Connect with us

Economy

The reforms and the current situation of the State budget and accounts

Giancarlo Elia Valori

Published

on

As we have all realized, since the COVID-19 epidemics broke out the number of regulations enacted – especially by the Italian Presidency of the Council of Ministers – has literally sky-rocketed.

 The starting date of the sequence of regulations is certain. It is, in fact, January 31, 2020 with the declaration of the state of emergency connected to the onset of diseases resulting from transmissible viral agents, pursuant to Article 7, paragraph 1, sub-paragraph c) of Legislative Decree No. 1 of 2018 (Civil Protection Code).

 The Prime Minister’s Decrees, the many Guidelines, Directives and Ministerial Orders, as well as the many Orders of the Head of the Civil Protection Department and, finally, the many Regional and even Municipal Orders have added to the Emergency Ordinances and the many – probably too many – decree-laws to be quickly converted into laws after the Parliament’s vote, pursuant to the Constitution.

 There has never been an exception to the eternal rule – mathematical, at first, and then legal – according to which the greater the number and complexity of rules, the greater the indecision and misunderstanding inherent in their implementation.

 Even in such a severe and complex situation, the messy regulatory system created with the Emergency Ordinances and Decrees for the COVID-19 infection is, therefore, a source of ambiguity, indecisiveness and potential conflict between State apparata and Local Administrations.

 This is the reason why, even in the State administration, the old maxim of medieval logic, simplex sigillum veri, should apply.

 Hence which is the final criterion for solving the inevitable regulatory ambiguity? The criterion is Politics, seen as Alexander’s Sword cutting the Gordian Knot immediately.

  This is, in fact, the real function of democratic representation, in a highly-regulated context, as is the case in every modern Western country.

 Parliament is always the decision-maker, together with the Government and the Presidency of the Republic, responsible for both budget items and the hierarchy of rules, which should be as simple as possible, as already taught us by Beccaria.

 Reverting – after this example – to the issue of Italy’s current Budget Law, what is it, in fact?

 As is well-known, the Budget Law is the legislative instrument, provided for by Article 81 of the Constitution, which lays down how the Government – with a preliminary accounting document – communicates to Parliament the public expenditure and revenue forecast for the following year, pursuant to the laws in force.

 At first, it should be noted that much of the expenditure is bound to be fully hypothetical – as happens also in private budgets – and cannot be completely organized by means of a single old or new rule. Finally, some budget items depend on cash flows and expenses which can never be fully predictable in the budget.

 Again pursuant to Article 81 of the Constitution, unlike what currently happens for the Stability Law, the law for adopting the State Budget cannot introduce new taxes and new expenses.

 The structure of the State Budget, namely the network of fixed items, must be only that one.

 The reason is obvious but, given this asymmetry, it is difficult to put together the Budget Law and the Stability Law in a reasonable way.

 It should be recalled that the Stability Law, also known as Finance Act or Budget Package, is the ordinary law proposed by the Government, which regulates the economic policy of the State (and also of civil society) for three years.

 Well, but in three years, as they say in French, chosir son temps, c’est l’épargner.

 In three years everything is done and everything can be destroyed or change, especially with the kind of international economy we are dealing with now.

 The Stability Law has been so called, almost officially, since 2009 mainly as a result of the introduction of “fiscal federalism”, implemented with the constitutional reform of 2001, which requires that the activity of the “central” State is coordinated with the local one, which has autonomous and different assets – albeit not always – from the “central” State finance.

 I believe that the famous “federalism” has been a long-standing illusion from which the sooner we wake up the better.

 The distribution of revenue among the Regions – increasingly eager for money, especially after the reckless “Reform of Title V” of the Constitution, invented by the leftist governments in the belief they could take votes away from the Northern League Party – has been detrimental. It has made the Local Authorities increasingly powerful, and therefore large and very expensive, with an efficiency that, except for the Northern regions, which would have been efficient anyway, has plummeted throughout the rest of Italy.

Again as a result of the Treaty of Maastricht – a city previously unknown except for the French siege of 1673, in which D’Artagnan stood out – the Stability Law must comply with the requirements of economic and financial convergence between the EU countries, but also with the criteria regarding the rules of coordination between the local, regional and State levels of public finance of the various EU-27 Member States. Sicily will coordinate with the economy of Finland, all based on cellulose and mobile phones, while Piedmont, with its precious white truffles, will coordinate with the Tayloristic and low-cost factories of the Czech Republic.

