Archive for September, 2015

Gender inequality costs the global economy $28 trillion

September 29, 2015

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A new report from the consultants at McKinsey has confirmed something we’ve all known for some time: gender inequality has an economic cost.

According to the report, it’s costing as much as $28 trillion or 26 per cent of global annual GDP.

“This impact is roughly equivalent to the size of the combined Chinese and US economies today,” the report says.

“Gender inequality is not only a pressing moral and social issue but also a critical economic challenge. If women—who account for half the world’s working-age population—do not achieve their full economic potential, the global economy will suffer.

“We acknowledge that gender parity in economic outcomes (such as participation in the workforce or presence in leadership positions) is not necessarily a normative ideal, as it involves human beings making personal choices about the lives they lead; we also recognize that men can be disadvantaged relative to women in some instances. However, we believe that the world, including the private sector, would benefit by focusing on the large economic opportunity of improving parity between men and women.”

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Lessons from Volkswagen

September 24, 2015

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So the big story today is the Volkswagen scandal claiming its first biggest scalp in the resignation of Volkswagen chief executive Martin Winterkorn.

It’s going to get worse. Volkswagen are facing time in jail with US authorities planning criminal investigations after discovering that the company had programmed computers in its cars to detect when they were being tested and alter the running of their diesel engines to conceal the true level of emissions.

Volkswagen is also facing $18 billion in fines. And there will be class action,

This will hit Germany, the engine room of Europe’s economy, because the auto industry plays an important role in Germany, both politically and economically.

Germany’s automobile sector includes the world’s biggest and best-known names, from VW itself to high-end makers like BMW, Daimler/Mercedes-Benz, and Opel, the German arm of US giant General Motors. It also includes some of the world’s leading parts suppliers, such as Bosch, Continental and ZF Friedrichshafen as well as myriad small and medium-sized enterprises all along the value chain. All up, the sector clocked up combined annual sales of 385 billion euros ($430 billion) last year, or 14 percent of Germany’s gross domestic product.  Already some industry observers, such as analysts at CMC Markets, are expressing concern about the “spill-over effects” the Volkswagen scandal will have on the wider German economy and Europe in the weeks and months ahead.

As CMC writes in its blog:

“Of all the factors that we saw yesterday the one that is most likely to be a particular worry is the spill over effects this drama surrounding Volkswagen will have on the wider German economy in the weeks and months ahead at a time when their appears to be some evidence that growth may well be slowing in the euro area.

“It is estimated that 1 in 6 German jobs depends in some way on the car industry, as well as 17.9% of German exports, and this week’s events have put a huge dent in the panel work of how the German automotive industry is perceived by its customers globally.

“It is going to take quite a lot of skilled panel work to repair the dents in the “Made in Germany” brand, particularly given this scandal has exposed a deliberate attempt to deceive. What can they have been thinking?

“The implications for German GDP growth could well be significant in the coming months, if global trust is lost, not only for VW but also the rest of the European car industry, if evidence is uncovered that we aren’t seeing an isolated case.

“With Europe’s second biggest economy in France already struggling, with GDP expected to be confirmed at 0%, Europe can ill afford a setback to its main growth engine of Germany.”

At the same time, Volkswagen’s deception is a warning for every company.

John Gapper reminds us in the Financial Times that the car industry is not alone in such behaviour.

“The same thing happens in many industries, from banking to pharmaceuticals. A few companies decide gently to bend the rules and stretch regulations and others soon follow. They know it is a little dodgy but it becomes normal practice and regulators turn a blind eye. Then, one day, someone goes too far and scandal erupts.”

Volkswagen’s emissions scandal

September 22, 2015

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So now the US Justice department has launched a criminal investigation into Volkswagen deliberately cheating on federal air pollution tests.

As Bloomberg reports, the criminal probe will provide an early test of the Justice Department’s newly stated commitment to holding individuals to account for corporate wrongdoing.

Just as importantly, if charges are laid, it will open Volkswagen to civil action which could cost the company billions.

