Transcript Responding to the Global Economic Crisis

2000
► The dot.com bubble bursts
► NASDAQ and Wall Street plummet
►The global economy shivers
►Then recovers
►And financial speculation
explodes globally
TRADITIONAL CAPITALISM
Stocks in companies
traded on regulated
stock markets
Corporate bonds
Government bonds
• companies raise capital
• finance for infrastructure
(roads, schools)
Banking system
Circulates credit
Shareholders
Employees
• Pension Funds
Personal and corporate taxation on
•revenues
• assets
• capital gains
• consumption (VAT)
Private/Commercial
property
Public sector
• Recurrent spending
• Debt service on capital/
infrastructure investments
CASINO CAPITALISM
PRIVATE EQUITY
STRUCTURED FINANCIAL
PRODUCTS
Unlisted on stock
markets
Off bank balance sheets
HEDGE FUNDS
Escape banking
Regulations
HUGE BONUSES !
OFFSHORE
MINIMIZE TAXES !
HAVENS
Corporate bonds replace
PROPERTY  SUB-PRIME MORTGAGES
Governments bonds
PPPs
MORE BONUSES
Often funded by private equity
for which a major source of finance
PENSION FUNDS
Buy a house (110% mortgage)
Raise your mortgage to finance:
house extensions; car; holiday; college fees
MORE COMMISSIONS
GLOBAL IMBALANCES
The United States No 1 economy
Coming out of « the lost decade »
 From balanced budget (Clinton)
Other OECD countries
 To record public deficits (Bush: taxcuts and Iraq war)
Big trade deficit
EU/Euro zone No 3 economy
Growth slowing
Higher unemployment
Developing countries
Africa, Asia/Pacific, Central/South
America, Caribbean
= Financial flows
Japan No 2 economy
Eg Australia: Commodities
Emerging economies
China
big trade surpluses
India, Brazil, Chile, South Africa
outsourcing
SWFs
Oil/gas producers
Russia, Gulf States, Nigeria,
Venezuela, Norway
Exchange rates
USD, Euro, Yuan
IMBALANCES
Global imbalances
+ fundamental underlying imbalances between
 the financial sector and the real economy
 between bargaining power and incomes of
employers and employees
So we had debt driven consumption
Source: Ron Blackwell, AFL-CIO
AUGUST 2007
Sub-prime mortgages
Structured financial products
DECEMBER 2007
Central banks start to ease
credit and money supply
AUGUST 2008
Where are the toxic products?
US Fed bails out Fannie Mae
and Freddie Mac
Inter bank lending freezes
15 SEPTEMBER 2008
Lehman Brothers collapses
THE PARTY STOPS !
16 SEPTEMBER 2008
US injects $85bn into American
International Group (AIG)
BAILOUTS
 AIG
 Banks
 Auto companies
STIMULUS PACKAGES
Monetary Stimulus
 Reducing cost of credit (interest rates)
 Increasing money supply (UK, US, Japan)
Fiscal Stimulus
Increase spending
 Cut taxes
IMF ESTIMATED IN JANUARY THAT 2% OF GLOBAL GDP IS
NEEDED FOR RECOVERY
NATIONAL STIMULUS PLANS SHOULD BE
COORDINATED TO HAVE BEST IMPACT
PUBLIC SECTOR SPENDING, INCLUDING EDUCATION,
WILL HAVE TWICE THE IMPACT OF TAX CUTS
Drop in aid from donor countries hit by financial
crises in 90s (Scandinavia)
Source: Roodman (2008), History Says Financial Crisis Will Suppress Aid
Drop in aid from donor countries hit by financial
crises in 90s (Japan)
Source: Roodman (2008), History Says Financial Crisis Will Suppress Aid
IMF CONDITIONS:
WAGE CUTS FOR TEACHERS AND
OTHER PUBLIC EMPLOYEES
In 9 out of 23 supported countries
Source: Global Campaign for Education
Education on the brink
Will the IMF’s new lease on life ease or block progress towards
education goals? Global Campaign for Education. April 2009
THE IMPACT ON EDUCATION, TEACHERS AND
OTHER EDUCATION EMPLOYEES
Central and Eastern
EUROPE
USA
Japan
Emerging
economies
Ukraine Hungary
GDP -10%
-5%
Western
Developing
countries
Latvia
-12%
OPTIMISTIC SCENARIO Recovery in 2 to 3 year’s time
PESSIMISTIC SCENARIO Structural change/Paradigm shift
 Interaction with food crisis
 Consequences of climate change
 Social and political upheaval
LESSONS FROM THE GREAT DEPRESSION
Table 1. Variation among countries
LESSONS FROM THE GREAT DEPRESSION
Table 2. US Recovery
Source: William D. O'Neil (2009) Wikipedia
LESSONS FROM THE GREAT DEPRESSION
Joseph Stiglitz:
« The situation is more
complex today »
INSTITUTIONS
From neo-liberal
IMF
To advocacy for global stimulus
Rescue packages: 13 countries so far and more to come
But still applying the old conditions – cuts in public sector
WORLD BANK
BIS
FSF
FSB
Development and combatting poverty
OECD
30 industrialized democracies
+ 5 candidate + 5 « enhanced engagement » countries
WTO
ILO
Trade
UNESCO
The UN
