Time is running out on so many things. Human race has done many things wrong in the last few centuries. On so many fronts we failed miserably: Equality among individuals and nations, access to good education, using the world resources efficiently, tolerance for differences, allowing dictators to remain in power while they exploited their own people as long as they delivered what the developed world demanded, rights of women, poverty in Africa… You can extend the list as you wish.
Now is the turn of rules of nature and simple economics. The world economy is in turmoil and global warming and sudden climate changes are taking their toll on our lives.
I was in middle school when the world population reached three billion. I am fifty in 2012 and we are at seven billion now. In 30 years we will reach nine billion. Our beloved Planet Earth will have to feed and sustain all nine billion of us soon with more carbon monoxide than ever, with less water than ever, and warmer than ever.
Developed countries have reached 40 thousand US dollar per capita income in the last decade and now it has stalled. From the US to Europe, more people are out of jobs than ever, companies, counties, cities, states and countries are going bankrupt, central banks and politicians clash everyday with many opinions to address the issues yet none has been able to restore confidence so far. It has been four hopeless years since the famous Lehman Brothers went bankrupt in 2008.
So, what happened? Did we lose our creativity that brought so many advancements in the name of civilizations? Aren’t there enough smart people around? What about people with good intentions? Where are the people with golden heart to reach out to those who are in need? Did all those individuals cease to exist? Are we destined to just vanish as human race? Or will there be a miracle U-turn for us to start behaving responsibly and change for better?
Change and constant motion….for better?
The key word is change. Try to find anything in life that is still and not in motion. From the universe to planet earth, from any matter around us to our own bodies, everything moves, changes. Nothing is constant. In July 2012 Cern scientists finally observed the famous Higgs Boson that Higgs the mathematician had predicted some 30 years ago that it should exist. It is so tiny and it only appears at a fraction of a fraction of a mili second, it took 30 billion dollars to observe it. It gives mass to matter, yet we were only able to prove it after so much effort. Even the mass of a matter is defined by a changing sub atomic particle.
Change is the essence of everything. As soon as a baby is conceived, it starts to change. After we are born, until the day we die, we change. Our height, weight, hair, nails, even our personalities change as a result of our experiences. Nothing in our brains and in our bodies is constant. Billions of cells interact with one another every second.
Why then, do we seek stability, as individuals, organizations and countries? We are the result of changes in the universe and we will cease to exist when we die. So if one longs for eternal peace, it will come eventually. (You might say we will not cease to exist but just change form, yet then it is another change hopefully for a more peaceful one!)
All the innovations, inventions and discoveries came from individuals who were not afraid to challenge what was known and believed. Asking why and why not are the only ways to improve and make things better. If you are smart and dedicated you end up not only improving, but discovering a whole new way to do something.
Let’s be fair to ourselves. Though painfully, we changed. We moved from caves to farms, to villages, and then formed cities. We’ve explored and discovered new lands and started new countries. Invented thousands of new ways to expend the knowledge and new gadgets to make our lives more efficient. Yet it took 20 thousand years to do so.
Do we have that much time now?
Still vs. motion….
The whole human history can be narrowed down to the fight between people who want to hold onto what they already have, and others who want to change things. I do believe that both climate and economics are showing us clearly that we must all change. Initiatives such as the 99% when people speak up without violence, send clear messages to the world leaders that the majority is not happy and wants a changed course. As we cannot wait for all seven billion people to reach the same level of consciousness and awareness, individuals with heart and brains should stand up and force change.
Can we change for a better election system where lobbyist will not be able to enforce any candidate appear eligible? Where candidates with execution experience and clear track record not just good-willed or well financed individuals will become more attractive? Can we leave issues like abortion and religion out of discussions, as they should be decided on a personal level?
Are these wishful thoughts?
With worse weather conditions hitting major urban areas each year and with millions of young people without jobs, isn’t it clear that we have clear and present dangers in front of us? Isn’t it obvious that we don’t have much time anymore? Isn’t it time that we unite and act against these common threats?
