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From “Information” Society to “Self-Sufficient’ Society

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We have not seen the World War III yet but after this pandemic, it is not difficult to make reliable projections about what would happen after that. Despite the huge amount of experiences of the world civilizations we simply went back to the social rules of the hunting and gathering societies. We literally became hoarders. Now we need to find a way to reach our “civilization” level just 3 months ago. We need to fast-forward a couple of thousands of years and get back to the end of 2019 in a couple of months.

Societies all around the world have structured ways of regulating and managing social life which are called social institutions, like the education system, health care system, economic system, etc. All of these social institutions are a result of previous experiences and future projections. They are not fixed and they constantly change based on new realities. COVID-19 is now our current reality. Our definition of “normal” will change indefinitely. Nothing will get back to “normal” as we used to know it. Just like the politicians, we all know that if the current stage of “curfew” continues for couple of months the whole social and economic system will eventually collapse. That is the reason why we see the urge to re-open businesses despite the high probability of tsunami-like waves of spread. Now we are trying to find a way to keep the “people” and the “economy” alive at the same time, but unfortunately “keeping the economy alive” looks like winning the war. A new study suggests that relaxing business closures and stay-at-home rules could cost 13,000 lives in Texas and 12,000 lives in Georgia by September 1. But it will also preserve $3.4 billion in statewide income in Texas, and $1.7 billion in Georgia. New York’s tougher restrictions will save 5,000 lives, but cost $2.4 billion in lost income.

The economy has been the driving force of our modern capitalist system. We defined ourselves by our wealth. We looked for easy ways to increase our wealth and climb the social class ladder as quickly as possible. We have been so obsessed with the idea of making a huge amount of money without breaking a sweat. We always fell for the get-rich-quick schemes like our modern inventions of stock markets, lottery, and other “financial” investment tools. Lots of people got really rich with these tools at the expense of the others who lost a lot. You can also think about these schemes at societal level as the exploitation and the colonization of other societies, which are the manifestations of imperialism.

We created this ideal of living in a bigger house and riding an expensive car which resulted in the habit of spending more and more. Even though we strive for this huge amount of products, we assigned the production duty to the “cheap” third world countries like China and Mexico. Instead of producing real/tangible products we focused on the “service” sector, because this is what the economic rules have been telling us; maximize your profits with minimum investment. They mass produced and we mass consumed. The idea of spending constantly as a “consumer” and even buying unnecessary things because they were “cheap” drove us into this “ideal consumer” who forgot to save for hard times.

When you combine the driving economic force of get-rich-quick capitalist system with the “ideal” consumer personality you would produce individuals who would not invest in the industrial production sector. We have forgotten that the production sector, not the service sector would create real, tangible goods. Without those goods our economic system thus our society would become extremely fragile especially when things do not go as planned; see COVID-19!!! It is now clear that the current means of production will not take us to a better stage. Too much reliance and dependence on other countries to provide essential parts of the supply chain brought us to this point.

To get a clear picture of what our economic backbone looks like, let’s look at the Fortune’s list of 10 largest businesses in the US in 2019. There are no “real” production businesses on this list. You can also understand why we are paying a ridiculous amount of monies for health coverages. We just see lists of business moguls with an unprecedented amount of wealth. We are the richest country in the “free” world with one of the worst wealth distribution system. On one hand you can see the extreme accumulation of wealth and on the other hand there are literally millions of people struggling to pay their bills and mortgages amid pandemic. You can’t simply explain the failure of these millions of people from a Weberian Protestant Ethics perspective. This mass misery is not a sign of predestination, this is exactly a system failure.

