Saturday, April 20, 2024
News and Views from the Global South
ECONOMY: ‘Privatise Profits, Socialise Losses’
Ravi Kanth Devarakonda
- The Davos delegate seems short of faith this year about anyone’s ability to save the world from the financial tsunami that the bosses have unleashed.
And with colleagues such as Ramalinga Raju of the now infamous Satyam Computers languishing in jail for fraud, the Davos delegate is uncertain what the 21st century holds for what was being celebrated until the other day as global capitalism.
Everyone has questions, but few seem to have the answers.
Little wonder that this year’s annual meeting of the World Economic Forum (WEF) that got under way Wednesday in Davos, Switzerland, is anything but glorification of financial capitalism.
WEF leaders say the writing has been on the wall for some time. “I have always cautioned about the dangers of unregulated financial capitalism,” Klaus Schwab, WEF founder and executive chairman told IPS.
In the face of the financial crisis crowned by fraud, Schwab said: “It is an extraordinary meeting this year.”
Satyam’s Ramalinga Raju and heads of the collapsed Lehman Brothers had addressed several sessions at the WEF meeting last year, and were stars at the Davos meetings for years.
Schwab admits that there is now an image problem because of some of the earlier participants. There are always bad apples that are difficult to spot in time, he says.
“Since we are in the midst of an unprecedented crisis, we set two objectives,” said Schwab. “How to get out of the crisis,” and “how to strengthen the global system after the crisis.”
This year’s meeting will also help the G20 leaders who met recently in Washington to further their debate on the global financial architecture, he said.
There is a sense that the Davos gathering is more needed now than ever before. Around 42 heads of states – compared with two dozen last year – are scheduled to attend the five-day session to find some ways of stopping the recession from sliding into a depression, a la the Great Depression of 1929.
With likely zero growth in much of the international economy and a proliferation of uncoordinated fiscal policies, early recovery looks difficult, chief economist of the United Nations Conference on Trade and Development (UNCTAD) Dr Heiner Flassbeck told IPS. “Nobody knows how the economic situation will change,” he said. “The real economy is facing several risks.”
A UN report has called for stronger regulation of financial markets and institutions, adequate international liquidity provisioning, an overhaul of the international reserve system, and a more inclusive and effective global economic government so as to prevent any repetition of the crisis.
Schwab says this year’s meeting will be a serious but sober one, with some 2,500 participants drawn largely from business. But in a change from earlier meetings, the WEF this year will not see too many brainstorming sessions involving investment banks such as Morgan Stanley or Goldman Sachs, that the British newspaper The Guardian lists as among 25 key actors at the heart of the meltdown.
It is intriguing that despite the freezing financial climate, more than 1,400 chief executives will be at Davos for the event. Among the leaders attending are Chinese premier Wen Jiabao, Russian Prime Minister Vladimir Putin, German Chancellor Angela Merkel, British Prime Minister Gordon Brown and Japanese Prime Minister Taro Aso.
In a year when nationalisation and the rescue of rich investment banks by the poor taxpayer have become the order, political leaders are bound to play a major role.
‘Privatisation of profits and socialisation of losses’ has been the Davos mantra for years. To the simple taxpayer, this year it sounds more bitter than ever before.
Delegates are due also to think about the real climate, not just the economic one. A lengthy debate is scheduled on climate change and whether the world can conclude another agreement to replace the Kyoto Protocol at a meeting due in Copenhagen later in the year.
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