Resetting economy, society and the world

Review by Abby Wong

 The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity

Author: Richard Florida
Publisher: Harper Collins

AN economic downturn is always unwelcome. But amidst even the worst depression, there is always a silver lining. This hope is firmly held by Richard Florida, a renowned American economist and urban theorist who has authored three international bestsellers on social trends of the 21st century, The Rise of the Creative Class, The Flight of the Creative Class and Who’s Your City?

In his latest book, The Great Reset, Florida sets his foot into economics, calling the current financial woes the necessary adjustments that will eventually give rise to new epochs of inventiveness, ingenuity, economic growth, and prosperity. But Florida is not being imprudent. Lest he upsets millions of people affected by the current downturn, he backs this idea with facts drawn from both history and rigorous research.

With flair of a storyteller, Florida recounts causes of the Long Depression of 1870s and the Great Depression of 1930s, and analyses the ensuing social and economical effects – the rise of innovation, changes in infrastructure, geographical resettlement and alteration of ways of living and working. Florida calls these adjustments resets and thinks the next Great Reset will take place soon or even now, if not already.

But what has worked in the past will not work quite as well in this era. No longer is our economy driven by manufacturing and factories like it was in the 20th century. Connected by a web of countries across the world and confronted by a mélange of problems never before seen as imminent, today’s economy can only be propelled by ideas and creativity.

Furthermore, with the busting of consumerism, restarting economic growth this time requires more than boosting spending but a new socio-economic framework that is in line with frugality, flexibility, conservation and environmentalism.

With his trademark blend of wit, verve and analysis, Florida presents an optimistic future and a society that he envisions as vibrant, mobile, prosperous and creative. To achieve this vision, he calls for abolishment of certain long-held beliefs, realignment of our way of life and redesign of governments’ policies.

So, will the current crash usher in a new age of thrift, caution and frugality? Will car-ditching be the next badge of honour, replacing car-loving? Will troubled, if not deserted, industrialised cities be revitalised? With mortgage lending became overblown and began to undermine the economy, will house ownership be replaced by renting? Finally, will education, infrastructure, employment, and the role of government be improved, adjusted and attuned?

Yes to all that, according to Florida, as he puts forth his reasons and suggestions. For instance, to breathe life back into abandoned industrial cities, he suggests a high-speed rail system that is faster than a speeding bullet, knitting active and dormant cities together to form mega-regions.

On jobs, which are fast disappearing as a result of the crash, Florida advocates creative job creation by knowledge professionals, rather than depending on big conglomerates that hire and fire and then close down when crisis takes place. On housing and cars, bigger is no longer better, while renting will be the new normal, more for mobility reason than for cautious introspection.

Though some changes may have already taken place, the real challenge, according to Florida, lies in the efficient and productive use of capital, which has become dangerously scarce after the financial crisis. Only by making intelligent investments in new infrastructure that goes beyond the current energy and environmental constraints, can we build a new creative economy and society that is vibrant and prosperous.

The Great Reset is a fantastic book that I think should be read especially by all policy makers seeking an inkling as to what will and should happen in the aftermath of this disastrous financial meltdown. Although much of the context is drawn from the United States, it is very much written for the emerging economic and social landscapes of the world.

Indeed, I closed this immensely stimulating book with a sigh and reflected on what seems to be a poverty of natural resources we are facing and wondered for how long the earth can endure human destruction before arriving at the much better world that Florida envisions.

Not too long, I hope.

G20 walks tightrope between growth, deficits

(Agencies)
Updated: 2010-06-28 08:04, China Daily

TORONTO – World leaders agreed on Sunday to take separate paths toward shared goals of lasting growth and safer banks as two years of global crisis give way to a fragile economic recovery.

The leaders of the Group of 20 pose for a family photo at the G20 Summit in Toronto June 27, 2010. [Agencies]

Balance was the buzz word. The Group of 20 pledged to halve budget deficits by 2013 without stunting growth, and clamp down on risky bank behavior without choking off lending.

Related readings: G20 to refrain barriers to investment and trade G20 leaders meet with youth delegates  G20 leaders offer insights at plenary session Thousand protest against G20 summit in Toronto

But they left room for countries to move at their own pace and adopt "differentiated and tailored" policies that match national economic or political priorities, a sharp reversal from the unity of the previous three crisis-era G20 summits.

"The G20's highest priority is to safeguard and strengthen the recovery and lay the foundation for strong, sustainable and balanced growth, and strengthen our financial systems against risks," the group said in a statement released at the end of meetings here.

The G20 allowed each country space to decide how to proceed with controversial provisions such as taxing banks to recoup bailout costs and implementing tougher bank capital rules.

The G20, which includes emerging economic powers as well as the developed economies, which is where the economic trouble started, united last year to throw trillions of dollars into the battle against recession.

But that unity has begun to fray as countries emerge from crisis at different speeds and with different policy needs. Emerging Asian economies such as China have come roaring back while the US recovery remains tepid and Europe lags behind.

"Now that the worst of the crisis is past, the dewy-eyed vision of G20 countries pulling together to solve global economic problems is steadily giving way to a more pragmatic approach of merging competing perspectives and agendas to fashion imperfect compromises and make incremental progress," said Eswar Prasad, a senior fellow at the Brookings Institution and a former International Monetary Fund official.

Newscribe : get free news in real time

Hu hits out at 'all forms' of protection

Chinese President Hu Jintao has slammed protectionism and urged his G20 partners to ensure exit strategies from economic stimulus programs will not harm the global recovery.

Speaking at a G20 summit in Toronto on Sunday, Hu took aim at the developed world, saying they should promote international trade with greater openness.

"We must take concrete actions to reject all forms of protectionism, and unequivocally advocate and support free trade," Hu told his counterparts from the G20 group of major developed and emerging economies.

He called for a renewal of commitments from countries not to impose new restrictions on goods, investment and services, and urged his partners to "earnestly follow through" on these pledges.

Amid warnings from American legislators seeking to impose trade sanctions on China over its relatively undervalued yuan currency, Hu said trade disputes should be settled through consultation.

"It is important to address trade frictions appropriately through dialogue and consultation and under the principle of mutual benefit and common development," Hu said.

Hu did not touch on the issue of the yuan's value, but said: "Exchange rates of major currencies fluctuate drastically and international financial markets suffer from persistent volatility."

He also weighed in on the debate between the United States and countries such as Germany and Britain - which are seeking rapid deficit reduction - on how to nurture the fragile global recovery from the worst recession in decades.

Despite its mounting deficit, the United States wants stimulus measures to be maintained while Germany and Britain, worried about the escalating budget crisis in Europe, feel deficits needed to be trimmed swiftly.
Hu offered words of caution.

"We must act in a cautious and appropriate way concerning the timing, pace and intensity of an exit from the economic stimulus packages and consolidate the momentum of recovery of the world economy," he said.

Hu also wanted a shift in the focus of the G20, the premier global economic forum, from coordinating stimulus measures to coordinating growth and from addressing short-term contingencies to promoting long-term governance.

"We should strengthen coordinating of macroeconomic policies among G20 members, keep the right intensity of our policies and support countries hit by the sovereign debt crisis in overcoming the current difficulties," he said.

The sovereign debt turmoil in Europe was triggered by a Greek budget crisis and has threatened to spread across the eurozone, undermining the stability of the euro and the strength of many European banks.

© 2010 AFP

Newscribe : get free news in real time