Responding to the Global Economic Crisis

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Responding to the Global Economic Crisis Powered By Docstoc
					2000
       ► The dot.com bubble bursts
       ► NASDAQ and Wall Street plummet



       ►The global economy shivers

       ►Then recovers

       ►And financial speculation    explodes globally
                       TRADITIONAL CAPITALISM
Stocks in companies      Corporate bonds                Government bonds 
traded on regulated      • companies raise capital      • finance for infrastructure
stock markets                                             (roads, schools) 


                             Banking system
                             Circulates credit
                                                         Private/Commercial 
Shareholders     Employees            • Pension Funds
                                                         property

Personal and corporate taxation on
 •revenues                                           Public sector
 • assets                                            • Recurrent spending
 • capital gains                                     • Debt service on  capital/
 • consumption (VAT)                                   infrastructure investments
                         CASINO 
PRIVATE EQUITY           CAPITALISM
                       STRUCTURED FINANCIAL                 HEDGE FUNDS
Unlisted on stock             PRODUCTS                      Escape banking
markets                  Off bank balance sheets            Regulations


       HUGE BONUSES !
                            OFFSHORE           MINIMIZE TAXES !
                             HAVENS
           Corporate bonds replace
           Governments bonds          PROPERTY   SUB­PRIME MORTGAGES
                                            Buy a house (110% mortgage)
PPPs                 MORE BONUSES           Raise your mortgage to finance:
                                             house extensions; car; holiday; college fees
       Often funded by private equity
                                                        MORE COMMISSIONS
   for which a major source of finance


            PENSION FUNDS
                               GLOBAL IMBALANCES
                                                                    Japan No 2 economy
The United States No 1 economy                               Coming out of « the lost decade »
 From balanced budget (Clinton)
 To record public deficits (Bush: taxcuts and Iraq war)           Other OECD countries
    Big trade deficit                                             Eg Australia: Commodities

EU/Euro zone No 3 economy                                 Emerging economies
   Growth slowing                                         China    big trade surpluses
   Higher unemployment
                                                           India, Brazil, Chile, South Africa
                                                                outsourcing
Developing countries
                                                          SWFs
Africa, Asia/Pacific, Central/South                          Oil/gas producers
America, Caribbean                                            Russia, Gulf States, Nigeria, 
                                                              Venezuela, Norway


           = Financial flows
                                               Exchange rates
                                               USD, Euro, Yuan
                       IMBALANCES
           Global imbalances

           + fundamental underlying imbalances between
                   the financial sector and the real economy
                   between bargaining power and incomes of 
                   employers and employees


           So we had debt driven consumption




Source: Ron Blackwell, AFL‐CIO
                                   DECEMBER 2007
AUGUST 2007
                                Central banks start to ease
   Sub‐prime mortgages          credit and money supply

Structured financial products
                                     AUGUST 2008
Where are the toxic products?    US Fed bails out Fannie Mae
                                 and Freddie Mac
 Inter bank lending freezes        15 SEPTEMBER 2008
                                Lehman Brothers collapses 

                                   16 SEPTEMBER 2008
    THE PARTY STOPS !
                                US injects $85bn into American 
                                International Group (AIG)
BAILOUTS
     AIG
     Banks
     Auto companies
STIMULUS PACKAGES
   Monetary Stimulus
        Reducing cost of credit (interest rates)
        Increasing money supply (UK, US, Japan)
    Fiscal Stimulus
        Increase spending
         Cut taxes
IMF ESTIMATED IN JANUARY THAT 2% OF GLOBAL GDP IS 
NEEDED FOR RECOVERY
NATIONAL STIMULUS PLANS SHOULD BE 
COORDINATED TO HAVE BEST IMPACT
PUBLIC SECTOR SPENDING, INCLUDING EDUCATION,    
WILL HAVE TWICE THE IMPACT OF TAX CUTS
Drop in aid from donor countries hit by financial 
           crises in 90s (Scandinavia)




  Source: Roodman (2008), History Says Financial Crisis Will Suppress Aid
Drop in aid from donor countries hit by financial 
               crises in 90s (Japan)




Source: Roodman (2008), History Says Financial Crisis Will Suppress Aid
                  IMF CONDITIONS:
            WAGE CUTS FOR TEACHERS AND
             OTHER PUBLIC EMPLOYEES
                         In 9 out of 23 supported countries




Source: Global Campaign for Education
Education on the brink
Will the IMF’s new lease on life ease or block progress towards 
education goals?  Global Campaign for Education. April 2009
      THE IMPACT ON EDUCATION, TEACHERS AND
            OTHER EDUCATION EMPLOYEES

                                   Central and Eastern
                     EUROPE       Ukraine Hungary        Latvia
USA
                               GDP ‐10%    ‐5%            ‐12%
                                  Western
             Japan



                              Developing
 Emerging                     countries
 economies
OPTIMISTIC SCENARIO Recovery in 2 to 3 year’s time


PESSIMISTIC SCENARIO Structural change/Paradigm shift
                        Interaction with food crisis
                        Consequences of climate change
                        Social and political upheaval
LESSONS FROM THE GREAT DEPRESSION
   Table 1. Variation among countries
                      LESSONS FROM THE GREAT DEPRESSION
   Table 2. US Recovery




Source: William D. O'Neil (2009) Wikipedia
LESSONS FROM THE GREAT DEPRESSION


        Joseph Stiglitz:

  « The situation is more 
     complex today »
                      INSTITUTIONS
             From neo‐liberal
             To advocacy for global stimulus
IMF
             Rescue packages: 13 countries so far and more to come
             But still applying the old conditions – cuts in public sector

