstreaming of the SDGs in their development plans and budgeting processes. In fact, 22 of the 193 Member States that endorsed the SDGs voluntarily reported on their progress at the High-level Political Forum (HLPF) held last month in New York.

The Government Kenya played a very important role in the design of the global development agenda. About 20,000 Kenyans participated in the MyWorld Survey, in which they voted on the kind of world they wanted after the MDGs. Kenya was also one of many countries that commissioned consultations at national, regional and community levels to discuss the Post-2015 development agenda, and these culminated into a position paper that was presented for inclusion into the post-2015 development agenda.

The global development agenda dovetails with Kenya’s Vision 2030 in terms of timeline and key strategic focus and seeks as well to make Kenya globally competitive and prosperous for all citizens. Kenya Vision 2030 does capture the three dimensions of sustainable development including economic, social and environment. This makes it much easier to align the national development plan of Kenya to the SDGs.

However, as was evident with the millennium development goals (MDGs), the work of translating SDGs into results requires strategic actions. It requires that countries exploit fully the resources within in order to make the giant leaps needed to meet the targets.

Experts agree that for Kenya and the rest of Africa, these giant leaps will come through the youthful human resource, but only when the working age population becomes larger than people of non-working age.

In Kenya, there are about eight dependents for every working person, meaning that the state faces very high costs associated with economically unproductive populations. It means that Kenya must invest to create jobs, and invest in the young people with the skills to fill those jobs.

A society that wants to diversify its economy, achieve industrialization and socio-economic transformation and the SDGs must invest heavily in a strong, dynamic and empowered youth and women to drive this agenda. Kenya’s children will need quality learning that leads to educational attainment that is relevant to their lives, and gives them with the skills needed for the country’s changing labor market. Protection from ill health, malnutrition, violence, conflict, abuse and exploitation are also crucial for children – and their nation – to prosper.

In Kenya, the youth constitute an important segment of the country’s population, accounting for 35.4% of the total population and 66.7% of the adult population in 2009. The proportion of the youth category is expected to remain relatively high at 35.4% of the population in 2015, 34.8% in 2020, 34.6% in 2025 and 35.2% by 2030. This means that at least one in every three Kenyans will continue to be young.

Therefore, if Kenya and all other developing countries must successfully implement the SDGs, it is very important that young people, both boys and girls, no longer remain passive beneficiaries of development but must become equal and effective partners for development. This means that the problem of youth must be addressed as a policy and development issue, which must be mainstreamed in all planning and budgeting processes.

In addition, strong political commitment and leadership must be demonstrated at both national and local levels to address the problems of youth in Kenya. High growth rates must be translated into skills and jobs for the increasing young population and workforce in Kenya. Such actions will indeed help to keep young people away from being targets of youth radicalization and violent extremism.

Investing in youth is not only an investment in the future but also fundamental for the successful implementation of the SDGs.

Today 12 August 2016 is International Youth Day. Let’s commit to investing in youth. It is not only an investment in the future but also fundamental for the successful implementation of the SDGs.

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Youth Employment: Turning Workplace Partnerships into Opportunityhttp://www.ipsnews.net/2016/08/youth-employment-turning-workplace-partnerships-into-opportunity/?utm_source=rss&utm_medium=rss&utm_campaign=youth-employment-turning-workplace-partnerships-into-opportunity http://www.ipsnews.net/2016/08/youth-employment-turning-workplace-partnerships-into-opportunity/#comments Fri, 12 Aug 2016 09:53:45 +0000 Sofia Garcia http://www.ipsnews.net/?p=146528 Sofía García García is the SOS Children’s Villages Representative to the United Nations in New York.]]> Sofía García García is the SOS Children’s Villages Representative to the United Nations in New York.]]> http://www.ipsnews.net/2016/08/youth-employment-turning-workplace-partnerships-into-opportunity/feed/ 0 Expansionary fiscal consolidation mythhttp://www.ipsnews.net/2016/08/expansionary-fiscal-consolidation-myth/?utm_source=rss&utm_medium=rss&utm_campaign=expansionary-fiscal-consolidation-myth http://www.ipsnews.net/2016/08/expansionary-fiscal-consolidation-myth/#comments Thu, 11 Aug 2016 12:15:03 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=146514 Anis Chowdhury was Professor of Economics, University of Western Sydney, and held various senior United Nations positions in New York and Bangkok. Jomo Kwame Sundaram was UN Assistant Secretary General for Economic Development.]]>

Anis Chowdhury was Professor of Economics, University of Western Sydney, and held various senior United Nations positions in New York and Bangkok. Jomo Kwame Sundaram was UN Assistant Secretary General for Economic Development.

By Anis Chowdhury and Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Aug 11 2016 (IPS)

The debt crisis in Europe continues to drag on. Drastic measures to cut government debts and deficits, including by replacing democratically elected governments with ‘technocrats’, have only made things worse. The more recent drastic expenditure cuts in Europe to quickly reduce public finance deficits have not only adversely impacted the lives of millions as unemployment soared. The actions also seem to have killed the goose that lay the golden egg of economic growth, resulting in a ‘low growth’ debt trap.

Government debt in the Euro zone reached nearly 92 per cent of GDP at the end of 2014, the highest level since the single currency was introduced in 1999. It dropped marginally to 90.7 per cent at the end of 2015, but is still about 50 per cent higher than the maximum allowed level of 60 per cent set by the Stability and Growth Pact rules designed to make sure EU members “pursue sound public finances and coordinate their fiscal policies”. The debt-GDP ratio was 66 per cent in 2007 before the crisis.

High debt is, of course, of concern. But as the experiences of the Euro zone countries clearly demonstrate, countries cannot come out of debt through drastic cuts in spending, especially when the global economic growth remains tepid, and there is no scope for the rapid rise of export demand. Instead, drastic public expenditure cuts are jeopardizing growth, creating a vicious circle of low growth-high debt, as noted by the IMF in its October 2015 World Economic Outlook.

Deficits, debt and fiscal consolidation

Using historical data, a number of cross-country studies claimed that fiscal consolidation promotes growth and generates employment. Three have been the most influential among policy makers dealing with the economic crisis unleashed by the 2008-2009 global financial meltdown.

First, using data from advanced and emerging economies for 1970-2007, the IMF’s May 2010 Fiscal Monitor claimed a negative relationship between initial government debt and subsequent per capita GDP growth as a stylized fact. On average, a 10 percentage point increase in the initial debt-GDP ratio was associated with a drop in annual real per capita GDP growth of around 0.2 percentage points per year. By implication, a reduction in debt-GDP ratio should enhance growth. Released just before the G20 Toronto Summit, it provided the ammunition for fiscal hawks urging immediate fiscal consolidation. The IMF has since admitted that its fiscal consolidation advice in 2010 was based on an ad-hoc exercise.

Using a different methodology, the IMF’s 2010 World Economic Outlook reported that reducing fiscal deficits by one per cent of GDP “typically reduces GDP by about 0.5% within two years and raises the unemployment rate by about 0.3 percentage point”. Domestic demand—consumption and investment—falls by about 1%”. Similarly, a 2015 IMF research paper concluded that “Empirical evidence suggests that the level at which the debt-to-GDP ratio starts to harm long-run growth is likely to vary with the level of economic development and to depend on other factors, such as the investor base”.

The second study, of 107 episodes of fiscal consolidation in all OECD countries during 1970-2007 by Alberto Alesina and Silvia Ardagna, found 26 cases (out of 107) of fiscal consolidation associated with resumed growth, probably influenced policy makers most. This happened despite the actual finding that “…sometimes, not always, some fiscal adjustments based upon spending cuts are not associated with economic downturns.”

Yet, in Harvard Professor Alesina’s public statement, “several” became “many” and “sometimes” became “frequently”, and mere “association” implied “causation”. In April 2010, Alesina told European Union economic and finance ministers that “large, credible and decisive” spending cuts to rescue budget deficits have frequently been followed by economic growth. Alesina was even cited in the official communiqué of an EU finance ministers’ meeting.

Jonathan Portes of the UK Treasury has acknowledged that Alesina was particularly influential when the UK Treasury argued in its 2010 ‘Emergency Budget’ that the wider effects of fiscal consolidation “will tend to boost demand growth, could improve the underlying performance of the economy and could even be sufficiently strong to outweigh the negative effects”. Christina Romer, then Chair of the US President’s Council of Economic Advisors, also acknowledged that the paper became ‘very influential’, noting exasperatedly that “everyone has been citing it”.

Researchers have found serious methodological and data errors in this work. Historical experience, including that of current Euro zone economies, suggests that the probability of successful fiscal consolidation is low. These successes depended on factors such as global business cycles, monetary policy, exchange rate policy and structural reforms.

Drawing on the IMF’s critique of Alesina and his associates, even the influential The Economist (30 September, 2010) dismissed the view that fiscal consolidation today would be “painless” as “wishful thinking”. Nevertheless, the IMF’s policy advice remained primarily in favour of fiscal consolidation regardless of a country’s economic circumstances or development level. There seems to be a clear disconnect between the IMF’s research and its operations.

The third study, by Harvard Professors Carmen Reinhart and Kenneth Rogoff on the history of financial crises and their aftermaths, claimed that rising government debt levels are associated with much weaker economic growth, indeed negative rates. According to them, once the debt-to-GDP exceeds the threshold ratio of 90 per cent, average growth dropped from around 3 per cent to -0.1 per cent in the post-World War II sample period. Since then, however, significant data omissions, questionable weighting methods and elementary coding errors in their original work have been uncovered. Nevertheless, the Reinhart-Rogoff findings were seized upon by the media and politicians around the world to justify austerity policies and drastic public spending cuts.

Bill Clinton, fiscal hawk?

Supporters of austerity based fiscal consolidation often cite President Bill Clinton’s second term in the late 1990s. However, the data shows that fiscal consolidation was achieved through growth, contrary to the claim that austerity produced growth. Clinton broke with the traditional policy of using the exchange rate to address current account or trade imbalances, opting for a strong dollar. Thus, the US dollar rose against major currencies from less than 80 in January 1995 to over 100 by January 2000.

The strong US dollar lowered imported inflation, allowing the Fed to maintain low interest rates even though unemployment fell markedly. The low interest rate policy not only boosted growth, but also helped keep bond yields close to nominal GDP growth rates. Thus, the interest burden was kept under control, with primary balances stable at close to zero.

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An Unequal Countryhttp://www.ipsnews.net/2016/08/an-unequal-country/?utm_source=rss&utm_medium=rss&utm_campaign=an-unequal-country http://www.ipsnews.net/2016/08/an-unequal-country/#comments Tue, 09 Aug 2016 19:38:57 +0000 Marc-Andre Franche http://www.ipsnews.net/?p=146487 By Marc-André Franche
Aug 9 2016 (Dawn, Pakistan)

One of the world’s great achievements of the past decades has been the significant fall in global poverty. Between 1990 and 2012, the proportion of humanity living under $1.90 a day fell from 37 per cent to only 13pc, driven in large part by the efforts of China. South Asia also witnessed a major decline in poverty, from 51pc to 19pc, with unequal progress across countries.

Despite this tremendous achievement, income inequality has increased both within and across countries. Today, high-income countries with 16pc of the world’s population represent 55pc of income while low-income countries with 72pc of the population account just over 1pc. Inequality matters for moral reasons; it also matters because of its implications for growth and development outcomes. Persi¬stent inequality hampers economic growth, impedes poverty reduction, fuels crime, squa¬n¬ders talent and human potential, and stifles social mobility. An unequal society is not only unfair, it is less prosperous and stable.

Escaping this inequality trap is the 21st century’s most critical challenge that lies at the heart of the global agenda which has been enshrined in the Sustainable Development Goals (SDGs) that has two goals, including the first SDG on ending poverty in all its forms; and the 10th SDG on leaving no one behind.

In Pakistan, the challenge of inequality is equally daunting. While consumption-based poverty dropped from 57.9pc to 29.5pc between 1998-1999 and 2013-2014 and multidimensional poverty — which includes health, education and living standards — fell from 55.2pc to 38.8pc between 2004-2005 and 2014-2015, inequality has actually grown. In 1987-1988, the Gini coefficient, which measures income inequality, was 0.35; by 2013-14 it had risen to 0.41. Pakistan’s richest 20pc now consume seven times more than the poorest 20pc.

Regional disparities are stark.

Regional disparities are stark and slow down growth and development. The government’s Multidimensional Poverty Index released recently found that 54.6pc of rural Pakistanis experienced poverty compared to 9.3pc of those in cities. Multidimensional poverty stands at 31.5pc in Punjab but rises to 73.7pc in Fata. While multidimensional poverty in Islamabad, Lahore, Karachi, and Rawalpindi is below 10pc it exceeds 90pc in Killa Abdullah, Harnai, Barkhan, Sherani Kohistan. Hence, some Pakistani districts are as well-off as any developed country while others are on par with the poorest in sub-Saharan Africa.

Inequality’s insidious effects pervades families. As women are mostly engaged in unpaid family work, their very real economic contribution is unaccounted for. Women own less than 3pc of land which impacts on their economic empowerment. Their participation in the labour force is a mere 18pc compared to 71pc for men. This is the lowest in South Asia after Afghanistan. Back in 1968 the renowned economist Dr Mahbub ul Haq identified 22 families which then controlled two-thirds of Pakistan’s industrial assets. In a 1973 article in The Times, Dr Haq called for reforming Pakistan’s economic, social and political institutions to help prevent the concentration of such immense wealth amongst the few.

Although the landscape has changed considerably since then, his recommendations remain painfully valid. Pakistan’s institutions, incentives, laws and norms continue to conspire to create rent for the rich and burdens for the poor.

