- Davide Accomazzo, MBA
This is the second of two posts on changes I think need to be made for a new, more sustainable economic and social system. Click here to read Part I. The full article exploring these interventions was first published in August 2008 on Goldmau.com.
Since the early part of the last decade, I have uncomfortably witnessed the unstoppable force of mass consumerism and economic leverage take over every aspect of our system in complete disregard for the social aspects. However, it was not until this recent “quantity over quality” takeover engulfed the cultural fabric of our society that I started to really question the future viability of Mass Capitalism. It seems to me what we need in its place is a new, more qualitative capitalism.
In the first post, I explored two of four areas of intervention for restructuring the imbalances of today’s capitalism: monetary policy and globalization management. In this post, I discuss the latter two: education and regulatory transparency.
Education
Improvements in education are at the absolute center of positive social change and, if implemented properly and forcefully, will be the driving force in redirecting the disruptive course our socio-economic system has taken.
The United States, once the proud global leader of knowledge, is facing the first generation that is about to lose such leadership. Thirty years ago, 30% of the world’s college graduates were produced here; now it is only 14%. Other measures of cultivation of technological talent, like the number of new patents awarded or the number of people employed in idea-generating occupations are also in decline in the U.S.
But no region is immune: Europe is dedicating only 1.3% of its gross domestic product to higher education, continuing a 30-year trend of underperformance relative to the US. And the much-proclaimed Russian “dream to build a knowledge-based economy based on an army of trained scientists” remains a dream. Even Italy, cradle of the Renaissance, is now sadly slipping toward the bottom of international education rankings. Quality in education is seriously in danger. This is an issue that must be tackled globally, locally and at different levels of the educational supply chain.
I strongly support U.S. involvement at the international level in efforts to raise global educational standards. Ideas such as the one put forward by former British Ambassador to the US, David Manning, to establish a World Education Bank may have merit.
At the domestic level it is imperative that standards be raised dramatically; that more and more children be brought into the educational circle; and that the unjustified sense of entitlement so rooted nowadays in many of our young students be eradicated in favor of a true appreciation for the discovery of knowledge. A recent US study indicates that every dollar spent in early quality care and children education saves about 13 taxpayer dollars over the long term. I believe this is a large underestimation. We need widespread education of a higher quality and a better understanding of the positive ramifications of globally improved education.
As a byproduct of more emphasis on education, a strong focus on research and innovation could be the spark to push the United States back into a global leadership position. The opportunities are endless. For example, as a nation we are now facing a dependence of unsettling proportions on non-renewable resources. The dire economic and environmental consequences of our (and the world’s) dependence on fossil fuels are now rather unquestionable. The US must take the lead in the development of alternative energies at this strategic juncture. This will put us in a position of global leadership and the economic advantage will help restore a lot of the global and political influence and prestige that was tarnished in the last few years.
Disclosure and Transparency in the Regulatory Process
Capitalism has developed into a powerful and all-encompassing international force and so, the need for a global and transparent regulatory process along seems like a reasonable expectation. Transparency, disclosure, and global regulatory co-operation, however, should not be equated with government take-over.
The role of government should be to referee rather than to dominate.
Governments around the world should provide level playing fields for the global economic agents to act. A few specific areas of quality intervention in the realm of global regulations and transparency should include central bank operations, global tax arbitrage and centralized and transparent clearing for derivatives. (See the full article for a more in-depth review)
Conclusion
Capitalism works. It may not be perfect but it does respond more efficiently than any other socio-economic systems to the main characteristics of mankind. However, we seem to have hit an important juncture where we may have outgrown capitalism’s first phase: Mass Capitalism.
A new variation centered on a qualitative process rather than a quantitative focus seems to be the solution to the present economic, environmental and social impasse. A better tomorrow will come from the global realization that a superior quality of life is rooted in a need for better things and better thoughts—not more things and more TV shows.
Related Articles in the GBR
- An Alternative Way to Manage Equity Portfolios by Davide Accomazzo, MBA, and Rosario Rivadeneyra
- Is Managed Futures an Asset Class? by Davide Accomazzo, MBA, and Michael “Mack” Frankfurter
- No Child Left Behind: A Blueprint for Success by Owen P. Hall, Jr., PE, PhD
- Crisis in America: A Nation at Risk by Darrol J. Stanley, DBA