 Beyond a certain level, the economies are incomparable with one another and there is no single currency that can put them in communication.

 If anything, we would need public accounting like the one that is implemented – even at European level – with the Power Purchasing Parity criteria.

 For the first time, in the 2009 Stability Law, an additional instrument was added on welfare – which currently, in the European bureaucratic jargon, also means “Health” – in which there are regularly also rules on labour, social security and competitiveness, which have little to do with Welfare and is drafted according to a deadline of missions, multi-year programs and functions, which is very hard, if not impossible, to monetize.

Furthermore, pursuant to Law No. 234/2012, the Stability Law has also provided that, as from 2016, the Stability Law shall be a Consolidated Act together with the Budget Law.

 This is anomalous, considering that the latter can regulate and create new taxes and duties, while the former cannot.

 However, the Reform of the State Budget, implemented with Law No. 163/2016 adopted on July 28, 2016, was definitively approved with over 80% of votes in Parliament.

 The Stability/Budget Law must be submitted by the Government to Parliament every year by October 15 and Parliament must adopt or amend it otherwise by December 31 of the same year. It is too short a lapse of time. Beyond the initial deadline, Article 81, paragraph 2, of the Constitution provides for the subsequent deadline of April 30 – a term which, however, shall be authorized by law.

 The Stability Law shall mandatorily include: a) the net balance to be financed; b) the balance of the recourse to market instruments, i.e. the final amount of money in the annual or three-year cycle for which to resort to loans (and this is certainly a vulnus, because the speculative markets know in advance the amount that can be financed); c) the amount of the special budget funds – and this is another vulnus, since all the other countries know how much the Services, the Special Operations, the Off The Record actions, etc. will cost; d) the maximum amount for renewing the public employment contracts – another vulnus, because this allows to calculate the industrial policy and, therefore, the possible effects of the labour cost on public and private markets, with obvious advantages for the E.U. competitors; e) the appropriations for refinancing the capital expenditure already provided for by the laws in force, and hence also the three-year stop of subsequent capital expenditure; f) the long-term expenditure forecasts.

 This is another vulnus since this allows to infer the sum available to a State for any E.U. military or foreign policy program, or for any other strategically important program.

 Not to mention the reserves for mergers and acquisitions of strategically important companies within the European Union, or even outside it, but permitted by the other European partners.

 A “mutualization” of the public budget which creates many dangers, but corresponds to the mental level of many E.U. accountants.

 This structure of the Stability Law leads to a situation in which only two choices are possible. Either the so-called austerity policy, when it comes to restoring possible balance to public funds (but this is always decided by others). We may think that a cyclical austerity policy must also be able to spend more on certain budget items, but much less on the others, while here the amount that counts is only the final one, which automatically determines the market behaviour. The only thing that markets have in mind, like conscripts, is the purchase of our public debt instruments at the best price and with the best interest rate, often carrying out trading operations, as also happens to certain States that profit from the difference – often completely rhetorical – between their debt instruments and ours.

 Or there is also the possibility of expansionary spending, which resorts always and only to deficit public spending – i.e. by issuing more public debt instruments – which can be “Keynesian” if it regards investment, but simply expansionary if rents, annuities and current expenses are privileged, in addition to investment.

 Sometimes even this may be necessary.

 The British economist, however, maintained that public spending applies above all to new investment, while for the “old markets” – as he called them – the self-equilibrium of private enterprises is also good.

 The childish idea underlying this conceptual duality is that you can be either “big spenders” (especially if “you come from the South”) or “strict” (especially if you are self-controlled and you come from the North), but this is just a vaudeville skit, not a serious economic policy idea.

 Thinking – as many people within the EU institutions believe – that “family” rigour has an impact on the State budget is a “paralogism” – just to use an ancient philosophy concept.

The equivalence between households and States – a concept often reiterated by unexperienced economists – would be fine only if households could issue face value money, which could be spent immediately according to their needs. These needs, however, would be linked to the credibility of their private “money”.

