Geopolitics-Other economic options

PLANETARY GEOPOLITICS AND  ECONOMICS TODAY

 

VI-OTHER ECONOMIC OPTIONS

 

 Society for the Promotion of a European Human Rights Model

Association pour la Promotion d'un Modèle Européen des Droits de l'Homme

 

By  Didier BERTIN

July 20, 2012

 

 

Table of Contents

  

I-INTRODUCTION-page 7

 II - GDP - page 11

1-THE TWO WORLD LEADERS: UNITED STATES AND CHINA AND THE OTHER THIRTEEN  COUNTRIES HAVING A GDP HIGHER THAN ONE TRILLION USD -page 11

2-THE FIRST FOURTEEN COUNTRIES - INDIA EXCLUDED page 13

3-COUNTRIES HAVING A GDP INCLUDED BETWEEN ONE HUNDRED BILLION USD AND ONE TRILLION USD - page 13

4-THE OTHER HUNDRED THIRTY FOUR COUNTRIES OF THE WORLD INCLUDING INDIA-page 14

5-CASE OF THE FIRST THREE ECONOMIC LEADERS COMPARED TO THE FOURTH ONE- page 14

6-REAL WORLD AND MEDIA WORLD - PAGE 16

7-EXAMPLES OF DIFFERENCES BETWEEN REAL WORLD AND MEDIA WORLD-Page 18

8-THE LIMITS OF GDP AND THE DANGERS OF ITS GROWTH - Page 44

 

III-MILITARY DETERRENCE - page 49

1-THE TWO REAL GREAT POWERS-Page 49

2-THE THREE SECONDARY POWERS page 51

3-OTHER COUNTRIES WITH ANNUAL DEFENCE BUDGET  IN EXCESS OF FORTY BILLION - page 52

4 - ISRAEL -page 55

 

IV-OIL: RISK FOR THE DEMOCRACIES - page 57

1 - MAIN NET-OIL IMPORTERS -page 57

2-ORGANIZATION OF OIL PRODUCERS AND EXPORTERS - page 58

3-ECONOMIC SITUATION OF OIL PRODUCERS AND  EXPORTERS -    page 59

4-POLITY OF OIL PRODUCERS AND EXPORTERS  - page 62

5- THE CHOICES IN THE FIELD OF ENERGY - page 65

 

V-PUBLIC DEBT-page 66

1 - KEY DATA ON PUBLIC DEBT-page 66

2- THE RISK OF OVER-INDEBTEDNESS CONCERNS ESSENTIALLY THE RICHEST COUNTRIES -page 67

3-THE PUBLIC "OVER-INDEBTED" COUNTRIES ARE MAINLY IN THE RICHEST ONES, ACCOUNTING FOR ONLY  13.9% OF WORLD POPULATION -  page 68

4- EUROPEAN UNION, EURO AREA AND PUBLIC DEBT - page 71

5- JAPAN -page  73

6 - POLICY REGARDING  PUBLIC INDEBTEDNESS-page 74

 

VI -OTHER ECONOMIC OPTIONS - page 75

1 - THE RISK OF PROTECTIONISM - page 75

2 - ECONOMIC CHALLENGES- page 76 

 

VII - PLANETARY SOCIAL DISPARTIES - page 80

1-DEFINITION-page 80

2-CALCULATION- page-80

3-GINI INDEX APPLIED TO THE PLANET-page 81

4-ANALYSIS-page 86

 

VIII-THE REASONS WHY THE EUROPEAN UNION IS NOT A GREAT POWER - Page 93

1-EU AND NATO-page 93

2-CREATION AND TREATIES - EXPANSION AND INTEGRATION, Page 96

3-THE PROBLEM OF THE APPLICATION OF THE CHARTER OF FUNDAMENTAL RIGHTS-page 98

4-THE CONSTRAINTS OF DECISION MAKING-page 100

5 - INSTITUTIONS page 101

6-THE POLITICAL ORIENTATION OF THE EUROPEAN UNION-page 108

7-INTERNATIONAL POLITICS - page 112

8-THE CASE OF THE EUROPEAN PARLIAMENT ELECTIONS - page 113

9- THE DISPARITIES OF THE MEDIAN INCOME OF HOUSEHOLDS IN THE COUNTRIES OF THE EUROPEAN UNION - page 114

10-THE NEW MEMBERS OF THE EUROPEAN UNION -page 115

11-THE LIMITS OF THE EUROPEAN UNION page 116

12-A PARTICULAR EXAMPLE OF THE RIGHTIST ROOTING OF THE EUROPEAN UNION-page 119

A-The Prague Declaration of June 3, 2008 - page 120

B-The dangerous consequences of the Declaration  of Prague and of the related Declaration of the European Parliament-page 121

k-DECLARATION - page 135

 IX - GENERAL CONCLUSION -page 138

 APPENDICES

1-DATA OF THE FIRST 60 COUNTRIES WITH GDP HIGHER THAN 100 BILLIONS USD AND THE REST OF THE WORLD - Pages 145 and 146 

2-DATA ON THE INDEBTED COUNTRIES OF THE EUROPEAN UNION page 147 

3-DATA OF THE  EURO AREA COUNTRIES -page 148 

4-GENERAL DATA OF THE EUROPEAN UNION -page 149

 

VI-OTHER ECONOMIC OPTIONS

 

1 - THE RISK OF PROTECTIONISM

Protectionism of Japan has not safeguarded  this country against its government mismanagement, the economic slowdown, the public over-indebtedness and the increase in poverty.

