Opinion – Page 2 – Mutual Responsibility

October 20, 2012October 19, 2012

Can Africa Continue Booming In A ‘Global Crisis Economy’?

Africa As Other ‘Emerging Markets’ Is Still In An Upward Swing, Especially Compared To The Stagnating Western Economies

An article, “Africa’s Big Boom” on the pages of Project Syndicate discusses the recent positive developments on the “forgotten continent.”

Africa is undergoing a period of unprecedented economic growth. According to The Economist, six of the ten fastest-growing countries in 2011 were in Africa. Average external debt on the continent has fallen from 63% of GDP in 2000 to 22.2% this year, while average inflation now stands at 8%, down from 15% in 2000. This positive trend is likely to persist, given that it is based on structural geographic and demographic factors, such as rising exports, improved trade conditions, and steadily increasing domestic consumption.”

Is Local Development, Continuing Growth & Progress Possible In An Otherwise Struggling Global System?

One of the biggest problems and reasons that no solution has been found for the global economic crisis is that isolated outlooks on all kinds of situations, including the economy of single nations or continents, still prevail. In other words, outlooks that do not take the full, global picture into account.

Thus, there is a lot of talk about “emerging markets,” China and India, and now also Africa, regions and continents that were either suppressed, or were dormant up until recently and that have now started to catch up to the more developed part of the world.

This, however, does not mean that the system being used, which copies the Western model, is a fruitful one. It simply means that they now have a lot of growth potential in relation to where they were before.

Looking at the global picture, however, these regions or continents have no chance of avoiding the problems the Western part of the world is already facing, since the economic paradigm, viewed from a global perspective, is based on a faulty and unsustainable foundation.

So on paper, China is still growing using its previous momentum, India is already slower, and the same goes for South America, and of course from a level at almost zero, Africa too can produce spectacular results until they hit the same wall everybody else is hitting.

The Present Socio-Economic Model Is Unnatural & Unsustainable, Regardless Of Region, Nation, Culture Or Governance Structure

Constant quantitative growth is simply impossible to maintain. It is unsustainable because it does not suit the system humanity exists in today.

Today’s world has reached a certain maturity. It is like a child who completes its “child” stage of development and moves on to becoming an adult. Now, instead of more quantitative development, a different, more mature, more qualitative kind of development has to start.

When a human being completes its growth, it happens gradually, some body parts and limbs still grow for a while, but the body in general stops growing and has to transform to a different kind of function.

This is what is happening to humanity today, it has reached a new stage of growth which requires a different kind of functioning than what the past models offer. Until people start understanding this concept, and in the meantime, continue stubbornly trying to push for further quantitative growth, they appear as if they are promoting cancer. In other words, by isolated parts of the “body of humanity” only focusing on growing themselves and not taking the benefit of the whole of humanity into account, by that they exhibit cancerous qualities that end up endangering other parts of humanity, and ultimately also themselves, as a result.

A Global, Interdependent Network Can Only Function Based On Global And Mutually Responsible Cooperation

At the end of the article, regional integration is suggested as being necessary for the further improvement of the economic situation in Africa:

African governments should pursue intra-regional trade liberalization, institutional integration, and infrastructure development with greater determination than ever. Their commercial enterprises need to progress in these areas in order to develop further and improve living standards for all.”

This regional integration is a positive step, but it is not enough. For development that would truly improve the living standards of all, such integration would need to extend worldwide, crossing all national and continental borders, using the already existing multi-level interconnections in a positive way.

As humanity shifts into a new globally interdependent era, new kinds of leaders and experts are needed, people who take into account the whole integrated system, who understand its laws and principles, and who can provide its citizens with the knowledge and tools to experience this global interdependence in a positive way. While isolated outlooks still prevail over global ones, the only “growth” taking place is the growth of multiple cancers, trying to take in as much as they can for themselves at the expense of the whole body, not understanding that by doing so they cause harm to other nations and ultimately, this harm also returns to themselves.

