Transcript Slide 1

Possible long-term
solutions
- from a Baha’i perspective
Temporary solutions:
Monetary policy and/or
increased public spending
Problem:
May create a
“bubble” economy
and/or too high
public debt that
ends in long-term
recession, and
even depression!!
Long-term solution:
Global income distribution
How?
 Progressive taxation within nations, and
international income distribution
 Huququ’llah, zakat & voluntary contributions
 Global ownership of natural resources
Why a solution?
 Better utilisation of human potential across the
globe
 Higher demand for products & services
 Higher level of innovation and technological
development globally
Highly uneven global income
distribution
Long-term solution:
Free flow of capital,
labour & goods
How?
 Remove all trade & capital barriers
 Remove all barriers for people to move across borders
 e.g., through standardisation of education, common international
language, one currency, no/limited visa and work-permit requirements
Why a solution?
 Flow of technology & capital across borders enhances
individual, national and global prosperity
 Products & services produced more effectively – at the
optimal place & for a global market, thus obtaining
economies of scale
 Leads to better income distribution across nations, and thus
higher global prosperity
Some benefits
from globalisation
See p. 132
 Cost effectiveness resulting from the coordination of
formerly competing operations tends to bring goods and
services within the reach of populations who could not
previously have hoped to enjoy them.
 Enormous increases in the funds available for research
and development expand the variety and quality of such
benefits...
 The abandonment of barriers to transnational trade
reduces still further the cost of goods to consumers.
Long-term solution:
Reduction in military expenses
How?
 Create international agreement about borders
& conflict resolution, international court to solve
disputes & international military forces
Why a solution?
 Resources dedicated to unproductive military
expenses are released
 Released funds may be used to provide
education, technology, health services, micro
and macro credits, etc. in developing countries,
but also in the industrial world
2008 global military spending:
$ 1.47 trillion
Military spending versus
foreign aid
UNDP:
• 20 billion dollars needed per year to provide all
people with adequate nutrition, clean water and
primary education
• 3 % of the rich world’s military expenses
suffice to giver more than what is needed
•
•
•
•
Education of one soldier in the rich world = schooling
for 10 000 children in a developing country
A nuclear submarine = primary education for 160
million children (UNESCO)
If the developing countries freeze growth in military
expenses, they will be able to free 10 billion dollars per
year
The sum equals two days of military expenses in
developed countries – or one week of military
expenses in developing countries (UNESCO)
Long-term solution:
Profit sharing
Why a solution?
 “Automatic” adjustment of labour price, thus
reducing rise in unemployment due to “friction”
in salary adjustments – which in turn may
trigger recession and ultimately depression
 Less labour-owner conflicts & increased
motivation – higher productivity & profit
 This effect will be reinforced by introducing a
“just” method of salary adjustment
 rather than injustice created through negotiations
between labour unions and owners/employers.
Example of profitsharing: Hallmark
 Annual contributions to Hallmark's
employee profit sharing plan have
averaged 9% of eligible employee
earnings since the plan started in 1956.
 ... Hallmark's financial performance
outpaced that of the stock market at
large.
Abdu’l-Baha encouraging
profit- sharing
 ...laws and regulations should be established which
would permit the workmen to receive from the factory
owner their wages and a share in the fourth or the fifth
part of the profits, according to the wants of the factory;
or in some other way the body of workmen and the
manufacturers should share equitably the profits and
advantages.
 ... the capitalists being moderate in the acquisition of
their profits,..
(Abdu'l-Baha, Baha'i World Faith - Abdu'l-Baha Section, p. 281)
Discouraging strikes
& revolt by workers
 In the same way, the workmen should no longer make
excessive claims and revolt, nor demand beyond their
rights; they should no longer go out on strike; they
should be obedient and submissive and not ask for
exorbitant wages.
 But the mutual and reasonable rights of both
associated parties will be legally fixed and established
according to custom by just and impartial laws.
(Abdu'l-Baha, Some Answered Questions, p. 275)
Long-term solution:
Gender equality
Why a solution?
