Global Financial Crisis Response | 2008 - 2011

The year was 1997. I was hired by UNDP Mongolia to establish and head up its communications operations in the country (UNDP Mongolia Communications Office). At the time, Mongolia was experiencing “one of the biggest peacetime economic collapses ever” (Pomfret: 1994) . And it showed. Food was scarce, unemployment high, poverty was increasing, and the capital Ulaanbaatar consisted of decaying and shabby Soviet and Communist architecture. The country felt isolated and cut-off from a world experiencing the boom of the late 1990s and the information technology revolution. 

Working in the country for two years (1997-1999) taught me a great deal about how a country recovers from a severe crisis and rebuilds its economy. I learned about human resilience and how markets can restore economies; the key role information technology plays and the importance of unfettered information and knowledge sharing to give people the tools they require to re-build their lives and grow wealth. Read more about this experience here: http://www.davidsouthconsulting.com/case-studies/case-study-4-un-undp-mongolia-1997-1999.html

The unfolding Global Financial Crisis in 2008, while caused by the collapse of the financial system, also presented an opportunity to apply the lessons learned in the late 1990s. The crisis was a roller coaster ride and provided a front row seat to what happens when too much debt and fraud overwhelms the financial system. A conference in Switzerland on African trade opportunities in 2008 was disrupted by the crisis as participants received frantic calls from London and New York and grabbed their bags and fled. Later that year I joined my wife (a foreign correspondent) in Reykjavik, Iceland as demonstrations erupted resulting from the collapse of their banks. Later this was called the ‘Pots and Pans Revolution’ (https://en.wikipedia.org/wiki/2009_Icelandic_financial_crisis_protests). See pictures of the demonstrations here: https://www.flickr.com/photos/15195144@N06/albums/72157613009834677

In 2009 I attended a UN conference in Geneva, Switzerland to evaluate the crisis and forecast where it might go. I wrote a blog about it here: http://www.davidsouthconsulting.com/blog/2016/1/8/global-crisis-report-from-the-un-conference-on-the-social-an.html

On the streets of Paris in 2009.

As this was happening something very exciting was emerging. While researching the e-newsletter Development Challenges, South-South Solutions for the United Nations Office for South-South Cooperation (UNOSSC), it became clear a quiet revolution was ocurring as a result of the rapid spreading of mobile and information technologies across the global South. That represented an exceptional crisis response tool where governments and the financial system were failing people. The e-newsletter was being sent to a global subscriber base across the United Nations and governments, reaching a highly influential audience in the global system. 

In 2011, this research went into the landmark first issue of the magazine Southern Innovator (called “a terrific tour de force of what is interesting, cutting edge and relevant in the global mobile/ICT space…”). This transformative magazine leveraged even greater change as it inspired many, as well as being cited as an influence on the UN’s and UNDP’s strategic priorities (the current innovation agenda and the focus on South-South cooperation). 

The repercussions of the 2008 Global Financial Crisis are still with us. Central banks continue with emergency measures (low interest rates, asset purchases, QE etc.) and consumer, government and corporate debt continues to rise. An ability to respond and recover will still be needed and David South Consulting will be there. 

© David South Consulting 2017

Global Crisis: Report from the UN Conference on the Social and Political Dimensions (2009) | 8 January 2016

A Report from the UN Conference on the Social and Political Dimensions of the Global Crisis: Implications for Developing Countries (12-13 November 2009)

Organised by the United Nations Research Institute for Social Development, Geneva, Switzerland. Held at the Palais des Nations.

A conference in Geneva struck a pessimistic note on the current global financial crisis and any hope for a new social and economic order. The conference asked “whether current policy reforms are conducive to a transformative social change or if they only reproduce the status quo.”

A March 2009 IMF report on the downturn’s affect on the Global South and developing countries found that “fluctuating commodity prices, high fuel costs, the rise in food prices in addition to a decrease in remittances, foreign direct investment and aid flow could mean an increase in the financing needs of low-income countries by at least US $25 billion.”

The presenters at the conference painted a picture of a robust neo-liberal economic order that is already in the process of dusting itself off from the crisis and restoring its dominance.

Bob Jessop, from the University of Lancaster, captured the paralysis of opposition to the neo-liberal order by saying “They are busy doing it and we are busy talking about it.”

To paraphrase philosopher Friedrich Nietzsche, that which does not kill us makes us stronger. Neo-liberalism may in fact be strengthened by the crisis, according to presenters. It will evolve and take on new forms, they argued.

The world’s business elites have an enormous capacity to re-shape the rules of the economic game back in their favour. While the massive state support to the banking sector had led some to believe governments were restoring faith in public investments, in fact state support is seen as “timely, targeted and temporary.” When asked about the future as the crisis passes and countries come out of recession, the presenters believed this was a short-term recovery, and that far worse economic crises would be coming in the next five to 10 years. Andrew Martin Fischer, from the Institute for Social Studies at Erasmus University, believes the harmful effects of the bailouts will be pushed to the periphery over the next five to 10 years, harming the poor. He also believes a major financial crisis is brewing in China. He called "China the fault line in the future."

The powerful, he pointed out, displaced the costs of their mistakes onto other people. Proponents of different approaches had missed the moment because they were not able to present off-the-shelf strategies that could be deployed in a crisis on short notice. Thus, they had left the field open to neo-liberal solutions.

The global crisis in the short-term has not been worse because of unprecedented global cooperation. Keynsian measures have been used to solve the crisis, but are also used to preserve Wall Street. Also, the enormous contribution of growth in China and India means there are other sources of wealth in the world than just the North.

Getting back to normal should not be what we are doing, the panelists concluded at the conference’s final session. Governments should look at new opportunities for social policy. The panelists were disturbed that the International Monetary Fund (IMF) is seen as part of the solution. This means deep cuts in public expenditure are coming. There will not be a trickle down of wealth and the imbalances from before the crisis will remain. In short, the system was not working before the crisis.Some policy suggestions put forward included: rural income guarantees, managed migration to support development goals, making a gender perspective critical to development. Governments should take a preventive approach to tackle future crises. Unfortunately, it now seems no money is left to address these problems. Yet business as usual is not an option with so many inequalities and imbalances.

“This conference on the social and political consequences of crisis is a critical subject for debate at this juncture,” said UNRISD’s director, Dr. Sarah Cook. “We are now at a point where many countries, particularly in the North, are emerging out of the severe shock of immediate crisis. Discussions of alternative policies and institutional arrangements at national and global levels may become less urgent; the status quo is reasserting itself and the space for ideas and policies that offer the possibilities of more stable, sustainable and equitable development will quickly shrink.”

Session 1: Impacts, Coping Strategies and Livelihoods

Session 2: Social Policy: Country and Regional Perspectives

Session 3: Social Policy: Global Perspective

Session 4: Political Economy Dimensions of Crisis

Developmental Aid Flows around the World Source: OECD