||The Origin Of The USA Crisis And The Impact On The World Economy:
More And Better Jobs
By Paul Nehru Tennassee
GuyanaJournal, December 2010
The financial crisis erupted in the U.S. in 2007 but is linked to the burst of the housing bubble in the last quarter of 2006. The impact on the global political economy is severe but varies within and between continents. This crisis is among the major causal factors that explains the ongoing Great Recession. Even though the epicenter of the crisis is located in the USA, it is documented that the ruling classes of the G7 members, embraced and implemented a defective “one-size fits all” neo-liberal economic model in their countries; and pressured nation-states globally to do the same since the 1980s. In the US, among the characteristics of the crisis are rising unemployment, continuous losses in property values, increasing federal and states debts, expensive rescue packages for large financial and industrial companies, two costly wars, low economic growth rates, deepening political polarization and congressional gridlock. In other nations of the world, the manifestations of the crisis are determined by the intensity of integration of local, national, sub-regional, regional and continental economies in the globalization process.
In the absence of a global government, inter-governmental institutions and groups with varying representations continue to meet and share their research, analysis and policy prescriptions. There is no consensus in any of these meetings of a clear-cut global response. The G8 and G20 met in June 2010 and reached a loose consensus about a global policy approach but individually governments implement policies as they see fit and at their own pace. The hard data on the crisis are obtained through the Organization of Economic Cooperation and Development OECD, IMF, World Bank Group, Regional and Sub-Regional Banks, United Nations, Universities, Think Tanks and Transnational Corporations. There is, however, a significant knowledge gap in the Global South: G77 members, Low Income Economy Countries (LIECs) and the Small Island Developing States (SIDS). In many of these countries, the research infrastructure is very limited. As such, the impact of the crisis on the global economy cannot be accurately assessed. However, there is a proliferation of information transmitted by citizens' reporters via internet like face-book, radio-online, trade unions, civil society organizations, international and local media: Al Jazeera, CNN, AP, Reuters, Inter-Press and other news networks that provide evidentiary and visual pictures of the rapidly deteriorating human condition across the globe.
This paper will highlight and briefly comment on the characteristics of the Great Recession in the US and Policy Responses, the impact on the Global Political Economy and Policy Responses, and discuss Job Creation: More and Better Jobs.
The paper takes the position that the US financial crisis is one of many crises. All crises have to be placed in the context of the Great Recession. The analysis and advocacy of policies for more and better jobs should be done in the context of the strategies that are being implemented to terminate the recession by achieving full employment. Stimulus packages should be designed to pursue job creation as “a central goal” rather than merely a by-product of growth oriented packages. In order to avoid frequent unemployment tsunamis, more and better jobs have to be placed permanently on the agendas of local, national, sub-regional, regional, continental and global private sectors, governments and civil society organizations. It has been a permanent fixture on the agendas of national and international trade unions and the International Labor Organization (ILO). Working families have always understood that not to have a job is to be lost in this world. Workers and unions must find new and creative ways to influence public opinion, economic and political governance at all levels in the world. The policy-makers must be convinced that oceans of unemployed citizens are a recipe for chaos on earth and put humanity at risk. Additionally, the paper will highlight at least one example of a good practice in the creation of more and better jobs.
The origin of the great recession in the USA
The origin of the Great Recession in the USA can be traced over the last three decades to the policies that were pursued during the administrations of President of Bill Clinton and President George G.W. Bush. The major factors during the Clinton administration were the deregulation of the financial sector, NAFTA, outsourcing by US corporations, the hard-sell and intensification of the neo-liberal model of globalization, the Asian crisis 1997-1998. However, it should be pointed out that jobs increased, the housing market saw the rise of equity in homes and a federal surplus. This was the conjuncture of the technological revolution and ascension of dotcom companies in Silicon Valley and other parts of the USA. It is also factual that President Clinton, lobbied by the AFL-CIO in Seattle at the WTO Ministerial in 1989, unsuccessfully attempted to link core labor standards to international trade. In the final year of the administration, it was evident that inequality continued to deepen since trickle-down economics did not impact significantly on working families. At the political level, the Democratic Party lost the majority in Congress and President Clinton devised a working strategy that was labeled triangulation with Newt Gingrich's Republicans who had proclaimed a stronger dosage of neo-liberalism titled Contract with America.
