Erenlai - Displaying items by tag: crisis
Wednesday, 12 December 2012 15:34

Long Live Crisis!

In January 2004, a new monthly appeared on the shelves of Taiwan's bookshops: Renlai proclaimed on its front cover: '危機萬歲!" (Long live crisis!) Let's face it: the layout was not very professional, and it was something more approaching an experiment, lacking an experienced team or serious distributing channels. Nobody around us would have placed a bet that 99 issues later, this maverick publication would still be around... The readers are to be credited first for their faithfulness and resilience. The efforts of the team that has produced and distributed Renlai every month too must receive some credit, a team that believes more than ever in the relevance and mission of our publication in contemporary Taiwan.

By entitling our first issue '危機萬歲!" (Long love crisis!), we were, I fear, predicting our own destiny: it is through crises and risks that we have navigated our way amidst stormy seas, always in the face of an uncertain financial future and a market in which it is most difficult to assert our values and outlook. We found joy and inspiration in these challenges, however. Our first issue extolled the virtues of crises: it is in a state of crisis that we access the core of our beliefs, we learn resilience, we are taught what it means to bet on hope against all hope, we make our life-style simpler, we are pushed to examine ourselves, we are trained in the virtues of solidarity and cohesion. This is exactly what happened to us, and what we are still experiencing from day to day. However, it has to be said that the title of our first issue still seems very relevant for the Taiwan of today? The challenges that Taiwan experienced in 2003-2004 are not exactly akin to those we are facing at the moment, but we are still called to examine our values and life-style, there is still the call to participate in national debate about what kind of society we want to build – and Renlai is still a tool and a voice for fostering just such a debate.

A crisis is often a gateway to innovation and Renlai will indeed need to be inventive if it wants to survive. We have changed a lot in the course of these 100 issues, but we will have to change even more on the road ahead. Therefore this issue is also aimed at soliciting your advice, your input, so as to know better what kind of publication you would enjoy, what kind of debates you would like us to foster, what format or new technology would you like us to embrace. We hope that the future can be forged together with you the readers– as we experience together the reflection and innovation that crises inspire. In a way Renlai's changing format can be seen as a litmus test for Taiwan's cultural climate and the strength of civil society here.

An anniversary is always an opportunity for thanksgiving. This issue will be marked with our gratitude. We give thanks to all our readers for their support and their continued feedback. Thanks for telling us what you expect from us, thanks for being demanding of us, and pushing us to give our best. Thanks to all the members of the Renlai team for the mutual support, the sharing, the dreams and the common effort. We keep in our heart those who had to leave us in the course of these last nine years, and we are very much thankful for the wonderful contribution that each of them has made. The crises may still loom on the horizon but we feel still ready to say: "危機萬萬歲! (Long live crisis!)

Thursday, 26 July 2012 00:00

Gaël Giraud's Proposals for Capitalism

Gaël Giraud, Economic Researcher at the CNRS, tells us about his book "20 proposals to reform Capitalism"(20 propositions pour réformer le capitalisme) and discusses topics ranging from the economic crisis to green development.

Monday, 23 March 2009 00:00

The Chinese Paradox

In these times of crises, there is something like a Chinese paradox.

On the one hand, Chinese is doing better than most nations when it comes to economic resilience: China has not been at the origin of the crisis; it does not experience a financial breakdown, though its stock market has been devastated and unemployment is increasing quickly; it has fiscal and financial means far superior to the ones of any other nation for engineering a stimulus; if its exports are falling, its imports are following on the same rhythm, letting its commercial surplus intact; once the crisis is over, it will most probably become the number two world economy, and Japan will be relegated to number three; its stimulus might actually come at the right time, helping it to achieve the infrastructure it still needs; its foreign reserves make it able to buy world-class industrial assets at unheard-of prices and to secure its energy and raw material supply for a long time. Summing up, the present world recession might actually be one decisive step in the accession of China to world prominence.

