Multiple Crisis, One Solution: Put People First

Author: 
By Roberto Bissio, Social Watch Coordinator

Time has come. In the Social Watch 2009 Report, People First, members of the network from around the world have called on their Governments to retool the stimulus packages they received to face the global crisis so they increase wages, expand social security coverage for the most vulnerable, strengthen local enterprises, and assist family farmers. This month, the Social Watch General Assembly to be held in Ghana, will be an invaluable opportunity to discuss and plan the actions for a coordinated and effective action on both the national and international levels.

The high-level United Nations Conference held this past June 2009 in New York unanimously concluded that “the world is confronted with the worst financial and economic crisis since the Great Depression”. It added that “developing countries, which did not cause the (…) crisis, are nonetheless severely affected by it”. It also noted that “this crisis is connected to multiple, interrelated global crises and challenges, such as increased food insecurity, volatile energy and commodity prices and climate change, as well as the lack of results so far in the multilateral trade negotiations and a loss of confidence in the international economic system”.

Remember the “perfect storm” movie, when three storms came together in one big catastrophic hurricane? Many people are now talking of “the perfect crisis”, due to this combination of global crises and challenges.

According to the same UN General Assembly resolution, which expresses the highest level political consensus of the world, “the global economic downturn is deeper than many early estimates, and the recovery is predicted to be gradual and varied. (…) The latest estimate of the United Nations indicates that world gross product will fall by 2.6 per cent in 2009, the first such decline since the Second World War. The crisis threatens to have calamitous human and development consequences. Millions of people all over the world are losing their jobs, their income, their savings and their homes”

The list of social impacts recognized by the UN include:

• Rapid increases in unemployment, poverty and hunger;

• Reduced ability to maintain social safety nets and provide other social services, such as health and education; and

• Increased infant and maternal mortality

The leaders of the world recognize that “the drivers of the financial and economic crisis are complex and multifaceted” and they list among them “systemic fragilities and imbalances”, the “inadequate functioning of the global economy”, “inconsistent and insufficiently coordinated macroeconomic policies and inadequate structural reforms”. To make matters worse, also quoting the UN consensus document, “these factors were made acute by major failures in financial regulation, over-reliance on market self-regulation, overall lack of transparency, financial integrity and irresponsible behavior leading to excessive risk-taking. (…) Financial regulators, policymakers and institutions failed to appreciate the full measure of risks in the financial system or address the extent of the growing economic vulnerabilities and their cross-border linkages. Insufficient emphasis on equitable human development has contributed to significant inequalities among countries and peoples”.

But the recognition of the problem and the unprecedented mobilization of trillions of dollars to rescue the big banks and bankrupt industries has not led to similarly ambitious reforms in the economic governance. And the “stimulus” packages to revitalize the economy are directed more towards trying to turn back to where we were before then to investing in the people and in the promotion of a new low carbon economy that would create green jobs and distribute wealth globally in an equitable way.

This return to “politics as usual” isn’t even efficient, according to civil society activists as well as mainstream economists. Stimulus packages that have relied on cutting taxes to the rich and subsidizing big banks and corporations have not produced the desired results. Anticipating a prolonged recession, the rich and the middle classes tend to save any additional money, instead of spending it, while banks have used stimulus money to rebuild their assets instead of lending it. But when funds are channeled to the poor it is spent immediately. Not because they have a better understanding of their role in contributing to the recovery of global economy, but just because they do not have a choice.

In the Social Watch 2009 Report, People First, members of the Social Watch network from around the world have called on their governments to retool these stimulus packages, so that they increase real wages, expand social security coverage for the poorest and most vulnerable, strengthen local enterprises, and assist family farmers.

Echoing the messages laid out in People First, this “perfect crisis” provides civil society activists with a chance to redirect the flawed neoliberal economic policies that have been at the root of the growing scourges of poverty and inequality in recent years. This window of opportunity for change is open all around the world.  The time for coordinated and effective action on both the national and international level is now, and the Social Watch General Assembly, to be held this month in Ghana, will be an invaluable opportunity to discuss and plan these actions.