RankCompany NameSectorIndustry
1WalmartRetailingGeneral Merchandisers
2Exxon MobilEnergyPetroleum Refining
3AppleTechnologyComputers, Office Equipment
4Berkshire HathawayFinancialsInsurance: Property and Casualty (Stock)
5Amazon.comRetailingInternet Services and Retailing
6UnitedHealth GroupHealth CareHealth Care: Insurance and Managed Care
7McKessonHealth CareWholesalers: Health Care
8CVS HealthHealth CareHealth Care: Pharmacy and Other Services
9AT&TTelecommunicationsTelecommunications
10AmerisourceBergenHealth CareWholesalers: Health Care

Source: https://fortune.com/fortune500/, 05.07.2020

Even China, which can be called as the “world’s production capital”, has the same non-productive entities at the top of their wealthiest list. They are even worse than the U.S. Five of their top 10 entities, which are among the top 50 in Fortune’s Global 500 list, are just state-owned financial institutions. I believe this also explains how China easily buys “assets” all around the world. There isn’t even a single “technology” company in this list. I can’t categorize China as a “free” society and obviously their wealth distribution system is worse than ours – if there is any.

RankCompany NameSectorIndustry
1Sinopec GroupEnergyPetroleum Refining
2China National PetroleumEnergyPetroleum Refining
3State GridEnergyUtilities
4China State Construction EngineeringEngineering & ConstructionEngineering, Construction
5Industrial & Commercial Bank of ChinaBanksBanks: Commercial and Savings
6Ping An InsuranceFinancialsInsurance: Life, Health (stock)
7China Construction BankBanksBanks: Commercial and Savings
8Agricultural Bank of ChinaFinancialsBanks: Commercial and Savings
9SAIC MotorMotor Vehicles & PartsMotor Vehicles & Parts
10Bank of ChinaFinancialsBanks: Commercial and Savings

Source: https://fortune.com/global500/, 05.07.2020

It has generally been accepted that the new information society is based on services rather than industrial production. At the very early times of modern internet which started to link global commercial networks and enterprises during the 1990s, Castells predicted a future society that he labeled as network society or information age. In his very influential trilogy of books, he speculated that by the development of information technology and rising dependency on networks, the time of traditional industrial society was fading away and a new type of economy was emerging. In this new type of economy, which he labeled as “informational economy”, he argued the competitiveness of individuals, companies, and even nations will be dependent on technology, networks, and information rather than the level and power of tangible productivity and manufacturing economy.  

I see the information sector as our newest get-quick-rich scheme where there is no real/tangible industrial production. Even as the richest country in the world with the most advanced technologies,we will not be able to survive under these economic conditions for very long.Supposedly “producing” this many things and still suffering from lack of vital goods?!?!?! There is something fundamentally wrong in this equation and it is the lack of producing real/tangible products.

Societies have institutions to meet their needs and governments are the most organized entities that are responsible for every other institution in the society, hence it is the government’s responsibility to regulate the new social order in the post-information society. If we are not a self-sufficient society, then we are not economically independent. The coming society should eventually be a self-sufficient society which would be a hybrid of production (industrial) and information societies with different regulations and taxation systems. We now understand that, in terms of economic rules, one size does not fit all and the governments now need to focus on more equity instead of equality.

The government should work on a new tax reform which will enable different taxing regimes for different sectors. An industrial production company should not be subject to the same tax regime with a service-based company. The information society will collapse if the COVID-19 threat continues for another year. Italy, which is one of the G7 member states, is now on the brink of financial collapse.Italy’s credit rating downgraded to just one step above “junk” by Fitch. This is not a joke and even the most powerful nations are being hit so hard by the ongoing pandemic. Finally, think about all of the financial institutions that are “keeping” your life savings, like the retirement plans and the insurances. It would be a devastating collapse if things do not get back to “normal” soon.

Ismail Dincer Gunes, Ph.D. Faculty Member at Sul Ross State University in USA Dr. Gunes is an expert in Criminal Justice with over 14 years of experience at the Turkish National Police Force from 1996 to 2010. He got his Master’s degree in Criminal Justice in 2001 and his Ph.D. in Sociology in 2008 both at University of North Texas. He got his Associate Professorship in Sociology in 2011. Dr. Gunes has numerous publications and presentations in Sociology, Criminal Justice, and other related fields. Currently he is serving as an Assistant Professor at the Department of Homeland Security & Criminal Justice and Training Coordinator of H. Joaquin Jackson Law Enforcement Academy both at Sul Ross State University.