These include tax exemptions on select sectors and indirect taxes which disproportionally affect the poor. The richest districts in Pakistan receive, on average, five times more public funds than the poorest, further aggravating inequality. The high cost of running for elections systematically excludes poor Pakistanis from political institutions. Discri¬mination on the basis of gender, economic status, religion and social identity restr¬icts upward mobility.

To date, Pakistan’s response to inequality has been superficial, focusing on symptoms rather than the root causes. As a result, inequality has persisted and even grown.

To tackle inequality seriously requires a holistic approach, addressing both its structural and distributional dimensions. Key institutions need to be reformed, and fiscal, monetary and other policies made equitable. Regional inequality may be addressed by investing adequate public funds in lagging regions and districts, and particularly in rural areas. Governments should use the Multidime¬nsional Poverty Index to inform allocations, especially under their Provincial Finance Com¬m¬i¬ssion awards, which are long overdue. Gender responsive budgeting can help mainstream women’s priorities in budgeting processes.

Most important, however, is to bring the debate on inequality back into the public realm. Politicians, bureaucrats, civil society, the media, many development partners and the wider public all continue to ignore the cancer of inequality on Pakistani society and economy. It is time to recognise that this inequality is not inevitable. Today, nearly 50 years after Dr Haq wrote his seminal diagnosis, it is time to act so Pakistan can escape its inequality trap and create the just, stable and dynamic society envisaged by its founders.

The writer is the outgoing country director for UNDP in Pakistan.
Published in Dawn, August 9th, 2016

This story was originally published by Dawn, Pakistan

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Blame It on Cronyism, Not the Free Markethttp://www.ipsnews.net/2016/08/blame-it-on-cronyism-not-the-free-market/?utm_source=rss&utm_medium=rss&utm_campaign=blame-it-on-cronyism-not-the-free-market http://www.ipsnews.net/2016/08/blame-it-on-cronyism-not-the-free-market/#comments Mon, 08 Aug 2016 21:02:42 +0000 Eresh Omar http://www.ipsnews.net/?p=146470 By Eresh Omar Jamal
Aug 8 2016 (The Daily Star, Bangladesh)

The current condition of global economic inequality should be of concern to all. An Oxfam report published this year titled, An economy for the 1%, revealed that “the richest 1% now have more wealth than the rest of the world combined.” It also said that “62 of the richest people now own more wealth than the bottom half of the world’s population. In 2015 it was the 80 richest, in 2014 it was 85 and in 2010, only six years back, it was 388 richest that owned similar wealth”, showing that inequality is actually growing at an increasing rate. This is also made evident by the fact that “the wealth of the poorest half of the world’s population has fallen by a trillion dollars since 2010, a drop of 38 percent” while “the wealth of the richest 62 has increased [during the same period] by more than half a trillion dollars to $1.76 trillion.”

op_3__Whereas many people around the world rightly blame the existing global economic system for the growing inequality, they also wrongly blame the free market. Wrongly because the system we have is anything but a free market, something that most fail to recognise. As Oxfam reported, “The 80 richest people have doubled their wealth between 2009 and 2014” during the period of austerity and quantitative easing. And as any economist that is not bought and paid for by the top 1 percent will tell you, neither of these have anything to do with the free market — they are a part of the cronyism that exists in our society.

The idea of a free market is based on the relationship between risk and reward, which determines the interest rate. When borrowers take out loans, they often put up their owned assets as collateral against the loan. They then try to invest what they borrowed prudently, hoping to earn a ‘reward’, pay back the loan and not lose the asset they had ‘risked’ as collateral against the borrowed amount. This is perhaps well understood. But as there are always two parties to any such transaction, lenders too are exposed to ‘risks’ because of which they acquire an ‘interest’ — reward — on the loan. As both parties face certain risks in going ahead with such transactions, both parties are also ‘liable’ to do their own ‘risk analysis’ — whether taking or giving the loan is beneficial.

This means that when there is a non-payment, the borrower and the lender are both liable, as both were supposed to do their own risk analysis which, in case of a default, they failed to do properly (except for in cases of force majeure). Yet, we have seen borrowers losing their homes through foreclosures or going bankrupt because of their failure to repay loans throughout the world, whereas big banks were bailed out using public funds for their ‘failed risk assessments’ or lack of ‘due diligence’, as was also the case in Bangladesh.

Just think about it. When you make bad decisions in your professional life, does the government ever bail you out? I would not think so. If we truly had a free market, these banks too would not have been bailed out. They would have gone bankrupt for making bad decisions like they should have in a free market. Furthermore, that alone would have discouraged most of these banks with highly ‘skilled professionals’ from making such ‘amateurish mistakes’.

In reality, however, they were anything but mistakes. For example, in Bangladesh, even the finance minister had said in Parliament that the loan scams in the banks were ‘dacoity’ (robberies). And it is because we do not have a free market and instead, have such ‘selective interventions’ by states that are largely serving the interest of the top 1 percent — bailing them out for committing robberies — that inequality throughout the world has increased and continues to do so. Meanwhile, those who are poor and have no involvement in these robberies have to endure extreme austerity measures that are literally inhumane, enhancing economic inequality in the process. For example, the current government budget saw the lowest allocation of funds to the healthcare sector since 2010-11 and to the education sector since 2009-10, while the proposed budget for the next fiscal year has a provision of Tk. 2,000 crore for investment in recapitalisation of the state-owned banks despite massive amounts of money being already injected into them over the past years, to save them from the consequences of their own disastrous policies.

All this combined is simply a form of wealth transfer that is being facilitated by the collusion between states and big banks. It has nothing to do with the free market and is, in fact, the opposite of it. Ironically, however, more and more people throughout the world, as they wake up to the fact that the current economic system is flawed, are starting to blame everything on the free market. And this is perhaps what we should be most concerned about, our lack of understanding of economics.

Such a lack of understanding can also be seen on part of the pro-free market economists who can identify that we do not have a free market but then say that if we did, we would have perfect equality by misquoting Adam Smith, the father of modern economics. Because what Mr Smith said was that the free market would only produce equality “in a society where things were left to follow their natural course, where there was perfect liberty [emphasis mine], and where every man was perfectly free both to chuse [choose] what occupation he thought proper, and to change it as often as he thought proper” (The Wealth of Nations, Adam Smith). Given, however, that we have never had conditions of ‘perfect liberty’, it is impossible to say whether Mr Smith’s assumption was right or wrong.

But regardless, what is important for people to realise is that the economic despairs plaguing the majority of the world’s population today, has very little (if at all) to do with the free market, and more to do with the fact that states are ‘selectively’ allocating resources to ‘special interests’ groups — largely the 1 percent. Because in order to cure the patient (economy), we must not get distracted by the symptoms; we have to first, identify, and second, treat the disease. To be able to do that, however, we must first educate ourselves in economics rather than letting the talking heads on TV, bought and paid for by the 1 percent, define what it is for us.

Henry George, one of the best economists of the 19th century, prophetically identified the tendency for such problems to arise in his book Poverty and Progress and how they can be best addressed, as so brilliantly defined by Cliff Cobb in more recent times, in the foreword to that book: “Many economists and politicians foster the illusion that great fortunes and poverty stem from the presence or absence of individual skill and risk-taking. Henry George, by contrast, showed that the wealth gap occurs because a few people are allowed to monopolise natural opportunities and deny them to others. If we deprived social elites of those monopolies, the whole facade of their greater ‘fitness’ would come tumbling down. George did not advocate equality of income, the forcible redistribution of wealth, or government management of the economy. He simply believed that in a society not burdened by the demands of a privileged elite, a full and satisfying life would be attainable by everyone.”

The writer is a member of the Editorial team.

This story was originally published by The Daily Star, Bangladesh

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Thinking Global? Act Provincialhttp://www.ipsnews.net/2016/08/thinking-global-act-provincial/?utm_source=rss&utm_medium=rss&utm_campaign=thinking-global-act-provincial http://www.ipsnews.net/2016/08/thinking-global-act-provincial/#comments Mon, 08 Aug 2016 20:45:25 +0000 Crispin Aranda http://www.ipsnews.net/?p=146467 By Crispin R. Aranda
Aug 8 2016 (Manila Times)

The least populated, northernmost province in North America even its own citizens dread to go has a per capita GDP of C$58,452 compared with C$3,439.28 for the entire Philippines.

Crispin R. Aranda

Crispin R. Aranda

If the northernmost province of the Philippines, say Ilocos Norte, has a per capita of more than P2.1 million, chances are there would be a huge migration flow from Imperial Manila instead of the reverse.

There would also be less Ilocanos leaving the province or the region since the high per capita reflects a good economy that translates into jobs, income, and a good quality of life.

Across the globe and closer to the North Pole, Nunavut is the newest, largest and northernmost province of Canada (North America). At the same time, it is both the least populous (31,906) and the largest in area of the provinces and territories of Canada at 1,750,000 sq. km. compared with the smaller 300,000 sq. km. of the Philippines.

In 2014, only 23 people migrated to Nunavut—a microscopic dot—given the fact that a total of 260,404 migrants applied for and obtained their permanent residency in Canada. In the same year 40,035 from the Philippines migrated to Canada, which placed the Philippines back on top of the list of countries with the highest number of immigrants.

Imperial Manila, Metro Manila or National Capital Region (as it is officially called), is the coveted place to be in the Philippines because it is the region of culture, economy, education, and government.

People from the North, South, and Central Philippines move to Metro Manila for jobs and opportunities making it the 7th most populous metropolis in Asia and the 3rd most populous urban area in the world, according to Demographia.

Canada set a target of up to 285,000 new permanent residents in 2015 to populate the country’s 10 provinces and three territories—Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan, and Yukon.

In January 2015, Canada initiated the Express Entry—the current selection system for attracting and getting immigrants. In addition to the individual allocation of each province by virtue of Federal and Provincial agreements, each province may also set up its own mini-Express Entry and get more than the usual number of migrants calling a province their new home.

Of the 285,000 planned and targeted new immigrants last year, 65 percent will be in the economic immigration class, the remainder will be in the family reunification and humanitarian categories, including refugees.

In addition Canada has increased “the number of caregivers becoming permanent residents to 30,000 in 2015, an all-time high in that category.”

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Nomination programs common to all provinces

The migration statistics for the period indicated showed that without their own programs, applicants qualifying under the Federal immigration programs (Federal Skilled Workers, Federal Skilled Trades Workers, Canadian Experience Class, and International Student/Graduates) preferred the more urban places in Canada such as Ontario, Quebec, and British Columbia.

Alberta and British Columbia (BC) tweaked their nomination program to attract the entry level, semi -skilled in addition to the traditional skilled workers. Both provinces offer temporary to permanent migration pathways for those with the required years of experience in the tourism/hospitality, hotel and lodging, long-haul trucking, food and beverage processing, and manufacturing.

The oil price volatility in the world market and the Fort McMurray fire, however, contributed to the bleak employment scenario in Alberta. Statistics Canada reported on August 5, 2016 that “Alberta’s monthly unemployment rate climbed to its highest level in nearly 22 years in July, marking the first time the province has had a worse jobless rate than Nova Scotia.”

Calgary, the oil and gas capital of Canada, recorded an unemployment rate of 8.6 percent—the worst among 33 Canadian metropolitan areas surveyed. Another major Alberta city, Edmonton, showed an unemployment rate of 7.7 percent, the sixth highest in Canada.

Manitoba distinguishes itself from the other provinces by providing extra points and preference for applicants with close relatives in the province. Close relatives include siblings, niece or nephew, aunt/uncle (maternal or paternal), first cousin, parent or grandparent.

New Brunswick offers specific pathways for applicants with qualified family members (the applicant must to be a non-dependent child, brother, sister, niece, nephew, or grandchild of the Family Supporter in New Brunswick). Your Family Supporter would also be able to provide you with on-the-ground facts about career and employment prospects, especially with the report of the Conference Board of Canada that New Brunswick is likely to join Alberta in recession this year (published by CBC New Brunswick, June 13, 2016).

Perhaps the province with the least expectation of economic recovery, Newfoundland-Labrador, the easternmost province of Canada, has had short booms and long-term busts, especially in the oil exploration and mining sectors. With the drop in oil prices and the shutting down of Labrador’s key iron mines in 2014, jobs were hard to find, even as the provincial government found itself in deficit. Maybe that was the reason why Newfoundland is one of the few provinces charging a $250 non-refundable fee for Express Entry and provincial nominee applicants.

Bright spots west and middle of Canada

Past halfway of 2016 reveals only a few Canadian provinces have improved in economic performance, with Manitoba and British Columbia leading the way.

Manitoba distinguishes itself from the other provinces by providing extra points and preference for applicants with close relatives in the province.

A July 2016 report by the Conference Board of Canada, noted, “Manitoba’s GDP is set to expand by 2. 1 per cent this year and 2.6 per cent in 2017, which would allow the province to be a reliable source of growth … due to strong employment and wage gains in recent years.”

The Manitoba government banks on its rich natural resources and fertile farmland for a sustained positive economic performance. Manitoba is not dependent on any single industry or commodity, although manufacturing is Manitoba’s largest sector accounting for over 12 percent of total GDP. Manitoba is home to Canada’s largest factories for furniture, doors, windows, and cabinetry. The province is also North America’s largest producer of intercity and urban buses.

In addition, large service operations, including two of Canada’s major financial corporations—Great-West Lifeco and IGM Financial—and one of the country’s largest media companies—CanWest Global Communications Corp.—have established corporate presence in Manitoba.

On the other hand, British Columbia, brims with confidence. The provincial government reports that “all signs point to British Columba holding on to the top spot in the provincial growth rankings in 2016.”

Citing the latest economic data published last June, yhr Royal Bank of Canada (RBC) noted that impressive job market statistic showed “the solid momentum … in 2014 and 2015” will carry over this year.