Image: “Africa in hearts” by futureatlas.com from Flickr

October 19, 2012October 18, 2012

How To Deal With Tax Evasions

Singapore, A Tax Haven, A Refuge For Tax Evaders, Started Taking Steps In Tightening Regulations

The article “Singapore: Full disclosure” in The Economist describes how Singapore is introducing tougher measures trying to combat tax evasion in line with the worsening financial crisis in the Western world.

From July 2013 financial institutions will be legally obliged to alert authorities to any overseas customer who they suspect of bringing in funds to evade taxes at home, just as they are expected to report on other offences. Equally, the authorities have been sending out stern circulars to all the banks warning them to monitor their customers better, follow the existing guidelines more closely and generally get their houses in order.

The flurry of activity is partially a consequence of the debt crisis in Europe and America. Cash-strapped governments have been ramping up tax-collection efforts. Inevitably, attention has therefore turned towards those countries perceived to be offshore havens. Just as Switzerland has become a target for European tax authorities, so has Singapore.”

People Need Either A Negative Or Positive Motivation For Change

The key to solving these problems is motivation.

As long as the solution is forceful, there will always be people who will find another way, tax evasion, offshore accounts, one trick to the next, and there will always be people, organizations and nations helping them since it is in their best interest.

Firstly, today’s global society will have to find a way of educating its citizens, aiming to lead them to the understanding that by cheating, by harming the system, they actually harm themselves.

Today there is enough actual field data and scientific knowledge showing clearly that humanity has become a single, interwoven network, and when someone “bites the network,” causes harm, the same person actually bites into his own flesh.

However, the majority today still only focus on short term self-centered benefits, not understanding that in the view of today’s big picture, the prosperity and health of the individual is fully and directly dependent on the prosperity and health of the whole system.

The Process May Start With Negative Motivations & Restrictions, But For Long Term Sustainable Results, Only Positive Motivation Built On Understanding Can Work

The steps Singapore is making is already a positive example in how a changing environment can lead others to change their practices, since otherwise they could be facing sanctions and exclusions, with the other obvious example being the embargo against Iran. But these are still restrictive, negative motivational tactics. The optimal way would be when the same “rogue” states or individuals change their practices to ones where they understand that it is their best interest to fall in line with others, mutually cooperating with everyone.

Image “Fishing nets” by Jack Newton from Flickr

October 18, 2012October 19, 2012

2 Roads To A Different World

People Are Running Out Of Options How To Save, Maintain The Integrity Of The Eurozone

Ashoka Mody, a visiting Professor of International Economic Affairs at Princeton University writes about the narrowing options for the Eurozone in his article, “The Eurozone’s Narrowing Window.”

Thus, the eurozone faces three choices: even more austerity for the heavily-indebted countries, socialization of the debt across Europe, or a creative re-profiling of debt, with investors forced to accept losses sooner or later.

Austerity alone cannot do it. Some countries face the growing risk of near-perpetual belt-tightening, which would further dampen growth and thus keep debt ratios high…

…More ambitious pan-European efforts are embodied in various Eurobond proposals. These schemes imply socialization of debt – taxpayers elsewhere in Europe would share a country’s debt burden. These proposals, once in great vogue, have receded. Not surprisingly, the political opposition to such debt mutualization was intense.

Given that perpetual austerity is untenable and others in Europe can only do so much, without robust growth the options will narrow quickly. As a result, much now hangs on the ECB’s actions – and how long they will be sufficient to maintain a truce with financial markets…”

It Seems, As It Happened So Far In Human History, Humanity Will Only Make The Necessary Next Step In Development When The Present System Collapses, When The Present State Becomes Intolerable

While based on the article’s argument that the window is narrowing, and that European countries as well as the whole global economy are gradually running out of options, this narrowing and eventually closing window still leads to solution, to the next stage of development.

It seems that all the windows have to close, people have to try and fail in everything they presently know and want to use, before a fundamental change in understanding emerges: that the whole system needs to change at its foundations.