But there is the other side of the equation…

If China’s economic and financial bases are comparatively sound, Chinas’ social and political sensitivity to the crisis is extremely high. Years of growth as well as the citizens’ acute perception of inequalities and corruption make society prone to rebel if revenues fall or unemployment continues to grow. According to unofficial reports, urban unemployment is already above 9 percent. The arrival of university graduates on the labor market is a source of tension, nurtured by parents’ expectations after having overpaid for ensuring that their children receive education and the job that used to be almost automatically attached to a university degree. Chinas’ higher education system proves to be very ill adapted to current economic needs…

When it comes to the stimulus, a significant rise in consumption will be extremely difficult to achieve, with consumers’ anxiety and expectant attitude linked to the cost of healthcare, threat of unemployment and necessary family investment in education. Vouchers can only achieve a very temporary effect. Public investment is easier to stimulate, but the problem here lies elsewhere: China is still not able to ensure quality spending where it needs it most – water sanitation, green buildings and green industries. “White elephants” types of projects and mere dilapidation of funds are still attached to sudden increase in public spending. If banks are now lending money more easily, they seem to do so preferentially to state industries (maybe recreating rampant bad loans), which is not where China needs to invest. So, stimulus might impede rather than hasten the necessary shift in China’s economic logic. Sustainability still remains a dream rather than a strategy.

In the countryside, the coming back of migrant workers makes the problem of land scarcity and degradation even more acute than before. Actually, the fact that millions of rural workers are left jobless (there will probably be more than forty millions people in this situation at the end of the year) has consequences that might be even more difficult to estimate. Part of this population comes back to the fields, where it will be mostly idle. Another part will stay in the cities, looking for an opportunity and constituting a growing lumpenproletariat. Finally, many of them will establish themselves in prefectoral-level and county-level cities, somewhere between their village and bigger metropolis, in several cases thus creating social tensions. In some parts of Chinas’ West, unemployment might already be a factor in the rise of animosity between Han Chinese and ethnic minorities.

Finally, there are several anniversaries this year that make the whole situation even more sensitive… The most important of these anniversaries is the foundation of the People’s Republic on October 1st. Some analysts see dissensions brewing within the Party’s leadership ahead of this celebration as to the course of action to be taken. Nobody knows yet in which mod China will celebrate the sixty years of the regime. The hydra of the crisis might be already largely vanquished, but the most plausible scenario is that China by then will enter into full struggle with its tentacles.

(Photo: B.V.)


Thursday, 06 November 2008 01:53

Do not let the crisis take all the gains away

During the last month the economic crisis has deepened its roots: the economy in the US fell 0.3% in the third quarter, the general indexes of stock markets have fallen all around the world from the developed countries to the emerging markets, consumer confidence is hitting record lows and articles about the financial crisis and the end of this period of capitalism are abundant. Critics on how the incentives system has deteriorated the world wealth distribution in favor of bankers and managers are leading the political debates in several countries.

The crisis exists and it is imperative to have a close look on how governments react locally and in concert with multilateral institutions. But this is also the right moment to check our definitions of social justice before launching ourselves into the criticism wave. Economic growth has been widespread during the last decade and, although there can be some improvements in the way the wealth is distributed, few periods of history have distributed it as successfully as the economic growth in the first decade of this century. Since 2002, East Asia – not including Japan - has grown at an outstanding 8% yearly; Central Asia has an average of 9.33%; Latam has an average of 4.22%; and even Africa has kept a growing trend with 5.1% yearly in average (Source: Swivel Preview. GDP Growth rates by country and region 2007).

If we combine the economic growth with the trends in employment growth on emerging markets we can tell how the reallocation of resources has reached the most remote people. In most of the emerging economies, unemployment has fallen or has remained steady during the last 5 years to climb recently as the credit crunch let these economies feel its effects.

Despite the absence of any proper estimate, we can say that we are now living the period of history when people have left poverty at the fastest rate. This rate might be even faster than in England during the Industrial Revolution. Some estimates mention that in China 50-70million people escape poverty yearly, and their estimations are not taking into account economic growth in other places.

Those facts are hard to admit when media is bombing with gloomy news, and the feeling of slowdown is overspread. In fact, we do not pretend to deny the crisis, but we would like to be advocates for a system that has allowed improved living standards in a vast population despite its many imperfections.