Domestic spending of BC households will lead economic growth with expected renewed “substantial activity in the retail, services, and housing sectors. Exports are expected to be a key driver of BC‘s forecasted growth rate of 2.3 percent in 2017.

RBC concluded that “with healthy job market conditions, confident households, and strengthening population growth (fueled by positive in-migration), British Columbia stands to benefit from skilled migration and vice versa.

Processing of provincial nomination applications and subsequent permanent resident applications at the Canadian Embassy in Manila could take 1 to 2 years.

If the oil price market remains unstable and terrorism continues to plague Europe and disrupts economic activity, resulting in national sentiments against migrants, the provincial migration to global Canadian cities might be focused only on British Columbia, Manitoba, Ontario, and Quebec, provinces which have shown to have the most pull factors for migrants—Filipino city dwellers and provincial migrants included.

For the rest of us the reverse migration begins if and when Federalism begins and the killings stop.

This story was originally published by The Manila Times, Philippines

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Poverty, Vulnerability and Social Protectionhttp://www.ipsnews.net/2016/08/poverty-vulnerability-and-social-protection/?utm_source=rss&utm_medium=rss&utm_campaign=poverty-vulnerability-and-social-protection http://www.ipsnews.net/2016/08/poverty-vulnerability-and-social-protection/#comments Thu, 04 Aug 2016 14:11:45 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=146391 Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.]]>

Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

By Jomo Kwame Sundaram
KUALA LUMPUR , Aug 4 2016 (IPS)

According to the World Bank, the MDG target of halving the share of the poor was achieved by 2008, well in advance of 2015, the target year. However, increased unemployment and lower incomes in recent times remind us that poverty is not an unchanging attribute of a shrinking group, but rather, a condition that billions of vulnerable persons risk experiencing.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Despite the various shortcomings of money measures of poverty, they nevertheless reflect the extent of vulnerability. For example, the estimated number of poor globally in 2012 more than doubles from 902 million to 2.1 billion when one raises the poverty line by 63% from $1.90/day to $3.10/day per person, suggesting that a very large number of those not deemed poor by the World Bank are very vulnerable to external economic shocks or changes in personal circumstances, such as income losses or food price increases.

Of the world’s poor, three-quarters live in rural areas where agricultural wage workers suffer the highest incidence of poverty, largely because of low productivity, seasonal unemployment and low wages paid by most rural employers. Vulnerability and economic insecurity have increased in recent decades with rising insecure, casual and precarious jobs involving part-time employment, self-employment, fixed-term work, temporary work, on-call work and home-working – often mainly involving women.

Such trends have grown with labour market liberalization, globalization, and declining union power. To make matters worse, macroeconomic policies in recent decades have focused on low inflation, rather than full employment, while limited social protection has exacerbated economic insecurity and vulnerability.

Additionally, lower economic growth rates, following the global financial crisis, would push 46 million more people into extreme poverty than expected before the crisis. This figure was later revised to 64 million, implying over 200 million people fell into extreme poverty due to food-fuel price hikes and the global financial crisis.

While some of these figures were subsequently revised downward, they suggest widespread vulnerability and economic insecurity, due to the inability of governments to respond with adequate counter-cyclical policies and in the absence of comprehensive universal social protection measures. During the East Asian financial crisis of 1997-1998, the official poverty rate in Indonesia shot up from 11% to 37% in just one year following the massive depreciation of the Indonesian rupiah.

Working poor

The working poor are defined as those employed, but earning less than the international poverty line ($1.25 a day in 2005 and $1.90 a day in 2011 in purchasing power parity [PPP] terms). Despite working, they cannot earn enough to get out of poverty. In most developing countries, most poor adults have to work, if only to survive, in the absence of adequate social protection.

According to the International Labour Organization (ILO), an estimated 375 million workers lived below the international poverty line in 2013. The number of working poor rises dramatically to close to 800 million when a $2-a-day poverty line is used. Women comprise the majority of the working poor, accounting for about 60%. It also found that progress in reducing the number of working poor has slowed markedly since 2008.

An estimated 1.42 billion people globally were in vulnerable employment in 2013, still increasing by around 1% in 2013, well above the 0.2% average increase in the years prior to 2008. The number was projected to exceed 1.44 billion in 2014, accounting for 45% of total world employment.

Social Protection

Most people who fall under the international poverty line are vulnerable, with no basic social protection. The lack of comprehensive universal social protection is a major obstacle to economic and social development, exacerbating high and persistent levels of poverty, economic insecurity, and inequality. Most countries do not have unemployment insurance or other similar social protection. In the most vulnerable countries, more than 80% have neither social security coverage nor access to health services.

The ILO’s World Social Protection Report, 2014/15 found a high or very high vulnerability in terms of poverty and labour market informality. Only 27% of the global population enjoy access to comprehensive social security systems, whereas 73% are only covered partially, or not at all. This means that about 5.2 billion people do not have access to comprehensive social protection, and many of them – in the case of middle- and low-income countries, nearly half their populations – live in poverty. About 800 million of them are working poor, of whom most work in the informal economy.

Although 2.3% of GDP worldwide is allocated to public social protection expenditure for income security during working age, there are wide regional, national and local variations, e.g. ranging from 0.5% in Africa to 5.9% in Western Europe. Only 28% of the global labour force is potentially or legally eligible for unemployment benefits. Yet, only 12% of unemployed workers worldwide actually receive unemployment benefits, with effective coverage ranging from 64% of unemployed workers in Western Europe to just over 7% in the Asia and Pacific region, 5% in Latin America and the Caribbean, and less than 3% in the Middle East and Africa.

Globally, about 39% and more than 90% of the population living in low-income countries have no right to healthcare. About 18,000 children die every day, mainly from preventable causes. On average, governments allocate 0.4% of GDP to child and family benefits, ranging from 2.2% in Western Europe to 0.2% in Africa, Asia, and the Pacific.

Fiscal austerity measures since the 2008-2009 global financial and economic crises have exacerbated the situation. Such measures are not limited to Europe; many developing countries have also adopted such measures, including reducing or ending food and fuel subsidies; cutting or capping wages; more narrowly targeting social protection benefits, and reducing public pension and health care systems.

These are contrary to the pledges countries made in adopting Agenda 2030 for the Sustainable Development Goals which include achieving universal protection and health care. Not surprisingly, fiscal austerity measures, including cuts in social protection expenditure, have not helped economic recovery, but instead, have exacerbated inequality

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Olympic Games End Decade of Giant Mega-projects in Brazilhttp://www.ipsnews.net/2016/08/olympic-games-end-decade-of-giant-mega-projects-in-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=olympic-games-end-decade-of-giant-mega-projects-in-brazil http://www.ipsnews.net/2016/08/olympic-games-end-decade-of-giant-mega-projects-in-brazil/#comments Wed, 03 Aug 2016 17:28:35 +0000 Mario Osava http://www.ipsnews.net/?p=146383 Modern office buildings and stores, all empty, are among the “white elephants” in the city of Itaboraí, near Rio de Janeiro, left by an aborted petrochemical and oil refinery complex in southeast Brazil. Credit: Mario Osava/IPS

Modern office buildings and stores, all empty, are among the “white elephants” in the city of Itaboraí, near Rio de Janeiro, left by an aborted petrochemical and oil refinery complex in southeast Brazil. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO , Aug 3 2016 (IPS)

An era of mega-events and mega-projects is coming to a close in Brazil with the Olympic Games to be hosted Aug. 5-21 by Rio de Janeiro. But the country’s taste for massive construction undertakings helped fuel the economic and political crisis that has it in its grip.

It is no mere coincidence that President Dilma Rousseff, suspended during her ongoing impeachment trial over charges of breaking budgetary regulations, will face the final vote in the Senate this same month.

Over the past decade, large-scale investment projects and public works, some not yet finished, others even abandoned, have driven the economy, triggered controversies, and fed the dreams and frustrations of Brazilians, mirroring and accelerating the rise and fall from power of the left-wing Workers’ Party (PT).

The country’s economic growth and the international prestige of then-president Luiz Inácio Lula da Silva (2003-2011) played a decisive role in the 2007 choice of Brazil as host of the 2014 FIFA World Cup.

Two years later, Rio de Janeiro was selected as the venue for the 2016 Olympic Games.

In 2007 Rio hosted the Pan American Games, which kicked off the string of sports mega-events in Brazil, including the FIFA Confederations Cup in 2013.

The wave of mega-infrastructure projects also began at the same time, in response to the needs of the energy and transportation industries, mainly for the export of mining and agricultural commodities.

Large hydropower dams, railways, ports, the paving of roads and the diversion of the São Francisco River to ease drought in the arid Northeast, as well as numerous public works in cities, formed part of the Growth Acceleration Programme (PAC), which included tax breaks and credit facilities.

Rousseff, who also belongs to the PT, succeeded Lula in the presidency after an election campaign in which she was referred to as “the mother of PAC” – an allusion to her skill in implementing and managing the programme that involved thousands of construction projects around the country, as Lula’s chief of staff.

In the oil industry, the 2006 discovery of enormous offshore petroleum deposits below a two-kilometre thick salt layer under rock, sand and deep water in the Atlantic prompted the launch of another major wave of construction, including four large refineries, two petrochemical complexes, and dozens of shipyards to produce oil drilling rigs, offshore platforms and tankers.

The two biggest refineries, in the Northeast, were cancelled in 2015, resulting in some 800 million dollars in losses. Another is partially operating.

Work on the last one – and on the petrochemical complex of which it forms part, near Rio de Janeiro – was interrupted, leaving empty a number of office buildings and hotels that were built in surrounding towns and cities to service an industrial boom and prosperity that never arrived.

The Belo Monte hydroelectric plant’s turbine room in the northern Brazilian state of Pará, under construction in 2015. The mega-project is to be finished in 2019. Credit: Mario Osava/IPS

The Belo Monte hydroelectric plant’s turbine room in the northern Brazilian state of Pará, under construction in 2015. The mega-project is to be finished in 2019. Credit: Mario Osava/IPS

Most of the shipyards went under or shrunk to a minimum. In Niterói, Rio de Janeiro’s sister city, half of the 10 shipyards closed and over 80 percent of their 15,000 workers were laid off.

Possibly the house of cards of this fast-track development would have come tumbling down regardless, but several destructive factors compounded the problem and accelerated the approach of the disaster.

Oil prices plunged in 2014, simultaneously with the outbreak of the Petrobras bribery scandal that has ensnared hundreds of legislators and business executives.

In addition, the governments of Lula and Rousseff attempted to curb inflation by blocking domestic fuel price increases – another blow to the finances of Petrobras, the state oil company, which almost collapsed under the weight of so many difficulties.

The railways did not fare any better. Construction of two railroads – one private and another public – designed to cross the impoverished but fast-growing Northeast at different latitudes ground to a halt and are candidates to become white elephants due to the suspension of mining industry projects, whose output they were to transport.

As a result, the construction of a new seaport and the expansion of two others were also suspended. 

At least the hydroelectric plants are in the process of being completed. But they are suffering the ups and downs of the power industry. There are delays in the installation of power lines and electricity consumption has slumped as a result of the economic recession that broke out in 2014, expanding spare capacity and driving up losses in power generation and distribution plants.

The four largest hydropower plants, built on fragile rivers in the Amazon rainforest, are facing accusations of causing environmental damage and violating the rights of local populations: indigenous people, riverbank dwellers and fishing communities.

Belo Monte, the world’s third-largest hydroelectric dam, with a capacity to generate 11,233 MW, was accused of “ethnocidal actions” against indigenous people by the public prosecutor’s office and is facing 23 lawsuits on charges of failing to live up to legal requirements.

At the same time, it is also criticised by proponents of hydropower, because it will generate, on average, only 40 percent of its potential. With a relatively small reservoir, an alternative that was chosen to reduce the environmental impact, it will be at the mercy of the marked seasonal variations in water flow in the Xingú River, where the flow is 20 times lower in the dry season than the rainy season.

Roads have not formed part of the recent wave of mega-projects. Although they are being paved and widened, they were originally built in earlier waves of construction projects, in the 1950s and 1970s.

Brazil’s addiction to massive construction projects was probably born with the emergence of Brasilia, built in a remote, inhospitable location over 1,500 km from the biggest cities, São Paulo and Rio de Janeiro, in just five years, during the administration of Juscelino Kubitschek (1956-1961).

This bold feat was completed with the construction of roads running from the new capital in all directions.

But these long roads that cut across the country didn’t become paved highways, with proper bridges, until decades later.

Seen as a success story, Brasilia has prompted politicians to seek to make their mark with major construction projects, although the city was only part of the broader plan of Kubitschek, who pushed forward the development of Brazil’s steel industry by spurring the growth of the automotive industry.

The widespread belief that Brasilia was the big driver of settlement and development of the west and north of the country ignores the role played by the expansion of agriculture.

The 1964-1985 military dictatorship later fed the ambition of turning Brazil into a great power, with a nuclear programme that took three decades to build two power plants, the construction of two of the world’s five biggest hydroelectric plants, and roads to settle the Amazon.

The Trans-Amazonian highway, which was designed to cut across northern Brazil to the Colombian border but is incomplete and impassable for large stretches during the rainy season, is a symbol of failed lavish projects that helped bring down the dictatorship.

The origins of the megalomania can also be traced to the 1950 FIFA World Cup, for which the Maracana Stadium was built in Rio de Janeiro – for decades the largest in the world – holding held up to 180,000 spectators back then, more than double its current capacity.

The historic defeat that Brazil suffered at the hands of Uruguay in the final match in 1950, a devastating blow never forgotten by Brazilians, did not keep this country from hosting the 2014 World Cup, building new stadiums to suffer yet another shattering defeat, this time to Germany, which beat them 7-1 in the semi-finals.

Now, in the grip of an economic crisis expected to last for years, Brazil is unlikely to embark on new megaprojects. And the hope that they can drive development will have been dampened after so many failed projects and the heavy environmental, social and economic criticism and resistance.

