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Between Markets and the State Stavros A. Zenios President of UNICA President of UNICA University of Cyprus University of Cyprus.

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Presentation on theme: "Between Markets and the State Stavros A. Zenios President of UNICA President of UNICA University of Cyprus University of Cyprus."— Presentation transcript:

1 Between Markets and the State Stavros A. Zenios President of UNICA President of UNICA University of Cyprus University of Cyprus

2  The State of the World  Markets –and the seeds of their destruction  States –and the seeds of their destruction  The value of COOPetition  COOP –and the seeds of their destruction Outline

3 “Anyone can count the seeds in an apple, but only God can count the apples in a seed” Robert H. Schuller, 1926. Conclusion

4  Constructed uncertainty  Technological innovation  Complex interconnectedness  Social reflexivity  Post-traditional societies (Anthony Giddens, Beyond Right and Left) (Anthony Giddens, Beyond Right and Left) State of the World: social

5  Global ecological footprint: 1.5 planets earth “At the current pace of population growth and consumption, by the year 2030 we will need 2 planets earth to sustain us. And of course we have only one.”  Ecological footprint of regions:  Mediterranean nations need 3 Mediterranean seas  Cyprus ??? (Global Footprint Network) (Global Footprint Network) State of the World: environment

6 Το Χρυσοπράσινο Φύλλο

7  World Bank Adjusted Net Savings State of the World: environmental

8 8

9  Club of Rome--MIT  Limits to Growth,  1970’s State of the World: sustainability

10 10 Corrections = increasingly more costly No correction = Collapse Since 1980’s

11 Hysteresis Hysteresis Societal attention deficit Societal attention deficit Social choices Social choices Lack of know-how Lack of know-how Collapse Trap Collapse Trap 11

12 “World economy is undergoing seismic shifts. This is partly because of the success in increasing productivity in manufacturing, so that a small fraction of the population can produce all the toys, cars and TVs that even the most materialistic and profligate society might buy” (Joseph Stiglitz, Freefall, 2009) This is partly because of the success in increasing productivity in manufacturing, so that a small fraction of the population can produce all the toys, cars and TVs that even the most materialistic and profligate society might buy” (Joseph Stiglitz, Freefall, 2009)  Huge trade imbalance EAST-WEST.  Manufactured goods automated-no job creation.  Manufacturing related SERVICES exacerbate the problem. State of the World: economy

13 Markets: the seeds of their destruction 1.Ignore negative externalities 2.Inequalities in distribution of wealth 3.Can not offer public goods

14 1. Externalities do not remain external Environmental problems Banks care about shareholders not about depositors Management bonuses erode shareholder value

15 1. Externalities do not remain external Total Income of Manager (1000 $)Shareholder Value (million $) Base salary 125403520125403520 Participation 1 %8 %10 % 20% 1 %8 %10 % 20% Rating AAA 817.1605.4661.3986.4103.7103.9103.8103.5 AA 821.7631.7690.61,007.6104.0104.1104.2103.7 A 825.6648.0705.3964.2104.1104.2103.9103.3 BBB 804.8682.7722.4799.0104.0 103.9103.3 BB 892.7794.1796.6636.5103.3102.9102.7101.6 B 979.9994.4977.0719.0102.3101.3100.998.9

16 2. Inequalities in distribution of wealth “All animals are created equal. But some animals are more equal than others.” Animal Farm

17 Increased inequalities:  Household debt  Reduce savings  Destabilize  Social problems

18 3. Can not offer public goods FIRST GENERATION: Healthcare, education, security, transport SECOND GENERATION:Healthcare standards Quality assessments Food quality Waste management Policing

19 States: the seeds of their destruction 1.Non-innovative bureaucracy 2.Dependencies 3.Complacency 4.Inefficiency 5.Fiscal irresponsibility 6.Corruption

20 The State of Cyprus 300% GDP private debt 300% GDP private debt +70% GDP public debt +70% GDP public debt Competitiveness on a ride34….40….50…. Competitiveness on a ride34….40….50…. Oversized banking sector Oversized banking sector

21 The value of COOPetition Love economy: 16 trillion USD vis-à-vis 24 tr. global GDP 16 trillion USD vis-à-vis 24 tr. global GDP Shadow economies: 34.5% of GDP = 8 trillion USD

22 Genuine Progress Indicator Human Sustainable Development Index

23 Social Capital TRUST TRUSTHonesty Keeping promises Reliability in performing duties ProfessionalismReciprocity Values have economic value added

24 COOPs: the seeds of their destruction 1.Markets destroy social capital 2.Government interventions destroy social capital 3.Can COOPs destroy social capital? Diamond’s Collapse Trap?

25 COOPs: the seeds of their destruction Causal link behind evidence that banks’ lending to owners and directors can result in “looting”. Looting occurs when controlling parties are at risk of losing control. Related lending is used to transfer profits only in localities where the incumbent politicians face significant competition for reelection. Where the incumbent party has a high probability of reelection there is no such evidence. Halling, Pichler, Stomper The Politics of Related Lending Institute of Advanced Studies, Vienna

26 “Anyone can count the seeds in an apple, but only God can count the apples in a seed” “Anyone can count the seeds in an apple, but only God can count the apples in a seed” Karl Marx “Society poses itself only such problems as it can solve” Karl Marx “Society poses itself only such problems as it can solve” John F. Kennedy “Our problems are man-made, therefore they can be solved by men” John F. Kennedy “Our problems are man-made, therefore they can be solved by men” Stavros A. Zenios amendment “Our problems are man-made, therefore they can be solved by women” Stavros A. Zenios amendment “Our problems are man-made, therefore they can be solved by women”


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