Envío Digital
Central American University - UCA  
  Number 421 | Agosto 2016



How did we get to this chaos?

On his return from the Auschwitz concentration camp, Pope Francis said the world is at war. How did this happen? It’s hard to tell left from right among today’s political leaders, as they all seem without ideologies and subordinated to finance. Some historians argue that history’s two engines are greed and fear and explain that values and priorities change in an avaricious society. Clearly, the world today is experiencing a time of greed and fear.

Roberto Savio

A curse long attributed to China says: May you live in interesting times. What makes it a curse is that too many events disturb the essential element of harmony, the basis of the Chinese pantheon. Today’s times are certainly interesting, with a build-up of dramatic events from terrorist acts to coup d’états and even climatic disasters, not to mention institutional decline and social upheaval. Let’s briefly review how we’ve gotten to this “unharmonious” situation.

1981: The UN begins to decline

Let’s starts with some known facts. After World War II there was global consensus about the need to prevent a repetition of the horror experienced between 1939 and 1945. The United Nations was the forum where almost all nations met. The Cold War that ensued led to the creation of an association of young, newly independent countries, the Nonaligned Nations, which became a buffer zone between the East and West.

With that the global gap between North and South became the most important issue of international relations. So much so that in 1973 the UN General Assembly unanimously adopted a resolution on the New International Economic Order (NIEO). The world agreed on a plan of action to reduce inequalities, promote global growth and make cooperation and international law the basis for world harmony and peace.

With the adoption of NIEO the international community began to work towards this and, following a preparatory meeting in Paris in 1979, the most influential heads of State and government met in what was officially known as the International Meeting on Cooperation and Development organized in the Mexican resort of Cancún on October 22-23, 1981, to adopt a global action plan. The Soviet Union chose not to attend and Cuba was excluded at the request of the United States.

Among the 22 heads of State and government from five continents attending that North-South Summit—the only one of its kind in history—were US President Ronald Reagan (1981-1989), and British Prime Minister Margaret Thatcher (1979-1990), who saw eye to eye. The two leaders proceeded to annul the NIEO and the very idea of international cooperation. The countries would design policies according to their national interests and not bow down to some abstract principle.

With that the UN began its decline as the arena for the promotion of governance. The place for decision-making passed to G-7, the group of the world’s seven most powerful countries, until then a technical body, and to other organizations dedicated to defending the strongest countries’ national interests.

Three events changed the course of history

Three other events helped Reagan and Thatcher change the course of history. The first was the creation of the Washington Consensus in 1989 by the US Treasury Department, International Monetary Fund and World Bank. These three institutions promoted a policy according to which the market was society’s only engine. States came to be seen as an obstacle to the unfettered market and were expected to shrink as much as possible. Reagan even considered eliminating the Department of Education. The impact of the Washington Consensus in the so-called Third World was very painful. Structural adjustments drastically reduced the already fragile public system of many of those countries.

The second event was the fall of the Berlin Wall in 1989, bringing with it the end of competing ideologies and the forced adoption of neoliberal globalization, which proved to be an even stricter ideology. Neoliberal globalization was characterized by market dominance, with “free” or private companies released from any obligation to the State: by the slashing of public spending on social services, thus destroying social safety nets; by deregulating or decreasing any State regulation that would reduce or limit profits; and by privatization, selling state companies providing goods and services to private investors. Neoliberal globalization also involved eliminating the concept of “public” or “community good,” replacing it with “individual responsibility,” thus forcing the poorest people to find their own solutions to lack of medical care, education systems and social security, blaming them for their failures, calling them “lazy.”

The third event, in 1999, was the progressive elimination of the rules governing the financial sector, initiated by Reagan and completed by Bill Clinton (1993-2001), under which banks could speculate with the money deposited in them by their clients. Since then, finance, considered the economy’s lubricant, has followed its own path, embarking on very risky operations unrelated to the real economy. Today, every dollar of goods and services produced generates $40 in financial transactions.

Greed as the engine of history

No one now defends the Washington Consensus or neoliberal globalization. It became clear that although globalization increased trade and promoted financial and global growth from a macro viewpoint, it proved a disaster on a micro scale.

The defenders of neoliberal globalization argued that growth would trickle down to everyone. Instead, it has become increasingly concentrated in fewer hands. In 2010, the wealth shared by 3.6 billion people in the world was equal to that concentrated in just 388 people’s hands. In 2014 the privileged few was reduced to 80 and in 2015 to 62. In an about-face from the Washington Consensus, the World Bank and IMF are now asking for the strengthening of the State as an indispensable regulator.

Since the fall of the Berlin Wall, 18 million Europeans lost their middle class. In the United States it’s been 24 million. There are now 1,830 multimillionaires in the world with a net capital of US $6.4 billion. It’s forecast that in 2025 inequality in Great Britain will be the same as in 1850 during the Victorian era, at the birth of capitalism.

The new world created by Reagan was based on greed. Some historians argue that greed and fear are the two engines of history and explain that values and priorities change in an avaricious society.

First horseman of the Apocalypse: The 2008 banking crisis

Today we have new horsemen of the Apocalypse riding about telling us that the damage we have experienced in the 20 years from 1981 to 2001 will worsen in the next 20 (2001-2020), of which we still have 4 to go.