 People believe in these fairy tales, especially within the European Commission.

 However, the European constraints of any Stability Law are the following: 1) a 3% ratio between the actual and the forecast public deficit and the national GDP – a fully specious and abstruse ratio, even in a phase of restrictive policies; 2) 60% of the ratio between public debt and GDP, another bizarre figure, which may also regard non-Keynesian policies when – for example – a “mature” sector has to be restructured or investment must be made in new and promising areas; 3) the average inflation rate, which cannot exceed by over 1.5 percentage points the one of the three best performing Member States in the sector during the previous three years. Are EU experts aware that there is also ‘imported inflation’?

 This happens when the prices of goods and services purchased abroad rise – although this formula is already quite wrong.

 Inflation is imported when the costs of imported products increase and obviously countries like Italy, which are processing economies, are also great importers. God knows – in these economic phases – how import-related inflation (just think of oil products) is important for the European economies.

 Furthermore, the EU has no strategic, military, geoeconomic and financial ability to change the oil and gas producers’ treatment towards it. The same holds true for the other particularly important raw materials.

 Let us now focus on constraint 4): compliance with the long-term Nominal Interest Rate, which must not exceed by over 2 percentage points the one of the best performing Member States in terms of price stability.

 This is the Taylor Rule. As the U.S. Treasury Secretary Taylor said in 1993, it is an equation in which the interest rate is a dependent variable, while inflation and national income are regressors.

The rule is the following:  ii = i*+α(πi- π*) +βγ+εi

The long-term inflationary target is π. It is the inflation rate that will prevail in the long term. Taylor here assumed that the long-term inflation rate should be 2%, as often happens in the United States, but the current interest rate is π that, only for the USA is a GDP deflator. If we were all just stockbrokers, it might also be true.

 But there are costs that are included in the GDP and are neither predictable nor changeable from outside.

 The actual nominal interest rate in the equation is γ. The rest is easily calculable.

 Hence what does the Taylor Rule mean? When inflation starts reawakening the rates are expected to rise.

 This is not at all implicit in the Maastricht rules, which also stem from these formulas.

 As the Taylor Rule also shows, the increase in interest rates reflects a decrease in the supply of real monetary rates.

  Not necessarily so because there may be many balances available, but with a less “attractive” monetary composition.

Again according to Taylor, investment is inversely correlated with interest rates, but this holds true for the economies that live on loans, not for many of our entrepreneurs who use – almost exclusively – “own resources” or bank loans to secure own resources.

 Because of this pseudo-mathematical sequence of events, if investment decreases, the national income and also unemployment increase – which is here the only cure for inflation. But where did these guys study?

 Another theory resulting from the Taylor Rule is that when the economic activity slows down, the medium-term interest rate must fall.

 This has never happened, not even in the recent U.S. history. Just think of the 2006-2008 crisis.

 It is also strange – and I say so from a purely analytical viewpoint – that the purpose of economic theory is only to reduce inflation, considering that – as already pointed out above – it does not depend solely on the excess of public spending, of the availability of low-cost capital (which, instead, is considered in the Taylor Rule) and the use of “moderate” budgets, according to the theories of the ignorant economists à la page.

 Let us revert, however, to the procedure of the Italian Stability Law.

 According to the procedure known as European Semester, the EU Member States must submit their budgets to the European Commission and the European Council by the end of April, which ipso facto limits our legislation, which also provides for a budgetary role until December 31 of the same current year.

 For the time being, the penalties envisaged for some delays can be reduced, at most, to the single penalty equal to 0.2% of GDP for the year under consideration.

 The principles of the State budget and the related Stability Law are again the traditional ones established by Law 468/1978, including specification, whereby all budget items must be defined analytically so as to avoid ambiguities in their intended use; truthfulness, whereby no revenue overestimations or expenditure underestimations are allowed and, finally, publicity, whereby the budget must be made known with the most suitable means.

 There is also the issue arising from the adoption of Law No. 1/2012, which amended Article 81 of the Constitution, thus enshrining the principle of “balanced budget” in the Constitution.

 It is a laughing matter: since the invention of the double-entry accounting by Frà Luca Pacioli – Leonardo da Vinci’s friend and sometimes drinking companion – all budgets “break even” by definition.

