Possible long-term Possible long-term solutionssolutions

- from a Baha’i - from a Baha’i perspectiveperspective

Temporary solutions:Temporary solutions:Monetary policy and/or Monetary policy and/or increased public spendingincreased public spending

Problem:May create a “bubble” economy and/or too high public debt that ends in long-term recession, and even depression!!

Long-term solution:Long-term solution:Global income Global income distributiondistribution

How?How? Progressive taxation within nations, and Progressive taxation within nations, and

international income distributioninternational income distribution Huququ’llah, zakat & voluntary contributionsHuququ’llah, zakat & voluntary contributions Global ownership of natural resourcesGlobal ownership of natural resourcesWhy a solution?Why a solution? Better utilisation of human potential across the globe Better utilisation of human potential across the globe Higher demand for products & services Higher demand for products & services Higher level of innovation and technological development globallyHigher level of innovation and technological development globally

Highly uneven global income Highly uneven global income distributiondistribution

Long-term solution:Long-term solution:Free flow of capital, Free flow of capital, labour & goodslabour & goods

How?How? Remove all trade & capital barriersRemove all trade & capital barriers Remove all barriers for people to move across borders Remove all barriers for people to move across borders

e.g., through standardisation of education, common international e.g., through standardisation of education, common international language, one currency, no/limited visa and work-permit requirements language, one currency, no/limited visa and work-permit requirements

Why a solution?Why a solution? Flow of technology & capital across borders enhances Flow of technology & capital across borders enhances individual, national and global prosperityindividual, national and global prosperity Products & services produced more effectively – at the Products & services produced more effectively – at the optimal place & for a global market, thus obtaining economies optimal place & for a global market, thus obtaining economies of scaleof scale Leads to better income distribution across nations, and thus Leads to better income distribution across nations, and thus higher global prosperityhigher global prosperity

Some benefitsSome benefitsfrom globalisationfrom globalisation

Cost effectiveness resulting from the coordination of Cost effectiveness resulting from the coordination of formerly competing operations tends to bring goods and formerly competing operations tends to bring goods and services within the reach of populations who could not services within the reach of populations who could not previously have hoped to enjoy them. previously have hoped to enjoy them.

Enormous increases in the funds available for research Enormous increases in the funds available for research and development expand the variety and quality of and development expand the variety and quality of such benefits... such benefits...

The abandonment of barriers to transnational trade The abandonment of barriers to transnational trade reduces still further the cost of goods to consumers. reduces still further the cost of goods to consumers.

See p. 132See p. 132

How?How? Create international agreement about borders Create international agreement about borders

& conflict resolution, international court to solve & conflict resolution, international court to solve disputes & international military forces disputes & international military forces

Long-term solution:Long-term solution:Reduction in military expensesReduction in military expenses

Why a solution?Why a solution? Resources dedicated to unproductive military Resources dedicated to unproductive military

expenses are releasedexpenses are released Released funds may be used to provide Released funds may be used to provide

education, technology, health services, micro education, technology, health services, micro and macro credits, etc. in developing countries, and macro credits, etc. in developing countries, but also in the industrial worldbut also in the industrial world

2008 global military spending: 2008 global military spending: $ 1.47 trillion$ 1.47 trillion

Military spending versus Military spending versus foreign aidforeign aid

UNDP: • 20 billion dollars needed per year to provide all

people with adequate nutrition, clean water and primary education

• 3 % of the rich world’s military expenses 3 % of the rich world’s military expenses suffice to giver more than what is neededsuffice to giver more than what is needed

• Education of one soldier in the rich world = schooling for 10 000 children in a developing country

• A nuclear submarine = primary education for 160 million children (UNESCO)

• If the developing countries freeze growth in military expenses, they will be able to free 10 billion dollars per year

• The sum equals two days of military expenses in developed countries – or one week of military expenses in developing countries (UNESCO)

Long-term solution:Long-term solution:Profit sharingProfit sharing

Why a solution?Why a solution? ““Automatic” adjustment of labour price, thus Automatic” adjustment of labour price, thus

reducing rise in unemployment due to “friction” reducing rise in unemployment due to “friction” in salary adjustments – which in turn may in salary adjustments – which in turn may trigger recession and ultimately depressiontrigger recession and ultimately depression

Less labour-owner conflicts & increased Less labour-owner conflicts & increased motivation – higher productivity & profitmotivation – higher productivity & profit

This effect will be reinforced by introducing a This effect will be reinforced by introducing a “just” method of salary adjustment“just” method of salary adjustment rather than injustice created through negotiations rather than injustice created through negotiations

between labour unions and owners/employers. between labour unions and owners/employers.

