Enoughness

This is probably the shortest and most concise film on the current economic challenges people around the world are facing. It addresses western vs indigenous cultures, individualism vs community and interconnectedness, scarcity vs abundance of nature’s resources, accumulation and centralization of resources vs redistribution, sharing, decentralization of production.

Concept of ‘enoughness’ makes us depart from quantitative to qualitative approach on economic activity and suggests us to see ourselves as individuals, communities, countries not as individual units but as interconnected elements in space and time.

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What GDP has to do with economic progress or wellbeing?

Nothing!

If there is one single lesson to be learned from the economic crisis culminating in 2008-2009, then it is – unsustainable economy is not viable and socially justifiable.The problem though is that as long as GDP (gross domestic product) will continue to be used as the dominant, key indicator to characterize success, growth, recovery, improvement of economy, we will not escape the good old in-sustainability circle. As long as political leaders will use GDP to measure success of their policies and wellbeing of their people, we will continue missing the point, and it is: it is not the size of the economy, but its content and distribution of resources which matters and affects people’s wellbeing and quality of life.

Back in 1968 it was perfectly clear to Robert F. Kennedy that GDP “measures everything, in short, except that which makes life worthwhile.” He understood the danger of GDP as the political/ economic goal which is useless in measuring things which politicians AND economists should be really worrying about, like human wellbeing, employment, decent living conditions, infrastructure, shelter, self-realization, human security, education, good health services and social relations.

I wish every single politician in every single country could watch this Kennedy’s speech and if even just 1% of all of them would understand the true essence (or actually lack of it) of GDP, it will be a huge achievement. Actually, you should watch this too. Everyone should.

 

Money and Life

During the last few years following the global financial crisis many films have been produced to explain the paradoxes of current economic/ political system and what are the real consequences and impact of modern capitalism on the state of economy, our lives and planet.

This particular film has managed to find the right balance of simplicity and quality of argument from analytical point of view. This is not a mainstream film and not everyone would find it easy to follow, but it does give a great insight into the history of money, money creation, consumerism, growth, enoughness, Wall street, financial sector, democracy, new alternatives, redistribution of resources and wealth, cooperation, Occupy movement etc.

Film is particularly critical about the financial sector which has doubled in its size over the last 14 years in USA and is simply taking over economy. It is not economically productive, but is becoming as a cancer of a real economy as it is sucking real resources out of it. One of the story tellers in the film claims: “if financial sector was working as Las Vegas gambling business, we would not be in that mess now.” This perfectly illustrates how out of control this sector is and how dangerously relaxed and asleep we still are. Watch this film and wake up.

Who is broke?

Last weekend thanks to the Tax Justice Network an TippingPointFilmFund i had a chance watch absolutely fascinating film “We are not Broke” which every single person in the USA and worldwide should watch. And, not because it probably will make you angry (i hope so), but because we need to leave the comfy zone of ignorance and wake up. In essence this film is about massive tax evasion by multinational companies (MNCs), which in a way is not illegal, but for sure is not right and fair either. Because of the tax regime loopholes, tax havens, transfer pricing and financial innovations, many billions of dollars and pounds and euros are never reaching the governments’ wallets.

Though official corporate tax rate in the USA is 35%, in reality some of the MNCs like Bank of America, GE, Chevron etc have been paying 0%! Now, when was the last time you were able to pay 0% tax of your salary??? Or, when have you been able to negotiate your tax rate?

In 2008 when Obama ran for elections it was one of his commitments to close tax loopholes. But, not much progress has been made so far. His dependence on donations from the financial sector and multinational companies (MNCs) in order to stay in power (last USA presidential elections cost about 7-8bn USD) is probably the answer to this. Moreover, in 2010 lobbying industry in USA was worth 3.5bn USD which is obviously working hard to maintain ‘status quo’ or make even greater loopholes. Complexity of tax system as such in itself is a problem which allows tax optimization experts to explore the limits of their creativity.

In this film though, there was hardly ever mentioned word ‘corruption’ but in all honestly this is what it is. In 2004 government did an experiment and for one year allowed repatriation of profits being hidden abroad for 5% tax only (instead of 35%). Ability to openly abuse the system without being punished has effectively been legitimized and accepted by the authorities.

This privilege to avoid tax or to negotiate tax is based on the argument that in such a way MNCs are creating more jobs and increasing the global competitiveness of these MNCs and hence the USA in general. This would make sense only if all companies in the USA would have a chance to negotiate their tax and if only that money which was not paid in tax would have really been invested in more jobs instead of being hidden in tax havens.

Also, by avoiding tax, MNCs de facto are subsidized by everyone who is paying tax as they use the public infrastructure and human capital which is a direct result of public investment (education, health, social welfare, roads, etc).

To sum up, indeed, we are not broke. Broke is the system.

for those who are in the USA – you can watch full film here.

“Too many economists wanted to believe that markets work well”

In the midst of this economic turmoil banks and Governments, apart from handful of global companies, have been made the main scapegoats. But, Stiglitz in his brief video commentary is turning now blame to economists by saying: “too many economists wanted to believe that markets work well” and most likely because they have been too politically motivated and self-interested. Stiglitz notes that economists have been ignoring 200 years of capitalism and thus unable to draw well-informed conclusion that markets do indeed do all sorts of nice things, but they are not self-regulating.

This statement challenges objectivity and professionalism of economists as well as ideological impartiality of their research and analysis. If the outcomes of their research and analysis depends on who they work for or what political or financial interests they have then it would be the same situation when patient attending the doctor would be prescribed medicine which brings more profit to the doctor rather than which is the best addressing the specific illness of the patient.

planes vs banks

“The airline industry benefits from every mistake ever made anywhere on the planet. Any pilot who makes a mistake anywhere on the planet today will make your next flight safer. The banking industry is the opposite. Every mistake takes the banking system closer to total collapse. One system is antifragile, the other is fragile. The banking system failed because it was built for order and not built for the unpredictable.”

Professor Nassim Nicholas Taleb, author of “Black Swan”