As long as people still seemingly have other options and other solutions, which they think they haven’t tried yet, yet another bailout, yet another kind of austerity, some more “easing” or “injection” they will continue their futile attempts until they become so desperate, falling on their knees, that there will be no other option but to change the only thing that can change: the human being, one’s attitude toward the world, one’s lifestyle, one’s grabbing of everything for oneself, expansively growing where it is impossible to grow, exploiting everything like a cancer until the whole human system and the environment is on the brink of “death.”

This is the story of human evolution, history so far, where for every next step, a leap was made when the present actual state became intolerable. Then came a revolution, a war or some other violent change, pushing humanity to the next level.

So as things stand today people have to wait until the whole system collapses after the futile “stimulus vs. austerity” attempts dry everything out, countries break away from each other or break apart themselves … leading to unpredictable and scary scenarios in a long, crisis filled transitional period. And then a new, better, sustainable system would be built on the ruins of this one.

The Other, More Pleasant Option Would Be The Understanding Of The Root Causes Leading To The Present Crisis, And The Subsequent Adaptation To The New Evolutionary Conditions Around

Of course, there could be another way, if humanity finally started understanding through the daily examples of the crisis and the countless scientific publications coming out each day that humanity evolved into an unprecedented new state, in a global, totally interconnected network with each other, within the closed, finite natural environment, where only a completely new, mutual and equal human socio-economic system, based on necessity and available resources could prosper.

With each day there is less time to choose the better option.

Image: “desperation” by Eleni Papaioannou from Flickr

October 18, 2012October 18, 2012

Trying To Push A Cube Through A Circular Hole

Politicians Are Desperately Helpless In Tackling The Issues Of The Deepening Crisis

Hugo Dixon, the founder and editor of Reuters Breaking Views writes in his article, “Spanish circle getting hard to square“:

The art of politics is about squaring circles. In the euro crisis, this means pushing ahead with painful but necessary reforms while hanging onto power.

In Spain, where I spent part of last week, these circles are getting harder to square. Mariano Rajoy isn’t at any immediate risk of losing power. His 10-month old government has also taken important steps to reform the economy – cleaning up banks, liberalizing the labor market and reining in government spending.

But the recession is deepening, the prime minister is a poor communicator and his political capital has plummeted. Madrid will also find it harder than thought to access help from its euro zone partners…”

Humanity Is Trying To Push On With A Fragmented Worldview In A Rounded World

The example of squaring circles is a fitting one, and it is even more fitting turned around.

The problem with Spain, Europe and in fact with the whole global economy and political leadership is that everybody tries to push a square through circle, or more precisely try to push on, force a polarized, fragmented and isolationist mindset and behavior in a world that has become round, global, that has evolved into a totally interwoven and interdependent network.

All the present tools and even Nobel Prize winning ideas are based on the “old” square reality, and they do not work in the new round, circular reality. Not only are they useless; they are self destructive.

On top of that the main engine, the constant quantitative growth economic model has also become obsolete, exhausted and unsustainable, the fact of which is proven each day by the daily vents of the crisis, and more and more scientific studies.

Fundamentally New Tools & Methods Adapted To The New, Global Interconnected Reality Can Serve As Basis For The Crisis’ Solution

There is a need for fundamentally new political and economic theories and practice, basically there is a need for a total operating software reinstallation, a new socio-economic system adapted to the new “hardware,” the closed and finite and at the same time global, integrated reality humanity today exists in.

Image: “Day 279. Cube on circle” by Alf Storm on Flickr

October 10, 2012October 9, 2012

Understanding Crisis And Today’s Need To Shift To A Global, Interconnected And Integral World

John Dupré, Professor of Philosophy of Science and Director, at the ESRC Center for Genomics in Society, University of Exeter writes the following in Project Syndicate:

…The creationists are right about one thing: contrary to the impression given by much popular writing on the subject, the theory of evolution is in crisis. But this is a positive development, because it reflects the non-linear progress of scientific knowledge, characterized by what Thomas Kuhn described in his influential book The Structure of Scientific Revolutions as ‘paradigm shifts.’…”

…Beyond undermining the gene-centered theories of evolution that have dominated public consciousness for several decades, these developments call for new philosophical frameworks. Traditional reductionist views of science, with their focus on “bottom-up” mechanisms, do not suffice in the quest to understand top-down and circular causality and a world of nested processes…”

…Evolutionary theory’s current contretemps – and our inability to predict where the field will be in 50 years – are a cause for celebration…”

Crisis = Turning Point, Point Of Decision, Rebirth

Indeed the word “crisis” in its original meaning describes a “turning point”, “point of decision”, or even “rebirth,” thus it does not necessarily mean a negative event as the word is mostly used nowadays.