The harshest critics come from sectors that are heavily exposed to the changes globalization is causing in their societies. The noisiest examples are in the unions of the developed world, which face strong competitions from labor forces in other countries. They talk about a depletion of jobs in their countries as “sweat-shops” have mushroomed. Such a depletion of jobs proves false as the unemployment rates of the first world have kept low during most of the last 5Y period and only have started to climb along with the downturn trumpets. In the US, unemployment was 6% in 2003, and it was 6.1% in August, 2008. Germany reached 9% in 2003 and stands at 7.5% currently. I still ask myself: where did all the unemployed go?

I would like to close this article with asking ourselves to establish longer links than those the media suggests. Regulation is needed, but we should be jealous of the extent of the governmental intervention regardless of the country, and especially if the country has a corrupt record. Globalization might cause unemployment but it is not fully proved in the short term, and no link exists in the longer term; on the other hand, opportunities have been opened for millions of people that had never even dreamt about them. To keep them opened might be our responsibility.

Wednesday, 22 October 2008 20:31

China’s Environmental Crisis and Global Warming

(extract from the speech given by B.V. during the colloquium on Cultural resources against Global Warming. oct 4, 2008, Taipei)

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IV- The international position

- Efforts by China to become a player in global governance, including in the environmental field, should not be underestimated. The country has signed more than fifty international conventions and treaties related to environmental protection and natural resources. The review of implementation by China of the Montreal Protocol on substances that deplete the ozone layer, has shown gradual compliance by China to the Protocol and its willingness to fulfill its contractual obligations (it had completed in 1999 the targets set for 2002), but also conflicts of interest adversely affecting its ability to act. China is also aware of the strategic role played by NGOs in environmental diplomacy.
- However, China implicitly refuses to engage positively in the management of environmental resources, contributing to the unbridled exploitation of tropical forests of Southeast Asia or hydro-electric resources in the Amazon Basin.
- China’s position in international forums is constant: national responsibilities in this area are "common but differentiated"; climate change and sustainable development must be thought as a whole; technology transfer play a key role in meet the climate challenge; the "Clean Development Mechanism" and other similar programs should be continued and encouraged.

V – International Margin of Action

China may moderate its demands but will hardly abandon its basic positions. However, a change in the level of quotas could be acceptable to China, with a passage to a non-binding commitment level higher and stronger. China would probably limit international agreements with a regime that would facilitate practical cooperation projects and would thus releasing funds for promoting research and development in the field of new energies and to introduce renewable energy. At present, external pressures as influential as they are, are still weaker than internal resistance.
However, Hu Angang, an renowned economics professor at Tsinghua University, advisor to the government on environmental and social issues, has publicly called for China to accept to be bound by an international pact to reduce emissions. He acknowledged that his point of view remains in the minority but emphasizes the seriousness of the problems encountered by China. It envisages a sharp increase in Chinese emissions until 2020, but feels that implementation of drastic reductions in the following decade is quite feasible, so that Chinese emissions may go down to their 1990 level by 2030, and be reduced again by half over the next twenty years. China, he insists, will be the first victim of climate change, and has a strong economic and diplomatic interest to transform itself into a "green power.”
China therefore has the potential to play a positive international role, if it dares to tackle the speculative and risky nature of its present model of development. It will thus contribute to a better management of "global public goods". Making the turn towards sustainable development is without doubt the best way to assert its global contribution. Yet the Chinese response seems hesitant, often contradictory. Because the debate on its own model of governance remains severely limited, China finds it difficult to play a more active role in reforming global governance.
For now, we can just bet that China will carry out its ecological reform at its own pace but that it still refuses to be bound by a priori international agreements. The Chinese reticence should not block the commitments of other partners: Global governance, when it comes to climate change, must be one of "variable geometry" rather than based on the principle of "everything or nothing." In other words, the WTO model, (based on the search for consensus without offering viable alternative if unanimity is not achieved), model strongly challenged in recent months with the failure of the Doha Round, is not directly exportable in the field of environmental diplomacy.
It remains possible that, faced with bold initiatives of other nations, starting with the ones that the European Union must take in any case, China decided to take on the role it says to be aspiring to. In other words, the best way to engage China in world climate governance is perhaps to start without waiting that China finally decides to join global initiatives...

Thursday, 02 October 2008 03:53

A longer mindset for a short crisis

I just finished watching the CNN report on how the stock markets went after the rejection of the US plan to save the “world from an economic crisis”. Let’s say that I do not blame either Mr. Bernanke (head of the Federal Reserve or central bank of the US) or Mr. Paulson (treasury secretary) for their failure in achieving a consensus over the plan, but there has been a problem to communicate what the real consequences of the crisis are and how does the plan really work as well.

