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Business Global rescue
The world faces its worst-ever outlook in our lifetime, created by global imbalances which were not addressed until it was too late.
- By Francis Mathew, Editor-at-Large
- Published: 23:02 November 9, 2008
The world faces its worst-ever outlook in our lifetime, created by global imbalances which were not addressed until it was too late.
There was over focus on short-term goals driven by the need to meet profit expectations.
Governments are now applying the right set of tools, but we still have to expect very severe dysfunction. Capital flows to developing markets are drying up, and businesses cannot get funds.
The crisis has undermined confidence in the advantages of open markets, and the consensus is that more intervention is needed.
What to do?
Everyone needs to be part of the global rescue.
Strong economic and business stimulus is needed.
We need to build capacity of national and international regulatory mechanisms to handle global markets.
Governance in the private sector has to be better.
We need better linkage between government policies and regulatory bodies covering areas like monetary, banking, and treasury policy, as well as business and commerce.
The rules of engagement for the government acting in the private sector need to be defined. You cannot have a regulator also being a market player unless all players know what is happening.
Investment in companies needs to continue. For funds to dry up now would lead to much greater disaster.
Avoid protectionism. So do not restrict trade.
Public stake holders need to have their confidence re-installed.
Innovation is a medium to long term process, and the present crisis should not stop it.
Education is crucial and has to be at the heart of developing any new technology, and allowing it to spread into communities.
Five new conditions which are changing how we work are:
1. The expansion of new communications networks, which are global networks.
2. The championing of a multi-disciplinary approach to any issue.
3. Global multi-stakeholder standards are to be set.
4. The process of planning has to change since it will cease to be 'top down', and become planning 'with' the people. The new technologies of communication channels mean that far more information is available to far more people, who will be available to help planning to become a 'bottom up' process.
5. Do not let the risk paralyse change and innovation.
Fuel, food and finance are the three canaries in the mine shaft for the global system.
Their failures have flagged up that the system as a whole is failing and is not sustainable. 2008 is the precursor of the perfect storm.
Water security, climate change, the search for alternative and sustainable energies, are all at the heart of an agenda that the world has to address as a mater of the greatest urgency. There is no second chance for these issues. They are issues of security and survival.
We need to build Transformational Action which will attract substantial government, private sector and public support in order to shift the situation.
The international public sector needs more investment. Smart markets need to be developed so as to create and spread wealth. Private money needs to become more innovative in the ways that it is used.
Everyone has to support the climate change agenda for 2009, which is contained in the Bali Process. We all need to identify and support Transformational Actions.
There were 60 million deaths in 2004, 60 per cent of which came from endemic diseases.
The increasing older population is a major burden on the world's health care systems.
Ten per cent of global economic activity is health-related.
A true global pandemic would be worse than any financial crisis, and the world is not prepared for it. We need to build pandemic preparedness among the private sector, public sector and civil society.
We need a new social compact, which lists a specific set of entitlements that people can expect from the health system, such as has been done in Mexico or Thailand.
We need to recognise that data on health issues should be public and come from many sources.
There should not be one source or one method of collecting and anaylsing. Without multi-disciplinary information, we will be limited in our capacity to analyse and prepare.
The crisis is not indicative of a flawed system. The benefits remain for competitive markets, entrepreneurial activity, and the accumulation of capital.
Efficient correction is happening. Better regulation is needed.
We have to free up mobility of people in the world. Out of the total population of over 6 billion people, only 300 million people live outside the country of their birth. We need a global policy of free movement.
National retirement policies are stagnant in the face of massive change. The populations of old people are growing at a huge rate, and it is nonsense to expect retirement to start at 55. The working lives for most people are becoming longer.
We need to encourage those groups of people who may not be at the top of the pile to have a go. We need to encourage all disadvantaged groups to play a full social and economic role, be they women, ethnic minorities or religious minorities.
Antiquated regulation has to be attacked and pushed aside.
For example, the protection offered to traditional telephone companies has greatly hampered the world growth in mobile telephony.
Existing institutions have not broken down.
Attacking corruption can create good governance.
We need a digital marshal plan to take new technologies into the poorer nations.
We need to work on how to solve intra-state conflict which is how many of the world's conflicts are happening today.
Many new challenges cannot be solved through existing mechanisms.
Climate change is not a national problem.
The nuclear order is fragile: controls are light; the illicit trade is much larger than we ever imagined, and we are building new power stations all over the world.
New boundaries will need to reduce sovereignty.
Trade is working because it has global regulation and finance has failed because it has national regulation.
Some changes in the regulations will be intrusive, but interdependence is growing anyway.
Global governance is highly needed, but not global government.
China and India need to be more involved and from their part they need to provide more leadership.
The United Nations Security Council needs to be reformed.
Africa needs a more effective voice, needs to reduce dependence on raw exports and needs to find new forums to discuss its own affairs within the continent.
Latin America should have better infrastructure and should preserve its ecosystem better, which is a major global resource.
The Middle East should be a bigger player in the financial world.
It needs educational reform to tackle radicalism and needs to avoid an on-going brain drain.
Russia should join World Trade Organisation (WTO).
Russia also needs better corporate governance.
The West should find a way to support new East European states without antagonising Russia.
Many issues from various regions converge and fear dominates the international arena. Crisis overwhelms.
But risks are also balanced by opportunities.
We need to rebuild trust through strong national leadership.
We must also accelerate poverty reduction programmes, reach a global deal on climate change by 2010, improve global governance and improve on the WTO Doha Round.
Poverty is being reduced. Millions of people have moved up from below the poverty line into better lives. The important process needs to continue, bringing huge benefits to the people themselves and to the markets they live in.
We need to develop human potential, and attack the blocks that might exist, through discrimination, poverty, and indifference. The most vulnerable need to be protected.
There is huge talent in many people who are not yet able to participate as they should. There are billions of women who are not yet in the social market and there are 1.2 billion children coming into the labour market in the next few years.
We need to acknowledge that our various religious traditions are important repositories of values.
New media channels are needed to open up important topics and issues.
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