Protectionism generates higher prices in the newly protected and  former importing country and thus impoverish people of both importing and exporting countries. It might only improve the corporate profitability of the former importing country with no guarantee of the creation of new jobs.

The countries targeted by protectionism are often poor countries seeking to escape their condition by taking up productions with low added value. The protectionism applied by rich countries protects the privileges of their businesses by avoiding questioning the nature and the adequacy of their production and general management.

Protectionism is sometimes fallaciously justified by ethical reasons such as the job protection in rich countries and the protection of local populations of exporting countries against abuse of their employers.

The protection of workers in poor countries should indeed be a prerequisite for signing import contracts. The demand of reliable and controlled social audits of exporting companies should guarantee decent working conditions for the workers more than protectionism : limited working time, rest period, social protection, health coverage, prohibition of child labor.

The main importers: the main countries of the European Union, the United States and Japan, have together the power to improve the working conditions in the exporting countries by conducting a concerted action.

The promotion of the Charter of Fundamental Rights of the European Union in Europe and abroad could be among others a target of the international policy of the EU but it seems that the EU has neither the means nor the will to do so in Europe and as outside.

 

2 - ECONOMIC CHALLENGES

 

A-INDUSTRIAL SECTOR

The poor countries have shown that they did not intend to remain so in order to preserve the privileges of the rich countries and have developed competitive industries that should encourage rich countries to build new activities with high added value, which should be more in line with the high level of education they claim to have.

This new challenge is facing the shortermist traditional opposition of businesses, which control the markets and are not enough creative.

Instead of focusing on research and development and create new activities, businesses prefer outsourcing, layoffs, reduced social benefits, in order to maintain the profitability of their production process as it is.

The substantial share taken in the stockholders' equity of large companies, by financial investors such as pension funds, has led to an abandonment of specific industrial management criteria for the benefit of those applied in the financial markets, i.e. the predominance of optimal and immediate performance of investments.

The predominance of short-term performance of stocks is damaging to the investment choices that would ensure the long term survival of businesses. This new behavior has resulted in an increased unemployment, a declining of purchasing power and consequently that of State revenues.

The current functioning of capitalism does not permit anymore to cope with the new economic challenges that would preserve the welfare. The State should exercise a greater control over economic actors to protect the citizens against this new type of public disorders. Administrative and legislative measures should avoid costly nationalizations.

 

The tension between poor and rich countries may increase until a solution be found to harmonize the welfare of everyone taking into account the inability of the planet to resist to unlimited production growth amplified by  a constant demographic pressure. 

 

B-BANKS SECTOR

The development of interbank transactions was among others intended to stabilize short finance resources for longer term applications and to syndicate the risks of operations. Since it appears that this market now react by contagion and pulsion, the benefits that were expected, may turn into threats on economies: risk of sudden interruption of the credit lines and  increase of the interest rates, both  aggravated by the rating agencies that only amplify the existing and known problems.

A good State budget management is not sufficient to protect itself from financial crises due to private banks mismanagement, which may accumulate too many bad risks by greed spirit.

The Banks risk may, among others, be reduced  by stopping speculative activities of trading desks that should become, as they were initially,  service providers to traditional banking activities and not anymore  independent profit centers.

The central banks including ECB have for obvious problems of means, restricted approaches of risk by financial structures rather than by the underlying reality.  The tightening of prudential ratios in the Agreements of Basel III dated of  16 December 2010 did not permit to escape the crises of banks in 2011 and 2012.

Of all the banking scandals that have generated each time a serious systemic risk for  the banking system and which led to adopt additional and vain control steps, the Libor crisis is particularly impressing by the magnitude of the related risk and consequences and by the ease with which malpractice have occurred from 2005 to 2009:

  • The manipulation of Libor affects all products that take it as a reference and which could reach USD 350 trillion.
  • The reasons were mainly the greed of the traders and  of the Banks, which stop to be actors on an the market in instrumentalizing it  in order that it stops to be a market.
  • The ease to  find accomplices in the Banks used as market references in order  to distort what was a market.

The corrections of similar failures in the past have proven to be vain and the hardening of regulation or penalties do not remedy the situation.

Even control by automation did not work and market economy is no longer satisfactory. The so called the market may no longer be insidiously a market due to manipulations difficult to identify (those of Libor began at least 8 years ago).

 

The banking business is not an ordinary commercial activity because of its  immediate impact on the overall economy and cannot be freely left in  private hands.