Friday, January 27, 2017

The carnival is over - World Economic Forum 2017


The recent World Economic Forum (WEF) in January 2017, was, by comparison with their previous meetings, a rather drab event. It was shunned by many influential figures who had more pressing engagements and who chose to stay away from the annual bean-feast in Davos, Switzerland.

Behind the scenes, however, the 'more pressing engagements' fell into two categories: previous economic directives issued by the forum have proved spectacularly unsuccessful and incorrect; their ability to subsequently monopolise main political agendas has seen the body pushed to the periphery of any meaningful dialogue.

There is no evidence, however, those associated with the WEF intend changing the economic theories to which they aspire.

The 2017 WEF will be remembered by many observers as the think-tank gathering which was shunned by many people. The elite body just did not attract the conga-lines of habitual conference goers usually associated with the annual event, who either stayed at home or attended other, similar meetings elsewhere. (1) The WEF, founded over forty years ago, to formulate global economic policy would now appear to have seen much better days.

About forty Australians are known to attend annual WEF events although their contribution is rarely acknowledged on official websites and media releases. (2) Despite claiming travelling and hotel expenses from various organisations and government departments their contribution has yet to be clarified. (3) Davos, Switzerland, it should be noted, is not a cheap tourist destination but caters for the top-end of town.

Following the WEF extravaganza one of the Australian delegation, Greg Medcraft, chairman of the Australian Securities and Investments Commission (ASIC) was also booked to travel onto France for further high-level meetings with 'fellow European regulators'. His noted managerial specialisms include long-term investment and balancing technological innovation with financial stability. (4)

The WEF official website provides an introduction to the glitzy world of technocrats and proclaims the organisation is 'impartial', 'not for profit' and a promoter of 'global public interest'. There are also numerous references to softer-style diversionary politics which include charitable work, gender issues and environmental concerns although not a single mention about exploitation.

While riding high on the triumphalism of capitalism and imperialism of the so-called New World Order (NWO) of the 1990s the WEF today, however, does not have much to prate about. The global environment they are largely responsible for creating with others can hardly be viewed as an achievement: the continued implementation of economic policies of deregulation, privatisation and liberalisation have had the opposite effect of what was intended. It has also not been a good advertisement for so-called free trade agreements (FTAs) which form part of the same package. (5)

The policies have not stimulated economic growth through expansion of world trade nor have they increased living standards for the vast majority of people.

The global economy is slowing: reliable source material from the World Bank show it failed to exceed 2.4 per cent growth in 2016 and was hindered by 'sluggish growth, low commodity prices, diminished capital flows and weak global trade'. (6)

World trade flows and container traffic never recovered from the global financial crisis (GFC) of 2008, and fell by more than half to about an average of 3.5 per cent per annum during the 2012-2014 period. They then declined still further, falling at around one per cent a year to last year. While a slight increase has been recorded in recent months it is regarded as only temporary. (7) Other sources, including the World Trade Organisation (WTO) record 'trade growth' as slowing from 2.8 per cent to 1.7 per cent' last year. (8)

One speaker to the WEF, John Chambers, executive chairman of CISCO Systems actually stated 'some 40 per cent of large companies would disappear in coming years' as a warning of even harder times looming with whole industries collapsing. (9) In Australia, by the end of this year the entire car industry together with 80-90 per cent of the component sector will have closed, affecting an estimated 200,000 workers in related and linked employment. Whole areas of the country will be economically decimated as unemployment becomes the norm.

Those in regular employment also have often not received wage-increases in line with the cost-of-living for years. Even official WEF research has been forced to accept the 'annual median incomes in 26 advanced economies fell 2.6 per cent in the period between 2008 and 2013. (10)
In Australia, only 91,500 new jobs were created in 2016 and the national economy has been slowing for many years. Those new jobs recorded tend to also be casual and often part-time with few, if any, entitlements for workers. There are 740,000 unemployed people officially looking for any work together with a further 1.1 million searching for 'more work than they can get'. (11) In New South Wales, Australia's largest state which includes Sydney, Australian Bureau of Statistics (ABS) show only 1,100 new jobs were generated last year. (12)

The economic rationalist theories which have created these problems were also not new or original. They grew out of the Chicago School of Economics which dominated the thinking of decision-makers during the 1920s. The theory was based on an assumption the basic factors of production, labour and capital, should be allowed to operate in an unfettered manner without government interference to enable growth and sustainability. Competition was regarded as an economic stimulus.