 Otherwise they are not budgets.

 In fact, the term “break even” is never used in the rule. The more cryptic term “balanced budget” is used. We all know that, in physics, the balance can also be unstable.

 As already noted above, it is an unintended funny rule.

 What could we do if the Vesuvius erupted – an event which may be sure in the future, but unpredictable? Would we issue debt instruments, but for ten years at least, so as not to disturb or offend the E.U. accountants and their search for a liquid monetary base for an improbable and incorrectly calculated immediate fiscal liquidity to support debt instruments?

Hence are millions of homeless people to be left in the city of Naples, possibly in the Vomero and Pietanella neighbourhoods, or in the Sanseverino Chapel, waiting for these accountants to decide to study economics and political economy on the right handbooks?

 This is a rule that should not only be deleted, but should also be mocked by some famous comedian, better if with some knowledge of political economy.

 In addition to the “balanced budget” requirement, as from January 1, 2014, Law 243/2012 provided for the establishment of the “Parliamentary Budget Office”, with the task of carrying out “analyses, verifications, checks and evaluations” – thus replacing the role of politicians who should be the sole ones responsible for distributing the resources available and the forecast ones among the most suitable budget items.

 Moreover, in the summer of 2016, Legislative Decrees No. 90 and 93, as well as Law 164, were enacted, which amended Law 243 in relation to the Local Authorities’ balanced budgets.

 Another mistake, albeit a partial one: Local Authorities live on a complex mechanism – on which we need not to elaborate here – of remittances and transfers from the Central State and of sums partially withheld by these Authorities, which are then recalculated by the Central State, again in a too complex way that need not be explained here in great detail.

 In this case, how can we repay the local administrations’ colossal debt? Just think that the European Court has already condemned us for these matters. If the current legislation remains in force, there is no way out.

 In short, the “European cure” on the State Budget has worsened its ambiguities. It has depoliticized the selection of budget items, thus often moving it away from voters’ and citizens’ real needs. It has not allowed a modern solution to the Local Authorities’ financial crisis. It has also devised the funny mechanism of the “balanced budget”, which literally means that there is no longer a provisional budget (hence how can the real items be calculated?). Finally, it forces us into a debt cycle that is both excessive and, at times, burdensome, but always uncontrollable.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

Continue Reading
Comments

Economy

A post-COVID recovery presents significant challenges for the French economy

Kareem Salem

Published

on

As France tentatively eases its lockdown measures, the French government is faced with dealing with an unprecedented economic crisis.

The curb in economic activity during the coronavirus pandemic has considerably strained the second biggest economy of the eurozone. During the first economic quarter, the French economy plunged by 5.8% – which factored only one month of confinement where 67 million people were ordered to stay at home.

The resultant health security measures required the French government to act swiftly to prevent redundancies, by launching a partial unemployment scheme ‘chômage partiel’, under which fixed-term workers received partial unemployment benefits from the French government. Public aid was also granted to small businesses to prevent them from going bankrupt during this uncertain period.

Whilst these measures have prevented significant job losses during the confinement, the easing of restrictions now requires the French government to stimulate the economy. Economic activity figures are expected to continue to decline in the second quarter and real GDP is expected to drop by 8% overall this year.

Since the relaxation of the lockdown measures, only non-essential enterprises that can guarantee social distancing practices have been allowed to resume their business activities. The tourism sector, which accounts for8% of national wealth and 2 million jobs, has received 18 billion euros in rescue funds in response to the remaining closure of hotels, restaurants and cafes.

Yet, there are also other strategic sectors that urgently require government support. These sectors include entities operating in the automotive, aerospace and retail sectors. Well-Known French car manufacturers such as the Peugeot group and Renault, have seen their business operations severely affected by the Covid-19 pandemic since the lockdown of Wuhan, where their assembly plants are located. Subsequent health restriction measures taken by the French government have also led to a significant 84% decline in their operating sales results due to the closure of car dealerships during this period. 

The standstill of the airline industry has inevitably affected the financial stability of aircraft manufacturers and their supply chains in France. Falling sales have led Airbus to reduce the production capacity of its Toulouse manufacturing plant by and is expected to increase further by June, which will inexorably affect the financial stability of their suppliers. The halt in air traffic is expected to result in the loss of 26000 jobs for Airbus and 85000 for its subcontractors in the Occitanie region.

