Global Issues, Local Readers Business and economics are global, but they affect your local audience. Example: A Nigerian cotton farmer can’t sell his crop profitably because U.S. subsidies make the global price too low. Example: Euro falls apart because Greeks, Italians spend more than they earn. Jobs lost. Example: Global bank stocks fall because banks bought too many European government bonds. Investors everywhere lose money.

More Examples Example: American middle class falls apart because manufacturing work moves to cheaper countries. Example: People can’t afford gasoline because Iran threatens to close Hormuz Straits. Example: Hong Kong people have bad air because China’s factories are dirty. Example: People in Cambodia lose jobs because Westerners stop buying their goods. Your challenge is to understand and explain all this and much more.

Issues We’ll Highlight In 12 weeks, 10 broad topics. No way we’ll cover everything. No way we’ll be 100% right about what’s most important. In 2010, collapse of the Euro wasn’t on the syllabus as a topic. Develop a routine for staying on top of what’s important. When you stop learning, you fall behind as an investor and as a journalist!

Issue 1: Crazy Debt Levels The global financial crisis began in 2007 and isn’t over yet. Main problem: too much debt. Not enough money to pay it off. Huge trade imbalances. Weird “derivatives” didn’t eliminate risk. Problem began in U.S. with subprime mortgages. Now it’s spread to European governments.

Source: World Economic Forum, 2011

Source: globalissues.org

Issue 2: No Global Regulation Economic system is global. Regulatory systems are national. International regulators have no teeth. Bank for International Settlements can’t impose new rules to lower bank risk. Financial Stability Board hasn’t stabilized anything. Doha global trade negotiations have gone nowhere. Politicians won’t give up sovereignty.

3. Economics & the Environment The world is growing hotter, getting more polluted, using up all the hydrocarbons. Economic activity is the main reason. Kyodo Protocols haven’t worked. U.N. climate talks stall year after year. Problem: How to make environmental change profitable for business? Problem: How to get governments to cooperate on pollution of all kinds? Business needs incentives to respond properly.

Source: NASA, 2011

4. Poverty & Development U.N. “Millennium Development Goals”: --Eradicate extreme poverty and hunger. --Achieve universal primary education. --Promote gender equality and empower women. --Reduce child mortality. --Improve maternal health. --Combat HIV/AIDS, malaria and other diseases. --Ensure environmental sustainability. --Develop a global partnership for development.

At least 80% of humanity lives on less than $10 a day.

Puzzle for Business So many potential customers, so little income. How can the economy be channeled to bring people out of poverty and sickness? China is most successful so far, but is command economy. How can developed nations invest when they are broke? How can business, capitalism play a role in development, jobs and poverty eradication? Where will enough jobs come from?

5. Illusion of Global Free Trade World Trade Organization’s “Doha Round” began in Intended to eliminate trade barriers worldwide. In 2003, talks go nowhere in Cancun. In 2005, talks fail to produce in Hong Kong. In 2006, talks break down entirely. In 2009, talks collapse again. In 2011, new negotiations go nowhere in Geneva. Does that sound like progress?

What’s the Problem? Developing nations—China, India, Brazil—want to protect their manufacturers. Developed nations—U.S., EU—want to protect their agriculture industries. Tariffs, nontariff barriers keep products, services from flowing freely across borders. When barriers are lowered, someone loses jobs as cheap products find customers. Meanwhile, global trade develops chaotically. Is global free trade really good?

6. Are China, Asia the Future? China, India, Brazil, Russia—BRICs—have faster GDP growth rates than developed nations. They also have greater threat of inflation. They also rely on developed nations to buy their goods—what if customers dry up? They need strong consumers at home, but people are used to saving against hard times. As living standards in developing world rise, must standards fall in developed world? How does business navigate this perilous economic landscape?

7. The Business of War More than 40 armed conflicts now under way. “Arab Spring” counts as one, though it involves many countries. People need weapons to fight. Business and governments make weapons. Once they’re made, they can work for 100 years or more—Kalashnikovs, mines. Are weapons good business? Do they contribute to global sustainability, productivity?

Source: The Economist magazine

Company (country) Arms sales ($ m.) Profit ($ m.) 1 Lockheed Martin BAE Systems (UK) –70 3 Boeing Northrop Grumman General Dynamics Raytheon EADS (trans-Europe) – Finmeccanica (Italy) L-3 Communications United Technologies The 10 largest arms producing companies, 2009 Companies are US-based, unless indicated otherwise. The profit figures are from all company activities, including non-military sales. Source: Stockholm International Peace Research Institute

What Other Issues? Cybercrime and spying? New technology? Energy and commodities competition? Global immigration policy? Hedge funds, dark pools, financial engineering? Corporate social responsibility (CSR)? Education for new business environment? Green energy? Health care? Global court system?

A More Abstract View of Issues Global power shift from West to East. Unsustainable population growth. Uncertain economic recovery. Economic, political inequality. Shortage of resources, overconsumption. Source: World Economic Forum, 2011

What We’ll Be Reading Documents from official sources: IMF, ASEAN, BIS, UN, central banks, government agencies. Documents from interest groups: Amnesty International, Greenpeace, Human Rights Watch. Documents from experts: consultants, professors, think-tanks. These are quotable in stories. We’ll avoid casual blogs, “commentators,” editorial writers. Concentrate on what journalists use!