Models are the hot topic at this week's gathering of political and business heavyweights in the Swiss mountain resort of Davos for the annual World Economic Forum (WEF).
Not of the pouting, long-legged variety who strut the catwalk, but economic models -- those invisible and mysterious systems that not only steer stock markets and currency prices but shape the livelihoods of each and every one of us.
And while there is unlikely to be a new black unveiled, organizers are canvassing discussion of an extreme makeover of the rules that govern global trade.
Economist and WEF founder Klaus Schwab is leading the charge, and is not mincing words about the failure of the status quo -- talking about 'outdated and crumbling models' and the need for new ways of thinking, going so far as to say that capitalism in its current form is not working.
Those are welcome words to labor leaders as we prepare to put our case for reform at Davos this week.
It's never been clearer that unrestrained market forces do not produce the kind of societies we aspire to -- economically stable and socially inclusive, where citizens have access to secure jobs with the dignity of a fair wage and a welfare safety net.
Just ask an unemployed parent in Greece, a pensioner in Britain, a subsistence farmer in Africa or an evicted homeowner in the US whether system is working for them.
Let's take a look at some of the characteristics of global economic circumstances:
- rising inequality: income inequality has risen over the past three decades in 17 of the 24 OECD countries for which data is available.
- social unrest: the International Labor Organization predicts significantly increased social unrest in many parts of the world, including countries in Europe, the Middle East and Asia.
- growing unemployment: European unemployment is expected to remain at nearly 10% this year.
- stagnating wages: in the US, the real median wage has been stagnant for 25 years, despite an almost doubling of GDP per person.
The drivers of these unwelcome trends are diverse, but some fundamental flaws in our current economic model stand out.
For example, High Frequency Trading (HFT) -- where stocks, options, futures and currencies are bought and sold in split-second trades by sophisticated computer programs -- accounts for a rapidly growing slice of international financial transactions.
In 2010 HFT accounted for 25% of spot foreign exchange transactions worldwide, 56% of US equity trading (up from 21% in 2005) and 38% of European equity trading (up from 9% in 2007).
The popularity of HFT continues to grow, allowing traders to pocket handsome profits from small margins on large, frequent trades -- but putting world markets at risk by significantly increasing volatility.
HFT is not just a smart program designed to create money for a select few -- it is a sign of a model that is breaking down and a clear indicator of the growing chasm between the current economic model and ordinary people's lives.
If between a quarter and a half of all global financial transactions are decided by a computer algorithm -- with no consideration of the impact on workers, on children, on pensioners, on health, on the environment -- it's clear why a mainstream economist like Klaus Schwab is decrying the 'morality gap' in current economic thinking.
I'm in Davos this week, with labour leaders from around the world, to put the people back into our economic system.
We are not looking to the WEF delegates to reinvent the wheel. What we need is for our political leaders to look beyond the narrow and restrictive prism of austerity to put jobs and growth at the center of plans to reboot the global economy.
International trade unions will be promoting five principles for dealing with our current economic challenges to political and business leaders in our meetings in Davos.
1. Jobs - it is workers in work who will drive the global economy out of crisis. We need investment in green economy infrastructure; public services, training and education; and a multilateral plan to create youth job opportunities. Five years of two per cent GDP invested in the green economy across six sectors in 12 countries can drive more than 55 million sustainable, decent jobs.
2. Social protection, sustainable demand and decent work - measures to mitigate social inequality are crucial to building a fairer, more stable global economy. These should include a social protection floor in every country, with a global fund to kick-start development in the poorest countries; minimum wages on which people can live with dignity and an expansion of collective bargaining to ensure fair work conditions.
3. Financial regulation - Governments must band together to stand up for the 'real economy', by putting a ban no algorithmic High Frequency Trading, regulating the credit rating agencies, and requiring transparency for the shadow banking system -- the hedge funds and investment vehicles that transact trillions of dollars but fall outside national regulatory systems.
4. Fair and progressive taxation - it is time to repair the balance sheets of governments through a fair contribution from those that can afford to pay: through making corporations pay their fair share, urgently implementing a broad-based, low-rate Financial Transaction Tax to reduce speculation and provide a new source of government funding to invest in public services, social protection and development.
5. Climate action - Governments must find the political will required to save our children's future, by reducing emissions of industrialised countries by 25-40% by 2020, implementing a green climate fund and ensuring a just transition for workers and communities.
If we embrace these principles and commit to a new economic model that serves these needs -- rather than just focuses on the often illusory creation of wealth and hopes for a "trickle down" effect -- then the WEF will have helped deliver a new model worthy of the prefix 'super.'
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