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Economy

Can e-commerce help save the planet?

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If you have logged onto Google Flights recently, you might have noticed a small change in the page’s layout. Alongside the usual sortable categories, like price, duration, and departure time, there is a new field: CO2 emissions.

Launched in October 2021, the column gives would-be travellers an estimate of how much carbon dioxide they will be responsible for emitting.

“When you’re choosing among flights of similar cost or timing, you can also factor carbon emissions into your decision,” wrote Google’s Vice President of Travel Products, Richard Holden.

Google is part of a wave of digital companies, including Amazon, and Ant Financial, encouraging consumers to make more sustainable choices by offering eco-friendly filter options, outlining the environmental impact of products, and leveraging engagement strategies used in video games.

Experts say these digital nudges can help increase awareness about environmental threats and the uptake of solutions to reduce greenhouse gas emissions.   

“Our consumption practices are putting tremendous pressure on the planet, driving climate change, stoking pollution and pushing species towards extinction,” says David Jensen, Digital Transformation Coordinator with the United Nations Environment Programme (UNEP).

“We need to make better decisions about the things we buy and trips we take,” he added. “These green digital nudges help consumers make better decisions as well as collectively drive businesses to adopt sustainable practices through consumer pressure.”

Global reach

At least 1.5 billion people consume products and services through e-commerce platforms, and global e-commerce sales reached US$26.7 trillion in 2019, according to a recent UN Conference on Trade and Development (UNCTAD) report.

Meanwhile, 4.5 billion people are on social media and 2.5 billion play online games. These tallies mean digital platforms could influence green behaviors at a planetary scale, says Jensen.

One example is UNEP-led Playing for the Planet Alliance, which places green activations in games. UNEP’s Little Book of Green Nudges has also led to more than 130 universities piloting 40 different nudges to shift behaviour.

A 2020 study by Globescan involving many of the world’s largest retailers found that seven out of 10 consumers want to become more sustainable. However, only three out of 10 have been able to change their lifestyles.

E-commerce providers can help close this gap.

“The algorithms and filters that underpin e-commerce platforms must begin to nudge sustainable and net-zero products and services by default,” said Jensen. “Sustainable consumption should be a core part of the shopping experience empowering people to make choices that align with their values.”

Embedding sustainability in tech

Many groups are trying to leverage this opportunity to make the world a more sustainable place.

The Green Digital Finance Alliance (GDFA), launched by Ant Group and UNEP, aims to enhance financing for sustainable development through digital platforms and fintech applications. It launched the Every Action Counts Coalition, a global network of digital, financial, retail investment, e-commerce and consumer goods companies. The coalition aims to help 1 billion people make greener choices and take action for the planet by 2025 through online tools and platforms.

We will bring like-minded members together to experiment with new innovative business models that empower everyone to become a green digital champion,” says Marianne Haahr, GDFA Executive Director.

In one example, GDFA member Mastercard, in collaboration with the fintech company Doconomy, provides shoppers with a personalized carbon footprint tracker to inform their spending decisions.

In the UK, Mastercard is partnering with HELPFUL to offer incentives for purchasing products from a list of over 150 sustainable brands.

Mobile apps like Ant Forest, by Ant Group, are also using a combination of incentives and digital engagement models to urge 600 million people make sustainable choices. Users are rewarded for low-carbon decisions through green energy points they can use to plant real trees. So far, the Ant Forest app has resulted in 122 million trees being planted, reducing carbon emissions by over 6 million tons.

Three e-commerce titans are also aiming to support greener lifestyles. Amazon has adopted the Climate Pledge Friendly initiative to help at least 100 million people find climate-friendly products that carry at least one of 32 different environmental certifications.

SAP’s Ariba platform is the largest digital business-to-business network on the planet. It has also embraced the idea of “procuring with purpose,” offering a detailed look at corporate supply chains so potential partners can assess the social, economic and environmental impact of transactions.

