Three years on, the world is still living through the mess that was the near complete implosion of the World banking system. Governments have had to intervene to keep the cogs of Western economies turning. They have had to give bailouts to the financial system in an attempt at damage limitation. The crisis though has moved on. The debt has not gone, it has merely been absorbed by states, and is now threatening their stability as well. States in Europe and North America are starting to have difficulties paying their own bills, highlighted by the crisis in Greece. With the crisis now threatening to spread to the Chinese housing market and other sectors in the BRIC economies, there is a question that needs to be asked. Is there a way of enhancing our economic system in a way that can provide more global economic stability?
It seems that the market system is an effective way to increase general prosperity, or at the very least it is the best of a bad bunch. The market system has seen global rates of poverty fall continuously since the 1970s. However, given the recent economic turbulance, it would seem apparent that it needs to be enhanced, but by what mechanism?
Fairtrade, advocated by the Fair trade foundation set up in 1992, is a compromise. It is not unregulated capitalism, that seems quite evidently to be experiencing some difficulties, but a compromise which includes global rules governing an otherwise market economy. It does not require the government to take ownership of sectors of the economy but uses regulation to steer the global economy. It, therefore, keeps market principles, advocated by Ronald Reagan, Margaret Thatcher and Adam Smith, at its heart, but manipulates them to include a sense of social justice.
The concept of the market economy is consumer-led: it is driven by demand from the people. Therefore, any system that intends to boost that demand would be beneficial to the system. Fair trade seeks to increase the wages of the proletariat in developing countries above a subsistence level. If these individuals have an increase in their disposable income they are more capable of buying goods and have a higher standard of living. The firms they buy the goods from have more money to invest and create more jobs. It is a multiplier effect that grows the national economy.
An expansion in the economies of developing nations is likely to have a positive effect on developed nations. Over time it has the potential to expand the number of places that goods made in developed markets can be sold to, having a positive effect on lacklustre manufacturing industries in developed nations. An expansion of developed economy markets has the potential to increase the demand for fair trade goods and so the cycle goes on.
It is now plainly obvious that governments that attempt to structure their economies through a central planning system, like North Korea or Venezuela, do not deliver the promised economic prosperity for their workforces. They have never produced equality or high standards of living for the masses. With a bit of alteration, the market system, advocated by Margaret Thatcher, Ronald Reagan and Adam Smith, has the potential to continue to create prosperity not just in developed nations but in the developing world. Free trade has served the purpose of creating prosperity and reducing poverity well but it now seems that Fair trade has to take over the reins in order to create a more balanced world trade situation. In light of the financial crisis, a quote from Edmund Burke might be useful: "a state without the means of some change is without the means of its conservation". The global centre-right, notably in the UK and US, was right to advocate free market economics but now needs to embrace Fair trade as a way to further global prosperity. Far from being at odds with Fair trade, Fair trade seems a natural progression in centre right politics, and is compatible with the market economics encouraged by many centre right parties.
mercredi 12 octobre 2011
samedi 1 octobre 2011
Is Western-style democracy really the best form of Government?
In light of the Arab spring revolutions throughout North Africa, and King Abdullah of Saudi Arabia's granting sufferage to women starting with the 2015 elections, it seems a good time to discuss the thing that so many people have been fighting to achieve this year: democracy. For most of the 20th and 21st centuries, the right to vote has been deemed something for which everyone should strive for. But is democracy really the best way to run a nation state?
From a European perspective, the consensus seems be that democracy is by far and a way the best way. The Second World War and the repression experienced under Adolf Hitler's National Socialists, Benito Mussolini's National Fascists and Franco's Spain has convinced many that democracy, representation by elected members of national parliaments, is the best system because everyone gets the right to chose who they desire to represent them, whether that be a right wing, centrist or left wing candidate.
However, a flaw of democracy is that, rather than simply doing what is morally right, politicians will do what is politically popular with their electorate - even if it is not in the long term interests of their citizens. Perhaps cynically, you could say that leaders in democracies are not driven by beliefs but by their electorates. It would have been in Greece's national interest to get its finances in order long before the financial crash, but pressure from the government's electorate to keep spending high stopped it from making the difficult decisions that it should have taken to get its house in order. George Papandreou, the Greek Prime Minister, and his Panhellenic Socialist Party would simply not have won the 2009 legislative election promising to do what was in the national interest, to dramatically and, at the time, prematurally reduce spending, because national interest and what is popular do not correlate. The unpopularity and animosity among many in Germany and France to bailing out Greece is understandable. Of course, the elected officials in France and Germany are echoing the hostility of their electorates to spending money on other countries. However, if Angela Merkel and Nicolas Sarkozy were to appease their electorates and refuse to find some money for Greece they would violate their countries national interests. German and French banks would collapse if Greece defaults wholesale on its debts. The consequence of that? Well, working class German and French savers would lose all their savings. Leaders have to lead: however, in a democracy, leaders are sometimes forced to capitulate and not do what is right but what is popular or fashionable.
On the contrary, dictatorships do not have an electorate to look out for. Dictators are not in a popularity contest for votes. Whilst history suggests that in some instances - and notably in European history- dictators have been a force for bad, in others dictatorship has actually been beneficial. China is an example of a dictatorship that seems to run rather silky smooth. In the last twenty years, China has seen phenomenal growth almost unparalled anywhere in the world. In the last quarter of economic activity, China continued to achieve a dizzyingly high 9.5% growth. This compares to 7.7% in India, the largest democracy in the world, and rather pathetic growth statistics in the countries of almost completely democratic Europe. Added to this, China is set to face years of double-digit wage increases which will help the Chinese proletariat: yet again, many workers in Europe and other democracies are unlikely to see such large wage increases in the near future despite high inflation in many countries.
