Bubbles must burst
As I write this column New York’s Wall Street occupiers’ protests had
gone-on beyond its third week. Thousands of protesters have been living
in the Zuccotti Park (formerly NY Liberty Plaza) are showing their
displeasure at having to bear the brunt of the follies of the glamour
guys of the ‘financial capital of the world’. As at three days ago, over
50 other cities in the US, hosts of trade unions and support movements
on the virtual domain joined in the protest bringing in hundreds of
thousands of activists to the fore.
In another development, this year’s Nobel Prize for economics have
been awarded to Professors Thomas J. Sargent and Christopher A. Sims who
independently of each other conducted empirical research on cause and
effect in the macro-economy.
First world poverty
In the UK for the first time since the Second World War, white-collar
folk are lining up in charity-lines the likes of Fairshare, which
ventures to collect food stuff and other essentials that would otherwise
be thrown away at the nation’s supermarkets. They make these available
to an estimated 35,000 people who are without jobs and in need. Also for
the first time, we are seeing a clear demonstration of first world
poverty of a wide-spread kind emerging, not of the usual seekers of
charity, the disabled or the homeless, but of those belonging to the
middle-class, who now cannot but help seek it. An array of street
demonstrations we have seen, even leading to looting in some major
European cities may well be manifestations of what seemingly is wrong in
our societies today.
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Professors
Thomas J. Sargent |
Christopher
A. Sims |
European leaders met last week to discuss how bail-outs can be worked
out for the sick economies of their own and others around them. The Wall
Street protests show that bail-outs alone cannot save nations in debt
who have for far too long, lived beyond their means. The protesters
claim that 99 percent of Americans are paying for sins of one percent,
who have chosen to create bubbles that have been kept inflated by the
government apparatus. Luxurious life-styles maintained through
non-existent resources have drawn that nation to debt and resultant
chaos.
What must be noted are the Domino and Ecosystem Effects that all of
this leads to. In today’s world’s nations, economies, financial networks
and systems and everything else that we know, are linked closely with
each other. iPods and other such devices enable information exchange at
rapid speeds and fund transfers of significant magnitude can now be made
within seconds. No one in effect is spared of these happenings.
Waste not
It is apparent that we are facing the wrath of having chosen to
ignore the principle of cause and effect. We have treated Mother Nature
with scant regard and lived in denial and sadly some continue to do so
now, even when all scientific and other evidence shows that all is not
well with the health of our planet. This has gone-on for far too long
without any real corrective action taken and all of human-kind seems to
be getting into deep trouble. Our greedy ways have led us to seek,
build, acquire or spend on many things that are unnecessary.
In our own context in Sri Lanka, we talk of conservation of our
environment and go on destroying our forests and other natural assets.
Millions are spent on tamashas; the many luxurious wedding ceremonies,
unproductive political rallies, fancy openings of development projects,
conventions, conferences, award ceremonies followed by cocktail parties
and wasteful dinner parties, sponsored events for ‘stars’, promoting
many non-essential products and habits.
Consumption of alcoholic beverages, tobacco and other more harmful
substances known as ‘drugs’, while building huge financial empires
around them have been acceptable practise and there has been a ‘looking
away’ by many in positions of power on these operations. Grand Prix
races and Rallies of energy guzzling luxurious vehicles are touted as
sporting events. What can be done modestly and in austere ways is done
with grandeur and waste, to satisfy the egos of a few.
How many types of soaps, beauty-care products, baby-care products,
generic medicines, food stuff, educational modes and institutions,
development and entertainment options do we humans kind need to have to
lead affordable lives of acceptable levels of comfort? Instead we
continue to place undue pressure on the natural resource-base of this
planet, by producing so many unwanted goods and services. This only
serves to please the greed that has been allowed to grow within each of
us leading us to believe that it is good. Need has been replaced by
choice within this belief system.
Sound fundamentals
A house is built on a foundation that is carefully planned. Different
for different soil types; on slopes, on hills, on sandy or muddy moving
ground they will be designed and built differently. Some will be built
on stilts, while other on foundations of granite and concrete. If the
house happens to be your own, this becomes even more relevant and more
care is exercised. If it is built for others by you, there may not be
the same care that goes into it. That is the sad reality but it is true.
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Wall Street
protesters |
Singapore’s leaders when building that nation’s economy always
maintained that it needed to have a strong foundation. They called it
having sound fundamentals. The nation has a healthy 50 percent average
savings rate which means that each Singaporean on the average has saved
or invested half of his or her income regularly. Some of it is in the
form of forced savings through the central provident fund (CPF),
mechanism of the country.
At the worker level, the country’s trade union movement is also
geared to saving, investing and managing major portions of their
members’ incomes through the national trade union congress (NTUC), one
of the richest organizations in the country operating taxi services,
recreational facilities, chains of supermarkets etc.
In the current economic environment, even a country with such sound
fundamentals will only be able to withstand external pressures after
some time. For the Domino Effect referred to earlier will begin to
eventually push down even those who have lived prudently, for they are
closely linked to global financial markets and systems.
The currently strong economies of China and India will also begin to
feel the pains of this crisis and may need to play a greater role in the
establishment of a new order for the world in the future.
And in doing so the principle of ‘hethu pala dharmathavaya’ or cause
and effect, which is at the root of all oriental teaching need be taken
as the basis for designing these new systems and models. Just tinkering
with what is on now, as the Nobel prize winning economic researchers
have sought to do, in determining the impact interest rate and tax
instruments have on the overall economies of countries may not do. What
will be needed is to look at establishing solid fundamentals in living
in harmony with nature, within one’s means, based on the ethic of hard
work in creating real products and services that will richly serve all
humankind.
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