Democracy for 100% and a gentler capitalism?
A Simple(!) Recipe for a better World
1 – Democracy for 100% and a gentler capitalism?
Well, what are going to do? If many agree on a changed course of action, how will the masses act? Are we all going to hit the streets and yell “we want change”? Of course not. We must advocate changes to the way the world operates to make it livable and to provide hope and better education for all.
Well, the world operates around two systems: Democracy and Capitalism which brought much freedom and wealth to the nations and individuals but are under tremendous criticism now.
The human brain is ready to operate very well provided that there is enough quality inputinto it. Otherwise it cannot compare and judge the information it receives. If I am told that Amy is a nice person, unless I have previous knowledge of her, I tend to accept it. If I know something about her and I tend to agree with the opinion, I do so as I compare her with the other people I already know. This is the essence of processing information. Taking it, evaluating it and then storing it. This is where both systems failed: Ensuring that all individuals were given an equal chance of education (and of course, shelter, love and opportunity) so the decisions that we all make every day are based on sufficient set of data and input.When we were in high school, we were taught that the democracy was a governance system with the least number of known efficiencies. Later as the USSR has failed, the same was said of capitalism. Both seemed like they worked best when the individuals are all equally (or above a certain level of minimum criteria) educated and informed about possible outcomes.
With less informed and not properly educated individuals voting, eventually democracies around the world started to produce inferior leaders. Do we all believe that Mr. George W. Bush, or Mr. Berlusconi were the best that the US and Italy could produce to lead them?
Capitalism on the other hand, had its fair share of crisis, as such sufficient warnings, that it wasn’t the best possible system. Yet we ignored the clear signs, as it was easier to continue with what was known rather than embark on a new and changed course.
Today, finally all players agree that all participants must be equally informed for the perfect market economy which is governed by an invisible hand to operate as desired. Looking at financial markets for the past four years, seeing the unemployment figures in double digits in most countries, and living through negative growth rates, I believe most people are also convinced that the current capitalist system cannot continue as is. If the home of the relatively most perfect capitalist society; the US has 46 million of her citizens with food stamps, it must be telling us something! 2 – What can be done? Any good ideas?
If we all agree that we must act, and if all agree that we must and can make changes to the systems that govern our social and economic life, let’s try to come up with solid recommendations.
It starts with the most important principle that each nation needs three distinct and sound pillars to effectively govern itself: Legislation, Execution and Judiciary.
Elections and Legislation: Every individual who is over 18 and a high school graduate must be eligible to vote to elect and to be elected. If there are many people in a country where high school is still rare, then that country should have two level legislation houses; one with everybody and one with college degree only. Individuals who are running for the office must be elected by their constituents or by party delegates and not be appointed by party leaders. Democracy can only exist if it is bottom up!
We need to avoid the same people running for the office over and over again as it impairs new and talented people to run. USA has a good two term limitation for Presidency which prevents this. However, in the last two decades, this double term limitation has started to produce sub-optimized first terms. Hence for the president or Prime Minister I believe, a single term of seven or eight years could lead to a better execution. Parliament on the other hand should go back to voters every four years to explain and observe the results of their legislative decisions.
Local (municipality) elections are about local services and must not be linked to the political parties. Candidates running for the office of the mayor should not be elected there based on their opinions on world affairs but rather their expected ability to serve local communities.
Execution: Elected members of Parliaments (MPs) should not be ministersor secretaries as they are part of legislation and not execution. Execution should be left to the individuals who are accepted as experts in their areas based on their past performances, not just ideas.
Judicial: Judiciary system must totally be independent of execution as it is the core of checks and balances in democracies. Therefore the legal system must not be based on elections. That is; neither politicians nor public elections should appoint prosecutors or judges. On the other hand, jury based system may be acceptable for countries with that tradition. (However, with the way technology spreads the news I believe it will become obsolete soon as it will be impossible to find members of the jury who are totally unaware of the cases!!!)
