Economy - The ethical angle

Oil price hike, inflationary tendencies, terrorism, financial meltdown – there is nothing local these days. The global financial meltdown that started on Wall Street has become the topic of discussion on all streets now. The effect has been global but the wrath sure enough goes down to the local as well. Is it not human greed that drives each individual towards the stock market – knowing fully well that it is a mountain of smoke?

Basically, the moral fibre that runs across the theory relating to wealth creation should be righteous. The basic tenet of unfettered free-market globalisation, profit- maximisation or wealth-maximisation, as witnessed, is driving each individual to grab as much as possible from this world. Gearing up and accelerating the engine of economic growth cannot be unlimited when the resources available are limited in character. Unfortunately, the excitement lies in flying high in a reckless manner.

Dangerous portents

The fact that we are trying to outrun the natural recouping ability of our environmental resources is something that the advocates of globalisation refuse to bring to visibility yet. The financial crisis and the scale of its impact came to light — so fast and so vast — because it was quantitatively expressed day in and day out. But we tend to discount the natural resource crisis because it is not quantitatively expressed. Moreover, the people who are dependent upon such resources, be it land or water, are voiceless, and so it goes unexpressed. There is again ‘global brainstorming’ taking place about innovating a way to save capitalism and to call it creative capitalism, happy capitalism, innovative capitalism and so on. Perhaps, it might be possible to manage this financial slowdown or meltdown.

But the ones we are most likely to face in the near future are more dangerous because they are inadequately expressed and insufficiently heard — depleting fresh water resources, lost water bodies and rivers, missing farms and farmers, perishing culture in the communities, and shrinking human values and democratic ethics. Let us realise that these cannot be ‘innovated’. If this global meltdown has done some good to the poor, I would say, there are people who have started talking that ‘the survival of the fittest should take into account the survival of the weakest also’.

Resistive guarding

It is some leftover quality of the democratic character that saved India from the global crisis that several countries of the world including Pakistan are reeling under now. Had it not been slow due to the pulls of various Civil Society Organisations, and the Left, we would not have had the solace we have now. Therefore, it is high time we take up a stand with regard to globalisation.

What if a more prudent approach — to welcome globalisation and industrialisation ‘with certain non-negotiable ifs and buts’— could be adopted by us? That is, it will be allowed without resistance at the local level provided it will not harm the natural environment by over exploiting resources; it will not emit smoke; it will not let out effluents into fields or into water bodies; and it will allow local bodies to exercise some powers like levying corrective tax, if it shows any tendency to harm the land or other resources of the poor.

IMF chief warns of bigger economic crisis in 2009

International Monetary Fund (IMF) chief Dominique Strauss-Kahn said a lack of fiscal stimulus by governments to tackle the global slowdown may make a bad 2009 even worse, according to an interview released on Sunday.

Strauss-Kahn told BBC radio that the IMF may need to cut its next economic growth forecasts, due in January, referring to "2009 as really being a bad year".

"I'm specially concerned by the fact that our forecast, already very dark ... will be even darker if not enough fiscal stimulus is implemented," he said in an interview.

The IMF has called for fiscal stimulus -- higher government spending and temporary tax cuts -- worth $120 trillion, or two per cent of global annual economic output, to fill the gap caused by slumping private demand following the credit crunch.

Britain has announced fiscal stimulus worth around 1 percent of output, and despite a "disturbing" level of public debt, Strauss-Kahn said more public borrowing would be the lesser of two evils.

"The question of having social unrest has been highlighted by journalists ... but it's only part of the problem," he said. "The problem is that all the whole society is going to suffer."

"The threat is that big today that I think that between two different problems, increasing deficit -- which is never good -- and fighting against recession -- which is even worse -- we have to choose the less bad solution," he said.

Strauss-Kahn dismissed recent criticism of higher government borrowing by German Finance Minister Peer Steinbrueck and European Central Bank President Jean-Claude Trichet, saying both men had traditionally taken a strong stance against heavy government borrowing.

Strauss-Kahn said help was unlikely to come from further global interest rate cuts -- or even a move to so-called quantitative easing, where central banks try to increase the volume of credit in the economy.

"We've probably reached a point today where the quantity of money in the economy is fine globally. The question is even with this liquidity banks are very reluctant to lend. The main thing we have to do today is to restore confidence," he said.