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Preventing the Next Panichttp://www.ipsnews.net/2016/08/preventing-the-next-panic/?utm_source=rss&utm_medium=rss&utm_campaign=preventing-the-next-panic http://www.ipsnews.net/2016/08/preventing-the-next-panic/#comments Tue, 02 Aug 2016 19:21:26 +0000 Robert Samuelson http://www.ipsnews.net/?p=146370 By Robert J. Samuelson
WASHINGTON, DC, Aug 2 2016 (Manila Times)

The hostility toward Wall Street remains so great that both political parties say, in their platforms, that they’d like to break up America’s biggest banks. But before engaging in this drastic economic surgery, it’s worth examining whether Dodd-Frank is working. Recall that the law, named after its congressional sponsors, former Sen. Senator Christopher Dodd and former Rep. Barney Frank, overhauled the financial system to make it more panic proof. Is it? The answer may surprise.

Robert J. Samuelson

Robert J. Samuelson

The Obama administration’s position is clear: “We can say without question that Wall Street reform has made our financial system safer and sounder,” Treasury Secretary Jacob Lew recently said on the sixth anniversary of the law’s signing. Up to a point, this is true. Banks are required to have more capital than before the 2008-09 financial crisis, and this creates a larger buffer against losses.

Capital typically — but not always — consists of shareholders’ investments in banks. In 2016, the ratio of the biggest bank-holding companies’ common stock to risk-weighted assets (loans, securities) was 12.2 percent, more than double its level in early 2009, says the Federal Reserve.

This means that banks can better survive severe economic shocks — deep recessions or speculative excesses. Since 2009, the Fed regularly subjects major banks to a computer-driven “stress test.” It simulates a deep slump and examines how banks would fare. In the latest stress test, unemployment was assumed to double to 10 percent, the stock market to lose half its value, and the economy’s output to drop nearly 8 percent, larger than the decline in the Great Recession.

Under these conditions, estimated bank losses were huge: $385 billion, says the Fed. Borrowers defaulted; bonds lost value. Still, sufficient capital remained that all 33 bank holding companies — those with assets exceeding $50 billion, representing about four-fifths of the banking sector — continued to meet regulatory capital requirements. The capital ratio dropped from 12.2 percent to 8.4 percent. But that was well above the 4.5 percent required minimum (for large banks, the minimum can be higher).

This is good news. The essence of the 2008-09 financial crisis was a panic among large depositors (hedge funds, pension funds, corporations) — a bank “run.” They withdrew their money from banks, because they didn’t know whether the banks were solvent. If banks’ capital cushions had been larger, these fears might have been allayed and the withdrawals limited. In reality, the outflows threatened a second Great Depression, as banks cut lending and dumped bonds to meet depositor demands.

What avoided another Depression was the quick response of the Federal Reserve, which — acting in its role as “lender of last resort” — supplied trillions of dollars of credit to banks and other financial institutions to offset the loss of private credit. Without these infusions, who knows what would have happened.

Now, the bad news. In Dodd-Frank, Congress makes it much harder for the Fed to act as lender of last resort, says Hal Scott, a professor at Harvard Law School and a respected expert on financial regulation, in his book “Connectedness and Contagion: Protecting the Financial System from Panics.” The consequences, argues Scott, could be catastrophic. A US depression would “pose challenges to our political system,” as well as spreading abroad and undermining the US global role.

During the financial crisis, the Fed relied on section 13(3) of the Federal Reserve Act. This provision gave the Fed wide discretion in making loans when “unusual and exigent” circumstances prevailed. Now, Dodd-Frank has imposed restrictions on 13(3). As Scott shows, these include: The secretary of the treasury must approve all nonbank loans; there can be no nonbank programs for a single borrower; collateral requirements are toughened; loans must be disclosed within a year. Some of these may be sensible alone; together, they create an obstacle course for crisis lending.

Scott estimates that $7 trillion in funds are potentially vulnerable to panicky investor runs. Breaking up the big banks is no solution if, say, the investor run strikes money-market mutual funds.

There is a real issue here. The Fed has enormous powers; democratically elected officials think they should exercise some control over those powers. But a financial crisis — a panic — is by its very nature a rapidly moving event that usually was unpredicted. (If anticipated, it could likely be defused.) Unless the crisis is dealt with decisively, it could become a monster that cannot be contained.

The verdict on Dodd-Frank is mixed. One goal was to improve short-term financial stability. That has been achieved. The other goal was political: to handcuff those who engineered the financial “bailout,” which — though necessary — is immensely unpopular. That explains why Congress restricted the Fed. Ironically, legislation designed to protect us from financial panic may make some future panic more likely.

©2016, THE WASHINGTON POST WRITERS GROUP

This story was originally published by The Manila Times, Philippines

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The -Sad- US Nominationshttp://www.ipsnews.net/2016/08/the-sad-us-nominations/?utm_source=rss&utm_medium=rss&utm_campaign=the-sad-us-nominations http://www.ipsnews.net/2016/08/the-sad-us-nominations/#comments Tue, 02 Aug 2016 11:00:13 +0000 Johan Galtung http://www.ipsnews.net/?p=146351 The author is professor of peace studies, dr hc mult, is founder of the TRANSCEND Network for Peace, Development and Environment and rector of the TRANSCEND Peace University-TPU. He has published 164 books on peace and related issues, of which 41 have been translated into 35 languages, for a total of 135 book translations, including ‘50 Years-100 Peace and Conflict Perspectives,’ published by the TRANSCEND University Press-TUP.]]>

The author is professor of peace studies, dr hc mult, is founder of the TRANSCEND Network for Peace, Development and Environment and rector of the TRANSCEND Peace University-TPU. He has published 164 books on peace and related issues, of which 41 have been translated into 35 languages, for a total of 135 book translations, including ‘50 Years-100 Peace and Conflict Perspectives,’ published by the TRANSCEND University Press-TUP.

By Johan Galtung
ALICANTE, Spain, Aug 2 2016 (IPS)

The US mountain, so rich in human talent, labored and produced the two dwarfs for the huge job. A radical Republican strongman[i] and a conventional Democrat, disliked by 62% and 67%–bad for electing the president of a country that still puts some stamp on the world.

Johan Galtung

Johan Galtung

Trump challenged, successfully, the Republican machine. The Democratic machine got a Hillary who challenged absolutely nothing.

In both parties, in the name of unity, a veil was drawn over these basic US conflicts today, not between the parties, but within. Cruz did not give in, Sanders did–maybe bribed by some verbal rephrasing.

So there they are. Trump has his base in the vast WASP, White Anglo-Saxon Protestant middle class middle-aged who used to rule the country [ii], promising to make America–meaning WASP–great again.

Hillary has her base in that other Democratic Party, the Southern Democrats, in older people and the groups traditionally voting Democrat–Blacks, Hispanics, cultural minorities, women and much of labor– greatly aided by that wasp, Trump, stinging all of them.

Younger people may abstain. So may many, even most, in the choice between a less war-and-market Republican and a market-and-war Democrat willing, on sale for more wars.

Add the careers of these big Egos: one a businessman wrecking others, the other wrecking state secrets. “Stop him by all means” and “Lock her up” become mantras heard often. The high dislikes are well rooted. BUT, there is a difference: there is also much enthusiasm for Trump; none, it seems, for Hillary.

The election campaign started long before the nominations were over and the foretaste is bad. One thing is the candidates fighting; another, the burning issues for the USA and the world. They may both be right when certifying that the other is unfit for the presidency.

But that is still personal, ad hominem, cutting huge political cakes along personal lines. How about the issues facing the USA?

Take the issue-complex “speculation-massive inequality-misery”. 1% vs 99%. Traditionally, causes for the Democrats.

Sanders got at it; but his proposals were unclear or missing. Here some policy staples that the Democrats missed: separating investment and savings banking; holding Capital responsible for failures, not drawing upon State = tax-payers’ money; attacking inequality by illegalizing companies with the CEO:worker salary ratios way above, say, 10; lifting the bottom of US society with credits for the basic needs focused cooperatives.

How could Democrats justify such policies? Through Human Rights:

universal_620

What a marvelous collection of rights and freedoms! Democrats should not forever be accepting the US non-ratification of ESC human rights.

Trump, eager to make his middle class great, may actually do some ESC at the expense of UD to protect them from “trade” with loss of jobs from above and the threat of revolution, with violence from below that has already started, along racial lines, initiated by the White police.

Take the issue-complex “foreign policy-war”. “An isolationist Trump could save American lives”[iii] (and many more non-American lives). But doing so to save money is not good enough; take the issues head on.

“Clinton and Trump jostle for a position over North Korea”[iv] is more to the point: Trump is open to negotiate directly with Kim Jung-un, Hillary sticks to conventional isolation-sanctions-multilateralism.

Trump might become the first US president to take North Korea on the word: “peace treaty-normalization-a nuclear-free Korean peninsula”. Hillary’s line leads nowhere. What is missing is an open debate on the two untouchables: US foreign policy and the US right and duty to war.

The “less-than-Third World” infrastructure” has been mentioned.

However, how about the suicide and homicide rates? Not only the easy gun access aspect, what it says about demoralized US society? How about the shortening of lives due to deteriorating living conditions? How about the climate and the environment, specifics, not generalities? How about the whole American dream or dreams becoming exactly that, a dream only, dreamt in the past?

Trump has a new dream for his chosen people, greatness, Hillary’s dream is status quo since nothing has gone wrong.

And to that we may add: how about US democracy? Does it exist?

“Clinton did not run a clean campaign, she cheated. Caucus after caucus, primary after primary, the Clinton team robbed Sanders of votes that were rightfully his. Here is how. Parties run caucuses. States run primaries. The DNC controlled by Clinton allies like Chairman Debbie Wasserman Schultz[v]. Democratic governors are behind Clinton: State election officials report to them. These officials decide where to send voting booths, which votes get counted, which do not. You thought this was a democracy? Ha.”[vi]

The details make the “Ha” an understatement. And that in a country so bent on lecturing to others on their lack of democracy. Forget it. Even so, Sanders won 22 states; had basic rules been respected, he would have made a majority of states even if Clinton had delegate majority.

“The world is watching US elections,” CNN says with nationalistic pride. In disbelief and dismay, waiting for guidance beyond mutual name-calling. They may be dwarfs relative to a giant job. But nobody is born a president; they are made by the campaigns and on the job.

So far, the impression is that Trump learns more than Clinton, testing out new ideas well before he can put them into practice. Because he has more to learn, having no experience? Yes, he has a lot to learn. But her “experience”, in killing? In not solving conflicts? Maybe she has a lot to unlearn. Any evidence she does that? None whatsoever.

This gives an edge favoring Trump. We know what to expect from Hillary; not from Trump. On the two huge issue-complexes mentioned above, Hillary spells status quo, Trump not. Trump is gambling on his own–proven to be very high–persuasion capacity. Not quite hopeless.

Notes:
[i]. J. R. Hibbing and E.Theiss-Morse, in an article in Washington Post, make the point that “A Surprising amount of Americans dislike how messy democracy is. They like Trump.”, english@other-news.info, 17 May 2016. In their study 60 percent believed that “government would work better if it were run like a business”.

[ii]. Bryce Covert, “America was great, again”, INYT 17 May 2016: “Donald Trump’s campaign promise is appealing because it promises–to make the country great again for the people who had it pretty great in the first place”.

[iii]. Dough Bandow, Japan Times, 31-05-2016.

[iv]. INYT, 20 May 2016.

[v]. Now dismissed because of an e-mail scandal.

[vi]. Ted Rall, “Clinton beating Sanders by hook and by crook”, Japan Times, 05 July 2016.

Johan Galtung’s article originally appeared on Transcend Media Service (TMS) on 25 July 2016: TMS: The US Nominations.

The statements and views mentioned in this article are those of the author and do not necessarily represent those of IPS.

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Mainstream Media Are Betraying Humanityhttp://www.ipsnews.net/2016/08/mainstream-media-are-betraying-humanity/?utm_source=rss&utm_medium=rss&utm_campaign=mainstream-media-are-betraying-humanity http://www.ipsnews.net/2016/08/mainstream-media-are-betraying-humanity/#comments Mon, 01 Aug 2016 19:21:32 +0000 John Scales Avery http://www.ipsnews.net/?p=146343 The author was part of a group that shared the 1995 Nobel Peace Prize for their work in organising the Pugwash Conferences on Science and World Affairs. He is Associate Professor Emeritus at the H.C. Ørsted Institute, University of Copenhagen. He was chairman of both the Danish National Pugwash Group and the Danish Peace Academy, and he is the author of numerous books and articles both on scientific topics and on broader social questions. His most recent book is Civilization’s Crisis in the 21st Century.]]>

The author was part of a group that shared the 1995 Nobel Peace Prize for their work in organising the Pugwash Conferences on Science and World Affairs. He is Associate Professor Emeritus at the H.C. Ørsted Institute, University of Copenhagen. He was chairman of both the Danish National Pugwash Group and the Danish Peace Academy, and he is the author of numerous books and articles both on scientific topics and on broader social questions. His most recent book is Civilization’s Crisis in the 21st Century.

By John Scales Avery
OSLO, Aug 1 2016 (IPS)

Physicians have a sacred duty to their patients, whose lives are in their hands. The practice of medicine is not a business like any other business. There are questions of trust and duty involved. The physician’s goal must not be to make as much money as possible, but rather to save lives.

John Scales Avery

John Scales Avery

Are broadcasting and journalism just businesses like any other business? Is making as much money as possible the only goal? Isn’t the truth sacred? Isn’t finding the truth and spreading it a sacred trust?

Questions of thermonuclear war are involved, or catastrophic long-term climate change.