With only these minor changes, I believe every nation might have a more efficient administrational system to address the issues at hand.
3 – Global Changes-United Nations
Of course, to address common threats like global financial crisis and global warming, we need global organizations.
Weather our national leaders like or not, we must delegate more powers to global institutions. On the top of the list comes the UN.
1. Membership: At the United Nations, no country, which isn’t a democracy or at least on a clear road map and with clear time table to become one, and doesn’t recognize the rights of women, should not be given a voting seat and must be commercially isolated as well.
2. Common Policies: The UN must be able to enforce a common set of rules to its members’ constitutions for basic human rights, education, election guidelines for a sound democracy and climate control.
Global warming cannot be addressed with only Kyoto Protocol. It is true that the US senate did not ratify this agreement. However, there are many countries having ratified this protocol, have also been increasing carbon emissions. And more importantly, most countries yet to start/increase their investments in renewable energy. A strong UN, working with multinational energy companies may impose a global tax for fossil energies while proposing a tax break for renewable energy and hold countries liable to increase their investments in renewable energies for the next 10 years.
Decision Making: UN Security Council is the product of the World War II and must be abolished. It must be governed by countries elected based on a system of its development index, countries economic power, and population. Decisions should be based on majority and no country should be able to veto it.
Enforcement: Eventually UN Security Force should replace today`s NATO.
The above are unthinkable today. Should it be implemented, it would leave countries like China and Saudi Arabia out of context. And we all know that in today’s world this is naive. However, please consider this. Should the UN be empowered as such, it will be a much greater force to negotiate. After all any negotiation is based on parties’ respective powers. Today, one of them, namely the UN is not powerful enough.
Also, I reckon that there may never be immediate switch. Life is not 1 and 0. There are gray areas, migration periods. The important thing to believe that we can force change if we have enough goodwill and power for the betterment of all mankind.
4- Importance of Educational Reform
Did you know that in 2012, the average SAT score of the US students were the same with the class of 1972? In fact the US has gone back 40 years in education!
The most important asset of any country is her citizens’ level of education, their capacity to learn, question, search and thrive for better. Only an educated brain can make wise choices, and chose the best leaders to govern them. Therefore for both democracies to advance their societies, and capitalism to increase per capita income, we need the best possible human assets.
As companies or sport teams, we can hire and fire people, yet in countries, the only choice is to educate and train people.
Unfortunately, in spite of more schools and available technology, if you look at the average science test results of many western societies, including some developing nations, they have been going down for years while the average IQ of humans goes up by 3 points every decade. We need to address this widening gap between better brains and less quality knowledge to process in them!
Again here we need to authorize global institutions like the World Bank and the UN to help provide better education for all of us.
Every country should have “some” common curriculum for science and human rights.
There must be quantitative benchmarks to measure and adjust elementary, middle, and high school education and its graduates in all countries annually. Countries should take this seriously and take either pride or solace of the results.
All local leaders must be held accountable to increase those scores.
As the representation at the UN will depend on the development index, eventually the impor-tance of education and these scores will be appreciated and followed by all the nations.
5 – One Planet, One market?
If a company is registered at NYSE, and operate globally, should it be only responsible to US law makers? Take GE for instance, or BP, or Toyota. Are they national companies?
Why do we insist on having national regulation to go after multinationals? Today more than ever multinational companies offer products and services to the world consumers. Major companies have bigger sales figures than many countries’ GNPs. Through better logistics, trade pacts, labor mobility and technology, our world has become one single market place, yet, the national governments or rather local politicians, wary of their power loss, hang on to their ineffective set of rules.
Let’s not waste more time please. If it is a global market place, then it must be organized as such.
First; major stock markets around the world should align their rules. Capital market boards should align their regulations. Perhaps it is best to allow WTO or ICC to coordinate the differences. Those companies which do not comply should not be allowed to raise money from the public. Most public companies have multinational ownership anyhow, therefore those companies must be subject to international rules.