“Digital transformation is an opportunity to rethink how our business models can contribute to sustainability and how we can achieve full environmental transparency and accountability across our entire value chain,” said SAP’s Chief Sustainability Officer Daniel Schmid.

UNEP’s Jensen says a crucial next step would be for mobile phone operating systems to adopt standards that would allow apps to share environment and carbon footprint information.

“This would enable people to seamlessly calculate their footprints across all applications to develop insights and change behaviours,” Jensen said. “Everyone needs access to an individual’ environmental dashboard’ to truly understand their impact and options for more sustainable living.”

Need for common standards

As platforms begin to encode sustainability into their algorithms and product recommendations, common standards are needed to ensure reliability and public trust, say experts. 

Indeed, many online retailers are claiming to do more for the environment than they actually are. A January analysis by the European Commission and European national consumer authorities found that in 42 per cent, sustainability claims were exaggerated or false.

To help change that, UNEP serves as the secretariat of the One Planet network, a global community of practitioners, policymakers and experts that encourages sustainable consumption and production.

In November, the One Planet network issued guidance material for e-commerce platforms that outlines how to better inform consumers and enable more sustainable consumption, based on 10 principles from UNEP and the International Trade Centre.

The European Union is also pioneering core standards for digital sustainability through digital product passports that contain relevant information on a product’s origin, composition, environmental and carbon performance.

“Digital product passports will be an essential tool to strengthen consumer protection and increase the level of trust and rigour to environmental performance claims,” says Jensen. “They are the next frontier on the pathway to planetary sustainability in the digital age.”

UNEP

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Economy

2022: Small Medium Business & Economic Development Errors

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Calling Michelangelo: would Michelangelo erect a skyscraper or can an architect liberate David from a rock of marble? When visibly damaged are the global economies, already drowning their citizenry, how can their economic development departments in hands of those who never ever created a single SME or ran a business, expect anything else from them other than lingering economic agonies?

The day pandemic ends; immediately, on the next day, the panic on the center stage would be the struggling economies across the world.  On the small medium business economic fronts, despite, already accepted globally, as the largest tax contributor to any nation. Visible worldwide, already abandoned and ignored without any specific solutions, there is something strategically wrong with upskilling exporters and reskilling manufacturers or the building growth of small medium business economies. The SME sectors in most nations are in serious trouble but are their economic development rightly balanced?   

Matching Mindsets: Across the world, hard working citizens across the world pursue their goals and some end up with a job seeker mindset and some job creator mindset; both are good. Here is a globally proven fact; job seekers help build enterprises but job creators are the ones who create that enterprise in the first place. Study in your neighborhoods anywhere across the world and discover the difference.

Visible on LinkedIn: Today, on the SME economic development fronts of the world, clearly visible on their LinkedIn profiles, the related Ministries, mandated government departments, trade-groups, chambers, trade associations and export promotion agencies are primarily led by job seeker mindsets and academic or bureaucratic mentality. Check all this on LinkedIn profiles of economic development teams anywhere across the world.

Will jumbo-pilots do heart transplant, after all, economic performance depends on matching right competency; Needed today, post pandemic economic recovery demands skilled warriors with mastery of national mobilization to decipher SME creation and scalability of diversified SME verticals on digital platforms of upskilling for global age exportability. This fact has hindered any serious progress on such fronts during the last decade. The absence of any significant progress on digitization, national mobilization of entrepreneurialism and upskilling of exportability are clear proofs of a tragically one-sided mindset.

Is it a cruise holiday, or what? Today, the estimated numbers of all frontline economic development team members across 200 nations are roughly enough to fill the world-largest-cruise-ship Symphony that holds 6200 guests. If 99.9% of them are job-seeker mindsets, how can the global economic development fraternity sleep tonight? As many billion people already rely on their performances, some two billion in a critical economic crisis, plus one billion starving and fighting deep poverty. If this is what is holding grassroots prosperity for the last decade, when will be the best time to push the red panic button? 

