4fooey

October 16, 2008

The big adjustment

Filed under: Economy, Environment, Politics/News — Tags: , — 4fooey @ 10:10 am

Is this the end of life as we know it? Well, I doubt it, but with the ongoing financial crisis, and now the real threat of global recession, it seems that life for many millions will get tough (of course we’re talking about people in the western world, since there are many millions who have it pretty tough already). Many people are predicting a quite severe recession, that will probably last for a number of years, although most pundits don’t really know how bad it’s going to be. Chances are, most of us will get through it, one way or another, but I’m sure we will all have to make changes in our lives, to a greater or lesser extent.

Looking at the situation more broadly, however, this financial crisis or near meltdown, may be a manifestation of wider problems in our economies and our western society as a whole. Our whole way of life and levels of consumption have reached a level that relies on too many assumptions: relatively cheap and plentiful resources (fossil fuels & raw materials), relatively cheap and plentiful supply of food, as well as labour, and easy money/credit. Now though these assumptions have shown themselves to be completely unsustainable, as some resources become more scarce or expensive. Confidence in the whole system has broken down.

Consider the scale of the help given to the financial industry — it runs into the trillions of dollars, in the US and Europe, and we are told there are many ‘toxic assets’ that are hidden away that will probably need to be written off. We are told this help is necessry because the banking world is so central to the running of our economies. Imagine if we could spend a fraction of this on solving some of the other problems in the world, such as climate change, finding alternative energies, helping the developing world to fight disease, providing education, etc.

In the west we live in a kind of virtual dream world of relative luxury, that is supported by the media and advertising. This illusion has become shattered with the current financial crisis — consumer confidence has been hit by the crisis. A similar thing happened when the planes smashed into the Twin Towers in New York back in 2001 — immediately following the event people were traumatised and for a short while ‘normal life’ was suspended, while people stopped shopping and several websites were closed down. A blast of reality had shocked people into realising what really mattered to them — somehow they were turned off the merry-go-round of modern consumerist life. Soon after the attacks, President Bush told everyone to go shopping to get everything back to normal!

We really can’t go on living as we do, expecting our economies to carry on growing — we should aim for a good standard of living for the majority of people in the world. This financial crisis and impending recession gives us an opportunity to re-assess how we conduct our economies and lives as a whole. I’m sure the main thrust of how governments and individuals react to this will be “how do we get back to normal”, but I feel a more radical adjustment is needed — the changes needed to reach a fairer and more sustainable system are so huge it almost seems impossible to achieve. However, with the right leadership, with all the clever brains working on it, and with hope and optimism it could be possible.

Update 23/10/08; just read a good article by one “clever brain”, namely Jeffrey Sachs, writing in the Guardian: Amid the rubble of global finance, a blueprint for Bretton Woods II. He suggests that the leaders of the world should go much further than ‘just’ fixing the world economy by trying to roll climate change, poverty alleviation, and so on, into a grand ‘new deal’ — great idea, and I hope they really can pull it off, if indeed they try to do this. A similar line is taking by another “wise man” Jonathan Porritt in his article: Zero hour for a new capitalism. He sees economic and environmental issues as totally interelated, which of course they are, on a global level.

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