Second; there must be one single accounting standard globally accepted. USGAAP vs. IFRS, they just blur the picture and avoid transparency. Tax regimes must be aligned so companies and individuals must not be tempted to go to tax havens.
Thirdly; financial world must be regulated by a single Global Banking Supervisory Body consisting of major central banks and IMF should be a non-voting Board member. As a champion for action, I would recommend removing all the academicians from such posts and appointing for instance Jamie Dimon of JP Morgan or Joseph Ackerman of Deutche Bank to the head of this newly formed Supervisory World Banking body. Only insiders know all the tricks! Academicians should stay as advisors.
Fourth; investment and commercial/ retail banking must be separated and/or ring-fenced. What you do with others people’s money (deposits) cannot be treated the same way if some wealthy individuals want to come together and invest their own money. Here the key decision is whether to allow investment banks to raise money from the public. Based on my earlier discussion about equally informed individuals, I am against it. If you want to bet, bet with your own money!
Therefore financial engineering should be among those who can produce such unnecessarily sophisticated market by-products and should not be sold to masses like plain vanilla OTC goods.
Fifth; rather than academically discussing for years about Basel Ⅰ, Ⅱ and Ⅲ, with even longer years of adoption periods, let’s try to come up with fast and quick solutions. Basel rules have proven too complex and failed to prevent banking crisis. More than ever, the simple ratio of leverage provides a very clear picture compared to risk weighted asset calculations for capital.
And finally, world central banks with the coordination of the Global Banking Authority should move to abolish cash with a clear time table in 10 to 15 years. Cash is expensive, dirty, allows black economy and tax evasion. We have all the tools now to altogether get rid of it. Prepaid cards, virtual cards, debit cards, contactless and NFC technologies and smart cards all available to achieve this. Once for all, we can make a quantum leap in personal and national spending discipline.
If implemented, these changes will provide immediate relief to the world economy. Because if the banking is not sound then all others industries and consumers feel the strain as we have been living through…
Can we really make these changes?
A case Study: European Union…More Europe or No Europe!
Who won most Olympic medals in London 2012? Who is the 2012 Nobel Peace Prize winner? Where is world’s most popular tourist destination? Who is the world’s largest economy? All answers are Europe. With a combined population of over 500 million inhabitants, the EU, in 2011, generated the largest nominal world gross domestic product of 17.6 trillion US dollars, representing almost 20% of the global GDP when measured in terms of purchasing power parity.
As I advocate worldwide changes, EU is being forced to change radically. Formed in 1951 to constraint wars and let’s be honest the mighty Germany, it has succeeded to prevent wars yet economically did not deliver a more balanced Europe. It was established with the name European Coal and Steel Community, was quickly renamed in 1958 as European Economic Community which became European Union with the Maastricht Treaty in 1993.
Yet more and more EU gets less attention and individual member states get more coverage. Now everybody is questioning whether the EU as a project is falling apart.The EU had developed a single market through a standardized system of laws which apply in all member states. Within the Schengen Area passport controls have been abolished. EU policies aimed to ensure the free movement of people, goods, services, and capital, enacted legislation in justice and home affairs, and developed common policies on areas as trade and agriculture. A monetary union, the Eurozone, was established in 1999. Through the Common Foreign and Security Policy the EU has tried to develop a role in external relations and defense. It is also is represented at the United Nations, the WTO, the G8 and the G-20.
In the end, EU is going to decide. More Europe or less. More Europe will mean more aligned Europe in fiscal and social policies. A real common foreign policy and a leader to speak on behalf, and faster decision making. Less aligned Europe, on the other hand may take us to chaos.What went wrong in spite of all this movement and goodwill? Simple: local politicians stopped short of turning some of the powers to the EU. Namely on economy and foreign affairs. As there is no half pregnancy, there might not be half union in today’s world. And unfortunately the EU also created a bureaucratic behemoth even slower and less efficient than its members.
