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► The dot.com bubble bursts
► NASDAQ and Wall Street plummet
►The global economy shivers
►Then recovers
►And financial speculation explodes globally
2000
Stocks in companies traded on regulated stock markets
TRADITIONAL CAPITALISM
Corporate bonds Government bonds
Banking system
• Pension Funds Private/Commercial property
Shareholders Employees
Personal and corporate taxation on
• companies raise capital • finance for infrastructure(roads, schools)
Circulates credit
•revenues• assets• capital gains• consumption (VAT)
• Recurrent spending• Debt service on capital/
infrastructure investments
Public sector
CASINO CAPITALISM
HEDGE FUNDSPRIVATE EQUITY STRUCTURED FINANCIALPRODUCTS
house extensions; car; holiday; college fees
OFFSHORE HAVENS
PPPs
Corporate bonds replaceGovernments bonds
Often funded by private equity
for which a major source of finance
MORE BONUSES
HUGE BONUSES ! MINIMIZE TAXES !
MORE COMMISSIONS
PROPERTY è SUB-PRIME MORTGAGES
Unlisted on stock markets Off bank balance sheets
Escape banking Regulations
Buy a house (110% mortgage)Raise your mortgage to finance:
PENSION FUNDS
GLOBAL IMBALANCES
The United States No 1 economyFrom balanced budget (Clinton)
Coming out of « the lost decade »
EU/Euro zone No 3 economyGrowth slowing
Oil/gas producers
Emerging economies
Developing countries
Exchange ratesUSD, Euro, Yuan
Japan No 2 economy
SWFs
To record public deficits (Bush: taxcuts and Iraq war)
Higher unemployment
Russia, Gulf States, Nigeria, Venezuela, Norway
= Financial flows
Big trade deficit
Other OECD countriesEg Australia: Commodities
China
India, Brazil, Chile, South Africaoutsourcing
big trade surpluses
Africa, Asia/Pacific, Central/South America, Caribbean
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
IMBALANCES
AUGUST 2007
Sub-prime mortgages
Structured financial products
Where are the toxic products?
Inter bank lending freezes
THE PARTY STOPS !
DECEMBER 2007
Central banks start to easecredit and money supply
AUGUST 2008
US Fed bails out Fannie Maeand Freddie Mac
15 SEPTEMBER 2008
Lehman Brothers collapses
16 SEPTEMBER 2008
US injects $85bn into American International Group (AIG)
BAILOUTS AIG Banks Auto companies
STIMULUS PACKAGESMonetary Stimulus
Reducing cost of credit (interest rates) Increasing money supply (UK, US, Japan)
Fiscal StimulusIncrease 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
Source: Global Campaign for Education
IMF CONDITIONS:WAGE CUTS FOR TEACHERS AND
OTHER PUBLIC EMPLOYEESIn 9 out of 23 supported countries
Education on the brinkWill 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 ANDOTHER EDUCATION EMPLOYEES
USAEUROPE
Central and Eastern
Ukraine Hungary LatviaGDP -10% -5% -12%
Japan
Emerging economies
Developingcountries
Western
OPTIMISTIC SCENARIO Recovery in 2 to 3 year’s time
PESSIMISTIC SCENARIO Structural change/Paradigm shift
Social and political upheaval
Interaction with food crisis
Consequences of climate change
LESSONS FROM THE GREAT DEPRESSION
Table 1. Variation among countries
LESSONS FROM THE GREAT DEPRESSION
Source: William D. O'Neil (2009) Wikipedia
Table 2. US Recovery
LESSONS FROM THE GREAT DEPRESSION
« The situation is more complex today »
Joseph Stiglitz:
INSTITUTIONS
IMFTo advocacy for global stimulus
But still applying the old conditions – cuts in public sector
Rescue packages: 13 countries so far and more to come
WORLD BANKBIS
Development and combatting poverty
Central bankers
Financial Stability ForumFSF
OECD 30 industrialized democracies+ 5 candidate + 5 « enhanced engagement » countries
From neo-liberal
ILO Employment
UNESCO Education
WTO Trade
The UN
FSB Financial Stability Board G20
G7 G8
G14 [BRIC]
Canada, France, Germany,Italy, Japan, UK, US
Canada, France, Germany,Italy, Japan, UK, US
+ Russia
Canada, France, Germany,Italy, Japan, Russia, UK, US
+ Brazil, China, Egypt, India, Mexico, South Africa
Brazil, Russia, India, China
VARIABLE GEOMETRY
G20Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russia, South Africa, UK, US,
Argentina, Australia, Indonesia, Saudi Arabia, South Korea,Turkey, European Union
+
SUMMITS
G20Washington, November 2008London, April 2008
PITTSBURGH SUMMIT, 24 SEPTEMBER, with
IMF BIS WB OECD WTO+ ILO
Global Unions, NGOs
UNGENERAL ASSEMBLY, NEW YORK, OPENS SEPTEMBER 26
NGOs
G8/G14 ITALY, JULY 2009 Global Unions
Stiglitz Commission
Summit on the crisis June 24-26
VET
ECE
K-12
H. ED & R
INVESTMENT IN PEOPLE THROUGH EDUCATION
DEFENDING RESOURCES FOR EDUCATION
STAFFING Teachers
Support Staff
INFRASTRUCTURE BuildingsFacilities
- qualified for quality education- key actors in safe schools and colleges
Hire, not fire
In a downturn, its timeto upskill
The next generation –every nations’ future
An equal start and equityfor families
KEEPING TEACHERS AND SUPPORT STAFF WORKING IS A STIMULUS PACKAGE IN EVERY COMMUNITY
Investing in human progress + capacity for innovation
REASSERTING VALUES
VALUES
EI’s VISION FOR EDUCATION AND SOCIETYEducation is a public good not a commodity.Education is central in our societies in many ways;
Quality education requires quality teachersEducation unions should be key actors
Education is a human right.
• social and economic;• building and defending democracy;
• individual fulfillment;• community development;
Education should promote
• equity• non-discrimination• understanding among peoples
Keeping a global, long-term vision
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
“Choosing a type of education means choosing a type of society”
UNESCO ADG EDUCATION NICK BURNETT
Reaffirm the centrality of education
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
Knowledge, skills and values to promote informed choices and a more sustainable future
UNESCO ADG EDUCATION NICK BURNETT
Jobs + Income +EquitableIncome
Distribution
Investment in public education wins on all three
Mike Kahn – NEA Research
Investing in education creates jobs…
A $100 million tax cut results
in…
…a net loss of 2,200 jobs…a net loss of 2,200 jobs
A $100 million investment in
public education results in…
…a net gain of 2,200 jobs.
…a net gain of 2,200 jobs.
Source: School Funding, Taxes, and Economic Growth, April 2004
Mike Kahn – NEA Research
Every $1 invested in pre-school education provides an economic return of $7
Investing in Public Education is a smart economic development strategy
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
27
Source: The Price We Pay, Economic and Social Consequences of Inadequate Education, (2007) Brookings Institution Press Mike Kahn – NEA Research
MOBILIZATION
A clear vision for education and society
Powerful arguments for investment in people
Capacity to mobilize Globally Nationally Locally
A strategy of proposition
World Teachers’ Day: 5 October
EI Action Plan:
COALITIONS
THE GLOBAL CAMPAIGN FOR EDUCATIONhttp://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 UNIONShttp://www.global-unions.org/
200 million members in some 170 countries worldwide
NEA GLOBAL EDUCATION SUMMIT
San Diego, June 27, 2009
Gracias Merci
Thank you
Bob HarrisEducation International
bob.harris@ei-ie.org
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