Bubbles must burst

Renton de Alwis

Written in late 2011 this was the height of the street protests against the failing of the US and the world economy to serve peoples' needs. Today, the rage in India (see pix below) is against the rape of a young woman in the backdrop of the slaying of  little kids by a young man in a cozy little township in the US. I leave it for your critical thought for how we may approach the solutions ....

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 can not 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.

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 can not save nations in debt who have for far too long, lived beyond their means. The protesters claim that ninety nine per cent 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.

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% 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 organisations 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. 

Pix credit: Wordpress on Google