President George G.W. Bush, on arrival to the White House, implemented a tax cut that overwhelmingly benefited the rich. This combined with other factors saw the evaporation of the surplus he had inherited from the Clinton administration. The Bush administration aggressively continued the policy of financial de-regulation and actively restrained federal officials from scrupulously ensuring that corporations adhere to environmental and labor codes. Outsourcing continued unabated and in the process de-industrialization intensified. The manufacturing and service sector jobs migrated to emerging economies that significantly contributed to the economic re-emergence of China, India and Asia as whole, as one of three major geo-economic centers in the world. US entrepreneurs were so emboldened by the administration's free market philosophy to the point that the former CEO of General Electric Jack Welch, advocated that factories be placed on barges to escape the rule of law of nation-states. There was a deliberate race to the bottom by US corporations as they sought safe havens for the cheapest labor and tax havens for their windfall profits.
Bin Laden's Al Qaeda Network's 9/11 terrorist attack on the Twin Towers and the Pentagon provoked the US and NATO to declare war against the Taliban government in Afghanistan with the endorsement of the United Nations. The country was occupied and Bin Laden allegedly moved his headquarters to Pakistan. At the ideological and political level, neo-conservatives in Washington D.C. from the Republican Party proclaimed the end of history and inspired President G.W. Bush to embrace the doctrine of pre-emption. With an eye on the oil resources of Iraq, interest groups inside and outside the US made unsubstantiated allegations that Saddam Hussein's dictatorial regime had developed weapons of mass destruction. The George W. Bush administration subsequently invaded Iraq and overthrew the regime. However, the United Nations and “Old Europe” with the exception of the UK, did not support the war. These persisting wars drained the treasury of the US while the capture of Iraq did not impede the escalation of oil prices. The US economy by the end of the President George G.W. Bush's administration was characterized by trade deficits, budget deficits, escalating debts, housing bubble and rising unemployment followed by a major financial crisis that sunk the US and the Global Economy into the Great Recession in which unemployment continues to rise.
The US financial crisis
The consensus is that the immediate cause of the financial crisis in 2007-2009 was triggered by the burst of the housing bubble. By the last quarter of 2006, property values declined rapidly. The housing sector was infected with corrupt practices by real estate agents, mortgage brokers, developers and bankers. Mr. Greenspan, Head of the Federal Reserve, kept interest rates very low. It was cheaper to borrow money to invest. The lower middle class became the new targets in the housing market. Mortgages were given to citizens who did not have sustainable incomes or savings to afford the purchases of properties. They merely paid the interests but the equity in the properties rose as housing prices spiraled upwards. This allowed low income citizens to refinance their mortgages. Subprime mortgages were sold to investment banks based on triple A or A ratings given by reputable credit rating agencies. The first shock occurred when housing bubble burst and the refinancing route was no longer an option. This led to foreclosures and bankruptcies. This financial crisis worsened with an immediate negative impact on the construction industry and a persisting decline in the manufacturing sector due to outsourcing since the1980s. This provoked a second shock of rising unemployment that hit the middle class and low income classes severely. The financial crisis worsened as leading financial firms and banks with national and global reputation begun to fail. Fears developed in the US and around the world that a Great Depression was in the make. In the final days of the Bush administration, a rescue package was designed by the Secretary of the Treasury, Henry Paulson, who was a former CEO of one of the financial firms that contributed to the crisis. It was in this context that Barack Obama was elected President. In the first year of his administration, he obtained a bailout package for the banks based on the rationale that they were “too big to fail”.
The IMF in its World Economic Outlook (WEO) provided data on 113 periods of financial stress in 17 advanced economies over 30 years. It highlighted Sweden, Britain and the United States in the early 1990s and Japan throughout that decade and concluded that “half of these crises involved the banking sector and the remainder were in securities or foreign exchange markets.” The IMF concluded that “risk of recession is higher when financial turmoil is preceded by rising house prices and rapid expansion of credit, which was the case in the United States. “…The patterns of asset prices, aggregate credit and house borrowing in the United States during the current episode of financial stress appear similar to those of previous episodes that were followed by recessions…” (Wroughton, Lesley. "U.S. Heading for Sharp Downturn: IMF| Reuters." Business & Financial News, Breaking US & International News | Reuters.com. 02 Oct. 2008).
