Summit Fever
25 02 2009A few weeks ago the World Economic Forum took place in Davos. NZ has a Jobs Summit this Friday 27th Feb
Stewart Wallis from Nef (the new economics foundation) was there (Davos) and made these observations.
“People are clearly prepared to listen to ideas that would have been dismissed out of hand even a short time ago. For me, the key question was posed by Jim Wallis, Founding Editor-in-Chief of Sojourners: “Will we let this crisis change us? To do so requires repentance and real understanding.
Only if fundamental change occurs, will the crisis have any redeeming features.” I saw the outward signs of contrition, but repentance and real understanding were limited to the few.
Listening to the bankers and financiers was instructive. Some were courageous enough to admit that they got it completely wrong, but too often I heard lectures about the dangers of over-regulation and the need for preserving self-regulation. What planet do these people live on?
The regulators were more reassuring. It is clear that a sea change is coming. As Adair Turner put it, ‘If it looks like a bank and quacks like a bank, we will regulate it like a bank.’ John Gieve, Deputy Governor of the Bank of England, assured me that counter-cyclical capital rules are a certainty.
The causes of the depth of the financial crash seemed very clear – a total failure of regulation at all levels combined with flawed mathematical risk models and incentive schemes run out of control. The most plausible explanation I heard, though, was that too many people had been ‘bought-off’ in one way or another by the scale of the money being made to risk of questioning the source of this ‘gold.’”
….
Everybody understands the implications of recession, some see the magnitude of the climate challenge, but many seem lulled by low oil prices into a false sense of security on energy supply. Without seizing the current opportunity to both insulate against the worst impacts of recession and lay the foundations for our future energy infrastructure through a Green New Deal, we will, in a few years’ time, I believe, face not only runaway climate change, but oil prices of $300-400 a barrel triggering a depression that would make the current crisis look like a picnic.
One obvious, immediate solution would be giving annual vouchers of, say, £1,000 per household, to invest in insulation, renewable energy and other green products and services. Once people have been lifted out of fuel poverty and our fledgling renewables industries brought to scale, a whole range of other mechanisms – such as green taxation – become viable.
Once the policy had taken root, the increase in national debt could then be recovered by massive increases in the carbon price and fossil fuel energy taxes. This would be a precursor to a path to a low material throughput economy. According to Joseph Stiglitz, this will mean an economy based on saving material resources, rather than one based on saving labour.
In New Zealand we are on the eve of a national summit on Jobs and there is an opportunity here to redirect some of the capital flows from the “usual suspects” into more ground breaking areas.
Hopefully the “s” word (sustainability) will figure somewhere in the planning process and some attention devoted to becoming an economy that saves material resources, recognises “triplecrunch” and takes a longer term view on growth.
So far the conference looks promising with the Chairman – Mark Weldon of NZX being quoted:
“Some might turn up with ideological or narrowly self-interested agendas. It would be up to him and those chairing the break-out groups the conference would divide into to have highly developed “porkometers” and ensure proceedings did not get hijacked, Mr Weldon said. “
There has been some vigorous debate on the NZX blog about a number of scenarios raised by high profile contributors and many others. That would be a good place to look for any clues as to likely policy outcomes.
The Attendees List is over here. I would guess those on the list are already receiving some feedback from friend and associates on priorities but it does look very much like there is a bit of a representation gap from the green lobby.
We’ve had economic summits before including the 1984 one where Jane Stevens was able to put some key challenges out to the attendees.
It is clear that some targetted investments need to be made by government and the private sector towards a stronger economy for all those working in it.
Many of us have concerns that funding packages to banks and large businesses may just reinforce that old idea that when times are bad elites “socialise the risk but privatise the profits”.
A growing number of commentators think the ideology of market growth at all costs has failed us. It is easy to be cynical about summit style meetings.
It is smart PR that the ASB Bank has signalled a concessionary loan fund of $1b being made available ahead of the summit to assist with this accelerating recovery. That is a great idea but I suspect many businesses would want to refinance some of their existing funding arrangements which is much harder to do.
In the fine print among other things it says
“Loans are available only to existing businesses for new lending, the offer does not allow the refinancing of existing loans.”
I suspect that will be a deal breaker for many but the idea that there might be some funding to create or save jobs is an attractive one.
I detect an optimism from some of the lead participants that they can negotiate some more creative outcomes and road-maps. Lets all hope that this actually happens.
P.S If you want a harder look at the media side of all this have a look at the latest episode 4 of Media 7
“Starting today – with the objective of empowering NZ small business owners and managers to learn from each other’s experiences – Wellington online accounting software providers Xero are sponsoring an online discussion at Public Address System about business survival strategies.
The discussion will be led by myself (Scoop Media General Manager) and Xero founder and serial entrepreneur Rod Drury.
Our intention in holding this discussion is very much to seek to provide practical advice to business managers and owners. Hopefully an element of collegiality may also emerge and it is possible that useful new connections may be made. ”
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Food for thought, Jason. I shall read this through again when I have a bit more time to mull over the ideas, and get a bit more up to date with the concepts presented.
By now the NZ summit is over. There were 3 main ideas that came out. The 9 day fortnight with some training component on the 10th day. A cycle way the length of NZ and a matching fund for business involving banks and government funding to help businesses. The more interesting ideas from NZ Institute and NZX were not picked up. Much of the discussion stays with the people who were there but the net result seems quite cautious. This week the Australian central bank left interest rates unchanged. As NZ’s banking system is heaviliy influenced by Australia it will be interesting to see what happens to NZ rates next week and how the summit funding proposals proceed from here.
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