Brainforum

Sustainability sucks!?!

Sustainability sucks? At least that´s the impression we get when thinking about the social, economic and ecologic problems we are facing and the things people do or don´t do to change the way the world moves.

Even single persons struggle with integrating sustainability into their daily life. Public transport to get to the office? Recycling? Car-Sharing?
When it is not even possible for private persons to make the step towards sustainable behaviour, how should this work out for a global company? Even more: Do we then have the right to demand this kind of attitude?

When looking at corporate homepages, the first thing that comes into view most of the times is a big and shiny button screaming “Corporate Social Responsibility”. The flash video next door talks about sustainability. In my opinion, these two terms seem to have evolved to the new and hip gadget in the world of corporate communication. The true motive rarely is an altruistic one, but the fear that some day society will deprive the company from taking action and drift over to competitors.

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Hungarian Rhapsody: How to boost potential growth?

If there’s something that never works in Hungary, then it’s the economy. Unfortunately, this is not only a bad joke, but the reality.

Hungary’s economy was severely damaged by the financial crisis – public debt has soared to almost 80 % of the GDP, national currency (forint) lost more than 25 % versus the euro when the crisis peaked, unemployment rate reached its historical maximum at 10,3 % at the end of 2009 and may even increase in 2010. What structural weaknesses have led to the current situation? Well, inefficient allocation of resources, distortionary taxation system, low employment and high social expenditures are some of them.

This is the bitter truth and the boring numbers, but since every failure holds the possibility of success, let’s be optimistic and forward-thinking. I was thinking of some suggestions that , in my view, may shake up the Hungarian economy and boost the potential growth. Just to make it clear, my goal is not to give a detailed picture of the Hungarian economy, nor to find solutions to every economic challenge, however Hungary’s problems are not unique and may serve as a good lesson for others.

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Does our society need growth?

One can answer this question looking at both sides of the income equals outcome equation.

I will try to treat the income side. Therefore, I´ll specify the question a little: do we need steady growth to guarantee a certain minimum life standard for all human beings?
The other rather philosophical question would be whether we need technological growth, resulting in more work efficiency, more comfort and also longer estimated life times.
Keynes wrote in his standard work that he expected us to nowadays live in a perfect world without any unemployment – he underestimated the rising human pursuit of comfort and luxury: despite the exponential growth of work efficiency, increasing human desires have resulted in not only constant but even rising unemployment rates.

To facilitate the question, I will divide up our society into two parts: the employees and the capitalists. All assumptions are based on a solow model with integrated work efficiency affecting technological progress.
Additionally, I will assume that our international economy is more or less pretty close to the stationary point: the accumulation of capital has pretty far reached its maximum.
As I want to answer the question whether growth is required and possible when the global economy is saturated, I will assume the following scenario:

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Solve the problems of the villages to help the cities

I remember reading a comprehension passage during my school years titled “A billion strong or weak” which in a Rashomon-esque manner illustrated how we can look at India either as a billion mouths to feed or as 2 billion powerful hands that can be put to work.

Idealistic in many ways, it emphasized on a very important part which I only realized after coming to college.

The economy has to ensure that there’s inclusive growth. This isn’t a rant against capitalism, neither is it a cry for pity. Over the last 2 years I have immersed myself to learn more about the developmental sector and the problems that face our nation. A talk with an eminent social entrepreneur (and one of the first Oxfam GB trustees from a developing nation) made me realize that most models of capitalism don’t benefit the poor because of the way they are structured. The poor end up having no savings because they are caught in a vicious cycle of loans and debt out of which there is no escape. This isn’t to say that capitalism in itself is wrong, in fact I believe that market based approaches to alleviating poverty are in fact very essential for progress. But the form of capitalism that I subscribe to should be inclusive in nature.

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Crisis Demands

This Crisis changed the world. For sure?

The crisis catalysed thinking from years to months – even weeks. In this fast paced environment, drafting possible scenarios and thinking of how to react to them is essential. Disastrous consequences caused by an unstable financial system have been highlighted. Furthermore, the enormous interdependencies of our globally linked world have been shown. The setbacks in growth caused by this crisis had disastrous consequences for corporations and whole states as well as individuals. As response to that, economists, politicians and entrepreneurs try their best in order to revitalize economic growth. Cushioning the crisis’ impacts forced a dramatic increase of national debts. But, what happens with the augment of public debts all over the world? Are we navigating straight into a new heavy crisis, a crisis of states?

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