Professor Benjamin J. Cohen of the University of Santa Barbara, California explained the root causes and the characteristics of the U.S. Financial Crisis in the following manner: “There are two sides: supply and demand. On the supply side, there was an enormous excess of liquidity. When looking at rates of return, government, private institutions, and individuals had excess liquidity that had to be placed somewhere. The Federal Reserve ran a very easy monetary policy at the time, adding liquidity on the domestic level that resulted in large surpluses. We saw that emerging Asian economies like China had to place their huge surpluses somewhere and the US was an attractive place to put it. There was an enormous pool of liquidity “global savings glut” became a large factor. The other side of equation is the financial institutions that wanted to make money out of this were in the mortgage industry. They developed derivatives and they structured financial products that were meant to absorb that liquidity. However, the weakness or absence of authority allowed institutions themselves an opportunity and they borrowed heavily. In the process the financial fabric got more and more fragile with risky products being developed with high leverage ratios… Both global liquidity and regulatory regimes allowed financial institutions to develop risky products. Mortgage companies and banks approved mortgages that they knew that were highly risky: “ninja” loans or mortgages to low income families….
The other dimension of the financial crisis is the debt levels as measured in relation to GDP. It is the highest in history. When crisis occurred, one result was that the credit markets froze up. You can't have economic activity if you can't borrow money. The credit markets froze and no one took the risk of lending money. Public authorities had to step in and lend large sums. Many businesses could not get what they need. Consequently, production cut backs led to unemployment and dropping prices in the stock market. Cut backs on spending through freezing of credit markets led to a reduction of global demand. The combination of these factors led to reduction of production and rising unemployment and finally the Great Recession…” (Cohen: Benjamin/Power Point Presentation February 2010/Interview with a former student Abraam Nashed, August 2010).
The 2.67 trillion dollar US debt is primarily owed to foreign governments and investors as the information below highlights:
Reference: Winik, Lyric W.: "Who America Owes | Parade.com." PARADE Magazine, Celebrity News, Entertainment News, Health, Fitness, Food, Recipes, Games | Parade.com. 09 Nov. 2008. Web. 29 June 2010.
Two major consequences of the financial crisis and manifestations of the Great Recession are in 2009 the US lost 760,000 jobs and the budget deficit exceeded $1 trillion. The present unemployment has risen to 9.7%. The wars in Afghanistan and Iraq continue to drain the U.S. financially. According to Joseph E. Stiglitz and Linda J. Bilmes, the true cost of the Iraq war is $3 trillion (Washington Post, September 5, 2010).
The US policy response
In the final year of George W. Bush's presidency, the financial crisis in the US imploded. In the middle of the presidential campaign, Republican Senator John McCain suspended his campaign to meet the President Bush and invited Barak Obama to support the President's rescue plan for failing financial firms and banks. In October 2008, an Emergency Economic Stabilization Act was passed authorizing Secretary of the Treasury Henry Paulson to spend $700 billion to purchase distressed assets mortgages backed securities and to inject capital into the banks. The President signed the bill entitled Troubled Asset Relief Program (TARP). Secretary Paulson was the CEO of Goldman Sachs, prior to becoming Secretary of the Treasury, and his firm was among those responsible for the crisis.
On arrival to the White House, President Obama lobbied Congress to pass legislation for the American Recovery and Investment Act in February 2009 providing $775 billion to finance numerous public policies. This included a rescue plan for the auto industry. In 2008-2009, $84.8 billion was provided for this sector. Among the beneficiaries were Chrysler LLC and General Motors. Ford had fired 334,000 workers and now has re-employed 55,000. All three companies have recently declared profits. President Obama proposes to modernize federal buildings and improve energy efficiencies in two million homes. It is anticipated that 5 million green jobs would be created. This also includes $25 billion in a Jobs and Growth Fund that can save one million jobs in rebuilding infrastructure. In his words he aspired to “Retrofit America for the Global Economy.” Then in March 2010, he convinced Congress to pass the Patient Protection and Affordable Care Act. The Act is anticipated not only to reduce health care costs about $2,500 per family but also create jobs through incentives to small and medium sized businesses. During 2009-2010, businesses will receive $3,000 refundable tax credit for each additional employee hired. Small business investment expenses account was raised to $250,000 in 2009. Quite recently in August 2010 a Jobs Bill allocated $26 billion to aid state payrolls for teachers and government employees. President Obama has been emphasizing that investing in jobs retention is as important as direct job creation. He has provided resources temporarily to assist first home buyers, community colleges, retraining of workers and extending unemployment benefits. He is meeting significant opposition in Congress and the Republican Party to additional stimulus packages. Since 2007, it is calculated that the Federal Government has injected $1.2 trillion into the economy.