As the above mentioned article suggests, a crisis opens up new possibilities, clears previous dogmas and prepares paradigm shifts.

Today, humanity is in a global crisis. It is not only evolutionary theory that has reached a turning point, but basically all of the human institutions that looked well grounded, even 10 years ago, are facing crisis situations.

Moreover the developments in quantum physics started challenging even the perception of reality humanity was used to for several thousands of years.

The common feature of all these crisis points and scenarios is that from a previously flat, linear, polarized paradigm, the whole human experience shifts to a round, totally intermingled, matrix-like, integral experience.

What Does It Mean To Live In A Global, Interconnected & Integral World?

Although the expressions “global” and “interconnected” became much more popularized in the media and in scientific and even political publications, the full meaning of these terms is still only superficially grasped by most people.

In an integral system the importance and potential of the individual or even small or larger group of individuals is lost, since an integral system means total interconnections, where each element influences every other element.

From this viewpoint we can examine how those methods and tools that seemed to work in human society and institutions up to this point, developing humanity for centuries through its progress, suddenly turned useless and harmful.

The methods and tools did not change, but the system they are used in and should operate on has changed from linear/angular, fragmented and polarized to spherical/round and interconnected.

Thus, as the above article also suggests, humanity stands not only ahead of new evolutionary theories, but in front of a new stage of evolution due to the changing system and surrounding conditions.

In order to understand life in a global, integral and interdependent reality, humanity itself has to become global and integral and use its interdependence in a positive reinforcing way, balancing out negative traits and tendencies and amplifying the positives.

The developmental tendency in evolution is the birth of more and more complex structures, lifeforms in order to more efficiently cope with environmental influence and increase the chances of survival. Humanity is standing in front of this option now to use the already existing global interconnections and become a mutually cooperating, planning and acting “super-organism,” suitable to build a sustainable future.

Dealing With The Global Conditions: Combining Individual Experiences Into A Single Picture

By combining the individual perception, experience of all human beings into a single picture, puzzle can humanity put together the “true reality” and finally step out of the uncertainty, this “Russian roulette” that has been played for thousands of years.

The original quoted article states: “In fact, disagreement – and the deeper insights that result from it – enables new approaches to scientific understanding. For science, unlike for dogmatic belief systems, disagreement is to be encouraged…” Indeed the individual opinion, unique viewpoint is not lost in the new human system but it is combined into a multi colored mosaic, where if applied to a common goal, common point of agreement, it can give the right, true solution for any problem. It is like a round table discussion in between very different people with opposing opinions, but if they find a common point in between them “in the center” through a skillful moderator, through that common point they can channel their individual opinions contributing to a much more intensive and proper solution.

The advantage and superiority of humans above other lifeforms is the capability to make this evolutionary jump in a conscious, freely chosen and executed manner, and not by the negative pressure and subsequent suffering from the surrounding natural environment demanding this change based on unbreakable natural laws.

October 9, 2012October 9, 2012

International Monetary Fund Predicts Global Financial Crisis Will Take A Decade To Recover From

It is not yet a lost decade but it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape.”

– Olivier Blanchard, chief economist at the International Monetary Fund

The Daily Mail reports:

… with the eurozone crisis threatening to spiral out of control, the US approaching a debt storm, and the global economy slowing from China to Brazil, the outlook remains bleak.”