The Big Fallacy of “Access to Finance” Notion: The goals of banking and every major institution on over-fanaticized notions of intricate banking, taxation are of little or no value as SME of the world are not primarily looking for “Access to Capital” they are rather seeking answers and dialogue with entrepreneurial job creator mindsets. SME management and economic development is not about fancy PDF studies of recycled data and extra rubber stamps to convince that lip service is working. No, it is not working right across the world.

SME are also not looking for government loans. They do not require expensive programs offered on Tax relief, as they make no profit, they do not require free financial audits, as they already know what their financial problems are and they also do that require mechanical surveys created by bureaucracies asking the wrong questions. This is the state of SME recovery and economic development outputs and lingering of sufferings.

SME development teams across the world now require mandatory direct SME ownership experiences

The New Hypothesis 2022: The new hypothesis challenges any program on the small medium business development fronts unless in the right hands and right mindsets they are only damaging the national economy. Upon satisfactory research and study, create right equilibrium and bring job seeker and job creator mindsets to collaborate for desired results. As a start 50-50, balances are good targets, however, anything less than 10% active participation of the job creator mindset at any frontline mandated SME Ministry, department, agency or trade groups automatically raises red flags and is deemed ineffective and irrelevant. 

The accidental economists: The hypothesis, further challenges, around the world, economic institutes of sorts, already, focused on past, present and future of local and global economy. Although brilliant in their own rights and great job seekers, they too lack the entrepreneurial job creator mindsets and have no experience of creating enterprises at large. Brilliantly tabulating data creating colorful illustrative charts, but seriously void of specific solutions, justifiably as their profession rejects speculations, however, such bodies never ready to bring such disruptive issues in fear of creating conflicts amongst their own job seeker fraternities. The March of Displaced cometh, the cries of the replaced by automation get louder, the anger of talented misplaced by wrong mindsets becomes visible. Act accordingly

The trail of silence: Academia will neither, as they know well their own myopic job seeker mindset. In a world where facial recognition used to select desired groups, pronouns to right gatherings, social media to isolate voting, but on economic survival fronts where, either print currency or buy riot gears or both, a new norm; unforgiveable is the treatment of small medium business economies and mishmash support of growth. Last century, laborious and procedural skills were precious, this century surrounded by extreme automation; mindsets are now very precious.  

Global-age of national mobilization: Start with a constructive open-minded collaborative narrative, demonstrate open courage to allow entrepreneurial points of views heard and critically analyze ideas on mobilization of small mid size business economies. Applying the same new hypotheses across all high potential contributors to SME growth, like national trade groups, associations and chambers as their frontline economic developers must also balance with the job creator mindset otherwise they too become irrelevant. Such ideas are not just criticism rather survival strategies. Across the world, this is a new revolution to arm SME with the right skills to become masters of trade and exports, something abandoned by their economic policies. To further discuss or debate at Cabinet Level explore how Expothon is making footprints on new SME thinking and tabling new deployment strategies. Expothon is also planning a global series of virtual events to uplift SME economies in dozens of selected nations.

Two wheels of the same cart: Silence on such matters is not a good sign. Address candidly; allow both mindsets to debate on how and why as the future becomes workless and how and why small medium business sectors can become the driving engine of new economic progress. Job seekers and job creators are two wheels of the same cart; right assembly will take us far on this economic growth passage. Face the new global age with new confidence. Let the nation witness leadership on mobilization of entrepreneurialism and see a tide of SME growth rise. The rest is easy.

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Economy

Rebalancing Act: China’s 2022 Outlook

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Authors: Ibrahim Chowdhury, Ekaterine T. Vashakmadze and Li Yusha

After a strong rebound last year, the world economy is entering a challenging 2022. The advanced economies have recovered rapidly thanks to big stimulus packages and rapid progress with vaccination, but many developing countries continue to struggle.

The spread of new variants amid large inequalities in vaccination rates, elevated food and commodity prices, volatile asset markets, the prospect of policy tightening in the United States and other advanced economies, and continued geopolitical tensions provide a challenging backdrop for developing countries, as the World Bank’s Global Economic Prospects report published today highlights.