The survival of human civilization and the survival of the biosphere depend completely on whether the public receives true and important facts, or whether it receives a mixture of lies, propaganda and trivia.

If the erratic, self-centered, bigoted, racist, misogynist, neofascist Republican candidate, Donald Trump, is elected to the US Presidency in 2016, it will be because mass media like CBS find his deliberately outrageous outbursts entertaining and good for ratings.

Besides being manifestly unqualified for the position of President, Trump is an avid climate change denier, and he has said that if elected, he would repudiate the Paris Agreement.“Donald Trump is bad for America, but he is good for CBS” Leslie Roy Moonves, President of CBS

We need to wake up to the real dangers that are facing humanity. Terrorism is not a real danger. The number of people killed by terrorists each year is vanishingly small compared to the number killed in traffic accidents, not to mention the tens of millions who die each year from starvation and preventable diseases.

But the mass media shamelessly magnify terrorist events (some of which may be false flag actions) out of all proportion in order to allow governments to abolish civil liberties and crush dissent.

Meanwhile, the real dangers, the threat of thermonuclear war, the threat of catastrophic climate change, and the threat of a large-scale global famine, these very real threats remain unaddressed.

Our mainstream media have failed us. They are betraying humanity in a time of great crisis. Our educational systems are also failing us, too timid and tradition-bound to warn of the terrible new dangers that the world is facing.

What we need from all the voices that are able to bring a message to a wide public is a warning of the severe dangers that we are facing, combined with an outline of the practical steps that are needed to avert these dangers.

We need realism, we need the important facts, but we also need idealism and optimism.

The fact that our future is in danger must not be an excuse for dispair and inaction, but instead a reason for working with courage and dedication to save the future.

The statements and views mentioned in this article are those of the author and do not necessarily represent those of IPS.

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US Government Report Exposes Exaggerated TPPA Growth Claimshttp://www.ipsnews.net/2016/07/us-government-report-exposes-exaggerated-tppa-growth-claims/?utm_source=rss&utm_medium=rss&utm_campaign=us-government-report-exposes-exaggerated-tppa-growth-claims http://www.ipsnews.net/2016/07/us-government-report-exposes-exaggerated-tppa-growth-claims/#comments Thu, 28 Jul 2016 13:29:22 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=146283 Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.]]>

Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jul 28 2016 (IPS)

A US government agency acknowledges that the Trans-Pacific Partnership (TPP) will not deliver many economic benefits promised by its cheerleaders. The 2016 report by the United States International Trade Commission (ITC) acknowledges that the TPP will not deliver many gains claimed by the US Trade Representative (USTR) and the Peterson Institute of International Economics (PIIE) although it uses similar methodology and assumes that the TPP will not change the US trade deficit as a share of GDP.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

The ITC’s credibility has declined over the years as it earned a reputation for cheer-leading FTAs. It had grossly underestimated US trade deficit increases following virtually every ‘free trade’ pact it assessed. Its projections understated the large US deficit increase with Mexico following the North American Free Trade Agreement (NAFTA), the huge trade deficit explosion with China following ‘permanent normal trade relations’, and the trade deficit spike with South Korea following the US-Korea trade agreement.

To assess the impact of the TPP, the ITC used its variant of a computable general equilibrium (CGE) model modified to take account of foreign direct investment (FDI) effects. To be sure, the ITC accepts growth to rise due to a significant increase in FDI, although there is no strong evidence or even logic that the TPP provisions will ensure the increase in FDI and growth projected. In fact, the procedure used involves many arbitrary elements, such as the impact on the OECD’s Regulatory Restrictiveness Index (RRI), and the impact of the latter on productivity, FDI flows and GDP, both in the US and abroad.

However, the ITC accepts only a fraction of the overall growth attributed to ‘non-trade measures’ (NTMs) by the 2016 PIIE — and World Bank — assessment, effectively rejecting many claims of growth attributed to other NTMs. Thus, for example, the ITC estimates exports will increase by only 1% due to NTMs by 2032 as against the PIIE’s estimate of 9.1% by 2030.

Thus, the economic gains from the TPP are much more modest for the ITC, with US GDP growing by only $42.7 billion (0.15%) by the year 2032, or by an average of less than 0.01% annually. Indeed, the ITC found that US manufacturing output in 2032 would be $10.843 billion lower with the TPP than without it, with manufacturing employment lowered by 0.2%! And while vehicles production would gain, automotive parts, textiles and chemicals output would contract.

Overall projected gains to US real national income are $57.3 billion, or 0.23%, by 2032, implying an average annual increase of slightly over 0.01% over the next 17 years. The much larger increase in US national income compared to GDP suggests that the TPP will significantly increase (mainly corporate) income from economic activity abroad, presumably from outward FDI. It is not clear how much of this is due to enhanced intellectual property rights (IPRs) or TPP-related financial liberalization, or if such income changes have been considered. An alternative possibility is that the terms of trade will change sufficiently in favour of the US.

US trade balance to worsen

The ITC expects the TPP to have small positive effects on the US economy. Dropping the usual CGE modelling assumption of an unchanging trade balance, it adopts a controversial methodology to project changing trade balances. According to the ITC, US exports and imports would be $27.2 billion (1.0%) and $48.9 billion (1.1%) higher than ‘baseline projections’ without the TPP, thus increasing the US trade deficit to $21.7 billion in 2032. It projects that US exports to new TPP and other FTA partners would grow by $34.6 billion (18.7%) while US imports from them would rise by $23.4 billion (10.4%).

The ITC projects increased exports of $27.2 billion in 2032 (in 2017 US dollars), less than a tenth of the PIIE’s projection of $357 billion in 2030 (in 2015 dollars). It expects manufactured exports to rise by $15.2 billion, while such imports would increase by $39.2 billion, increasing the net manufactures’ trade deficit by $24.0 billion.

Although US services’ output is projected to increase by $42.3 billion (0.1%) due to the TPP, the net services’ trade surplus is expected to contract as the increased services’ imports of $7.0 billion would exceed the increased exports of $4.8 billion. Exports of services to non-TPP partners are projected to fall by $11.8 billion, less than the projected increase of $16.6 billion to TPP partners.

The ITC report also projects worsening trade balances for 16 of the 25 US sectors it featured, including vehicles, wheat, corn, auto-parts, titanium products, chemicals, seafood, textiles and apparel, rice and even financial services. It projects a declining market share of US manufactures, natural resources and energy of $10.8 billion as such exports increase by $15.2 billion while imports rise by $39.2 billion by 2032. In the US, agriculture would gain most, with output $10.0 billion, or 0.5%, higher by 2032. However, the costs and implications of the still growing US agricultural – including biofuel – production subsidies are largely ignored in the report.

Who gains, who loses?

While dropping the typical CGE modelling assumption of constant labour supply, the ITC nevertheless seems to assume that the economy naturally tends to full employment. It thus projects overall employment will increase by 128,000 full-time jobs, or by 0.07%, due to the TPP. The trade deficit increase due to TPP implementation would result in 129,484 American job losses, including a manufacturing employment drop of 0.2%. Hence, this has to be largely attributed to services employment growth despite the expected fall in the services trade surplus.

Even if a more comprehensive and balanced assessment of the costs and risks of TPP provisions finds the potential for improved net economic welfare for all in all TPP countries (which the ITC report does not claim to show), TPP measures will not compensate losing participating economies and stakeholders. And while there may be measures available for beneficiaries to compensate losers in some national economies, nothing in the TPP itself will ensure such compensation, let alone adequately compensate those who will lose.

Furthermore, the ITC analysis does not seem to consider public health and consumer welfare losses due to higher prices, and reduced access due to broader, stronger and longer patent and copyright protection — although higher prices for pharmaceutical drugs, software and other forms of intellectual property will impose substantial costs on the public and governments.

Implementing the TPP will greatly profit some large corporations, especially those getting IPR and financial rents. Meanwhile, real incomes for employees, especially the less skilled, are likely to be further depressed, as in the past, due to international competition following trade liberalization. Compensation for such losers is virtually unheard of in developing countries, and declining in developed countries, as they are hardly ever advocated by current conventional wisdom, let alone in the TPP Agreement’s 6350 pages.

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How Did We Arrive at This Chaos?http://www.ipsnews.net/2016/07/how-did-we-arrive-at-this-chaos/?utm_source=rss&utm_medium=rss&utm_campaign=how-did-we-arrive-at-this-chaos http://www.ipsnews.net/2016/07/how-did-we-arrive-at-this-chaos/#comments Tue, 26 Jul 2016 13:28:11 +0000 Roberto Savio http://www.ipsnews.net/?p=146233 Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News. ]]>

Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News.

By Roberto Savio
ROME, Jul 26 2016 (IPS)

A Chinese curse is “May you live in interesting times”. That meant that too many events would disrupt the essential elements of harmony, on which the Chinese pantheon is based.

We certainly live in very interesting times where every day dramatic events pile on us, from terrorism to coup d’etat, from climate disaster to the decline of institutions and ever increasing social turmoil. It would be important, even if very difficult, to look in a nutshell why we are in this situation now – “lack of harmony” . So here goes a dramatically compressed explanation.

Roberto Savio

Roberto Savio

Let us start from a little known fact. After the Second World War, there was a general consensus on the need to avoid the repetition of its horrors. The United Nations served as the meeting place for all countries, and the Cold War created as a reaction, an association of the newly independent countries, the Non Aligned countries, which acted as a buffer between the East and West camps. More, the North South divide become the most important aspect of international relations. So much so that in 1973, the United Nations General Assembly adopted unanimously a resolution on a New International Economic Order (NIEO).The world agreed to establish a plan of action to reduce inequalities, foster global growth and make of cooperation and international law the basis for a world in harmony and peace.

After the adoption of the NIEO, the international community started to work in that direction and after a preparatory meeting in Paris in 1979, a summit of the most important heads of state was convened in Cancun, Mexico in 1981, to adopt a comprehensive plan of action. Among the 22 heads of state, came Ronald Reagan, who was elected a few weeks before, and this is where he found Margaret Thatcher who was elected in 1979. The two proceeded to cancel the NIEO and the idea of international cooperation. Countries would do policy according to their national interests, and did not bow to any abstract principle. The United Nations started its decline as the meeting place on governance.

The place for decisions became the G7, until then a technical body, and other organizations, which would defend the national interests of the powerful countries.

At the same time, three other events did help Reagan and Thatcher to change the direction of history.

One was the creation of the Washington’s consensus, elaborated in 1989 by the American Treasure, the International Monetary Fund, and the World Bank, which imposed as policy that the market was the only real engine of societies. States were an obstacle, and they should shrink as much as possible (Reagan also considered abolishing the Ministry of Education). The impact of the Washington Consensus on the ‘Third World’ was a very painful one. Structural adjustments severely cut the fragile public system.

The second was the fall of the Berlin Wall, also in 1989, which brought an end to ideologies, and obliged adoption of neoliberal globalization, which turned out to be an even more strict ideology. The main points of neo-liberal globalization included: the rule of the market (liberating “free” enterprise or private enterprise from any bonds imposed by the government); cutting public expenditure for social services (and reducing the social safety net); deregulation (reducing government regulation of everything that could diminish profits); privatization (selling state-owned enterprises, goods and services to private investors); eliminating the concept of “the public good” or “community”and replacing it with “individual responsibility (pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves – then blame them, if they fail, as “lazy”).

The third was the progressive elimination of rules of the financial sector, started by Reagan and completed by Bill Clinton in 1999. Deposit banks were able to use the depositor’s money for speculation. Finance, that was considered to be the lubricant of economy, went on its own way, embarking on very risky operations, not any longer linked to the real economy. Now we have for every dollar of production for goods and services, 40 dollars of financial transactions.

Nobody defends any longer the Washington Consensus, and the neoliberal globalization. It is clear to all that while at macro level, globalization increased trade, finance and global growth, at microeconomic level it has been a disaster. The proponents of neoliberal globalization claimed that the growth would reach everyone in the planet. Instead, growth has been concentrating more and more in fewer and fewer hands. Six years ago, 388 individuals owned the same wealth as that of 3.6 billion people. In 2014, the number of the super wealthy come down to 80 individuals. In 2015, this number came down to 62 individuals. The IMF and the World Bank have been asking to reinforce the state as the indispensible regulator, reversing their policy. But the genie is out of the bottle. Since the fall of the Berlin Wall, Europe has lost 18 million of its middle class citizens and the US 24 million. On the other hand, there are now 1,830 billionaires with a net capital of 6.4 trillion dollars. In the UK, the level of inequality in 2025 is expected to be the same at the time of Queen Victoria in 1850 at the time of the birth of capitalism.

The new world created by Reagan is based on greed. Some historians claim that greed and fear are the two main engines of history; and values and priorities change in a society of greed.

Let us come to our days. We have again a new group of three horses of Apocalypse. The damages of the previous 20 years (1981-2001), are compounded by those of the continuing twenty years (2001-2021) and we are not through yet .

The first, was that in 2008 the banking system of the US went berserk for absurd speculations on mortgages. That crisis moved to Europe in 2009, caused by the falling value of the state’s title, like the Greek ones. Let us recall that to save the banking system, countries have spent close to 4 trillion dollars. An enormous amount, if we consider that banks still have toxic titles for 800 billion dollars. Meanwhile the banks have paid 220 billion dollars in fines for illegal activities. No banker has been incriminated. Europe is not yet back to its pre-crisis level of life. Meanwhile, many jobs have disappeared because of delocalization to the cheapest place of production, and jobs with substandard salaries have increased, together with precarious ones.

According to the Organization for Economic Co-operation and Development (OECD), today a worker makes in real terms 16% less than before the crisis. This has affected especially young people, with a European average of 10.5% of youth unemployment. Yet, the only stimulus for growth is for the banking system, into which the European Central Bank‚ is injecting 80 billion of dollars per month. This would have solved easily the youth’s unemployment.