Example of profit-Example of profit-sharing: Hallmarksharing: Hallmark

Annual contributions to Hallmark's Annual contributions to Hallmark's employee profit sharing plan have employee profit sharing plan have averaged 9% of eligible employee averaged 9% of eligible employee earnings since the plan started in 1956.earnings since the plan started in 1956.

... Hallmark's financial performance ... Hallmark's financial performance outpaced that of the stock market at outpaced that of the stock market at large. large.

Abdu’l-Baha Abdu’l-Baha encouraging profit- encouraging profit- sharingsharing ...laws and regulations should be established which ...laws and regulations should be established which

would permit the workmen to receive from the factory would permit the workmen to receive from the factory owner their wages and owner their wages and a share in the fourth or the fifth a share in the fourth or the fifth part of the profitspart of the profits, according to the wants of the factory; , according to the wants of the factory; or in some other way the body of workmen and the or in some other way the body of workmen and the manufacturers should share equitably the profits and manufacturers should share equitably the profits and advantages.advantages.

... the ... the capitalists being moderatecapitalists being moderate in the acquisition of in the acquisition of their profits,..their profits,..

(Abdu'l-Baha, Baha'i World Faith - Abdu'l-Baha Section, p. 281)(Abdu'l-Baha, Baha'i World Faith - Abdu'l-Baha Section, p. 281)

Discouraging Discouraging strikes & revolt by strikes & revolt by workersworkers

In the same way, the In the same way, the workmenworkmen should no longer make should no longer make excessive claims and revolt, nor demand beyond their excessive claims and revolt, nor demand beyond their rights; they rights; they should no longer go out on strikeshould no longer go out on strike; they ; they should be obedient and submissive and not ask for should be obedient and submissive and not ask for exorbitant wages.exorbitant wages.

But the mutual and reasonable rights of both But the mutual and reasonable rights of both

associated parties will be legally fixed and established associated parties will be legally fixed and established according to custom by just and impartial laws. according to custom by just and impartial laws.

(Abdu'l-Baha, Some Answered Questions, p. 275)(Abdu'l-Baha, Some Answered Questions, p. 275)

Long-term solution:Long-term solution:Gender equality Gender equality

Why a solution?Why a solution? Previously under-utilised (female) Previously under-utilised (female)

resources & talents will enhance resources & talents will enhance production & innovationproduction & innovation

Feminine qualities of love & service will Feminine qualities of love & service will promote more productive working promote more productive working environments (less aggression, more co-environments (less aggression, more co-operation) operation)

An age in which the masculine and feminine elements of civilization will be more evenly balanced

The world in the past has been ruled by force, and man The world in the past has been ruled by force, and man has dominated over woman by reason of his more has dominated over woman by reason of his more forceful and aggressive qualities both of body and forceful and aggressive qualities both of body and mind. But the balance is already shifting; force is losing mind. But the balance is already shifting; force is losing its dominance, and mental alertness, intuition, and the its dominance, and mental alertness, intuition, and the spiritual qualities of love and service, in which woman spiritual qualities of love and service, in which woman is strong are gaining ascendancy.is strong are gaining ascendancy.

- Abdu’l-Baha –- Abdu’l-Baha –

Equality between women and men is one of the Equality between women and men is one of the fundamental values of the European Union.fundamental values of the European Union.

- European Commission –- European Commission –

1986: Women in majority in 1986: Women in majority in government for the first timegovernment for the first time

                                                                                                                                                                                                   • Prime Minister of Norway, Gro H. Brundtland, with her government in 1986• 10 av 19 ministers were women

Share of women in governing bodies of European listed companies

Source: European Commission, top 50 listed companies per country in 2006

50%

32%

24%

21%

21%

19%

12%

11%

8%

7%

6%

4%

3%

1%

1%

11%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Long-term target

Norway

Sweden

Bulgaria

Latvia

Finland

United Kingdom

Germany

France

Netherlands

Belgium

Spain

Italy

Luxembourg

Portugal

EU average

But even in Norway only 5 of over 220

listed companies have a woman as CEO

Long-term solution:Long-term solution:Organisational structures & Organisational structures & incentives promoting long-term incentives promoting long-term results results