There is widespread consensus in the USA and around the world that the financial crisis and the Great Recession were majorly caused by the de-regulated role of the financial sector. In light of this stark reality, President Obama and the Democratic Party passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010 with the support of three Republican Senators. The financial sector and the vast majority in the Republican Party opposed any regulation. They are particularly opposed to the new Consumer Protection Agency that the Act will establish. This would include controls on the policy of financial institutions in relation to transparency and timely information disclosures to shareholders and credit card consumers.
The trade unions supported the Act. The AFL-CIO President Richard Trumka in a communiqué declared that the successful approval of the July 15, 2010 Comprehensive Financial Reform “represents a historic shift of power-away from big bankers and CEOs to working families and 'Main Street'. For years, big banks have profited on the backs of working families. Millions of working families lost their jobs and still can't find work because of the reckless and selfish actions of Wall Street and the big banks. After the financial meltdown brought on by Wall Street greed and irresponsibility it would have been an outrage for the status quo to stand. Yet all but three Republicans in the U.S. Senate voted against reforming our bloated and unaccountable financial sector…. The Dodd-Frank Wall Street Reform and Consumer Protection Act will create a strong consumer protection agency to protect working people from predatory lenders; shed light on the shadow markets by requiring most derivatives to trade on open, transparent exchanges and mandating that large managers of hedge funds and private equity funds register with the Securities and Exchange Commission; give long term investors new tools to hold corporate boards and senior management accountable; and help prevent future bank bailouts by creating a council or regulators to oversee systemic risk, giving regulators authority to dissolve failing financial institutions while prohibiting bailouts for bank shareholders and executives. Moving toward restoring of Glass Steagall by limiting banks ability to make risky bets backed by taxpayer funds. “We will continue to fight for reforms that will further address too big to fail financial institutions and make Wall Street pay its fair share to create the 8 million jobs it helped destroy. As we look ahead to November, when voters will once again have the ability to stay on the path to change or look back to the failed policies of the past, this vote is a defining line in the sand. Working families will be dedicated to supporting leaders who vote to create jobs and hold Wall Street and big business accountable.”
In spite of all the policies implemented under the Obama Administration, unemployment continues to rise, value of properties continue to devalue, foreclosures increase, poverty deepens, inequality grows and bankruptcies multiply. Secretary of Treasury, Timothy Geithner in defense of President Obama's policies states in his testimony at the congressional oversight panel that the U.S. economy remains in turmoil and many Americans are still without jobs due to “the damage of a deep recession.” However, he claims that there have been vast improvements. Secretary Geithner explained that “financial policies have lowered borrowing costs for homeowners, consumers, businesses, and state and local governments. They have supported small and community banks that have expanded lending to small businesses during the recession. They continue to help responsible, but at-risk Americans hold onto their homes and to repair essential channels of new credit.” He credited the achievements to the Troubled Asset Relief Program (TARP), which in his opinion “has helped restore financial stability at a much lower cost than anticipated. “We have already recovered more than half of total disbursements under the program. TARP investments have generated $24 billion in additional revenue for taxpayers.” (Geithner, Timothy. "RealClearPolitics - Geithner's TARP Testimony to the Oversight Panel." RealClearPolitics - Opinion, News, Analysis, Videos and Polls.22 June 2010. Web. 30 June 2010). President Obama in September announced a long-term jobs program that would require over $50B that would be allocated to rebuilding “roads, railways and runways.” (The Washington Examiner, September 7, 2010)
The global impact and policy response
It should be underlined that at the onset of the U.S financial crisis, President Bush met the G8 members, but subsequently, decided to hold a G20 meeting. The governments of the G8 concluded at their meeting that the world economy was too interconnected, and consequently, global policy had to be adopted by decision-makers beyond the borders of the USA and the G8. This was a recognition since the rise of European hegemony, dating back to the rise of capitalism, that a multi-centered world was in re-emergence.
