Possible long-term solutions - from a Baha’i perspective

1. Possible long-term solutions- from a Baha’i perspective

2. Problem: May create a “bubble” economy and/or too high public debt that ends in long-term recession, and even depression!! Temporary solutions:Monetary policy and/or increased public spending

3. Long-term solution:Global income distribution How? • Progressive taxation within nations, and international income distribution • Huququ’llah, zakat & voluntary contributions • Global ownership of natural resources Why a solution? • Better utilisation of human potential across the globe • Higher demand for products & services • Higher level of innovation and technological development globally

4. Highly uneven global income distribution

5. Long-term solution:Free flow of capital, labour & goods How? • Remove all trade & capital barriers • Remove all barriers for people to move across borders • e.g., through standardisation of education, common international language, one currency, no/limited visa and work-permit requirements Why a solution? • Flow of technology & capital across borders enhances individual, national and global prosperity • Products & services produced more effectively – at the optimal place & for a global market, thus obtaining economies of scale • Leads to better income distribution across nations, and thus higher global prosperity

6. Some benefitsfrom globalisation • Cost effectiveness resulting from the coordination of formerly competing operations tends to bring goods and services within the reach of populations who could not previously have hoped to enjoy them. • Enormous increases in the funds available for research and development expand the variety and quality of such benefits... • The abandonment of barriers to transnational trade reduces still further the cost of goods to consumers. See p. 132

7. Long-term solution:Reduction in military expenses How? • Create international agreement about borders & conflict resolution, international court to solve disputes & international military forces Why a solution? • Resources dedicated to unproductive military expenses are released • Released funds may be used to provide education, technology, health services, micro and macro credits, etc. in developing countries, but also in the industrial world

8. 2008 global military spending: $ 1.47 trillion

9. Military spending versus foreign aid

10. Long-term solution:Profit sharing Why a solution? • “Automatic” adjustment of labour price, thus reducing rise in unemployment due to “friction” in salary adjustments – which in turn may trigger recession and ultimately depression • Less labour-owner conflicts & increased motivation – higher productivity & profit • This effect will be reinforced by introducing a “just” method of salary adjustment • rather than injustice created through negotiations between labour unions and owners/employers.

11. Example of profit-sharing: Hallmark • Annual contributions to Hallmark's employee profit sharing plan have averaged 9% of eligible employee earnings since the plan started in 1956. • ... Hallmark's financial performance outpaced that of the stock market at large.

12. Abdu’l-Baha encouraging profit- sharing • ...laws and regulations should be established which would permit the workmen to receive from the factory owner their wages and a share in the fourth or the fifth part of the profits, according to the wants of the factory; or in some other way the body of workmen and the manufacturers should share equitably the profits and advantages. • ... the capitalists being moderate in the acquisition of their profits,.. (Abdu'l-Baha, Baha'i World Faith - Abdu'l-Baha Section, p. 281)

13. Discouraging strikes & revolt by workers • In the same way, the workmen should no longer make excessive claims and revolt, nor demand beyond their rights; they should no longer go out on strike; they should be obedient and submissive and not ask for exorbitant wages. • But the mutual and reasonable rights of both associated parties will be legally fixed and established according to custom by just and impartial laws. (Abdu'l-Baha, Some Answered Questions, p. 275)

14. Long-term solution:Gender equality Why a solution? • Previously under-utilised (female) resources & talents will enhance production & innovation • Feminine qualities of love & service will promote more productive working environments (less aggression, more co-operation)

15. 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 has dominated over woman by reason of his more forceful and aggressive qualities both of body and mind. But the balance is already shifting; force is losing its dominance, and mental alertness, intuition, and the spiritual qualities of love and service, in which woman is strong are gaining ascendancy. - Abdu’l-Baha – Equality between women and men is one of the fundamental values of the European Union. - European Commission –

16. 1986: Women in majority in government for the first time • Prime Minister of Norway, Gro H. Brundtland, with her government in 1986 • 10 av 19 ministers were women

17. Share of women in governing bodies of European listed companies But even in Norway only 5 of over 220 listed companies have a woman as CEO Source: European Commission, top 50 listed companies per country in 2006

18. Long-term solution:Organisational structures & incentives promoting long-term results How? • Longer period of service in governing bodies? • Incentive systems that rewards long-term results Why a solution? • Politicians focus today on short-term results, until the next election • Management & workers are not motivated to think in long-term, e.g., maximising company results 20 – 50 years into the future • Such behaviour may in aggregate cause economic recession and depression

19. Prejudice Greed Disunity Conflict Corruption Dis- honesty Greed is good? Ultimate solution: New values & culture • Long-term and sustainable growth and wellbeing are not possible, unless individuals, businesses and society as a whole are governed by the right values. Truth -fulness Justice Mode- ration Love Honesty Service Unity Humility Trust- worthiness

20. Example of true values & ethical 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 Næringsliv on 17 April 2009 Source: http://www.bahai.no/1355.0.html

21. True motivation And the honor and distinction of the individual consist in this, that he among all the world's multitudes should become a source of social good. Is any larger bounty  conceivable than this, that an individual, looking within himself, should find that by the confirming grace of God he has become the cause of peace and well-being, of happiness and advantage to his fellow men? No, by the one true God, there is no greater bliss, no more complete delight. (Abdu'l-Baha, The Secret of Divine Civilization, p. 2)

22. What is the Baha’i response to the economic crisis • Promoting 1500 intensive programs of growth • Promoting the institute process, children’s & junior-youth classes, devotional meetings, teaching... • Strengthen individual and community moral values & behaviour • Social & economic projects

23. Back-up slides

24. Causes of financial crisis according to Group of 20 • In its "Declaration of the Summit on Financial Markets and the World Economy," dated 15 November 2008, leaders of the Group of 20 cited the following causes: • During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. • At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. • Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.

25. What triggered the financial crisis 2007 – 2009? • America's housing collapse • Vulnerable financial system due to: • intricate and highly-leveraged financial contracts and operations • a monetary policy making the cost of credit negligible therefore encouraging such high levels of leverage • financial industry gaining too high share of the Gross Domestic Product (GDP)

26. Norway is in a unique position in Europe, together with Luxembourg