Economists speak now of a “New Economy”, where unemployment is structural. From 1950 to 1973, world’s growth was over 5% per year. It came down to about 3% during 1973 and 2007 (OPEP’s blockade of petrol price in 1973 marked the shift.). Since 2007 we are not able to reach 1%. We have to add the growing unemployment that the technological development is causing. Factories need a fraction of the workers they had before. The Fourth Industrial Revolution (robotizing), will bring robot production, now at 12%, to 40% in 2025. Some mainstream economists, like Larry Summers, (the establishment voice) say that we are in a period of stagnation that will last for many years. Fear for the future has become a reality, fueled by terrorism and unemployment, with many dreaming that is possible to go back to the better yesterday. This is what populist leaders, from Donald Trump to Le Pen, are riding. A consequence of the crisis was that in several European countries populist parties, engaged in a nationalist call, riding xenophobia and nationalism have emerged, 47 at the last count. Several of them are already in coalitions that govern, or directly, like in Hungary, Poland, Slovakia. Now watch the next Austrian elections.

The second horse of Apocalypse has been the result of the interventions made in Iraq by US, and then Libya and Syria by Europe (with a particular role by former French president Nicolas Sarkozy).

As a result, in 2012 Europe started to receive massive immigration, for which there was no preparation. Suddenly, people were afraid of the human tide coming, and its impact in workplace, culture, religion, etc. That become a major factor for fear.

And then the third horse was the creation of ISIS in Syria, in 2013, one of the gifts of the invasion in Iraq. Let us not forget the global crisis started in 2008, and since then populism and nationalism were on the rise. But ISIS spectacular media impact and the radicalization of many young Europeans from Arab descent, usually from the margin of societies and laws, accentuated Fear, and was a gift for the populist, now able to use xenophobia for mobilizing disaffected and insecure citizens. The decline of European institutions has brought several countries (after Brexit), to call for a deep revision of the European project. Hungary is going for a referendum on 2 of October. Would you accept an immigrant quota imposed by the EU, against the will of the Hungarian parliament? The same day there will be the re-run of Austrian elections, that the extreme right wing lost for 36,000 votes. Then the Netherlands, France and Germany will follow, with an expected increase of the extreme right wing parties. At the same time, Poland and Slovakia also want to have a referendum about the EU. It could well be that at the end of 2017, European institutions will be deeply wounded.

The real problem is that since the failed Cancun Summit in 1981, countries have lost the ability to think together. India, Japan, China, and many other are going through a tide of nationalism. In Cancun, all participants, from Francois Mitterrand to Indira Gandhi, from Julius Nyerere to Pierre Trudeau shared a set of common values.: social justice, solidarity, the respect of international law, and the conviction that strong societies were the basis for democracy (except of course for Reagan and Thatcher). She famously declared: there is no such thing as a society, there are only individuals). They shared many books. They considered peace and development as the paradigm for governance. All this has been swept away. Politicians, left without ideologies, subordinated to finance, have turned mainly to an administrative debate, on singles issues, without a framework, where left or right have become difficult to discern. We are clearly in a period of Greed and Fear.

Time is not helping. In 1900 Europe had 24% of the world population. At the end of this century, Europe will be 4%. Nigeria will be more populous than the US. Africa, now at 1 billion, will be 2 billion by 2050, and 3 billion by 2100. It is time now to engage all together to discuss how to face the coming world. We took 25 years to reach an agreement on climate, maybe it is too late. On migration and employment, two and a half decades is an eternity. But this must be a global agreement, not just a kneejerk reflex by Chancellor Angela Merkel in total solitude, without even consulting French President Francois Hollande. But this kind of agenda is politically unimaginable. How to discuss these issues with Le Pen, Donald Trump, the other emerging populists and the nationalist tide that runs in the world?

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Biswal’s Dreams Just Pretentious Prattlehttp://www.ipsnews.net/2016/07/biswals-dreams-just-pretentious-prattle/?utm_source=rss&utm_medium=rss&utm_campaign=biswals-dreams-just-pretentious-prattle http://www.ipsnews.net/2016/07/biswals-dreams-just-pretentious-prattle/#comments Mon, 25 Jul 2016 13:14:15 +0000 Editor Sunday Times http://www.ipsnews.net/?p=146199 By Editor, Sunday Times, Sri Lanka
Jul 25 2016 (The Sunday Times - Sri Lanka)

So Nisha Biswal, the US State Department’s point person on Sri Lanka, says that Sri Lanka could be another Singapore.

That will be the day. If after six visits to the country in 20 months she has still not grasped the basics of Sri Lanka’s socio-political culture and mores, the lack of respect for law and order and the rule of law infused by political interference and intimidation, she could hardly be a messenger of hope and good sense.

Nisha Biswal told a group of Sri Lankan business leaders that Lee Kuan Yew wanted to model his country on Ceylon and now it is time for Sri Lanka to be turned into a Singapore

Nisha Biswal told a group of Sri Lankan business leaders that Lee Kuan Yew wanted to model his country on Ceylon and now it is time for Sri Lanka to be turned into a Singapore

Perhaps she has become accustomed to the obsequiousness of foreign minister Samaraweera for things western and his habit of clinging on to the hands of every foreign visitor seemingly as a token of eternal friendship but actually in case they make a break for a quick getaway as some suspect.

The other day media carried a picture of our over-zealous foreign minister holding on to the hand of the visiting Chinese foreign minister leaving the latter looking rather perplexed. The Chinese reaction was not surprising given that the pro-western UNP leadership turned its back on Beijing shortly after the “good governance” coalition came to office possibly because China provided financial help to the Rajapaksa government when our so-called western friends would not do so and even refused to provide weaponry to fight an insurgency.

But now that the pro-western UNP finds itself in a financial mess it has no qualms about kowtowing and publicly displaying a willingness to accept its financial help with open arms and empty money bags.

An occasional peck on both cheeks might be considered by some in our diplomatic fraternity as a sign of undying friendship and gratitude. But in the world of diplomacy such over-familiarity especially in public might not always win friends and influence nations.

Speaking to a group of Sri Lankan business leaders during her recent visit, Nisha Biswal said that Singapore’s one time prime minister Lee Kuan Yew had wanted to model his country on Ceylon at the time. But now it is time for Sri Lanka to be turned into a Singapore.

Does Biswal believe that Sri Lankans are gullible or is this an insidious move to make this strategically-located nation an integral cog in Washington’s pivot to Asia policy intended to stymie China’s economic and military advance westward in the Indian Ocean?

If Biswal was even faintly aware of the bedrock on which the nascent Southeast Asian city-state was built she would not be proposing that we turn ourselves into a soulless nation however economically advanced and rich it has turned out to be.

I do not know whether Biswal has met Lee Kuan Yew when he was leading his newly independent state and talked to him. I have when I was working in Hong Kong and Mr. Lee visited the then British colony for a major conference.

So meticulous was the Singaporean he was able to tell me what I had called him in some of my writings – a dictator, an autocrat and a politician who did not tolerate dissent.

He did not entirely disagree but he carefully adduced reasons why he had to act the way he did, to craft a policy framework for a majority Chinese population sandwiched between two huge Malay-dominated nations. He said even Singapore’s language policy was determined by this geopolitical consideration.

Mr. Lee said that when Singapore was heading for independence Ceylon was the model on which he hoped to build the emergent state. Ceylon had a high rate of literacy, an educated people with a good educational system, an efficient civil service, a well-functioning judiciary and a performing economy.

But all these important qualities that made the Ceylonese nation were dissipated and destroyed by over-bearing and obtrusive politics. In later years when his people asked him for democratic rights and political freedoms he asked them whether they wanted to be another Sri Lanka involved in ethnic conflict.

Those who know the real Singapore story – I nearly went to work there when the editor of a new newspaper scheduled for launch invited me to join – how Ceylon born J.B. Jeyaretnam, the only opposition MP was treated (or mistreated) after he entered parliament after several attempts, how several journalists suffered including a friend of mine on the Business Times, Kenneth James, for ‘offences’ that most journalists would have considered normal professional duties.

Space does not permit an elaboration of the restrictions Singapore places on its citizens including the use of laws that a public gathering of five persons or more requires a police permit and charges of contempt of court, criminal and civil defamation and sedition are used to rein in government critics.

Human Rights Watch in its World Report 2015 states that the “Singapore’s government limits political and civil rights—especially freedom of expression, peaceful assembly, and association—using overly broad legal provisions on security, public order, morality, and racial and religious harmony.”

Admittedly some advances have been made – however meager – in the way of democratic freedoms. But the Singapore that Biswal and others speak of glowingly was not build on democratic foundations and the rights and freedoms associated with a free society.

So is Biswal then asking Sri Lanka to dismantle the constitutional and other rights guaranteed to its people, the democratic political system that took root even before independence in 1948 and the free press that politicians unfailingly promise the country?

I dare say Sri Lanka can well do without the corrosive and corrupt politics practiced today by many equally corrupt and abrasive politicians. If a nuclear destruction of the existing political system was possible that would certainly be for the betterment of the country.

Is Biswal able to provide such purifying political cleansing that is surely needed if Sri Lanka is to become another Singapore? Despite the democratic deficit that marks Singapore’s years of independence, it was able to achieve an enviable economic record because there were certain prerequisites that its leaders laid down.

Singapore was founded on meritocracy where only the best entered public service and other institutions and followed professional careers. Equally corruption was stamped on wherever it appeared and the guilty were shown no mercy.

Respect for law and order was inculcated in the populace and those who violated the law paid for it. That was the social order that produce Singapore’s economic miracle and a people who called themselves Singaporeans rather than by their ethnicity.

Moreover the city-state has had a political leadership that placed the country before self and was truly committed to building a prosperous society where the majority of its people were able to lead a comfortable life.

The reverse is surely true of Sri Lanka. Why talk of meritocracy when some of those who occupy official positions probably do not know what it means, where relatives, friends and acolytes are handpicked and planted in jobs for which the public pays. The qualified are deposited in the closest dust bin because they do not belong to the correct party, have not paid pooja to the presiding almighty and have sought to expose corruption and abuse or to indulge in it.

How could we build a meritocracy which is what Singapore has done, if a fundamental principle on which Sri Lankan politics is founded is nepotism and clannishness which this government promised to eliminate but practices with the same vigour as its predecessor?

The promises that the current government made to introduce “good governance” have been shattered long before the first year of this National Unity Government has ended. A classic recent example is the admission in parliament by the Higher Education and Highways Minister Lakshman Kiriella that he recruited 45 persons as consultants to the Southern Transport Development Project of the Road Development Authority at Rs.65,000 a month. If the highest qualification most of them have is the “O” level or some even lower how are they qualified to be consultants and consulted on what?

Lakshman Kiriella, who is increasing becoming an embarrassment to the UNP, admitted they were given these jobs because they helped in bringing his party into power. Whoever consults these unqualified consultants should seek psychiatric assistance.

It was not long ago that he wrote letters to two university authorities seeking to influence the appointment of persons known to him.

Just a few days ago I saw an article in which the writer says that the High Post Committee had advertised in newspaper calling for public comments on three persons whose names were listed for particular appointments.

It seemed that these three persons, one of whom is the President’s brother, was already functioning in those posts and have been doing so for some time. If the story is true then somebody should remind this committee of the bolting horses and the stable door.

So this is the country that Biswal wants to turn into another prosperous Singapore. Either she knows little of what she is talking about or is deliberately trying to sell these ideas to drag Sri Lanka into a tighter embrace with Washington so we will loosen our ties with China.

If this is the kind of rubbish that visiting diplomats oozing with spurious bon homie, lecture us about we could well do without it.

Before she comes here next and the Foreign Minister rushes to offer another handshake she should rid herself of the mental sloth that characterizes her advice.

This story was originally published by The Sunday Times, Sri Lanka

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Economic Recovery Needed To Enhance Food Securityhttp://www.ipsnews.net/2016/07/economic-recovery-needed-to-enhance-food-security/?utm_source=rss&utm_medium=rss&utm_campaign=economic-recovery-needed-to-enhance-food-security http://www.ipsnews.net/2016/07/economic-recovery-needed-to-enhance-food-security/#comments Thu, 21 Jul 2016 12:40:15 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=146164 Jomo Kwame Sundaram was the Assistant Secretary-General for Economic and Social Development in the United Nations system during 2005-2015and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. ]]>

Jomo Kwame Sundaram was the Assistant Secretary-General for Economic and Social Development in the United Nations system during 2005-2015and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jul 21 2016 (IPS)

After a half century of decline, agricultural commodity prices rose with oil prices in the 1970s, and again for a decade until 2014. Food prices rose sharply from the middle of the last decade, but have been declining since 2012, and especially since last year, triggering concerns of declining investments by farmers.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Earlier predictions of permanently high food prices have thus become less credible. Higher prices were said to reflect slowing supply growth as demand continues to grow with rising food needs for humans and livestock, and bio-fuel mandates introduced a decade ago on both sides of the North Atlantic.

Prices had become increasingly volatile, with successively higher peaks in 2007-08, 2010-11 and mid-2012. Some food price volatility had its origins in climate change-related extreme weather events in key exporting countries.

‘Financialization’, including linking commodity derivatives with other financial asset markets, also worsened price volatility in the second half of the last decade.

With three food price spikes over five years, food insecurity was widely seen as a major challenge. Higher and more volatile food prices seemed to threaten the lives of billions. But the FAO food price index peaked in 2012, years after the 2007-2008 food price spike triggered many mass protests.

Official development assistance for agriculture has fallen for decades despite the expressed desire by many developing countries to raise such investments. Meanwhile, rich countries have continued to subsidize and protect their farmers, undermining food production in developing countries, and transforming Africa from a net food exporter in the 1980s into a net food importer in the new century.