Prakash Loungani and Mai Dao of the Research Department of the International Monetary Fund (IMF), in a paper presented at a University of District of Columbia (UDC)-IMF Symposium, entitled “Job Creation: A Global-Local Dialogue” in Washington D.C. and the Joint ILO-IMF Conference with the Office of the Prime Minister of Norway in July and September 2010, highlighted that “about 210 million are unemployed across the globe today.” The Great Recession “added 30 million people to the ranks of the unemployed, about quarter of them in the United States… recessions leave scars on the labor market; the Great Recession of 2007-2009 has left gaping wounds. In the U.S., the number of unemployed people increased to about 7.5 million since 2007, nearly quarter of the world wide increase in unemployment. Long-term unemployment has been inching up for 30 years, but the situation today is alarming: nearly 1 in every 2 unemployed Americans has been out of work for six months. What will be the legacy of these dire straits? If the effects of the past recessions are a guide, the cost to those who get unemployed could be persistent loss in earnings, reduced life expectancy, and lower academic achievement and earnings for their children. Even 15-20 years after a job loss in a recession, the earnings loss amounts on average to 20%. Lifetime earnings losses are greatest for those who experience unemployment in youth, especially upon college graduation. Laid-off workers are likely to have shorter lives than comparable workers who kept their jobs: one study estimates unemployment shortens life expectancy by 1 to one and a half years. Job loss can reduce schooling achievement, and earnings, of the children of the unemployed: parents' job loss increases the odds that a child repeats a grade in school by nearly 15%. And surveys show that individuals who suffer through a recession when young tend to believe less in personal effort, perceive stronger inequalities, and have less confidence in public institutions….” (Loungani/Dao: 2010)
Prakash Loungani in another presentation expressed the view: “a different legacy is possible. Policies can make a difference. Supporting demand through fiscal and monetary policies is perhaps the single best cure for unemployment and its attendant costs. Fiscal prudence is needed in the years ahead, not a fiscal axe today. States and cities could ensure that stimulus money is spent on much-needed investments in infrastructure, on training and education, and on short-term subsidies to private sector job creation that build on their regional strengths. Unemployment insurance benefits to the long-term unemployed should be tied to social work and training. Then the longer-term legacy of the Great Recession could be better skilled Americans commuting to more profitable enterprises on less congested roads. The combined efforts of government spending programs and the Coca Cola Company - which loaned the city money to pay employees - helped the city of Atlanta through the Great Depression. A similar partnership is needed again, in Atlanta and all over the nation.”
The IMF Chief economist Olivier Blanchard in an interview emphasized: “We want to make unemployment, and the costs of unemployment, more prominent in current policy discussions…. An economic recovery that does not translate into more jobs will not mean much for most people…. Long term unemployment is particularly costly; it affects a person's morale and self-confidence and how the person is viewed by others.… So we have to act quickly before unemployment becomes a structural problem… our economic policies should target as quick a job recovery as possible.” He concluded that what's needed is a credible medium-term fiscal tightening, “not a fiscal noose today.” (Blanchard: 2010)
The IMF has an outstanding reputation as the bad wolf in global circles and has been severely criticized by trade unions and civil society organizations for nearly four decades. IMF was particularly criticized for structural structural-adjustment policies and its policies in the Asian Crisis of 1997-1998 (Tennassee: 1998/2005). One hopes that the findings and recommendations of the IMF Research Department in 2010 will enter into the mainstream of current IMF policies. If this happens then there will be a better environment for dialogue with all stakeholders. The opinion of civil society organizations is that this will not happen.
The mammoth challenge the world faces in the current crisis is the impact of the Great Recession on youth employment. ILO estimates that of the 211 million unemployed in 2009, 40% - or about 81 million - are between 15-24 years of age. Approximately 152 million young people work but live in households that earn less than the equivalent of US$1.25 per day. Young people who are unemployed lose faith in institutions and are susceptible to extremist theological and ideological currents that are engaged in creating chaos and destabilization.
The United Nations held a conference in June 2009 entitled: “UN Conference on the World Financial and Economic Crisis and its Impact on Development.” The conference made recommendations in various areas including adequate resources and policy space for developing countries to mitigate the crisis, debt standstills, restructuring and sustainability, right to use legitimate trade defense measures by developing countries, right to impose temporary capital restrictions, strengthened international tax cooperation, expanded allocation of Special Drawing Rights (SDRs), policy coherence and consistency in global economic governance as well as reforms of the Bretton Woods Institutions, establishment of a panel of experts on the world economic and financial crisis and establishment of an open-ended working group of the UN General Assembly to do follow-up on the conference. Many countries outside of the G-20 were very upset that they were ignored during the crisis. The UN Conference was a kind of G192.
