The Great Debate UK
By Adam Matthews, Secretary-General of Global Legislators Organisation (GLOBE). The opinions expressed are his own.
One of the great advances in the past century in economics is the understanding that there is such a thing as human, social and intellectual capital. We have come to realise that a well functioning judicial system and an excellent education system are as much a part of the wealth of a nation as its roads, ports and factories. The irony is that economists and economies have not caught up with the most important capital of all — natural capital – upon which we all depend.
In a nutshell, natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. It is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future.
Taking this one stage further, the concept of natural capital accounting involves valuing natural resources as accurately as possible, and including in national accounts the costs and benefits of conserving versus destroying them. So what would a country that incorporated the valuation of natural capital and ecosystem services into its framework of national accounting look like?
from The Great Debate:
On the night Queen Elizabeth scampered back from her Scottish castle to address an angry crowd outside Buckingham Palace – the crowd protesting she hadn’t paid enough respect to the memory of Princess Diana, killed in a car crash the week before – Rupert Murdoch was in the newsroom of the London Times. “There’s your headline,” he told the editor in charge. “Queen Saves Neck!” It was a perfect tabloid headline for a perfect tabloid story.
That Diana, named after the goddess of hunting, should die hounded by a pack of snap-happy paparazzi added a vein of irony to the story of her tragic life. A similar irony informs the scandal engulfing Murdoch. The biter has been bit, a fact clearly on display when Rupert and his son James, arm in arm with their flame-maned employee Rebekah Brooks, were shoved and jostled in a London street by the newshounds of Fleet Street. Hauled before a House of Commons committee, the usually unrepentant mogul looked dented when he uttered the phrase that will litter his obituaries: “This is the most humble day of my life.”
A new dimension to the currency crisis is upon us. First there was the two-speed growth – with richer, predominantly Northern European economies performing well while the weak south was on the cusp of recession. But in recent months an even more worrying divide has started to emerge in youth unemployment.
In Spain the number of under 24-year-olds out of work is 50 percent, in Italy nearly a third of young people are without a job and in France the figure is a quarter.
from The Great Debate:
It was the Welsh sage Alan Watkins who remarked that a budget that looked good the day it was delivered to the British Parliament was sure to look terrible a week later, and vice versa. The avalanche of new information dumped by the Treasury is simply too much to grasp at a single sitting, and governments tend to bury bad news in a welter of statistics. And so it proved with finance minister George Osborne’s budget served up last week.
The immediate headlines stressed that rich Brits would pay less income tax – down from 50 percent to 45 percent – but it only took a day before even traditional Conservative cheerleaders like the Daily Mail were condemning Osborne for funding tax breaks for bankers and billionaires by stealing from those living in retirement. The paper’s cover screamed: “Osborne picks the pockets of pensioners.”
By Laurence Copeland. The opinions expressed are his own.
In 1997, when Alan Greenspan famously pointed to “irrational exuberance” in the U.S. stock market, he nonetheless failed to follow up by doing what, according to an oft-quoted predecessor, is the critical task of a Fed Chairman: “taking away the punch-bowl just as the party gets going.” In fact, when the tech stock bubble burst in early 2000, he cut interest rates, and did the same again, more forgivably, in the aftermath of 9-11. The result of this laxity, emulated by the UK and Japan, was a new global bubble, this time mainly in real estate.
When the new bubble duly burst in 2007-8, the preferred “cure” for the hangover was the same as before – only a far far bigger headache required a far far bigger dose, newly bottled and relabelled QE. The result has been predictable – a reinflated bubble, this time in commodities (especially oil and precious metals) and in nominal assets: short term debt (Treasury Bills etc), long term debt (gilts, some corporate debt), and worst and most menacing of all, in money itself, which is now grossly overvalued too.
from The Great Debate:
The Kony 2012 director who was found naked in the street will remain in the hospital for several weeks. Danica Russell, Jason Russell’s wife, attributed her husband’s “reactive psychosis” to the “sudden transition from relative anonymity to worldwide attention – both raves and ridicules, in a matter of days."
“Relative anonymity to worldwide attention” is an understatement. The Internet gives new meaning to Warhol’s observation about 15 minutes of fame. Russell is striving to bring Joseph Kony, the Ugandan leader of the violent Lord’s Resistance Army, to justice for crimes against humanity, and his video exploded onto the global stage. More than 100 million people viewed the video the first week it was online. Many of these people expressed support and donated money to Russell’s cause.
–Daniel Tarling-Hunter is an economist at Euromonitor International. The opinions expressed are his own.–
The 2012 Budget has highlighted the divide between the richest and the poorest. Two standout policies have come under scrutiny; a reduction in the top rate tax, and support for the lowest income groups by raising the personal allowance. Though these changes don’t shift the fiscal position of the government, Euromonitor International forecasts that the UK’s existing income inequality is set to widen further with more pressure on the poorest consumers.
–John Vassallo is Vice President of EU Affairs for Microsoft. The opinions expressed are his own.–
European Commissioner for Employment Laszló Andor recently estimated that youth unemployment costs Europe €2 billion per week. Absorbing just 20% of youth who aren’t in education, employment or training, into the European labour market, would thus save Member States more than €21 billion a year collectively. Apart from damaging Europe’s future competitiveness, at this rate we also risk depriving a generation of young people of a route into independence and self-development. More than 5.5 million under 25s in the European Union are unemployed. This translates to a youth unemployment rate of 22% – more than double the overall rate for the working population.
from The Great Debate:
It is clear that the need for innovation has never been greater. As the world economy struggles to recover from the global financial crisis, governments are casting about for strategies to revive growth. They are also struggling to come up with solutions to difficult global challenges ranging from climate change and the threat of pandemics to the demographic and health burdens (think costly chronic diseases such as diabetes and heart disease) imposed by older, fatter, and sicker populations.
Accelerating the pace of innovation would certainly help countries deal with both problems. Because most of the output of rich countries now comes from nonmanufacturing sectors, where brain trumps brawn, boosting innovation offers a promising way to increase productivity and spur future growth. And even in traditional asset- and legacy-heavy industries such as manufacturing, the next chapter shows, investing in the knowledge component of those businesses can lead to a renaissance. Breakthrough technologies and disruptive business models, such as the spread in Africa of banking and medicine via mobile telephony, can make it much easier to tackle those thorny challenges.
–Dr Richard Wellings is Director of the Transport Unit at the Institute of Economic Affairs. The opinions expressed are his own.–
The British government is finally recognising the strong link between transport infrastructure and economic growth. The Budget set out plans for a national road strategy while earlier this week the Prime Minister announced that motorways and trunk roads could be operated by the private sector.