The Problem With Isolated Analysis

The unfortunate dilemma continually facing the global economy is a lack of unified integral analysis. For instance, the U.S. looks at the Eurozone and seeks to prepare itself for the worst, although not-much-thinking of providing aid. The Eurozone looks to the U.S.’s approaching fiscal cliff and thinks likewise—neither has proposed the need for mutual aid.

In an interconnected world, perhaps most represented in economic relationships, where markets are tied together, and therefore rise and fall in conjunction with one another; the idea of mutual responsibility is so fundamental that it is almost mind boggling that it has yet to be realistically proposed.

If markets remain connected, as they are now, and nations do not think of each other as parts of one global system, which is now in a growing crisis predicted to worsen, then how can it possibly be tackled by independent parties working towards different goals in an integral network?

The Family Analogy

The most simple interconnected group that exists is a family. In a family, we have a mother, father, possibly children, and extended family. The health of the family is predicated by the health of all of the units within it. If there is a baby in the family, it is given extra care. It isn’t asked a question like, “Why do you not go out and earn a living to support us?” It is naturally understood that a baby is a defenseless unit within the family, that it can not provide for itself, but being that it is part of the family, is provided for by the family.

The global economy is today like a dysfunctional family. Using the family baby analogy, we can perhaps look at Greece as a baby. Harsh austerity is imposed on it. Its public sector has been cut, those who have previously not paid taxes are now forced to do so. As a result, Greek depression and suicide have soared, poverty has risen, and the black-market economy has soared. The country is in no better shape now than previously, and the world sits and waits to see if worse conditions will present themselves.

But if the global economy were to act like a family, then it would look at Greece far differently. Obviously, it must grow up, to spend within its means, to not be a burden. But a baby is not asked to go and earn an income when it is unable to do so. The same analogy can be applied elsewhere as well, if it were allowed to, because the interconnection and interdependence of the global economy takes in many members who are strong, moderately strong, weak, and feeble.

In a family, all are equal.

The Need For Mutual Responsibility To Exit The Global Financial Crisis

Because the interconnection and interdependence of global markets does not subside, and because crisis between markets continues to escalate, the need for mutual responsibility presents itself.

When a family does not act for the mutual benefit of the family, all of its members suffer. If the baby in the family is not treated as a baby, but perhaps as the father of the family, then the baby suffers, and the rest of the family does also.

One key problem that exists within the global economy is that each is treated as if they must, “pull their own weight,” as if conditions are somehow equal existing within and between every nation. But they are not. As a result, the global economy continues to not act like a family due to its interconnection and the entire global economy suffers due to this continued calculation.

Mutual responsibility on the other hand, would necessitate each nation within the global economy to think of the needs of all the other members within the global economy. Greece then would not have to suffer such harsh and rapid austerity in order to bring it into line, but would be gently guided so as to not cause the incredible rise of depression and suicide which we see existing today. The U.S., likewise, would not be asked to face their upcoming fiscal cliff alone, and so on and so forth for each nation within the global economy.

But without mutual responsibility, the IMF’s prediction of perhaps a decade to recover from the global crisis is naïve at best. Global interconnection and interdependence is not ceasing, and mutual responsibility, sadly, is nowhere in sight on the current global landscape.

Image: ““I want all three of our hands together”” by emmiegrn on Flickr.

October 5, 2012

This Crisis Is Different

The observation that recoveries following a financial crisis are different suggests that standard macroeconomic policies might not work as one would usually expect…

On balance, it thus seems that this time – or, rather, this post-crisis environment – really is different, and that macroeconomic policies have done little to improve matters…”

— Daniel Gros, Director of Center for European Policy Studies, in the Project Syndicate article, “This Recovery Is Different.”

Today’s Crisis Renders Political Leaders & Financial Experts Helpless

Indeed political leaders, financial and economical experts seem desperately helpless in the face of the deepening crisis all over the world.

In Europe, for example, they switch from austerity to stimulus, and then back and forth. In the US, there is sharp debate about more market freedom or more State control, interest rates are lowered to even minus levels like in Denmark, but overall nothing seems to work.

All the debate and analysis is touching only the surface, the symptoms. It does not extend deeper trying to identify the core problem.