How?How? Longer period of service in governing bodies?Longer period of service in governing bodies? Incentive systems that rewards long-term resultsIncentive systems that rewards long-term results

Why a solution?Why a solution? Politicians focus today on short-term results, until the Politicians focus today on short-term results, until the

next electionnext election Management & workers are not motivated to think in Management & workers are not motivated to think in

long-term, e.g., maximising company results 20 – 50 long-term, e.g., maximising company results 20 – 50 years into the future years into the future

Such behaviour may in aggregate cause economic Such behaviour may in aggregate cause economic recession and depressionrecession and depression

JusticeMode-ration Love

Service Trust-worthiness

Truth-fulness

HonestyUnityHumility

Ultimate solution: Ultimate solution: New values & New values & cultureculture

Long-term and sustainable growth and Long-term and sustainable growth and wellbeing are not possible, unless individuals, wellbeing are not possible, unless individuals, businesses and society as a whole are businesses and society as a whole are governed by the right values.governed by the right values.

Conflict Corruption

GreedDis-

honesty

DisunityPrejudice

Greed is good?

Example of true values & Example of true values & ethical bevourethical bevour

Baha’i real estate agent in the USA who was praised by media, even in Norway, for ethical behavour, avoiding the common practice of offering loans to customers who might not be able to pay back their debts.

Published in Dagens Næringslivon 17 April 2009

Source: http://www.bahai.no/1355.0.html

True motivationTrue motivation

And the honor and distinction of the individual consist in And the honor and distinction of the individual consist in this, that he among all the world's multitudes should this, that he among all the world's multitudes should

become a source of social good. become a source of social good. Is any larger bounty  conceivable than this, that an Is any larger bounty  conceivable than this, that an

individual, looking within himself, should find that by the individual, looking within himself, should find that by the confirming grace of God he has become the cause of confirming grace of God he has become the cause of peace and well-being, of happiness and advantage to peace and well-being, of happiness and advantage to

his fellow men? his fellow men? No, by the one true God, there is no greater bliss, no No, by the one true God, there is no greater bliss, no

more complete delight.more complete delight.

(Abdu'l-Baha, The Secret of Divine Civilization, p. 2)(Abdu'l-Baha, The Secret of Divine Civilization, p. 2)

Promoting 1500 intensive programs of Promoting 1500 intensive programs of growthgrowth

Promoting the institute process, Promoting the institute process, children’s & junior-youth classes, children’s & junior-youth classes, devotional meetings, teaching...devotional meetings, teaching...

Strengthen individual and community Strengthen individual and community moral values & behaviourmoral values & behaviour

Social & economic projectsSocial & economic projects

What is the Baha’i response What is the Baha’i response to the economic crisisto the economic crisis

Back-up slidesBack-up slides

Causes of financial crisis Causes of financial crisis according to Group of 20according to Group of 20

In its "Declaration of the Summit on Financial Markets and the In its "Declaration of the Summit on Financial Markets and the World Economy," dated 15 November 2008, leaders of the Group World Economy," dated 15 November 2008, leaders of the Group of 20 cited the following causes:of 20 cited the following causes:

During a period of strong global growth, growing capital flows, and During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. failed to exercise proper due diligence.

At the same time, weak underwriting standards, unsound risk At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined financial products, and consequent excessive leverage combined to create vulnerabilities in the system. to create vulnerabilities in the system.

Policy-makers, regulators and supervisors, in some advanced Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of innovation, or take into account the systemic ramifications of domestic regulatory actions.domestic regulatory actions.

What triggered the financial What triggered the financial crisis 2007 – 2009?crisis 2007 – 2009?

America's housing collapseAmerica's housing collapse Vulnerable financial system due to:Vulnerable financial system due to:

intricate and highly-leveraged financial intricate and highly-leveraged financial contracts and operationscontracts and operations

a monetary policy making the cost of credit a monetary policy making the cost of credit negligible therefore encouraging such high negligible therefore encouraging such high levels of leveragelevels of leverage

financial industry gaining too high share of financial industry gaining too high share of the Gross Domestic Product (GDP)the Gross Domestic Product (GDP)

Norway is in a unique position in Europe,

together with Luxembourg