The theory was, however, discredited following the Wall Street Crash of 1929 and eventually discarded after the Second World War with the development of state enterprises to regulate economic growth and provide stability. For over the three following decades advanced, industrial economies experienced economic growth with notable rising living standards and increased opportunities for most working people.

Organisations such as the WEF, however, became major advocates of the former economic rationalist theories throughout the 1970s which subsequently became vogue thinking during the following decade. While initially being implemented by right-wing governments, the theory was also adopted by social-democratic parties such as the Australian Labor Party (ALP) which was swept along with the tide, either unable or unwilling to speak out. The notion of nationalisation of industry and services to protect jobs has disappeared from living memory of most Australian voters.

In the UK, likewise, millions of working people and voters were eventually confronted with the nauseating spectacle of Labour Prime Minister Tony Blair being responsible for implementing policies which were merely a continuation of the previous Conservative governments. There was little to choose between the two major parties.

Such political leaders do not tend to publicise economic statistics for obvious reasons.
Using reliable data to assess the economic malaise is not, however, difficult to find: the term general domestic product (GDP) growth is a primary indicator of the health of an economy and used to measure production and growth. It can be relatively accurately measured as seen below: 
                              GDP GROWTH %      2007          2016          % OF FORMER    
WORLD:                                                   5.571         2.936         52.78 %
AUSTRALIA:                                            4.547         2.695         59.27 %
OECD COUNTRIES                                 2.692        1.705         63.34 %
NON-OECD COUNTRIES                        9.150        3.391         37.10 %
DYNAMIC ASIAN ECONOMIES              6.698        2.800         41.80 %     (13)

It is, at first glance, difficult to establish why the economic rationalist policies responsible for the decline have been in continuous use for so long, until studies of who has benefited come to light. Those dominant social classes with access to ruling state power can clearly be seen to govern only from a sense of self-interest, they show no greater responsibility toward society.

A recent report on global wealth during 2016 revealed it has grown by 1.4 per cent from the previous year. While comparatively small, it was not evenly shared. Ordinary people have seen no increase in personal wealth since the GFC. The top one to ten per cent of the wealthiest people by contrast also continue to own a staggering 89 per cent of all global assets. The bottom fifty per cent of the population of the world own less than one per cent of similar assets. (14) And the inequalities continue to widen each year.

A salient point lingers: those who do not learn the lessons of history have to repeat them over and over again. Those on the receiving end of such injustice will continue to suffer exploitation until they unify around a common-cause to deal with the problem in an appropriate manner. The question of suitable organisation, likewise, remains. Until such time societies, the world over, will continue to be trashed by politicians and financiers. 
1.     Senior executives ditching Davos,
        The Australian, 18 January 2017.

2.     Senior executives give Davos the cold shoulder,
        The Australian, 18 January 2017, with reference to Sharan Burrow, former president,
        Australian Council of Trade Unions, now representing the Brussels-based
        International Trade Union Confederation.

3.     Davos attracting fewer leaders,
        The Australian, 17 January 2017.

4.     Senior executives ditching Davos, op.cit.
5.     Davos must deal with an anti-globalisation revolt,
        The Australian, 18 January 2017.

6.     Global Economic Prospects, The World Bank, 10 January 2017.
7.     Trade war fears firm despite lift in volumes,
        The Australian, 16 January 2017, see also,
        World trade growth near stalled,
        The Australian, 2 January 2017.

8.     Trade Policy, World Trade Organisation, 9 December 2016.
9.     Captains of industry see inside,
        The Australian, 19 January 2017.

10.   Concern over impact of automation on jobs,
        The Australian, 20 January 2017.

11.   Job figures sap 'growth' drive,
        The Australian, 20 January 2017.

12.   Ibid.
13.   GDP Growth, OECD STAT., Economic Outlook, 100, November – 2016, see also,
        GDP and GDP Growth, Main Website: Department of Foreign Affairs and Trade,
        Canberra, Australia, which provides volumes and percentages showing the decline.

14.   Global Wealth Report, 2016, Credit Suisse.

No comments:

Post a Comment