In the retail sector, entities that were in difficulty before the health restriction measures, also saw their financial situation considerably impeded. Between March and May, the retailer La Halle incurred a loss of 106 million euros in sales. Other prominent retailers, notably NAF NAF, which employs 1170 people and owns 160 stores, has been placed under judicial rehabilitation proceedings – redressement judiciaire.

The precarious predicament of certain sectors requires the French government to intervene to prevent greater financial strain mounting in key strategic sectors. The Minister of Economy and Finance has specified his intention to establish a recovery support package for the automotive and aerospace sector in the coming weeks.

The challenge for Bercy is straightforward – ensure that the recovery package meets the needs of both sectors. This is important considering that the automotive sector accounts for 36%of government revenue while the aerospace sector accounts for 12% of French exports of goods. This inevitably requires Bercy to ensure that stimulus packages for both sectors cover employee job security and the freezing of production taxes for aircraft and car manufacturers in order to alleviate their financial strain. This is particularly important for manufacturers in the aerospace sector, which will continue to be affected by the slow and progressive return of air travel.

The post-pandemic period also requires automobile manufacturers and retail sector entities to restructure their business strategy to regain the competitiveness lost during the confinement. The loss in business activity from the lockdown necessitates entities in these sectors most in difficulty, to extend their working hours and limit the number of vacation days in order to produce new wealth, which will enable them to mitigate the economic losses incurred during the confinement. The production of greater wealth will enable the French State to increase its tax base and thus revenues and repay more rapidly the debt accumulated during the pandemic.

As France tentatively moves out of confinement, it is also important for Bercy to encourage consumers to support French manufacturing entities. It is apparent during the eight weeks of confinement, households saved tens of billions of euros. In this perspective, positive deconfinement results coupled with the ease in lockdown measures will gradually rehabilitate consumer confidence. Providing economic incentives for low-income earners is also necessary to encourage them to purchase a new car, which will help boost the sales growth of car manufacturers.

Recovery also requires the collective support of EU member states. Paris and Berlin are seeking to push forward a 500 billion eurosrecovery fund, in which the European Commission will borrow on the financial markets in order to disperse the recovery funds through grants to European economies hit hardest by the pandemic.Its repayment would be the financial responsibility of the entire block.

Yet the naysayer countries Austria, Netherlands, Denmark and Sweden, have instantly rejected the idea of greater fiscal integration. The four’s main concernis the plan of Paris and Berlin to propose grants instead of loans. The challenge for Macron and Merkel is to convey to their European partners that this mechanism is important for Europe to recover less painfully from the pandemic and to shield off anti-European and populist sentiment, especially in the block’s southern countries.

For Bercy, the European solidarity fund will provide much-needed respite for French public finances, which have been significantly strained by the chômage partiel provision, which amountsto26 billion euros.

All in all, while the COVID-19 pandemic poses major challenges for the French economy, support of the French government and European collective action, combined with an overhaul of corporate strategy, will enable Europe’s second largest economy to recover from the crisis more rapidly.

Continue Reading

Economy

Stimulating the economy sustainably after coronavirus

Published

on

By

Authors: Yao Zhe and Wu Yixiu*

As the Covid-19 outbreak stabilises in China, the central government is starting to talk about protecting the economy as well as mitigating the virus.

On 3 February, the politburo standing committee called for China to “tackle the epidemic with one hand, and develop the economy with the other”, and continue working “to realise the year’s economic and social goals”. It reiterated this approach on 12 February.

This year marks the end of the 13th Five Year Plan, which includes the goal of creating a “moderately prosperous society”. Over the plan period (2016-20), national GDP and average incomes were meant to double compared to 2010. For that to happen, GDP would need to grow around 6% this year. There is no doubt the government will produce a stimulus package to help. But a programme focused on infrastructure such as railways and roads will hamper the country’s transition to a sustainable economy.