Food investments for economic recovery

Meanwhile, economic recovery efforts are needed more than ever in the face of protracted economic stagnation. A global counter-cyclical recovery strategy in response to the crisis should contain three main elements.

First, stimulus packages in both developed and developing countries to catalyze and ‘green’ national economies. Second, international policy coordination to ensure that developed countries’ stimulus packages not only ensure recovery in the Northbut also have strong developmental impacts on developing countries, through collaborative initiatives between governments of rich and poor countries. Third, greater financial support to developing countries for their sustainable development efforts, not only aid but also to more effectively mobilize domestic economic resources.

We need more investments that will help put the world on a more sustainable path such as in renewable energy and ecologically sensitive agriculture. After well over half a decade of economic stagnation, with developing countries slowing down dramatically since late 2014, it is still urgent to prioritize economic recovery measures, but also other needed initiatives. Preferably, recovery strategies should help lay the foundations for sustainable development.

Given the large unmet needs for infrastructure, more appropriate investments can contribute to sustainable growth. Such investments should improve the lot of poor and vulnerable groups and regions. In other words, investments should lead to the revival of growth that is both ecologically sustainable and socially inclusive.

Enhancing food security and agricultural productivity should be an important feature of stimulus packages in developing countries dependent on agriculture. Re-invigorating agricultural research, development and extension is typically key to this effort.

The Green Revolution of the 1960s and 1970s – with considerable government and international philanthropic support – increased crop yields and food production. However, the efforts for wheat, maize, and rice were not extended to other crops, such as other major indigenous food crops and those associated with arid land agriculture.

We need a renewed effort to promote sustainable food agricultural productivity. Public investments, including social protection, can and must provide the support needed to accelerate needed farmer investments. There are many socially useful public works, but priorities must be appropriate, considering national and local conditions.

For Sustainable Development

Projects could improve water storage and drainage, and contribute to agricultural productivity or climate adaptation. For example, in many developing countries, simple storage dams, wells, and basic flood barriers/levees could be constructed, and existing drainage and canal networks rehabilitated. Public works programs could prioritize basic sanitation or regeneration of wetland ecosystems that serve as “filters” for watercourses – as appropriate.

To be sure, many complementary interventions will be needed. Food security cannot be achieved without better social protection. This will be critical for the protection of billions of people in developing countries directly affected by high underemployment and unemployment, to reduce their vulnerability to poverty and undernutrition.

But sustainable social protection requires major improvements in public finances. While more revenue generation requires greater national incomes, tax collection can also be greatly enhanced through improved international cooperation on tax and other related financial matters.

Clearly, such an agenda requires not only bold new national developmental initiatives but also far better and more equitable international cooperation offered by a strong revival of the inclusive multilateral United Nations system.

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Ramifications of Terror Attacks in Bangladeshhttp://www.ipsnews.net/2016/07/ramifications-of-terror-attacks-in-bangladesh/?utm_source=rss&utm_medium=rss&utm_campaign=ramifications-of-terror-attacks-in-bangladesh http://www.ipsnews.net/2016/07/ramifications-of-terror-attacks-in-bangladesh/#comments Mon, 18 Jul 2016 13:37:34 +0000 Fahmida Khatun http://www.ipsnews.net/?p=146108 By Dr Fahmida Khatun
Jul 18 2016 (The Daily Star, Bangladesh)

At a time when Bangladesh has broken the 6 percent growth trap and has begun its journey towards achieving a faster growth of about 7 percent, and at a time when Bangladesh has achieved the status of a lower middle income country with a per capita income of USD1314 in 2015, it experiences the greatest shock in recent times. This has suddenly changed the perspective on Bangladesh. The ruthless killing of 20 lives, including 17 foreigners at the Holey Artisan Bakery of Gulshan in Dhaka on July 1, 2016, by terrorists has brought new realities for Bangladesh. A country which boasts to be a moderately Islamic country, holding the values of Islam yet being tolerant to other religions and a country that is reputed for its warmth and hospitality towards foreign nationals, has come under the global radar due to the brutality of recent terror attacks. While the grief for the lost lives is going to make a permanent place in our hearts, the implications of this painful episode on other spheres of lives cannot be ignored either.

Photo: Prabir Das

Photo: Prabir Das

Economic development of Bangladesh is apprehended to bear the brunt of this incident. Countries which lost their citizens on that horrifying night – Japan, Italy and India – are all important partners of Bangladesh’s development. Japan is the largest bilateral donor for Bangladesh. In 2015, the country disbursed USD366 million as foreign aid. Recently, Japan signed its 37th Official Development Assistance Loan Package for Bangladesh, which amounts to USD 1.65 billion, the largest ever in the history of Japan’s ODA to Bangladesh, at an interest rate of 0.01 percent and repayment period of 40 years, including a 10-year grace period. About 230 Japanese companies have invested in Bangladesh, mostly in export processing zones; the investment amount is equivalent to USD 250 million. Japanese support and investment are in sectors such as disaster management, infrastructural development including power plants, deep sea port and metro rail. Tragically, the seven Japanese who were killed during the Dhaka terror attack were working for Bangladesh’s metro-rail development project. Bangladesh’s exports to Japan were worth USD 615 million in 2015, of which the share of RMG was USD 448 million.

As for Italy, it is one of the important export destinations for Bangladeshi products, particularly readymade garments. In 2015, Bangladesh exported goods worth USD 1,170 million, of which USD 1,070 million constituted of apparels. Italy is also a source of remittance for Bangladesh. On the other hand, India’s aid disbursement amounted to about USD 93 million, while exports from Bangladesh to India were worth USD 542 million in 2015. Bangladesh expects these countries to continue supporting its efforts in achieving sustainable economic growth and poverty alleviation in the coming days. The assurance of the prime ministers of the respective countries to work together towards counter-terrorism is the recognition of the fact that terrorism is now a global phenomenon which kills people across the globe – Dhaka, Istanbul, Paris, Nice, Iraq.

On its part, Bangladesh has to work hard in bringing back the confidence of investors, development partners and the foreign community. The damage has already been done through worldwide media coverage. Now Bangladesh needs to reassure foreigners working here about their safety. The government has beefed up the security of the diplomatic zone in Gulshan and Baridhara, and other important places, including the Dhaka airport. But there are also foreign consultants and officials involved with projects, who are working at the field level. Their safety should also be ensured. We should also be careful in sending out our messages to the global community. While the Prime Minister fears more terror attacks in the country, some ministers are probably trying to show a brave face, dispelling possible negative impacts of the recent terror attacks in Bangladesh.

But the terror attack at Holey Artisan Bakery has been taken very seriously by the diplomatic community and development partners working in Dhaka. Some of them have given their officials the option to send their families to their respective countries, and many officials have already started to move their families out of Dhaka. Some are considering continuing their operation through regional offices, such as Delhi or Bangkok. We hope that this will not have any negative impact on the size of their operation in Bangladesh. But this obviously is an indication of the insecurity felt by foreigners in Bangladesh. This will have an impact on prospective investors and visitors to Bangladesh. As an important sourcing destination of apparels, the country may face new challenges if buyers do not feel secure to come to Bangladesh, and if they place their orders in other countries.

The shocking revelation of the terrorists’ social background has prompted us to reflect on our education system, particularly that of the private universities where some of these terrorists studied. Run like private banks, some of these universities have made education a commodity, through which they can mint money. Many of these universities do not have a registrar or a proctor, and the Vice Chancellor has no say at the board room. Several of these universities have mushroomed through high profile connections without any plans for human resources and curriculum. Borrowed teachers from public universities often find no reason to be an integral part of the university. The curriculum of these universities does not include holistic education that helps students to become enlightened human beings. Instead, they try to cater to the need of the corporate world, sprinkling a bit of everything in the syllabus. It is time to bring an overall change in the education system.

Globally, the impact of terrorism has been manifested through reduced growth, mainly due to higher government expenditure for actions against counter-terrorism and loss of investment. The new reality dictates that Bangladesh has to strategise its security measures with the help of its friends so that its growth momentum can continue.

The writer is Research Director at the Centre for Policy Dialogue.

This story was originally published by The Daily Star, Bangladesh

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Increased Adb Aid Will Help Cushion Economic Blowshttp://www.ipsnews.net/2016/07/increased-adb-aid-will-help-cushion-economic-blows/?utm_source=rss&utm_medium=rss&utm_campaign=increased-adb-aid-will-help-cushion-economic-blows http://www.ipsnews.net/2016/07/increased-adb-aid-will-help-cushion-economic-blows/#comments Fri, 15 Jul 2016 16:28:33 +0000 Editor Manila Times http://www.ipsnews.net/?p=146085 By Editor, The Manila Times, Philippines
Jul 15 2016 (Manila Times)

The Philippines faces prospects of slower growth this year because of external factors.

One such factor is the effect of Brexit on the world economy. With Brexit causing the European Union’s already sluggish economy to shrink further, Philippine exports to EU countries in 2016 may end up being less than half of last year’s.

A European freeze, notwithstanding the European countries not being as hot as the US or China or Japan, would also cool down their trade with other countries, including us.

At this point, it is already certain that Philippine exports growth this year will end up less than 2015’s.

The government has cut down its original export growth target of from 6.6 – 8.8 percent to 3 percent. This is a drop of more than 50 percent.

The export growth reductions were seen to be the result of Brexit.

Perhaps the UN Permanent Court of Arbitration’s decision in our favor in the complaint we filed against China over its takeover of our islets and reefs in the West Philippine Sea will also make China deal angrily with us in trade, commercial matters and tourism. So loss of exports to China will probably add to the export growth decline in 2016—and the coming few years.

The website of the Philippine Exporters Confederation includes on its lists of news items on July 14 the Philippine Star story headlined “Philippines likely to miss exports growth target this year.” The Times has a July 13 story, “Exports decline prompts focus on domestic market,” which contains the data in the Star story and a lot more.

That Star story by Richmond Mercurio has the lead: “The Philippines is unlikely to meet its exports growth target this year on account of the ‘Brexit’ event and the country’s continuing political tension with China, an export industry official said.”

The export industry official is Philippine Exporters Confederation, Inc. President Sergio Ortiz-Luis, Jr., who is quoted as saying:

“Lately we have been saying we can’t meet it so we’re looking at the lower end of the target as a six percent growth is very ambitious.”

“So we expect a three percent growth for exports this year. We’re already at half of the year and we’re still negative so for us to be able to beat the target, we have to grow 20 to 25 percent and there’s no way we can get that,” he added.

Ortiz-Luis, who is also the private-sector vice chairman of the Export Development Council, surmises that his lower growth figures are likely also to be the NEDA’s updated numbers if it decides to revise the earlier target.

As if it has come to the rescue in the old cowboys vs Indians movies, ADB announced that it was increasing its aid to the Philippines.

The story on Wednesday, July 13, by The Times’ Mayvelin U. Caraballo said, “The Asian Development Bank (ADB) has expanded the areas where it is ready to support the Duterte administration and affirmed its commitment to boost assistance to the Philippines going forward.”

ADB President Takehiko Nakao had met with President Rodrigo Duterte to discuss how the bank could support the new government in its efforts to achieve sustainable growth, reduce poverty, and increase transparency in government affairs.

Mr. Nakao commended Duterte for his early efforts to consult the private sector, civil society, and other partners to ensure a level playing field for all businesses, and uplift the lives of poor Filipinos that make up one-fourth of our country’s population.

ADB’s increased aid will surely help us ward off economic blows delivered by China.

This story was originally published by The Manila Times, Philippines

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Is Sustainable Development Hindering Economic Recovery?http://www.ipsnews.net/2016/07/is-sustainable-development-hindering-economic-recovery/?utm_source=rss&utm_medium=rss&utm_campaign=is-sustainable-development-hindering-economic-recovery http://www.ipsnews.net/2016/07/is-sustainable-development-hindering-economic-recovery/#comments Thu, 14 Jul 2016 13:04:02 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=146053 Jomo Kwame Sundaram was the Assistant Secretary-General for Economic and Social Development in the United Nations system during 2005-2015 and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. ]]>

Jomo Kwame Sundaram was the Assistant Secretary-General for Economic and Social Development in the United Nations system during 2005-2015 and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jul 14 2016 (IPS)

The global economic and employment situation is alarmingly protracted, with recovery not expected any time soon. In October 2012, then IMF chief economist Olivier Blanchard indicated he did not see a global economic recovery before 2016.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Now, in mid-2016, it is clear that the global crisis has dragged on for several reasons; many governments, especially in advanced economies, still prioritize fiscal austerity and tough labour market reforms, even though such measures undermine livelihoods, incomes, the social fabric and economic recovery prospects.

Meanwhile, despite ‘quantitative easing’, investments remain depressed, blocking employment creation. Easy credit before the crisis led to over-investment in sectors expected to be profitable. Hence, despite low-interest rates, with the overhang of excess capacity, there has been less private investment in recent years.

Since 2007, employment rates have only risen in six of the 36 developed economies, while youth unemployment rates have increased in four-fifths of advanced countries and two-thirds of developing countries.

With higher inequality and unemployment, as well as shrinking incomes and domestic markets, it is obviously unrealistic for everyone to recover by exporting. Even developing countries, long pressed to produce for export, are switching course – producing increasingly for the domestic market once again.

Having suffered more current and capital account difficulties with greater openness, many emerging market economies still feel compelled to accumulate large reserves for ‘self-protection’. Meanwhile, financial globalization has not enhanced growth but has instead exacerbated volatility and instability.

Recovery for All
There have been few efforts since 2008 to enhance national ‘policy space’ for economic recovery, especially for sustainable development. Increased public investment and other spending, including for social protection, can help turn this situation around, creating tens of millions of jobs.

