"Current Affairs Editorial – How to Turn The Economic Ship Around"

                    How to Turn The Economic Ship Around

G.S. Paper II: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment; Inclusive growth and issues arising from it

Context:
Who is Muhammad Yunus?
• In 1976, Muhammad Yunus launched Grameen Bank in Bangladesh, which made capital available to the poor, especially women.
• He observes, through his new book A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Net Carbon Emissions, that:
Some Profound Observations:
The Potential of Micro Credit:
• The impact of microcredit is enabling millions of people to lift themselves out of poverty.
The Short Comings of the Traditional Banking System:
• The above development has helped to expose the shortcomings of a traditional banking system.
No Country for the poor across the world:
• Yunus found, through his travels, that low-income people in the world’s richest nations were suffering from the same problems the poor faced in poorer nations.
The basic problems faced by the poor the world over:
• The problems are the lack of institutional services, health care, inadequate education, substandard housing, and so forth.
What is the cause behind our glaring Poverty?
• Yunus, who won the Nobel Peace Prize in 2006, argues through his new book that the problems of poverty are failures of our economic system.
• According to Muhammad Yunus, we’ve tolerated the persistence of poverty, unemployment, and environmental destruction for too long.
• We treated them as if these are natural calamities completely out of human control, or, at best, unavoidable costs of economic growth.
The failure of our Economic System:
• Muhammad Yunus claims that far from being natural, these problems are the failures of our economic system.
• Since the economic system was created by human beings, these failures can be corrected if human beings choose to replace that economic system with a new system.
The Central Problem With Capitalism:
• The central problem with capitalism as it is now practiced is that the system recognizes only one goal — the selfish pursuit of individual profit.
• Only businesses designed around this goal are recognized and supported.
• All three problems, namely the elimination of poverty, unemployment, and environmental degradation, cannot be dramatically reduced if we simply begin designing businesses with the goal of poverty in mind.
Crises in the last decade and its devastations:
• In the last decade, several major crises have combined forces to bring even greater misery and frustration to the world’s bottom 4 billion people.
A Hopeful beginning to the 21st century:
• The 21st century began with high hopes and idealistic dreams, encapsulated in the UN initiative known as the Millennium Development Goals (MDGs).
• The establishment of the MDGs led to significant progress on several fronts in the battle against poverty.
The Effect of the Financial Crisis in 2008:
• Sadly, however, 2008 will go down in history as the year of a rude awakening about the gross weaknesses in our capitalist system.
The Three Pronged Crises:
• It was the year of the food price crisis, the oil price crisis, the financial crisis, and the ever-worsening environmental crisis.
• The combined effect of these crises caused a profound loss of faith among people who thought they had full understanding of and control over the global system.
Food Induced Riots due to its shortage:
• Early in 2008, the United Nations World Food Programme (WFP) reported that more than 73 million people in 78 countries were facing the reality of reduced food rations.
• Skyrocketing prices for staple foodstuffs like grains and vegetables especially wheat, food shortages in many countries, rising rates of death from malnutrition, and even food riots threatened the stability of countries around the globe.
• Since the June 2008 peak in global food prices, prices have continued to fluctuate, reaching another record high in 2011.
Climbing Food Prices and Pressure on the Poor:
• As of 2016, they had fallen slightly, bringing a bit of short-term relief to millions. But continuing high food prices have created tremendous pressure in the lives of poor people.
• For the poorest of the poor in the world, the basic food can consume as much as two-thirds of their income.
Solution: Create A Humane System:
• This new system should accurately reflect human nature, human needs, and human desires.
The Role of Social Business:
• This is where social business plays a crucial role.
• Social business offers advantages that are available neither to profit maximising companies nor to traditional charities.
No Profit Pressures and Nagging Investors:
• The freedom from profit pressures and from the demands of profit-seeking investors helps make social businesses viable.
Rate of Social Return is always high:
• Even in circumstances where current capitalist markets fail — where the rate of return on an investment is near zero, but the social return is very high.
The Self Sustaining Economics of Social Business:
• Social business is designed to generate revenues and thereby become self- sustaining.
• It is free from the need to constantly attract new streams of donor funding to stay afloat, which drains the time and energy of so many people in the non-profit arena.
• Thus, the economics of social business can be simple and sustainable.
Successful Models of Social Business across the World:
• This is illustrated by successful experiments that have already been launched in both the developing world and the wealthy nations.
No one can stop an Idea whose time has come:
• We live in a particularly suitable time for some great experiments in Social Business.
• New forms of business, since electronic technologies for information and communication can play a huge role in amplifying the power of individual entrepreneurs today.
Attracting a wider market by harnessing Social Networks:
• A social business owner who devises a product or service that helps the poor or benefits society in some other way may be able to attract a wide market by using social networking and other online tools to spread the word.
• Thanks to the Internet, good ideas can spread more rapidly.
• Proven business models can grow to scale more quickly and easily than ever.
A Marriage of Social Business and Technology:
• Health care, education, marketing, financial services, and many other economic arenas can be revolutionized through the combined power of social business and technology.
• These new economic concepts have been spreading around the globe through the efforts of entrepreneurs, executives, academics, students, and political leaders.
A New Economic System with Social Business as its cornerstone:
• Now it’s time to apply the potential of social business to solving the problems of inequality, unemployment and environmental decay — all symptoms of the broken engine of capitalism.
• We owe it to future generations to begin moving towards a world of three zeros: zero poverty, zero unemployment, and zero net carbon emissions.
• A new economic system in which social business plays an essential role can enable us to achieve this goal.
Expanding the Prosperity of Humankind for upliftment:
• Humankind as a whole is living in a time of unparalleled prosperity.
• This is fuelled in part by revolutions in knowledge.
• This prosperity has changed the lives of many but billions of people still suffer from poverty, hunger and disease.
The Way Forward: A Comprehensive Redesigning of the International Framework:
• Some serious thought needs to go into how the evolution of the world economy and, in particular, of the system whereby food is produced and distributed has led us to today’s dilemma.
Actions has consequences:
• The economic, political, and business practices prevailing in the developed world have a profound impact on the availability of food in the poor nations of the world.
It’s Time For A Thorough Redesign:
• Thus, solving the global food problem will require a redesign of the international framework, not merely a series of local or even regional reforms.
Source: “THE HINDU Editorial – September 25, 2017