The global context will also weigh on China’s outlook in 2022, by dampening export performance, a key growth driver last year. Following a strong 8 percent cyclical rebound in 2021, the World Bank expects growth in China to slow to 5.1 percent in 2022, closer to its potential — the sustainable growth rate of output at full capacity.

Indeed, growth in the second half of 2021 was below this level, and so our forecast assumes a modest amount of policy loosening. Although we expect momentum to pick up, our outlook is subject to domestic in addition to global downside risks. Renewed domestic COVID-19 outbreaks, including the new Omicron variant and other highly transmittable variants, could require more broad-based and longer-lasting restrictions, leading to larger disruptions in economic activity. A severe and prolonged downturn in the real estate sector could have significant economy-wide reverberations.

In the face of these headwinds, China’s policymakers should nonetheless keep a steady hand. Our latest China Economic Update argues that the old playbook of boosting domestic demand through investment-led stimulus will merely exacerbate risks in the real estate sector and reap increasingly lower returns as China’s stock of public infrastructure approaches its saturation point.

Instead, to achieve sustained growth, China needs to stick to the challenging path of rebalancing its economy along three dimensions: first, the shift from external demand to domestic demand and from investment and industry-led growth to greater reliance on consumption and services; second, a greater role for markets and the private sector in driving innovation and the allocation of capital and talent; and third, the transition from a high to a low-carbon economy.

None of these rebalancing acts are easy. However, as the China Economic Update points out, structural reforms could help reduce the trade-offs involved in transitioning to a new path of high-quality growth.

First, fiscal reforms could aim to create a more progressive tax system while boosting social safety nets and spending on health and education. This would help lower precautionary household savings and thereby support the rebalancing toward domestic consumption, while also reducing income inequality among households.

Second, following tightening anti-monopoly provisions aimed at digital platforms, and a range of restrictions imposed on online consumer services, the authorities could consider shifting their attention to remaining barriers to market competition more broadly to spur innovation and productivity growth.

A further opening-up of the protected services sector, for example, could improve access to high-quality services and support the rebalancing toward high-value service jobs (a special focus of the World Bank report). Eliminating remaining restrictions on labor mobility by abolishing the hukou, China’s system of household registration, for all urban areas would equally support the growth of vibrant service economies in China’s largest cities.

Third, the wider use of carbon pricing, for example, through an expansion of the scope and tightening of the emissions trading system rules, as well power sector reforms to encourage the penetration and nationwide trade and dispatch of renewables, would not only generate environmental benefits but also contribute to China’s economic transformation to a more sustainable and innovation-based growth model.

In addition, a more robust corporate and bank resolution framework would contribute to mitigating moral hazards, thereby reducing the trade-offs between monetary policy easing and financial risk management. Addressing distortions in the access to credit — reflected in persistent spreads between private and State borrowers — could support the shift to more innovation-driven, private sector-led growth.

Productivity growth in China during the past four decades of reform and opening-up has been private-sector led. The scope for future productivity gains through the diffusion of modern technologies and practices among smaller private companies remains large. Realizing these gains will require a level playing field with State-owned enterprises.

While the latter have played an instrumental role during the pandemic to stabilize employment, deliver key services and, in some cases, close local government budget gaps, their ability to drive the next phase of growth is questionable given lower profits and productivity growth rates in the past.

In 2022, the authorities will face a significantly more challenging policy environment. They will need to remain vigilant and ready to recalibrate financial and monetary policies to ensure the difficulties in the real estate sector don’t spill over into broader economic distress. Recent policy loosening suggests the policymakers are well aware of these risks.

However, in aiming to keep growth on a steady path close to potential, they will need to be similarly alert to the risk of accumulating ever greater levels of corporate and local government debt. The transition to high-quality growth will require economic rebalancing toward consumption, services, and green investments. If the past is any guide to the future, the reliance on markets and private sector initiative is China’s best bet to achieve the required structural change swiftly and at minimum cost.

First published on China Daily, via World Bank

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