Heavy industry on the mend

Covid-19 led to the extension of the Chinese New Year holidays to almost a month, which affected all parts of the economy. For heavy industry, the biggest uncertainty was demand. Downstream manufacturers and property developers have been slow to get back to work and the economy in general is sluggish. With demand not yet recovered, output of the raw materials produced by heavy industry, such as steel and aluminium, has fallen, though not precipitously. Steel mill utilisation rates remain at a normal level of about 70%, with no major reduction in output. First quarter steel output is expected to be down about 3%.

The return to work has picked up since 10 February. Coal consumption at six major power plants has increased slowly but steadily, indicating industry is getting back on track. Work on key infrastructure projects such as roads and bridges resumed on 15 February, with considerable fanfare. Experts answering questions online for the Ministry of Ecology and Environment said that despite widespread stoppages in construction, services and labour-intensive manufacturing, the heavy industries that supply these sectors continued to operate through the Chinese New Year and beyond. It’s not economical, for example, to stop furnaces in a steel factory for a week or two, so these continued to burn while producing less steel.

The analyst Lauri Myllyvirta pointed out that China has excess heavy industrial capacity and the sector will be able to ramp up to meet any increased demand, with industrial output and power consumption soon recovering. Experts have said the epidemic will mean a significant but short-term drop in energy consumption by heavy industry in the first quarter of the year, until the epidemic is brought under control.

Signs of an infrastructure-focused stimulus

Covid-19 is a new challenge for a Chinese economy already facing a slowdown. The government’s usual response to economic pressure is to use public spending to promote investment, particularly in infrastructure, and there are signs this will again be the case.

Tens of trillions of yuan of investment is planned in major projects across China this year, according to figures in the Economic Information Daily. The latest figures indicate that among the batch of special-purpose bonds (SPBs) issued by local governments earlier in the year, about 67% are to the infrastructure sector. SPBs are designed to help local governments inject funds into specific projects, such as irrigation and toll roads, to help boost their economies. Since January, local governments have issued about 950 billion yuan (US$136 billion) of SPBs, accounting for about 73.6% of the front-loaded SPB quota for this year.

Transport and energy infrastructure – including gas pipelines, oil refineries and nuclear power plants – are well represented in the project lists that some provinces have published. For example, Jiangsu province plans to invest 220 billion yuan (US$30 billion) in infrastructure out of the 540 billion yuan that is going into 240 major projects. Of the 233 major projects listed by Shandong province, 25 are road or rail construction and 16 are building projects. Meanwhile, Yunnan province announced an infrastructure construction plan at a recent press conference on Covid-19, including 100 billion yuan for high-speed rail.

Economic analysts expect to see infrastructure investment in China climb by as much as 8% to 9% this year.

Lauri Myllyvirta has calculated that the extended holiday cut China’s carbon emissions in the first two weeks of the lunar new year by a quarter year-on-year. These climate savings may be offset by a government stimulus package favouring infrastructure projects. According to Zhang Shuwei, director of the Draworld Environment Research Center: “If the government eases monetary policy and boosts infrastructure construction, we may see a nationwide increase in the energy intensity of the economy. It’s likely that energy consumption will not be affected, or will even jump quite a bit.”

If an economic stimulus is unavoidable, it should at least be targeted and not run contrary to China’s efforts to improve the structure of the economy. The service sector, which has been rocked by Covid-19, accounts for 54% of China’s GDP and provides huge numbers of jobs. Support tailored to it will be crucial for rebuilding resilience and confidence, and is in line with China’s economic transition.

Sustainable stimulus?

Chinese economists often debate how best to direct public finances in order to stimulate the economy. The coronavirus has brought something new to that discussion, by highlighting that public services like hospitals and schools suffer from a lack of resources and capacity to respond to emergencies.

Former mayor of Chongqing, Huang Qifan, wrote that government spending has long favoured transportation and construction, while overlooking public facilities and services. Huang believes spending on the latter would be a more effective way to boost GDP while also meeting public needs. He thinks government spending should incentivise consumption of public goods and services “to promote sustainable and high-quality economic growth.”

Heilongjiang and Jiangsu provinces are adding public health and other “catch-up” projects to their list of major projects, with funding support for those chosen. Nationally, the decision on whether to make improving the public health and emergency response systems a key target for government investment will be a test for policymakers.