Education
Central bankers
Financial Stability Board
Forum
Employment
G20
VARIABLE GEOMETRY
G8
G7
Canada, France, Germany,
Italy, Japan, UK, US
G20
Canada, France, Germany,
Italy, Japan, UK, US
+
Russia
Brazil, Canada, China, France, Germany, India, Italy,
Japan, Mexico, Russia, South Africa, UK, US, +
Argentina, Australia, Indonesia, Saudi Arabia, South Korea,
Turkey, European Union
G14
Canada, France, Germany,
Italy, Japan, Russia, UK, US
+ Brazil, China, Egypt, India,
Mexico, South Africa
[BRIC]
Brazil, Russia, India, China
SUMMITS
G8/G14
G20
ITALY, JULY 2009
Global Unions
Washington, November 2008
London, April 2008
PITTSBURGH SUMMIT, 24 SEPTEMBER, with
IMF BIS
UN
WB OECD WTO
+ ILO
Global Unions, NGOs
Stiglitz Commission
Summit on the crisis June 24-26
GENERAL ASSEMBLY, NEW YORK, OPENS SEPTEMBER 26
NGOs
DEFENDING RESOURCES FOR EDUCATION
INFRASTRUCTURE Buildings
Facilities
STAFFING
Teachers - qualified for quality education
Support Staff - key actors in safe schools and colleges
INVESTMENT IN PEOPLE THROUGH
EDUCATION Hire, not fire
VET
In a downturn, its time
to upskill
K-12
The next generation –
every nations’ future
ECE
An equal start and equity
for families
H. ED & R
Investing in human progress
+ capacity for innovation
KEEPING TEACHERS AND SUPPORT STAFF WORKING IS A STIMULUS
PACKAGE IN EVERY COMMUNITY
REASSERTING VALUES
VALUES
EI’s VISION FOR EDUCATION AND SOCIETY
Education is a public good not a commodity.
Education is central in our societies in many ways;
• social and economic;
• building and defending democracy;
• individual fulfillment;
• community development;
Education should promote
• equity
• non-discrimination
• understanding among peoples
Quality education requires quality teachers
Education unions should be key actors
Education is a human right.
Keeping a global, long-term vision
“Choosing a type of education means choosing a type of society”
Reducing poverty at a time when one billion people live under $1 a day
Social justice at a time of growing inequality within economies and
societies
Peace at a time of intolerance and conflict within countries
 Sustainable societies at a time of global warming and climate change
Adapting to the unknown at a time of economic uncertainty and
continued technological advances
UNESCO ADG EDUCATION NICK BURNETT
Reaffirm the centrality of education
Knowledge, skills and values to promote informed choices
and a more sustainable future
Education is a catalyst for development. It:
•
Contributes to economic growth
•
Reduces poverty
•
Improves health, nutrition, income and livelihoods
•
Promotes citizenship and democratic participation
•
Is a condition for achieving all the Millennium Development Goals
UNESCO ADG EDUCATION NICK BURNETT
Jobs
+
Income
+
Equitable
Income
Distribution
Investment in public education
wins on all three
Mike Kahn – NEA Research
Investing in education creates jobs…
…a net gain of 2,200
jobs.
A $100 million
tax cut results
in…
…a net loss of 2,200 jobs
Source: School Funding, Taxes, and Economic Growth, April 2004
Mike Kahn – NEA Research
A $100 million
investment in public
education results in…
Investing in Public Education is a smart
economic development strategy
Every $1 invested in pre-school
education provides an economic
return of $7
America’s economy will grow by
$309 billion if all high school
students graduate
A high school graduate’s contribution
in income tax revenues would result
in savings of $37,388 in healthcare
costs and $167,990 in crime costs
over his/her lifetime
Source: The Price We Pay, Economic and Social Consequences of Inadequate Education,
(2007) Brookings Institution Press
Mike Kahn – NEA Research
27
MOBILIZATION
World Teachers’ Day: 5 October
EI Action Plan:
A clear vision for education and society
Powerful arguments for investment in people
Capacity to mobilize
 Globally
 Nationally
 Locally
A strategy of proposition
COALITIONS
THE GLOBAL CAMPAIGN FOR EDUCATION
http://www.campaignforeducation.org/
GLOBAL ACTION WEEK, APRIL 2009
http://www.ei-ie.org/globalactionweek2009/en/index.php
13.3 million took part in « The Big Read »
GLOBAL UNIONS
http://www.global-unions.org/
200 million members in some 170 countries worldwide
www.ei-ie.org/handsup
Blog:
http://fundingeducation.blogspot.com/
NEA GLOBAL EDUCATION SUMMIT
San Diego, June 27, 2009
 Gracias
 Merci
Bob Harris
Education International
[email protected]
 Thank you