Home of great civilizations and wars, birth place of printing machine, renaissance and religious reform, if Europe can find a better system to govern itself without a war, just as a result of financial crisis, it will not only save itself, but will be able to show the world a new role model that we can take and try to implement on a global scale to achieve the objectives that I believe we should to prevent economic and climate catastrophe.
Again, almost all wise man know what to do. It’s a matter of people putting pressure on their politicians to make the right decisions.
Big Brother watching us? Back to 1984?
Some of might ask, well even if we implement all these, what about real choice, real freedom? Aren’t you actually proposing an elitist dictatorship? If we delegate more powers to the global organizations, how are we going to maintain our freedom and flexibility? And at the end, who is going to ensure that the UN will not become a big power in its own, transforming itself to a big force that George Orwell visualized in its famous novel 1984?
First of all, I am not proposing to create organizations to oversee everything. What I am proposing is to set global standards for the benefit of world’s consumers.
Secondly, there are two types of rule setting. The first is continental European style; developing rules with the intentions of covering all the angles so there are no interpretations. The second approach is developing principles with the intention of further unfolding frameworks by the local practices. I am certainly with the latter. On a global scale, the more one tries to cover everything the more complicated it gets. And worst of all, you need to develop additional departments and hire additional personnel to look after them as they are so detailed. This is exactly the case with EU and Brussels and it is one of the reasons why EU failed to deliver more value for European citizens.
And thirdly, I believe in local values, local setups. I am a true believer of creating manageable units within big organizations as a successful set up for running innovative organizations. Big companies create company wide rule and regulations in all areas, and in detail, leading to kill creativity which at the end drain talent. No wonder we have start ups leading innovations and not big companies. (Apple may seem to be an exception yet don’t forget, even after Steve Jobs, a handful of people only in Cupertino California are in charge to design products, unlike many other multinationals.)
Similarly, should we become successful creating a true global economy, the need for nation states will actually disappear. Most likely we will go back to city states. And… city states are more local, more in touch with individuals and easier to manage as they will be easier to measure due to their more manageable/compact sizes.
Therefore, all the global institutions I mentioned will be in charge to develop standards to make global companies and economies more transparent and easy to understand/analyze. They will draw guidelines for multinationals and countries to report their financials so consumers will have access to information they can analyze without hidden gimmicks.
Similarly for other issues namely, democracy and education, we need global minimum standards to ensure that ALL countries pay attention to those values. Each country must be free to develop more in its own style and tradition on those minimum standards.
This approach therefore will not create 1984 type of a big brother. Following the simple principles of the democracy on a global scale as I covered earlier, namely Legislation, Execution and Judiciary will also ensure that it won’t happen.
A cry for change!
What a manifesto for those individuals who are afraid of change. Yet dear reader, neither the universe, nor your body is the same since you started reading this article; you have changed already!
I am afraid in the near future either we will have more and more uprisings in every nation as a result of massive unemployment to force such changes, or the climate changes as a result of global warming will hit more and more cities. My guess is that both will take place concurrently. Therefore I don’t believe that we will be able to delay such discussions for long.
What we need is more creativity, not less. More individual freedom, not less. Better education for all, not for a certain country for a certain group of people. Justice for all, not for some. Choice for all and well-informed people not for privileged some.
I guess that the time has come to realize that we are all human, living on the same planet, before we are Chinese, American, Indian or German. And the wealthiest person will not have a safe and prosperous life unless the poorest kid somewhere in Africa, India, Middle East or China has a clear chance for education, shelter, love and a bright prospect to become as rich as that wealthiest person.
Time is running out fast, very fast. Only in the next few years human history will need to be re-written.
Let’s make our views and demands known to the leaders of our nations so that they will be forced to take a longer view and do the right things for their fellow citizens. Let us all put an effort to make our world a better place to live in.
Let’s change for better while there is still time.
We owe it to our children!
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