November 14, 2008
The Future World Economy:
The Future World Economy :
Bretton Woods II in Washington Must Deliver
Published on November 13th, 2008 – The Inspired Economist – http://inspiredeconomist.com
As the G20 leaders gather in Washington for what has been dubbed “Bretton Woods II”, here’s a brief list of the economic opportunities they need to discuss:
The World’s population is estimated at 6.7 billion:
- of this, 15% live in slums and are permanently hungry
- yet the USA, the EU, the UK, Russia, China, India and Brazil have all reported bumper harvests this year
The World’s GDP is estimated at $55.5tr per annum:
- of this 85% is consumed by 20% of the population
- while 45% of the population live on around $900 per annum
- and 0.0001% of the population have a combined wealth of over $10tr
In the USA, in the ten years to 2006:
- employment stayed at around 72%
- while average earnings rose 45% from $37,000 to $54,000
- and the average real income of the poorest 20% of households fell
In other words, the global economy is fixed in a spiral where prosperity is hoarded by those who already have and isn’t shared with those who already have not. Social mobility is non-existent.
The G20’s Historic “Bretton Woods” Opportunity
Corporations’ historical reluctance to engage with the vast market of the poor has been driven largely by the fact they cannot make as much profit from it as they can by segmenting the wealthy market.
However, with the advent of CSR many companies are starting to understand that the pursuit of ever greater profit is not, in and by itself, a wholesome goal. Now is the time to put that understanding into action.
So the will is there and the market is there. All the Bretton Woods II governments in Washington need to do is establish the institutions to bring the two together.
In 1932, over ten years before the original Bretton Woods conference, John Maynard Keynes, wrote the following in the New Statesman:
The delegates to the World Conference should assemble in sackcloth and ashes, with humble and contrite hearts. … Fear and greed, duplicity and incompetence, but above all conventional thought and feeling, have brought their collective performance far below the level of the participants regarded as human individuals. But here is a last opportunity.
The question is, will that opportunity be taken? Or will it take another ten years for the world to put it’s house in order?
What do you think about the Future Financial Architecture?
Is the G20 meeting a historic opportunity to remould financial architecture in a more socially responsive and responsible framework?
Can previously “irresponsible” corporations be trusted to enact this through the free market, or should we be “once bitten, twice shy” and demand strong regulation?
Photo Credit “World Distribution of Per Capita GDP By Country” by Wesley Fryer from Flickr under Creative Commons Attribution Share Alike License.
Note: Click on hyperlinks in this article to get more information, graphs and maps.
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