How Is It Possible That The Methods & Tools That Drove Progress Until Today Turn Out To Be Useless, Moreover Harmful?

Every day, the news increasingly exemplifies how the globally interconnected economy affects every country in the world, but when it comes to implementing solutions to global problems, no leaders or experts know how to do it.

A global, integral system means that all the elements are tightly intermingled with each other. When one part of the network moves, the whole network moves with it. All the elements are fully interdependent.

Today’s globally interdependent conditions are still being approached by methods and tools developed in the past, which were built for a world unlike today’s. In the past, tight global interconnectedness was not taken into account, and thus fragmented, protectionist, self calculating and many times exploitative measures proved to be successful. However, as the world today heads into a new integral era, those same methods and tools have become cancer-like, running down the whole system and making success look like a bleak objective.

Global Scale Problems Require Global Scale Solutions

For a solution that works, people around the world will need to first understand how the protectionist and self calculating attitudes that have been at the core of modern upbringing and education, which seemed to offer success in the past, lead only to increasing problems.

Secondly, people will need to learn about what living in today’s new globally interdependent conditions means for each and every person, and become motivated to rise above the previous thinking that considers only the success of individual people, organizations and nations, to a thinking that considers a truly global scale success.

With a full understanding about today’s globally interconnected conditions – how these conditions came about, what are today’s problems, what is their source, how should these conditions be optimally related to in order to reach globally interconnected solutions – it could become clear to each and every human being that the health, prosperity and future of every individual directly depends on the health, prosperity and future of the total, unified network.

Image: “humanity street – Voxefx” by Vox Efx.

September 30, 2012September 30, 2012

3 Ways To Develop Mutual Responsibility

When it comes to the implementation of a new idea, whether it is in science, economics, culture, etc.—every idea, if it is new, has an uphill battle to undertake. When Galileo proposed that the earth revolved around the sun, and not the other way around, it was the beginning of that idea’s long trek up the hill of what had previously been thought. It was a similar trek walked by the idea of natural selection proposed by Darwin, or by Edison numerous times, or by hip hop to become accepted as a respectable form of music.

And so it is now with the idea of mutual responsibility. Just as the earth revolving around the sun suffered through past arguments to the contrary, mutual responsibility does likewise. It has been said to be some sort of form of communism or socialism, a utopian idea, etc. But every new idea undergoes this sort of critique before it, if it has merit, is eventually accepted.

Does Mutual Responsibility Have Merit As An Idea?

When thinking of the idea of mutual responsibility, where instead of a person valuing individual ideals, or loose collective ideals for the sake of receiving one’s needs and not suffering harm from the rest of society; its value in an increasingly interconnected and interdependent world should be becoming apparent.

Because if it can be shown that society, global society, is suffering as a result of interdependence not being valued, and that this then leads to the development of crises on all levels (economic, interpersonal relations, communities, states, nations, international relations), then what idea other than mutual responsibility—where people agree to mutual conduct and responsibility for everyone—is more natural?

1. New Education

It is conceivable that through the prolonging of the current global crisis (in education, culture, economics, climate change, health, and international relations) that mutual responsibility could be arrived at by masses of people through persistent suffering.

But such a path—suffering—is not desirable. This path requires conditions similar to osmosis: A concentration gradient where, here, an idea eventually passes through the barrier of what is accepted and what is not due to concentration, i.e. here suffering increases to a point where it passes through its barrier.

The other path is that of education.

If mutual responsibility were to be taught in the education system as a natural part of life that every modern student should know, this would then hasten mutual responsibility’s acceptance into the marketplace of ideas.

2. Community Involvement

If a child in school learns about ethics, about what society deems good and bad, and then is put into an environment where such ethics are not valued, then that child will forsake his or her learning due to society’s influence. This is why mutual responsibility, in addition to it being taught, must have a practical application in the form of community involvement.

It is similar to someone who wishes to quit smoking. Does a person who desires to stop smoking congregate closely with those who smoke? Of course not, that is if they are serious about no longer smoking. Because the influence of society, of the smokers on that person, will be an inhibiting force.