Covid-19 is believed to have spread to humans via wild animal consumption. The public is now more aware of the importance to health of living in better harmony with the natural world. What is less recognised is that as well as bringing us disease, the overexploitation of nature also brings systemic risks that could cause disastrous “black swan” events. Four of the five major risks listed in the World Economic Forum’s 2020 Global Risks Report are environmental: climate change, biodiversity loss, extreme weather and the water crisis. As these risks interact rather than stand alone, they could cause a chain reaction.

If we are to increase our resilience, we need to fully understand these risks and ensure the facilities and mechanisms to respond are in place to prevent incidents escalating catastrophically. Environmental risks, like public health risks, need major investment to guard against. There are two aspects to this investment: one is spending on restoring our damaged environment and minimising further damage; the second is investment in environmentally-friendly technologies and industries that can change our mode of economic growth – to increase the “compatibility” of our society and economy with the environment.

How will we restore the economy once the epidemic has passed? If we direct government spending to high-carbon infrastructure construction and heavy industry, as usual, we will place ourselves at huge climate risk. This kind of investment is clearly not sustainable.

According to Zhang Shuwei: “The key is what we see when we look back at the lessons of the epidemic. Will we focus solely on the joy of victory, or acquire an awe at how nature, society and ourselves rely on each other? Our answer will lead us down different paths.”

From our partner chinadialogue

*Wu Yixiu is team leader of chinadialogue’s Strategic Climate Communication Initiatives. Before joining the team she was campaign manager with Greenpeace East Asia responsible for international policies. She also worked as a reporter at the English Service of China Radio International. Yixiu holds a B.A. in History in Fudan University and a master’s degree in Journalism from University of Westminster, London.

Continue Reading

Economy

Pandemic Recovery Shape: WWW

Naseem Javed

Published

on

Evelyn Dunbar painting 1947

Like a World-Wide-War, the pandemic recovery appears WWW shaped amidst fog of misinformation. It’s a global war of sorts showcased on global stage; nation by nation, multi-layered battlefields, tackling healthcare, economy, upskilling, and social justice with complex or comical dialogues, shielded with expert narratives or proclamations of stupidity avoiding bullets of facts and sciences.  

Casualty counts on battlefields rise with bodies littered across the world, sufferers gasping for the last oxygen and masked combat warriors on frontlines in out of control interactions but all yelling for truth. The highs and lows of competency levels publicly acrobated each day, hastily sensationalized by media, super-glazed by political punditry has created new lower standards of deployments. Equally, it has successfully fertilized the global mindshare to ask serious questions while novelty dances of national leaderships and political behavior picks up new rhythms to fix the old broken systems.  The masses of the new world now want large scale change. American elections ready for battle.

There never ever was a call for all G7 or G100 meeting on Day One of the pandemic, the greatest opportunities to step up on global platform missed. The narcissism prevented such humanistic dialogue; exceptionalism is only worthy when measured to serve humanity, otherwise just self-destructionist.

This unforgiving mistake for not having frank, globally open, scientifically intelligent dialogue, streamed live 24×7 global-access on digital-stage to acquaint global masses is a historic failure. Nation by nation, the politics and science mixture shakedown did not create some fine Angostura cocktails rather it turned into a Molotov. The restless citizenry of the world is hoping for truthful solutions. The irony of this pandemic will not be forgotten but immortalized in heavily casted monumental war memorial remembering  the crisis, the fighters and the lost ones; the wise and not so wise of the battle.

Nevertheless, few leadership teams are handling superbly while majority in visible chaos.

The only reward left amongst the casualty of war, if the global populace of billions can claim of at least acquiring some new wisdom while quarantined, earned as a weapon against tyranny, social justice and fairness to enable some balance on the economical charades and some truth to achieve some equality. In this case, cost of human sufferings may become bearable, otherwise, just a cruel reality wrapped in fakery.

The world must open global all-nation dialogue to tackle complex borderless mankind suffering issues; deep silence only becoming living proofs of incompetency and lack of precise knowledge to articulate on such issues.