For decades after the end of World War Two, most advanced economies have used counter-cyclical fiscal policy to great effect. Such deficits have not only financed strong, sustained and inclusive recovery, and growth in their own economies but also abroad — as with the US Marshall Plan at the beginning of the Cold War, so crucial to European post-war reconstruction, recovery and take-off.

A cruel logic has been invoked to justify recent inaction. First, huge financial resources were deployed to selectively rescue ‘too big to fail’ private financial interests. Then, the resulting greatly increased sovereign debt was invoked to impose fiscal austerity, ostensibly in deference to bond markets.

To make matters worse, Eurozone countries are not only constrained by this fiscal fetish, but also by their lack of exchange rate policy space, resulting in insurmountable obstacles to recovery in a monetary union not among equals.

And despite strong evidence to the contrary, the presumption that public spending crowds out private investment continues to deter government-led economic recovery efforts.

Perhaps most frustrating in the recent period have been the limited efforts at multilateral cooperation for global recovery since 2009 — the year of the G20’s London and Pittsburgh summits, including the Global Jobs Pact, on which there has been little meaningful progress since.

As a consequence, subsequent years have seen little progress towards a strong, sustained and inclusive recovery. Instead, after decades of promoting globalization, often recklessly, the recent period has seen a gradual turn to creeping protectionism and currency warfare.

Thankfully, after decades of promoting economic, including financial liberalization and pro-cyclical macroeconomic policies, even the IMF, under its recent French leadership, has become more careful, if not skeptical of its own earlier analysis, policy prescriptions, and priorities. But the earlier conventional wisdom still prevails in most of its operations, policy conditions and advice.

Why Sustainable Development?
How can the world get out of this cul-de-sac, worsened by the short-termism of markets, especially financial markets, electoral politics and powerful corporate interests?

Although inclusive multilateralism has been battered by various challenges, including its slow progress, it remains the best option available. Hence, the UN system has to be bolder, but also has to be allowed to play a greater leading role.

In early 2009, the UN Secretary-General proposed a Global Green New Deal. The GGND proposed cross-border public-private partnerships, especially to generate renewable energy and increase food production, recognizing that market forces alone would not generate the investments needed to address climate change as well as to ensure adequate and affordable food production.

If pragmatically implemented, UN initiatives – such as the GGND, the Global Jobs Pact and the Social Protection Floor – can help overcome the current stasis. Likewise, if sufficiently supported, the recently approved UN Decade of Action against Malnutrition can help improve nutrition for all.

As the quadrennial High-Level Political Forum, mandated by the Rio+20 Summit on Sustainable Development in 2012, meets for the first time in mid-July, it is crucial that global leaders recognize that sustainable development is not a luxury which the world cannot afford in these dire times. Instead, it must be recognized as providing the essential sense of common purpose for collective action by the multilateral system, not only for it to stay relevant, but also to lead us all out of the darkness of our times.

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Is Federalism Pro-poor?http://www.ipsnews.net/2016/07/is-federalism-pro-poor/?utm_source=rss&utm_medium=rss&utm_campaign=is-federalism-pro-poor http://www.ipsnews.net/2016/07/is-federalism-pro-poor/#comments Thu, 07 Jul 2016 15:25:27 +0000 Jeresa May http://www.ipsnews.net/?p=145966 By Jeresa May C. Ochave
Jul 7 2016 (Manila Times)

Poverty, according to the United Nations, is “a denial of choices and opportunities, a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and clothe a family, not having a school or clinic to go to, not having the land on which to grow one’s food or a job to earn one’s living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living in marginal or fragile environments, without access to clean water or sanitation.”

JERESA MAY C. OCHAVE

JERESA MAY C. OCHAVE

Constitutional experts contend that our unitary system’s centralized form is the culprit for poverty in the country. The top-to-bottom approach (pinatulo governance, as we call it) limits the powers, authority and resources of its own local governments, impairing gravely the decision-making process. Planning and programs for the communities are divorced from the realties on the ground.

In effect, local governance are inefficient in providing even the public services that majority of Filipinos need and expect—health care, education, employment and housing; a state of affairs contrary to the promise of the 1987 Freedom Constitution, where framers have been mandated to create one that is “truly reflective of the aspirations and ideals of the Filipino people.”

A research by the Economic Intelligence Unit (EIU), in 2015, affirms that the Philippines remains one of the poorest in Southeast Asia despite robust economic growth in the past few years.

The current and slow increase of the minimum wage cannot partner with the rising prices of commodities; we have the highest income tax rate (32 percent) compared to our neighboring countries in the Asean: Singapore, 2 percent; Vietnam, 20 percent; Malaysia, 11 percent; Cambodia, 20 percent; Laos, 12 percent. We also are a highly corrupt country, ranked 85th out of 175 countries). “Leakages” in our country are far beyond normal—and we don’t prosecute. (The Napoles corruption cases involving senators and congressmen have barely gone up through our justice system and those nominal “name brands” incarcerated may be freed soon with the advent of a new administration).

Rogier van den Brink, of the World Bank (WB), says the perennial challenge is to channel economic growth toward the poor to make the economy inclusive, thus, ending poverty. Rogier adds this can be achieved if investments in infrastructure, health, and education are increased; including an enhanced competition to level the playing field; simpler regulations to promote job creation, especially for micro and small enterprises; and the protection of property rights.

Karl Kendrick Chua, senior country economist of the WB, says both tax administration and tax policy reforms are needed to generate the revenues required to finance the decades-old investment deficit in infrastructure, health and education.

While tax policy reforms can be implemented, however, under a unitary system, national taxes remitted to the center will still take away much of the wealth and revenues generated by agriculture and other industries in various local communities around the country. Major corporations, including banks, pay their taxes in Metro Manila whose cities benefit more from their activities than the provinces and other cities in which the branches of the corporations operate.

Local officials will continue to spend much of their energy and limited funds seeking the assistance and approval of national government officials in Metro Manila. Local dependence will continue to stifle local initiative and resourcefulness, and hamper local business and development.

Although new taxes and fiscal reforms have been initiated, the government lacks funds and is heavily in debt from too much borrowing.

Federalism, in contrast to our current unitary system (that only concentrates political powers and authority in the national government), emphasizes regional and local self-rule and self-reliance in governance based on the principle of subsidiarity. In short, the decisions are made at the lowest possible level where local problems can be solved. In addition, while regions or state governments are designed to be autonomous, the federal government will provide assistance to various regions and states, especially the less developed ones. In most federal governments this is called the “Equalization Fund,” designed to lift the less endowed states to a decent level, meeting the basic needs of its constituencies. This fund is raised by contributions from all the states in the federal republic and expensed by federal government.

As Atty. Josephus Jimenez emphasized in a Philippine Star column, “Once we are under a federal system, all component states collect their own taxes and contribute only a small fraction of their revenues to the federal or central government for only three centralized functions, namely: National Defense, including the National Police, Justice and Foreign Affairs. All the rest shall be left to each state, including health, education, labor and employment, trade, transportation, communication, agriculture, agrarian reform, justice, environment, natural resources. The states will manage mining and forest matters and shall control all natural resources.”

A federal republic will provide better policies and implementation that will enable the people to raise their standard of living. At the same time,

• Citizens will be more willing to pay taxes that will finance government programs and services for their direct benefits, as they see where their money goes;

• Equitable regional development will be promoted;

• Faster political, economic, social, and cultural development and modernization will take place; and

• There will be inter-regional competition in attracting domestic and foreign investments and industries, professionals, and skilled workers.

It is true that there will be inevitably some “leakages,” but corruption on a local level is much more transparent through a vigilant local community now empowered to run its own affairs.

Let us take note at how America has empowered its people and become the most powerful country in the world through federalism:

“So long as local affairs are reserved to the greatest possible extent for the localities themselves and so long as the people are both interested in and capable of understanding and handling their own problems, then the philosopher’s stone has indeed been discovered and a large measure of both freedom and order are possible.” – Dr. George Charles Roche III.

Ms. Jeresa May C. Ochave is communications director of the Centrist Democracy Political Institute (CDPI). A graduate of the Mass Communications program in Ateneo de Davao University (AdDU), she currently serves as secretary of Centrist Democratic Party of the Philippines (CDP) – Davao Chapter and was elected as regional chairperson of the Centrist Democratic Youth Association of the Philippines (CDYAP) – Region XI. Ms. Ochave is also a part-time professor at the University of the Immaculate Conception, in Davao City, and is taking her masters in Public Administration, major in Public Policy, at the AdDU.

This story was originally published by The Manila Times, Philippines

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The UN and Global Economic Stagnationhttp://www.ipsnews.net/2016/07/the-un-and-global-economic-stagnation/?utm_source=rss&utm_medium=rss&utm_campaign=the-un-and-global-economic-stagnation http://www.ipsnews.net/2016/07/the-un-and-global-economic-stagnation/#comments Thu, 07 Jul 2016 12:06:56 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=145957 Jomo Kwame Sundaram was the Assistant Secretary-General for Economic and Social Development in the United Nations system during 2005-2015, and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. ]]>

Jomo Kwame Sundaram was the Assistant Secretary-General for Economic and Social Development in the United Nations system during 2005-2015, and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jul 7 2016 (IPS)

When the financial crisis preceding the Great Recession broke out in late 2008, attention to the previously ignored UN Secretariat’s analytical work was greatly enhanced. This happened as the UN and the Bank of International Settlements (BIS) had been almost alone in warning, for some years, of the macroeconomic dangers posed by poorly regulated financial sector developments.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

In contrast, most other international organizations – the IMF, World Bank and OECD – which monitor developments in the world economy have failed to see the crisis coming. Until the third quarter of 2008, they were still predicting continued robust growth of the world economy, and, ‘soft landings’ in the unlikely event of financial turmoil, including in the US.

Thus, the UN was in a strong position to lead the global response to the crisis. However, although ‘second opinions’ were offered to Member- States upon request, in practice, it largely remained business as usual. Each part of the international system carried on with their own work programs with obligatory references to the crisis and its impacts. There was no coherent response or sustained attempt to seriously address fundamental issues.

Meanwhile, although there have been some occasional signs of recovery, economic stagnation in most developed economies continues, with high joblessness and underemployment. Occasional signs of recovery have been uneven, and easily reversible. Early withdrawal of stimulus measures in 2009 pushed the global economy into stagnation, especially as private consumption and investment spending remained weak.

Most developing countries have remained vulnerable, with little fiscal space to be able to respond to shocks. Their policy space remains restricted, especially following the collapse of mineral and other primary commodity prices, and continued denial of the need for counter-cyclical macroeconomic policies by most influential policymakers.

The poorest countries and communities also face the prospect of a resurgence of poverty and hunger. In recent years, the push to cut social security institutions and spending threatens to eliminate the main remaining forms of social protection.

Meanwhile, efforts to strengthen prudential regulations in developed countries have been indefinitely postponed since 2009, with the first signs of recovery in response to financial market pressures, once it had been rescued. Since then, there has been little serious discussion of reforms in the international financial system.

In 2009, the UN Secretary-General called for a Global Green New Deal, seeking internationally coordinated fiscal stimuli, involving major investments in renewable energy and other long-neglected global public goods. At its April meeting, the G20 successfully mobilized over a trillion dollars, but these mainly enhanced IMF resources and thus further empowered the Washington-based international financial system.

The UN emphasized the promotion of sustainable energy to address the looming climate change challenge. In the face of limited private investments, it argued that public investments had to take the lead, to help quickly bring down the unit costs of renewable sources.

But the proposal was then rejected as inappropriate owing to the higher costs of renewable energy. In fact, subsequent developments have shown that the UN was too cautious as the costs of renewable energy have fallen much faster than it anticipated although the recent oil price collapse has limited its competitiveness once again.

Another element in the UN proposed New Deal involved strengthening world food security by encouraging investment in food agriculture by small farmers, again with public investment leading, supplemented by ODA.

In addition, there was growing recognition of the need to completely eradicate poverty and hunger with extraordinary measures under the rubric of ‘social protection’. In so far as such measures would also enable beneficiaries to enhance their productive assets and capacities, they would also ensure higher incomes and more investments, thus accelerating economic recovery, greater resilience, and self-reliance in the medium term.

Recognizing the critical role of the 1944 Bretton Woods conference and the institutions it created for post-war recovery and post-colonial development, the UN also called for reforms to the international financial system to better address new circumstances and challenges.

The 2008 second Financing for Development conference in Doha reiterated the Monterrey Conference’s call to mobilize the international community for accelerated debt relief, improve international tax co-operation, better developing countries’ access to developed country markets, and enhance developing country access to technology, especially for life-saving drugs and renewable energy.

If UN initiatives had not been blocked by some OECD countries, it is likely that the world would have developed a debt management framework to address the Icelandic, Greek and other debt crises as well as greater international tax cooperation to better address massive and still growing tax evasion and fiscal constraints faced by so many governments today.

The June 2009 High- Level Conference on the Global Financial and Economic Crisis made specific proposals for urgent actions, many of which were later elaborated by the Stiglitz Commission Report’s recommendations. But some hints of recovery provided the pretext for the U-turn to ‘fiscal austerity’ in Europe once the commanding heights of most powerful financial interests had been rescued.

In early 2009, the UN system committed to supporting Member States to re-orient their macroeconomic policy frameworks to include full employment as an explicit target for both developed and developing countries. But without resources and facilities to support the provision of appropriate policy advice, few countries have sought UN assistance for counter-cyclical macroeconomic management since.

Thus, despite its longstanding mandate and better track record than most other international financial institutions, a greater pro-active role of the rest of the UN system has been denied by a coalition of powerful countries. Sadly for the world, this marginalization threatens the very future of economic multilateralism, as has long been evident from the continued hegemony of the Washington Consensus, and at the Addis Ababa third UN Financing for Development conference last July and the World Trade Organization ministerial in Nairobi in December.

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