If a person reaches the conclusion that mutual responsibility is needed in order to create a healthily functioning society, and as such wishes to develop an attitude of mutual responsibility, he or she needs to be surrounded by those who also hold this idea with regard.

3. Critical Mass

Even still, although education and community involvement are needed for mutual responsibility to grow to be an accepted idea, it is still not enough. This is because although small groups of people, or even whole communities, can hold this idea, it would still not be on the level needed for a global society that is interconnected and interdependent to be swayed.

That being said, there is an interesting phenomenon known as “critical mass.” It is the concept that once an idea is held by ten percent of a population that idea suddenly begins to spread rapidly and its growth is sustained. As a result, the conundrum of living in a global society which knows little about its interconnection and interdependence also holds a shining light: It provides a network of connections that allows for the transmittance of ideas rapidly.

As a result, with new education, community involvement, and the transmittance of the idea of mutual responsibility through social networks (physical and virtual), it is conceivable that critical mass, as a result of the prolonging of the global crisis, could be reached rather quickly.

The continued spread of the idea would then be the result of self-perpetuating motion.

Image: “Unity – Zickri Teo” by Adi Arfan Mikhail.

September 28, 2012

Downward Spiral In An Interdependent World

The Slowing Down Of The Chinese Economy Continues

A recent article in the Financial Times, “Downturn in China spreads to key sectors,” outlines how the slowdown in China spreads into the key sectors of economy previously thought to be solid.

…China’s downturn is spreading to the sectors and companies that were expected to withstand the slowdown and drive growth in the region.

Financial Times analysis shows that a third of publicly listed Chinese companies suffered cash outflows in the quarter to the end of June as the combined effect of the slowdown in exports, a build-up in stocks and tightening local government finances begins to bite.

Cash balances at a tenth of 1,700 companies analysed by the FT using data from S&P Capital IQ have turned negative in the past two quarters.

For a further 6 per cent of companies that normally report an outflow, the outflows were worse than last year.

The results highlight that even the companies that are expected to help rebalance China away from an investment-driven economy – such as consumer and retail businesses, healthcare, pharmaceuticals and electronics companies – are being affected by the slowdown, along with construction, real estate, industrial machinery and chemicals…”

The Chinese Downturn Is Part Of The Global Process Due To The Interdependent, Integral System

For a long time many observers, and also leaders of the global economy, financial institutions and politicians look at China as a potential savior of the global economy with its unstoppable growth. But this belief did not take into calculation the interdependent state nations evolved into in today’s human network.

Individuals and nations alike are tied together into a single, integral system, depending on each other even for their necessities.

Or as leading economists and politicians have stated, “we are all in the same boat,” thus no individual or nation could pull away from the others, or pull the others behind them relentlessly without being affected by the crisis.

There is plenty of proof of this interdependence, one is how Australia’s mining boom suddenly halted as a result of the Chinese slowdown:

…Australia’s resources minister has said that the country’s resources boom, one of the biggest drivers of its economic growth, is “over.” His comments come after BHP Billiton posted a 35% dip in profits and delayed plans to expand its Olympic Dam mine. There are concerns that a slowing global economy may hurt demand for coal, metal ores and other commodities. A slowdown in its mining sector, one of the biggest employers, is likely to dent Australia’s economic growth. ‘You’ve got to understand, the resources boom is over,’ Martin Ferguson told ABC radio on Thursday…”

On the other hand China will continue to slow down as long as the consumer demand is weakening from Europe and the US, and all these changes are augmenting each other in an ever growing vicious cycle.

Any Solution Needs To Take Into Consideration The Global, Interdependent Nature Of The Human Network

The global economy has no chance for any revival as long as the individual nations continue with their fragmented, polarized worldview of ruthless competition. Humanity has reached the stage when only a coordinated, mutually responsible and considerate planning and action can provide any short or long term results.