UN Secretary-General Ban Ki-Moon at the G8 meeting in Toronto 2010 credited the collective action of the G20 leadership at meetings in Washington, London and Pittsburg, for averting a global depression. He called on the G8 to deliver $30B committed to climate change financing over the next three years. He also highlighted commitments made in the Global Jobs Pact, L'Aquila Food Security Initiative and for funding of the Global Fund on various health challenges including AIDS (Ban Ki-Moon: 2010).
Challenges in creating more and better jobs
City of Sunderland
All countries around the world are faced with the challenge to create more and better jobs. One part of the world that has made significant progress in job creation and job retention that deserves detailed examination is Sunderland, the largest city in the North East of England in the United Kingdom. The City Council of Sunderland (COS) has taken the bull by the horn in terms of job creation and is creatively responding to the rapid changes of globalization. The information that follows lacks an assessment by trade unions or the role of trade unions on these ongoing initiatives. It does identify a role of a major stakeholder, the City Council. The example demonstrates that local government can take initiatives, mobilize resources and coordinate complex relations at the local, regional, national and global levels. It is a Glo-Local Initiative that creates and sustains jobs. The City Council of Sunderland has provided outstanding leadership in developing initiatives that are quite unique and innovative. It has not only attracted international companies but also successfully getting them to re-invest.
“The City of Sunderland (COS) worked very diligently and deliberately to make its location the center of one of Europe's foremost automotive manufacturing industry. It started since the 1980s. The industry is reinforced with a cluster of key suppliers. It employs 10,000 people of which 50% work in the Nissan Plant. The location holds a very skilled, loyal and adaptable workforce
The COS provides targeted financial support. Additionally, it undertakes other support initiatives like attracting Lear (a US component manufacturer to participate in the COS inward investment activities). In 2003, COS created a Vocational Learning Center on Nissan Site. Nissan key suppliers needed extra staff in 2008 following the success of its Qashquai Model. Subsequently, COS organized a major recruitment event in the stadium.
The Low Carbon Initiatives: In July 2009 COS attracted Nissan to select its location for the company's European Center of Excellence for Battery Manufacturing. It is anticipated that Nissan will invest two hundred million pounds in the plant over the next 5 years. It will employ 350 people and produce 60,000 lithium-ion batteries annually. By 2010, new battery powered vehicles would be launched in Europe. The COS and Regional Development Agency is upgrading their electricity facilities to attract low carbon initiatives. Sunderland automotive manufacturing sector is the focus of one of the UK's first low carbon economic areas (LCEAS). It was launched by the UK government in 2009 to 'pull together national, regional and local agencies to focus support on accelerating the growth of low carbon industries while developing the associated skills base and supply chain.' A new Center for Sustainable Manufacturing, Productivity and Innovation is being created in Sunderland. It will be the first center where workers will be trained for zero-emission for the car industry. Other initiatives include a Research and Development Center, an Open Access Test Track at the Nissan Plant and more than 750 charging points are to be installed in locations in the North East in hospitals and super-markets.
COS successfully established the Sunderland City Council Contact Center that carried out a number of initiatives: new business parks 1990s, contact center consortium, contact center recruitment event, contact center training (list of companies, financial assistance, sharing best practices, annual recruitment, employer link service, school educational on job possibilities-careers, personality profiling, contact center awards, stress reduction programs and home shoring that linked independent experts in the field to explore new ways of working). Additionally, COS improvement in transport and site security.
The COS worked very closely with the University of Sunderland. The University played a central role in embedding the knowledge economy in the city: application of technology based R&D, prestigious learning environment, excellent ratings in various intellectual disciplines including media studies, pharmacy, physiology, biological sciences, healthcare, pharmaceuticals, automotive design and computing. The University runs a successful knowledge transfer program that enhances business performance through improved use of knowledge, technology and skills. The state of the art Media Center at the University focuses on Sunderland. The University has an office in Beijing.” The COS visits various cities around the world and establishes city to city agreements, in which for example, the consortium universities in Washington D.C., like the University of the District of Columbia, participates in faculty and student exchange programs.