WORLD BANK   Development and combatting poverty
BIS          Central bankers
FSB
FSF          Financial Stability Forum
                                 Board      G20
             30 industrialized democracies
OECD         + 5 candidate + 5 « enhanced engagement » countries

WTO          Trade
ILO          Employment

UNESCO       Education
The UN
                            VARIABLE GEOMETRY
           G7                                                     G8
  Canada, France, Germany,                              Canada, France, Germany,
  Italy, Japan, UK, US                                  Italy, Japan, UK, US 
                                    G20                           +   Russia

              Brazil, Canada, China, France, Germany, India, Italy, 
              Japan, Mexico, Russia, South Africa, UK, US,  +
              Argentina, Australia, Indonesia, Saudi Arabia, South Korea,
              Turkey, European Union


          G14                                              [BRIC]
Canada, France, Germany,                           Brazil, Russia, India, China
Italy, Japan, Russia, UK, US
+ Brazil, China, Egypt, India, 
     Mexico, South Africa
                         SUMMITS

G8/G14   ITALY, JULY 2009        Global Unions



         Washington, November 2008
 G20     London, April 2008
         PITTSBURGH SUMMIT, 24 SEPTEMBER, with

         IMF BIS        WB OECD WTO               Global Unions, NGOs
                       + ILO

 UN      Stiglitz Commission
         Summit on the crisis June 24‐26
         GENERAL ASSEMBLY, NEW YORK, OPENS SEPTEMBER 26

                                           NGOs
          DEFENDING RESOURCES FOR EDUCATION
             INFRASTRUCTURE Buildings
                                    Facilities

               STAFFING       Teachers ‐ qualified for quality education
                              Support Staff ‐ key actors in safe schools and colleges

      INVESTMENT IN PEOPLE THROUGH 
      EDUCATION Hire, not fire
                                                                     ECE
        VET                       K‐12                      An equal start and equity
                           The next generation –            for families
 In a downturn, its time   every nations’ future
 to upskill                                        H. ED & R
                                            Investing in human progress
                                            + capacity for innovation
KEEPING TEACHERS AND SUPPORT STAFF WORKING IS A STIMULUS 
PACKAGE IN EVERY COMMUNITY
REASSERTING VALUES
VALUES
EI’s VISION FOR EDUCATION AND SOCIETY
   Education is a public good not a commodity.
   Education is central in our societies in many ways; 
     • social and economic;
     • building and defending democracy;
     • individual fulfillment;
     • community development;
   Education should promote 
      • equity
      • non‐discrimination
      • understanding among peoples 
   Quality education requires quality teachers
   Education unions should be key actors
   Education is a human right. 
            Keeping a global, long‐term vision
“Choosing a type of education means choosing a type of society”

    Reducing poverty at a time when one billion people live under $1 a day

    Social justice at a time of growing inequality within economies and 
  societies

    Peace at a time of intolerance and conflict within countries

     Sustainable societies at a time of global warming and climate change

    Adapting to the unknown at a time of economic uncertainty and 
  continued technological advances


UNESCO ADG EDUCATION NICK BURNETT
              Reaffirm the centrality of education

       Knowledge, skills and values to promote informed choices
                    and a more sustainable future

Education is a catalyst for development. It:  
•   Contributes to economic growth
•   Reduces poverty 
•   Improves health, nutrition, income and livelihoods
•   Promotes citizenship and democratic participation
•   Is a condition for achieving all the Millennium Development Goals


UNESCO ADG EDUCATION NICK BURNETT
                                          Equitable
    Jobs               +   Income   +      Income
                                         Distribution



             Investment in public education
                    wins on all three

Mike Kahn – NEA Research
  Investing in education creates jobs…
                                                                  …a net gain of 2,200
                                                                          jobs.
               A $100 million
               tax cut results
                    in…

                                                                      A $100 million
                                                                   investment in public
                                                                  education results in…
        …a net loss of 2,200 jobs
        …a net loss of 2,200 jobs

Source:  School Funding, Taxes, and Economic Growth, April 2004


  Mike Kahn – NEA Research
                      Investing in Public Education is a smart
                          economic development strategy

   Every $1 invested in pre-school
   education provides an economic
            return of $7
                                                                       America’s economy will grow by
                                                                        $309 billion if all high school
                                                                            students graduate



A high school graduate’s contribution
 in income tax revenues would result
in savings of $37,388 in healthcare
costs and $167,990 in crime costs
         over his/her lifetime

Source:  The Price We Pay, Economic and Social Consequences of Inadequate Education,  
(2007) Brookings Institution Press                                            Mike Kahn – NEA Research
                                                                                                          27
               MOBILIZATION
World Teachers’ Day: 5 October
EI Action Plan:
   A clear vision for education and society

   Powerful arguments for investment in people

   Capacity to mobilize
            Globally
            Nationally
            Locally
   A strategy of proposition
                       COALITIONS
THE GLOBAL CAMPAIGN FOR EDUCATION
                http://www.campaignforeducation.org/


     GLOBAL ACTION WEEK, APRIL 2009

                http://www.ei‐ie.org/globalactionweek2009/en/index.php
    13.3 million took part in « The Big Read »

GLOBAL UNIONS
                http://www.global‐unions.org/
  200 million members in some 170 countries worldwide
www.ei‐ie.org/handsup
Blog:




http://fundingeducation.blogspot.com/
NEA GLOBAL EDUCATION SUMMIT

        San Diego, June 27, 2009

     Gracias
                          Merci
                                  Thank you


   Bob Harris
   Education International

   bob.harris@ei‐ie.org