Through learning about the nature and principles of the present interdependent human system based on factual, scientific information, politicians and people capable of changing public opinion could provide the positive motivation all over the globe for the transition from a self calculating mindset to an approach that considers the well being of the whole a priority above individualistic and nationalistic interests.

Image: “A Downward Spiral” by Peter Lee on Flickr.

September 16, 2012September 16, 2012

Are Politicians Kicking The Can On Hard Economic Decisions, Or Are They Out Of Options?

Nouriel Roubini, professor at the NYU’s Stern School of Business, and Chairman of Roubini Global Economics, in the Project Syndicate article “Fiddling at the Fire,” describes the precarious, and volatile state the economic and geopolitical world state is in, and challenges today’s leadership in the wake of the deepening global crisis, accusing them of “kicking the can,” avoiding hard decisions and action:

Politicians Kick The Can On Hard Economic Decisions When Approaching A Brick Wall In The Economy

Ineffective governments with weak leadership are at the root of the problem. In democracies, repeated elections lead to short-term policy choices. In autocracies like China and Russia, leaders resist the radical reforms that would reduce the power of entrenched lobbies and interests, thereby fueling social unrest as resentment against corruption and rent-seeking boils over into protest.

But, as everyone kicks the can down the road, the can is getting heavier and, in the major emerging markets and advanced economies alike, is approaching a brick wall. Policymakers can either crash into that wall, or they can show the leadership and vision needed to dismantle it safely…”

Is The Reason For Politicians Kicking The Can On Hard Economic Decisions Weak Leadership Or Something Else?

Indeed, politicians have their own calculations, they think about their personal legacies, the next elections, what the party line is, what the powerful lobby groups, sponsors want, but in general they are not “evil people” intentionally wanting to destroy the world or their own countries.

The Reason For Politicians Kicking The Can On Hard Economic Decisions Is Incomplete Knowledge About The World’s Current Situation

The politicians seem weak, they “kick the can” because simply they have no idea what to do with the crisis, or if they start to see the possible actions they do not dare to make them as they fundamentally differ from previous ones, they might seem like political suicide.

They are actually in a truly desperate state, since from their position they certainly see the direction the world goes, and most probably they are much more aware of the potential catastrophic events waiting for us if we do not change course than most others can imagine.

And still, they are helpless to change course.

The Problem Is That The World Has Shifted While The Approach To It Hasn’t

This is because a fundamental shift happened within the conditions we exist in, and the whole upbringing, attitude, the methods and the tool set of the present leadership have become obsolete, moreover destructive.

Everything they know, even the Nobel prizes given to eminent economists, the whole financial structure, political ideology they have always been using is based on a linear, polarized, fragmented world.

In that system there are friends, enemies, there are open markets and free, mostly ruthless competition, the stronger survives, and rules, and so on.

What Are The New Conditions In Today’s World? How Should It Change The Approach Toward A Solution?

All this thinking has become irrelevant. It’s as if one day humanity suddenly woke up on a different planet.

Today’s social and environmental conditions have become round, global and integral, which means all the people, individuals and nations are all totally interconnected as cells of the same body, or cogwheels of the same machine, and there is nothing that can be done about it. It happened as part of the evolutionary process, the interconnected parts cannot be separated.

As an example it is similar to highly individualistic sport stars, shining alone, receiving all the accolades, rewards, fame for themselves, suddenly being drafted and ordered to play in an All Star team, losing their individual recognition, simply playing for the team, in order to achieve a common goal. Or as an even more extreme example like cancer cell cultures, living purely to multiply and consume their environment suddenly merged together in order to build a healthy, living, balanced organism, where each needs to serve the whole.

Thus humanity urgently needs totally new concepts and ideology in politics, economics, and finances, the whole human system needs to be rearranged not along the lines of previously knows “isms,” leftist, rightist agendas, separatist, fragmented, polarized worldviews, but based on a full research and understanding of this new global interdependent system, where individual people and nations truly constitute cells, or cogwheels of the same united organism that has to find its way and future in a mutually responsible and considerate way.

Image: “Kick’n the can” by Anthony on Flickr.