Volker Treicel in his book entitled, Putting Nigeria to Work a Strategy for Employment and Growth highlighted the dilemma in job creation by underlining “that while unemployment rates can be low, jobs are scarce. The wages are low. Jobs are not a central goal in policy-making in Nigeria. The author claims that there are few jobs that provide decent wages, good working conditions and security. There has been a “failure to create jobs in the private sector.” He advocates a policy focus for higher-wage jobs and a balance between education and jobs. “Increasingly higher levels of education are perceived as necessary to get a job.” Consequently, he states, “An expansion of education without an expansion of jobs for the newly educated is a recipe for social unrest.” Treichel recommends the implementation of the policies similar to China. “If those making a marginal living in the self-employed sector could be absorbed into a higher-paying paying jobs,” then that may be the answer. In Treichel's opinion Africa had improved economic growth rates until the economic crisis of late 2008. He also observed that Nigeria “may be more efficient to concentrate resources geographically so that cost can be reduced in certain localities…[they] can improve productivity and performance of local firms.” He concludes that Nigerians have to pursue economic growth by learning from the Chinese and Indian models that embraces policies to grow the manufacturing sector (Treichel, Volker: Putting Nigeria to Work a Strategy for Employment and Growth. Washington, DC: World Bank, 2010/ Page 96-97: job Creation).
Conclusion and Summary
The ongoing Great Recession that the world is presently experiencing originated with the financial crisis in the USA during 2007-2009. The major manifestation of the Great Recession is escalating unemployment. There is no clear global policy to make job creation a central focus of public policy. The Great Recession cannot be accurately assessed in terms of hard data for all countries. We do have visual and other evidence that the human condition for the majority of humanity is deteriorating overall at various levels. The OECD member countries have more data. Most countries in the world are not consulted on a common global policy. This may not be possible, not only because of an absence of political will, but also because countries are at different levels of development; while others, consider it their sovereign right to undertake measures appropriate to their realities and levels of integration in the global economy. It is evident that the world is in transition to systems with various geo-economic and geo-political centers. We live in an age of transition from Euro-North American hegemony to a world where the imperatives of capitalist development dictate shared governance, for now with Asia; and by the end of the century with Brazil and other countries.
Unemployment destabilizes human security on earth. A person without a sustainable job is lost in the world and a prey for criminals and extremists theologians and ideologues. There is no one road for job creation or a recipe that is easily available. It is advisable to adopt Glo-Local political economy approaches. This requires investments in interconnected initiatives at the local, regional, national and global levels. Nigeria and other developing countries will not stop or transform their growing informal economies by adopting the American, Chinese, Indian or even the City of Sunderland Models. The latter are unique to their respective realities.
Each community and country have to find their own path forward in the context of a cruel, neo-liberal, globalizing world. Many parts of the world witness transitions from plantation slavery to credit card and sovereign debt slavery. In spite of this, we must construct knowledge-based economies and societies from below and above. In this regard, the sharing of best initiatives in sustainable job creation in any part of the world is useful for all. The trade union's challenge is to become a significant stakeholder in job creation at the local, regional, national and global level. The world is at a conjuncture where if civil society, democratically elected representatives at all levels and small and medium sized businesses do not undertake sustainable job creation as the major challenge of our time, then the continuous process of a multi-faceted criminalization of capitalism as witnessed during the US financial crisis and this Great Recession will continue unabated and put humanity and the earth at risk.
o Thanks to Abraam Nashed from the University of California, Santa Barbara, who was a volunteer research assistant with NAPFE for doing a literature search and engaged with me in discussing the subject and interviewing his former professor Benjamin Cohen, August 2010.
o Presentation at seminar on more and better jobs held September 23-24, 2010 Larnaca, Cyprus/sponsored by the European organization of world organization of workers (EOWOW), the European center for workers questions (EZA) in cooperation with Pan Cyprian Federation of Independent Unions (POAS) and support of the European Commission.
Paul N. Tennassee: Historian and Political Scientist. Former Representative World Confederation of Labor (WCL) to the United Nations & Director of the Washington D.C. Liaison Office to the World Bank Group and the International Monetary Fund and Inter-American Institutions (1998-1996) Email; 202 384 2194.
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