 Previously under-utilised (female)
resources & talents will enhance
production & innovation
 Feminine qualities of love & service will
promote more productive working
environments (less aggression, more cooperation)
An age in which the
masculine and feminine
elements of civilization will
be more evenly balanced
The world in the past has been ruled by force, and man
has dominated over woman by reason of his more
forceful and aggressive qualities both of body and
mind. But the balance is already shifting; force is losing
its dominance, and mental alertness, intuition, and the
spiritual qualities of love and service, in which woman
is strong are gaining ascendancy.
- Abdu’l-Baha –
Equality between women and men is one of the
fundamental values of the European Union.
- European Commission –
1986: Women in majority in
government for the first time
• Prime Minister of Norway, Gro H. Brundtland, with her government in 1986
• 10 av 19 ministers were women
Share of women in governing bodies
of European listed companies
11%
EU average
Portugal 1%
Luxembourg 1%
3%
Italy
4%
Spain
6%
Belgium
But even in Norway
only 5 of over 220
listed companies have
a woman as CEO
7%
Netherlands
8%
France
11%
Germany
12%
United Kingdom
19%
Finland
Latvia
21%
Bulgaria
21%
24%
Sweden
32%
Norway
50%
Long-term target
0%
5%
10%
15%
20%
25%
30%
35%
40%
Source: European Commission, top 50 listed companies per country in 2006
45%
50%
Long-term solution:
Organisational structures & incentives
promoting long-term results
How?
 Longer period of service in governing bodies?
 Incentive systems that rewards long-term results
Why a solution?
 Politicians focus today on short-term results, until the
next election
 Management & workers are not motivated to think in
long-term, e.g., maximising company results 20 – 50
years into the future
 Such behaviour may in aggregate cause economic
recession and depression
Ultimate solution:
New values & culture
 Long-term and sustainable growth and
wellbeing are not possible, unless individuals,
businesses and society as a whole are
governed by the right values.
Moderation
Justice
Humility
Service
Love
Unity
Trustworthiness
Conflict
Greed is good?
Honesty
Prejudice
Greed
Disunity
Truth
-fulness
Dishonesty
Corruption
Example of true values &
ethical bevour
Baha’i real estate
agent in the USA
who was praised by
media, even in
Norway, for ethical
behavour, avoiding
the common
practice of offering
loans to customers
who might not be
able to pay back
their debts.
Published in
Dagens Næringsliv
on 17 April 2009
Source: http://www.bahai.no/1355.0.html
True motivation
And the honor and distinction of the individual consist in
this, that he among all the world's multitudes should
become a source of social good.
Is any larger bounty conceivable than this, that an
individual, looking within himself, should find that by the
confirming grace of God he has become the cause of
peace and well-being, of happiness and advantage to
his fellow men?
No, by the one true God, there is no greater bliss, no
more complete delight.
(Abdu'l-Baha, The Secret of Divine Civilization, p. 2)
What is the Baha’i response
to the economic crisis
 Promoting 1500 intensive programs of
growth
 Promoting the institute process,
children’s & junior-youth classes,
devotional meetings, teaching...
 Strengthen individual and community
moral values & behaviour
 Social & economic projects
Back-up slides
Causes of financial crisis
according to Group of 20
 In its "Declaration of the Summit on Financial Markets and the
World Economy," dated 15 November 2008, leaders of the Group
of 20 cited the following causes:
 During a period of strong global growth, growing capital flows, and
prolonged stability earlier this decade, market participants sought
higher yields without an adequate appreciation of the risks and
failed to exercise proper due diligence.
 At the same time, weak underwriting standards, unsound risk
management practices, increasingly complex and opaque financial
products, and consequent excessive leverage combined to create
vulnerabilities in the system.
 Policy-makers, regulators and supervisors, in some advanced
countries, did not adequately appreciate and address the risks
building up in financial markets, keep pace with financial
innovation, or take into account the systemic ramifications of
domestic regulatory actions.
What triggered the financial
crisis 2007 – 2009?
 America's housing collapse
 Vulnerable financial system due to:
 intricate and highly-leveraged financial
contracts and operations
 a monetary policy making the cost of credit
negligible therefore encouraging such high
levels of leverage
 financial industry gaining too high share of
the Gross Domestic Product (GDP)
Norway is in a unique position
in Europe,
together with Luxembourg