I mention the note in CNN, as the journalist talking about India used a sentence which tries to disguise her lack of knowledge on the topic: “It’s like every day there was a death person in the family” she said, with regards to the last couple of daily results in the Indian stock markets. To be true, this sort of sentence might scare the incautious people but in other people open distrust and curiosity.

As this is an electoral year in the US, some of the politicians are trying to take advantage of the situation blaming each other. The facts are: Bush and McCain supported the plan, and blame democrats for its failure. Democrats want more debate and are calling for calm. On the other hand, votes were 205 pros and 228 against, but the supporting republicans were only 133 and 193 were against; by contrast, democrats supported the plan with 140 votes against 90 who rejected it. From the voting, it is clear that democrats supported the plan more than republicans did, but probably they did not want to be committed with a plan that is regarded with distrust by an increasing amount of people. However, both parties find on their lines explosive rhetoric of the sort that the CNN Indian journalist used.

They are not the only people using that kind of language about the apocalyptical consequences of the rejection of the plan, but there is something beyond it. Also because most of the people I see, demonizing the objectors to the plan, have a stake on the crisis whether political or economical. To some analysts, it seems that the financial institutions have taken too much risk during the last years, they have collected all the gains that were available and they now want to collectivize the losses of the crisis generated by the risk taking. This distrust is shared by others, and it is the main reason to believe that the plan mainly helps the badly behaving guys on Wall Street.

Some people compare the actual crisis with what happened in 1929 but the comparison seems rather exaggerated. They share in common the broad lack of confidence among investors that are not willing to make more transactions (and move all the economy) even if credit is cheap, as it was in 1929, and as it is being offered by the Federal Reserve nowadays. With the expectation that most of the goods and assets available of the economy are going to lose their value, nobody wants to take any debt or go for any investment. But the magnitudes are completely disproportionate: the Great Depression lasted almost four years and unemployment in the US reached 25% before some great interventions were executed, exports value in USD fell to a fifth which was equal to half of the original quantity; also, household income and prices fell between 20% and 50%. By contrast, the levels of any of these variables are in better shape now than they were at the time of the last mild recession of a couple of years ago.

There is no doubt that the problem exists, that there is an economical crisis and nobody would like to try to wait and see if what happened in 1929 can happen again. But that does not exactly mean that a prize should be awarded to the world financial system for taking more risk than the one they were supposed to. The media, instead of using metaphorical and apocalyptical phrases should be trying to explain how confidence is going to be restored by the plan or plans and, more important, how the plan or other options work in the best interest of the tax payers. Of course, this applies to the US as the main market, but it applies as well to individual economies that want to encourage their economies too. The media should make more references to how the plan’s package is to be spent, how the package should create an antecedent and punish financial institutions with lax risk management; how it will address social issues on the defaulted mortgages, how it affects the walking citizens, and so on.

Up to now, we have mainly heard the scandalizing amount of money required by the plan, USD700billion or two times Taiwan GDP in 2007, and the strong responsibility that the Secretary of the Treasury (Mr. Paulson) is supposed to have on it. Although there are provisions for reporting, there is no clear reference to how the money will be spent or who is subject to receive aid from the Treasury. People should not be frightened by the rejection of the plan; instead, US citizens should be proud of their democratic system as it will request more debate on the salvation plan.

Financial institutions, along with free marketers have insisted on the ease of regulations for a long time. Now there is a common voice among politicians in North America, Europe and the Far East Asia: regulation is indispensable to support confidence, especially in the development of the new financial markets of securitized assets where the crisis finds its origin. Securitized assets imply a level of abstraction between the investor and its actual investment, thus it will be easier for a regulatory agency than for a pension saver to check what the embedded risks of the investment are.

Governmental intervention is going to be required and probably beyond the US National borders. In fact, any measure taken from Taiwan to Argentina to boost the economy helps to avoid the deepening of the recession. But, there will still be an issue of how much of the tax-payers money should be spent to heal each economy. I invite all those who are interested on the development and economical justice, to follow the process in their own countries and, of course, the process in the US.

For a draft on the plan you can look at:

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