Transcript obama - Fasset

SESSION THREE:
Brave New World
Questioning Anglo-Saxon model
Dominant, deregulated
FINANCIAL MARKETS:
- Key promise securitisation –
reduced risk - proved false
- Economy actually MORE
vulnerable to financial disruption
Questioning Anglo-Saxon model
Debt-driven CONSUMER
SPENDING as primary engine
of growth:
- Since WWII, US shifted from
production to consumption
- More profitable to finance goods
than produce them
Questioning Anglo-Saxon model
The investment gap:
- Focus on present / consumption rather
than future / investment
- Private sector spends less on
research & investment than
economically ideal
- After Great Depression, state investment
provided crucial growth boost via:
- GI Bill
- Interstate System
- Defence Department
The future of capitalism
Owners of capital will stimulate the working class
to buy more and more expensive goods, houses
and technology, pushing them to take more and
more expensive credits, until debt becomes
unbearable.
The unpaid debt will lead to the bankruptcy of
banks, which will have to be nationalized, and the
State will have to take the road which will
eventually lead to Communism.
Karl Marx, 1867
“The rich need a dose of capitalism. Capitalism punishes
those who invest in companies that fail.”
– The Guardian, 24 March 2009
Economic lesson from Norway
“As a socialist, I have always said that the market can’t regulate
itself. But even I was surprised how strong the failure was.”
- Kristin Halvorsen, finance minister, Norway
New role for government
OBAMA: overhaul Washington’s approach to education, health
care, science and infrastructure all in effort to “lay new foundation
for growth”
New role for government
GREATER ROLE GOVERNMENT:
- more palatable since global crisis
- government still able raise capital at
reasonable rates
GOVERNMENT CAN STIMULATE or TRANSFORM an economy
- Obama stimulus package attempts both (SA too):
- jump start job creation
- down payment on solving bigger problems
(education, health, energy, science & infrastructure)
Two goals often conflicting (at least short-term)
New growth sector: energy
Oil consumption since 1980:
30%
21%
20%
10%
2%
0.2%
0%
USA
UK
Japan
Italy
France
-13%
-14%
Germany Sweden Denmark
-10%
-20%
-20%
-30%
-32%
-40%
-33%
New growth sector: energy
New growth sector: education
- Goldin & Katz: The face between education and technology
- 20th century: US century because investment in education
- Education increases economic pie and distributes more equitably
New state role: formidable agenda
OBAMA:- attempt resolve financial crisis & recession
- face fierce opposition as tries restructure economy
FDR:
- Social Security, Interstate System & GI Bill
- lay foundation for sustained period of robust grow
SA developmental state
The role of the developmental state is “sharing risk, cofinancing investment and jointly engaging with the banking
sector in constructing a vibrant growing economy”.
US labour market reflects change
“These jobs aren’t coming back … Firms are making strategic decisions that
they don’t want to be in their businesses.”
– John E Silvia, chief economist, Wachovia
US labour market reflects change
SEVERE JOB LOSSES:
NEW JOB OPPORTUNITIES:
- auto manufacturers
- education and health
- financial services
- environment and energy
- retailers
- government and public service
- manufacturers
- science and technology
US labour market reflects change
Brave new world: growth sectors
UNDERPEFORMERS
GROWTH SECTORS
- Retailers: luxury goods
- Basic consumer goods
- Auto manufacturers
- Alternative energy: related
technology and
manufacturing
- Financial services
- Manufacturers: consumer
goods
- Residential construction
and related industries
- Infrastructure and related
industries
US and CHINA: trading places?
CHINA: infrastructure boom
CHINA: a global green leader
“Save energy, cut emissions”
- Energy efficiency
- Reduce pollution
- Tackle global warming
CHINA: the emerging superpower
- China more assertive on world stage
- Using dollar reserves to secure
resources
- Pressuring for reform of IMF
and World Bank
GREEN: the future growth sector
FUTURE GREEN ISSUES:
- Energy technology, the next
revolution
- Natural capital
- Sustainable development
GREEN: energy technology
MASDAR CITY:
World’s first zero waste,
zero emissions city
GREEN: concept of natural capital
“Until we learn to pay a realistic
price for all the benefits and
services we derive from nature, we
will never get ourselves on to a
truly sustainable path.”
GREEN: sustainable development
KEY ISSUES:
• Biodiversity
• Water
• Energy
• Food
• Pollution
• Climate change
“I don’t care whether you’re driving a hybrid or an
SUV. If you’re headed for a cliff, you have to change
direction. That’s what the American people called for
in November, and that’s what we intend to deliver.”
- Barack Obama