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Towards a new world order

Mains -GS2- Social Justice, Mains -GS3- Economic Development

1. The World Economic Forum (WEF) held at Davos has become a Mecca for all forms of new capitalism.

2. WEF was started in 1971 with the objective of improving the state of the world. But now it serves as a platform for world leaders, billionaires, professionals at the top of the business pyramid.

Social Inequality

1. Social inequalities and continuing poverty are at the epicenter of the new world.

2. The latest Oxfam Report points out that 2,153 billionaires have more wealth than 4.6 billion people.

3. The emergence of billionaires and oligarchs in different parts of the world coincides with increased poverty among the already poor people, especially children.

4. This questions capitalism as a concept.

Energy Use

1. One of the chief characteristics of economic development is the intensification of energy use because all economic development is linked to high energy density.

2. The bulk of the energy continues to be generated from non-renewable sources.

3. Main objective of developed countries and China is to capture energy-generating resources from across continents and use them to push GDP growth to greater heights.

Excess Consumption

1. High consumption of energy by the developed world has been accompanied by the disposal of residual products (‘e-waste’) on the shores of many African and Asian countries.

2. As a result, the poor in the developing world are exposed to toxic, hazardous materials like lead, cadmium and arsenic.

3. The ‘globalisation’ phenomenon has turned out to be exploitation of the developing world, with most countries being treated as a source of cheap labour and critical raw material.

4. Most transactions are based on the arbitrage between price and value difference, from which only the ‘middleman’ gains, not the primary producer.

5. Countries in the developed world, and China, are using up finite raw materials without much concern for the welfare of present and future generations.

6. Technological progress has brought revolution in the fields of healthcare and communications, but it also has a dark side.

7. High expenses and Intellectual Property Rights further favour the rich.

8. For example, under carbon credit system countries with high energy consumption can offset their consumption patterns by purchasing carbon credits, the unutilized carbon footprint, from poor developing countries.

Nordic Economic Model

1. The ‘Nordic Economic Model’ pertains to the remarkable achievements of the Scandinavian countries comprising Denmark, Finland, Iceland, Sweden, Norway, and allied territories.

2. The total population of the Nordic countries is estimated at almost 27 million people.

3. These nations are among the richest in the world in terms of GDP per capita.

4. They also have large public sector enterprises, extensive and generous universal welfare systems, high levels of taxation and high state involvement in promoting and upholding welfare states.

5. UN reports also indicate that the Nordic countries are the happiest countries in the world.

6. Nordic model can serve as a model for new ‘enlightened global order’, that includes

a. Effective welfare safety nets for all,

b. Corruption-free governance,

c. A fundamental right to tuition-free education, including higher education and

d. A fundamental right to good medical care.

7. This also has to involve shutting of tax havens. In Nordic countries, personal and corporate income tax rates are very high, especially on the very rich.

Holding Companies Responsible

1. In traditional business accounting, ‘bottom line’ refers to the financial year’s profit or loss earned or incurred by the company on pure financial parameters.

2. But under a new format, a company’s performance is measured through four ‘Ps’.

The four ‘Ps’

What does it mean?

Profit

Profit on financial parameters

People

How the company’s actions impact not only employees, but society as a whole.

Planet

Are the company’s actions and plans sensitive to the environment?

Purpose

The companies and individuals must develop a larger purpose than ‘business as usual’.

3. Using big data and text analytics, a company’s performance can be measured in terms of all the four ‘P’s and a corporate entity can be thus held accountable.

4. A global consensus and the will to make the planet more sustainable is needed to ensure justice, equality and hunger or poverty-free childhood.

Source: The Hindu