The attempts to enforce democracy in the Islamic Republic of Afghanistan is instructive as to the failings of the democratic model of governance. The people of Afghanistan simply do not want democracy: they deem it to be a foreign concept not congenial with their culture and their way of doing things. Many Islamic nations are dictatorships for a reason. It is the system that works well for them, a way of doing things that they can relate to culturally. The West just does not get it: the Western value system assumes that a peoples not under democratic rule are, therefore, an unhappy not contented peoples. However, in many of these countries, security trumps personal liberty and human rights. Freedom from state violence and a state where torture does not exist are perhaps desirable, but they are higher order demands: a political do not run before you walk. Ultimately, people are concerned about their personal safety: human rights are nothing if to inforce them means your citizens will be blown to smithereens?
The post- war consensus has been that democracy is good and, therefore, dictatorship is evil, and with valid reason to believe this given the horrific events of the Second World War in Europe and the wider World. Many rich liberal do-gooders and socialists of all degrees use the human rights argument to critize dictatorships. However, with the debt crisis and the need for leaders to lead and not follow, and the ascendancy and success of China, could dictatorship be right after all? I leave you with the following quote by Charles Bukowski: 'the difference between a democracy and a dictatorship is that in a democracy you vote first and take orders later: in a dictatorship you don't have to waste your time voting' (http://www.dumb.com/quotes/dictatorship-quotes/2/).
From a European perspective, the consensus seems be that democracy is by far and a way the best way. The Second World War and the repression experienced under Adolf Hitler's National Socialists, Benito Mussolini's National Fascists and Franco's Spain has convinced many that democracy, representation by elected members of national parliaments, is the best system because everyone gets the right to chose who they desire to represent them, whether that be a right wing, centrist or left wing candidate.
However, a flaw of democracy is that, rather than simply doing what is morally right, politicians will do what is politically popular with their electorate - even if it is not in the long term interests of their citizens. Perhaps cynically, you could say that leaders in democracies are not driven by beliefs but by their electorates. It would have been in Greece's national interest to get its finances in order long before the financial crash, but pressure from the government's electorate to keep spending high stopped it from making the difficult decisions that it should have taken to get its house in order. George Papandreou, the Greek Prime Minister, and his Panhellenic Socialist Party would simply not have won the 2009 legislative election promising to do what was in the national interest, to dramatically and, at the time, prematurally reduce spending, because national interest and what is popular do not correlate. The unpopularity and animosity among many in Germany and France to bailing out Greece is understandable. Of course, the elected officials in France and Germany are echoing the hostility of their electorates to spending money on other countries. However, if Angela Merkel and Nicolas Sarkozy were to appease their electorates and refuse to find some money for Greece they would violate their countries national interests. German and French banks would collapse if Greece defaults wholesale on its debts. The consequence of that? Well, working class German and French savers would lose all their savings. Leaders have to lead: however, in a democracy, leaders are sometimes forced to capitulate and not do what is right but what is popular or fashionable.
On the contrary, dictatorships do not have an electorate to look out for. Dictators are not in a popularity contest for votes. Whilst history suggests that in some instances - and notably in European history- dictators have been a force for bad, in others dictatorship has actually been beneficial. China is an example of a dictatorship that seems to run rather silky smooth. In the last twenty years, China has seen phenomenal growth almost unparalled anywhere in the world. In the last quarter of economic activity, China continued to achieve a dizzyingly high 9.5% growth. This compares to 7.7% in India, the largest democracy in the world, and rather pathetic growth statistics in the countries of almost completely democratic Europe. Added to this, China is set to face years of double-digit wage increases which will help the Chinese proletariat: yet again, many workers in Europe and other democracies are unlikely to see such large wage increases in the near future despite high inflation in many countries.
The attempts to enforce democracy in the Islamic Republic of Afghanistan is instructive as to the failings of the democratic model of governance. The people of Afghanistan simply do not want democracy: they deem it to be a foreign concept not congenial with their culture and their way of doing things. Many Islamic nations are dictatorships for a reason. It is the system that works well for them, a way of doing things that they can relate to culturally. The West just does not get it: the Western value system assumes that a peoples not under democratic rule are, therefore, an unhappy not contented peoples. However, in many of these countries, security trumps personal liberty and human rights. Freedom from state violence and a state where torture does not exist are perhaps desirable, but they are higher order demands: a political do not run before you walk. Ultimately, people are concerned about their personal safety: human rights are nothing if to inforce them means your citizens will be blown to smithereens?
The post- war consensus has been that democracy is good and, therefore, dictatorship is evil, and with valid reason to believe this given the horrific events of the Second World War in Europe and the wider World. Many rich liberal do-gooders and socialists of all degrees use the human rights argument to critize dictatorships. However, with the debt crisis and the need for leaders to lead and not follow, and the ascendancy and success of China, could dictatorship be right after all? I leave you with the following quote by Charles Bukowski: 'the difference between a democracy and a dictatorship is that in a democracy you vote first and take orders later: in a dictatorship you don't have to waste your time voting' (http://www.dumb.com/quotes/dictatorship-quotes/2/).
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