The world must set new leadership standards on global crisis management as new challenges;

The omnipresence of the pandemic; whensocial front strikes like a hidden kiss of death; the response demands strict quarantines, the impact resulting in bankrupt economies. The damaged economies stretched, stronger ones counting days, any national shut down over 30 day is like creating a year of depression for that nation. A year-long closing, opening, closing and reopening is unimaginable wave to break down civil and economic structure. It’s a world-wide-war but not yet open for a “global stage daily briefing by global experts” the mankind suffers.

The omnipotence of the fear; when risk of exposure lingers for months and years, creating recovery shaped like WWW demands new thinking and open debates. The economic policies, business protocols, and global trade all in YOYO Economy will go up and down with every major shift and shock reactions unbalancing the progress. The fear if filled with new high quality open debates and discussions designed as constructive upskilling platforms shifts into hope and options and eliminating seek and destroy mentality.

The omnicompetent entrepreneurialism; historically, across the world, entrepreneurs created the origin of economic landscapes; they will do it again, as natural risk takers on earth shattering, mind-bending and life-altering creations for the advancements of mankind.  A quick study of the last 1000 entrepreneurs on global stage will provide the proof and blueprints. How do you uplift national citizenry and upskilling hidden talents, the dead silence from national gatekeepers will eventually turn into higher notes. The national trade groups like Chambers, Associations and government departments with vested interest in local economic development must rise all together with digital platform mobilization.

The post pandemic world will positively overflow with billion new entrepreneurs on march from Asia and all the other global entrepreneurialism suddenly bounce on advanced digital platforms, in an office-less, work-less, retail-less, remote-working, remote-learning, remote-shopping and remote living world; creating brand new solutions.

The omnidirectional thinking; the old-business-world is dying for mostly failing to create local grassroots prosperity; they may finally reemerge with new bloodstreams based on global interconnectivity of global trade and consumption with maximum technology and free platforms. The damage caused over decades already visible for ignoring entrepreneurialism as national hidden assets in local SME and ignoring women entrepreneurs as top quality untapped resource, now the day of lip service are almost over. The workers of the world, the thinkers and alpha dreamers, will go remote and carve out global access and digital paths to thousands of cities for their goods and services and create a far more fluid and rewarding culture of trade and commerce. Futurism is workless but NOT trade-less, study deeply

The critical need for new agents of change; covidism mastery is a new art and science, living the new normal as abnormal new learning, the entrepreneurial business world desperately needs ‘agents of change’ the masters of covidism, the new critical thinkers, the dreamers, complex problem solvers and fighter of better quality work models and economical survival strategies. Something mostly unavailable in universities degrees and critically lacking in the corner-offices of the world, but hidden as unknown talent in the working citizenry of any nation. National mobilization to harness such powers of young and old men and women entrepreneurs, nation by nation will rebuild and foster progress.

Study very deeply; plan next 1000 days very meticulously, as you too may have to answer about your own future, very soon 

Rest is easy

Continue Reading

Publications

Latest

Urban Development7 mins ago

Vietnam Can Lead ASEAN through the Smart Cities Network Vision

When Vietnam takes over the ASEAN chairmanship in 2020, the country outlined five priorities to be executed throughout the year....

East Asia2 hours ago

From Patriotism to Humanity: China Leading the Fight of the COVID-19

The outbreak of the novel coronavirus has not only impacted human and social life in terms of disease and infection...

Middle East4 hours ago

Palestine Ends All Agreements with Israel and the United States

On May 19, Mahmoud Abbas, President of the Palestinian National Authority (PNA), declared an end to all agreements, including security...

Defense6 hours ago

22 Years of Nuclearization of South Asia: Current Doctrinal Postures

May 2020 marks the 22nd anniversary of the overt nuclearization of South Asia. The evolved nuclear doctrinal postures of both...

Reports8 hours ago

The Covid-19 crisis is causing the biggest fall in global energy investment in history

The Covid-19 pandemic has set in motion the largest drop in global energy investment in history, with spending expected to...

Reports10 hours ago

More than one in six young people out of work due to COVID-19

More than one in six young people have stopped working since the onset of the COVID-19 pandemic  while those who...

South Asia12 hours ago

Youm-e-Takbeer: When A Responsible Nuclear Power Was Born

Youm-e-Takbeer is a day of greatness when Pakistan already a responsible country was transformed into a strategically mature regional power....

Trending