The first horseman was the 2008 collapse of the US banking system through absurd speculations with mortgage loans. The crisis spread to Europe in 2009, following the fall in the value of property titles. The countries spent close to US$4 billion to bail out the financial system, an enormous sum when you consider that the banks still have some US$800 billion in toxic assets.

The banks had to pay $220 billion in fines for illegal activities, but no bank manager was convicted. Europe didn’t return to its pre-crisis situation. Many jobs disappeared through the relocation of production to cheaper places and the numbers of low-wage and precarious jobs increased.

According to the Organization for Economic Cooperation and Development (OECD), a worker today earns 16% less than before the crisis in real terms. This has mainly affected the younger sectors, among which only 10.5% in Europe are employed on average. The only sector that is growing is banking, with the Central European Bank turning over US$80 billion each month. It could have easily resolved the lack of jobs for young people with that amount.

Structural unemployment terrorism and populism

Economists now talk about a “New Economy” in which unemployment will always be structural. From 1959 to 1973 world growth was at over 5% per annum. It dropped to 3% p.a. in 1973 with the oil crisis, which marked a permanent change. World growth hasn’t reached 1% p.a. since 2007.

To this we must add the growing unemployment brought about by technological development, with factories now needing fewer workers. The Fourth Industrial Revolution, involving robotized production which already accounts for 12% of total world production, will rise to 40% in 2025.

Some economists, among them the system’s official spokesperson, Larry Summers of the United States, say we are in a stagnation period that will last some years. Fears for the future became a reality, fueled by terrorism and unemployment, but accompanied by the dream of those who believe it’s possible to return to a better past.

Taking advantage of this nostalgia are populist figures from Donald Trump in the US to Marine Le Pen in France. One of the consequences of the current crisis is that populist parties with nationalist and xenophobic platforms have also appeared in several other European countries, 47 at last count. Many are already in government or have joined governing coalitions: in Slovakia, Hungary and Poland, and attention must be paid to the upcoming elections in Austria.

Second horseman: Mass migration over Europe

The second horseman of the Apocalypse is the result of the US armed interventions in Iraq and those of Europe in Libya and Syria, in which former French President Nicolas Sarkozy (2007-2012) played a notable role.

Military interventions led to massive migration aimed at Europe starting in 2012, for which Europe wasn’t prepared. The European populations are afraid of the human wave coming towards them, with its impact on the labor market, culture and religion becoming an important ingredient of the fear.

Third horseman: Islamic State and xenophobia

The third horseman has been the 2013 creation of the Islamic State in Syria, one of the consequences of the US-led invasion of Iraq in 2003. With the global crisis beginning in 2008, populism and nationalism began to grow with it.

The dramatic impact of the Islamic State in the media and the radicalization of many, generally marginalized young Europeans of Arabic origins accentuated the fear and became an incentive for populism, now able to use xenophobia to mobilize insecure and discontented citizens, both male and female.

The decline of European institutions led many countries to ask for a thorough review of the European project following Great Britain’s Brexit. On October 2, Hungary will consult its citizenry: Would you accept a migrant quota imposed by the European Union against the will of the Hungarian parliament?

Elections will be repeated in Austria that same day due to questions of form, after the extreme Right lost by 36,000 votes in the previous ones. Elections will follow in Holland, France and Germany, with the likelihood that the extreme right parties will grow. Poland and Slovakia also want to hold referenda about staying in the European Union. It’s possible that by the end of 2017 the European institutions will be grievously damaged.

We’ve lost the ability to think together

The real problem is that ever since the failed Cancún Summit in 1981, countries have lost their ability to think together. India, Japan, China and many others are also experiencing a wave of nationalism.

All the participants in Cancún, from then-President of France François Mitterrand (1981-1995) to Indian Prime Minister Indira Ghandi (1966-1977 and 1980-1984), from Tanzanian President Julius Nyerere (1964-1985) to Canada’s Prime Minister Pierre Trudeau (1968-1979) shared certain values of social justice, solidarity and respect for international law, as well as the conviction that strong societies were the basis for democracy. The exceptions were Ronald Reagan and Margaret Thatcher, who declared: “There is no such thing as society…there are only individual men and women…”

Those other leaders also thought of peace and development as the paradigms of good governance. But all this has disappeared. Today’s political leaders, bereft of ideology and subordinated to finance, have mainly taken refuge in administrative debates about specific, uncontextualized issues, where it’s hard to distinguish between leftists and rightists. Clearly we’re in a period of greed and fear.

And time isn’t helping. In 1900, 24% of the world’s population was concentrated in Europe; by the end of this century it will only have 4%. By 2050 Nigeria will have more inhabitants than the United States. Africa, which now has 1 billion inhabitants, will have twice that in 2050 and three times it in 2100.

It’s time for a global agreement

It’s time to discuss together how to we’re to face the world that’s coming. It took 25 years to reach an agreement about climate change and the one we achieved in 2015 is perhaps already too little too late. The subject of migrations and employment is eternal.

It’s time for a global agreement, not just the impulsive reaction of Germany’s Chancellor Angela Merkel, in complete solitude without even consulting France’s President François Hollande.

This kind of agenda is politically unimaginable today. How can something like that be discussed with Le Pen, Trump and the other populists emerging in the nationalist framework spreading throughout the world?

Roberto Savio is a journalist; expert in communications issues; political analyst; activist for social justice, climate and global governance; and the co-founder and former director of Inter-Press Service.

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