On Friday, Volkswagen was ordered to pull 500,000 vehicles off the road after it admitted to the US regulator, the Environmental Protection Agency (EPA), that it had fitted “defeat devices” to its cars which are designed to get around emissions tests in the laboratory. The software activates full emission controls only during testing but then reduces their effectiveness during normal driving. This enables cars to get better fuel economy at the expense of higher nitrogen-oxide emissions. It puts more zip into the VW.

,VW’s share price has slumped by almost 20 per cent on the news.

Why is this happening? Because as reported here, other governments around the world are now looking into the matter to see if their emission standards have been violated by Volkswagen.  In plain language, this may not be an isolated case. The tail risk has just got much bigger.
What makes this case even more egregious is the difficulties regulators are now having managing all those greenhouse gas emissions we are now pumping out in the air. Volkswagen has done the wrong thing and has betrayed society.

A moral approach to refugees

September 5, 2015

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As the son of refugees, the subject of asylum seekers is close to my heart.

My parents, who experienced the Holocaust, Stalin’s Soviet Union and fighting at Stalingrad, came to Australia because it was the safest place they could find.

They weren’t queue jumpers. There was no queue. In 1950, Australia was quiet, insular and conservative. But it was safe, and that was all my parents cared about. They fell in love with the country because they found Australians were friendly.

My mother always talked about how she loved the way people would smile at her in the street. That was unheard of where she came from. Such a friendly country, she said, they took us in because we were outsiders.

This is why the Reclaim Australia rallies against asylum seekers, and the politicians who attend them, seem to be so un-Australian. At least through my refugee eyes. As are the policies discriminating against asylum seekers. As is a government that seeks to hide atrocities perpetrated at Manus Island and Nauru, Australia’s answer to Guantanamo Bay, from the world. Or a Prime Minister who calls a drowned Syrian toddler an illegal migrant.

The response to asylum seekers is rooted in a profound compartmentalisation where what’s moral and right, is separated off from the politically expedient.

John Howard’s immigration minister, Philip Ruddock, was a member of Amnesty International. And yet the same person was responsible for human rights violations and incarcerating asylum seekers without charge.

Amnesty International was critical of the policy of mandatory detention. Ruddock was blunt when asked how he could reconcile his actions as a minister and his membership of Amnesty International. He said he had waited 22 years to become a minister and he wasn’t going to waste that opportunity.

Scott Morrison is a devout Christian. Asked by journalists how he reconciled his faith with the incarceration of asylum seekers, he replied, “How I reconcile [my role] with my faith is, frankly, a matter for me”.

This is the compartmentalisation that stops political leaders from drawing a moral framework around asylum seekers. It creates a series of bewildering contradictions. The result: an asylum seeker policy that’s not moral but amoral.

What’s missing here is a moral framework that can hold the contradictions together. What’s needed is something that helps guide people to a resolution that could work politically without locking people up. A way to create a humane system that does not break people down mentally, incarcerate them in detention centres which are worse than jails, where children are sexually abused, guards give detainees marijuana in exchange for sex and asylum seekers stitch their lips shut in an act of protest.

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A framework could be drawn using the nineteenth century concept of Utilitarianism and twentieth century definitions of human rights.

Utilitarianism was developed by John Stuart Mill and Jeremy Bentham.  The model allowed legislators to decide on laws that were morally best. Theirs was a model that provided greatest balance of good over evil. .Legislators had to ask, who would be affected by each action, and examine what benefits and harms would be derived. They would have to choose which action would produce the greatest benefits and least harm. They would focus on society and the community, not on their prospects of being re-elected and holding on to power.

Our framework for asylum seekers can also draw on human rights. What makes humans, wherever they may be from, different from animals, is that they have a dignity. This dignity is based on our freedom to choose what we do with our lives. Central to this is a set of rights: the right to be told the truth–and be told about matters that would affect our choices, the right not to be injured and finally, the right to do whatever we wish in our personal lives without violating the rights of others.

It is quite clear that asylum seekers have not been treated well under either Utilitarianism or human rights; .Our lack of framework creates a gap between what’s morally right and politically expedience.

Incarceration without charge, denial of basic health care, sexual assault, other humiliations, as well as harm and traumatisation of children, are all occurring. I would argue this leaves a human just one step from death.

We must urgently apply a moral framework to allow a humane resolution to the problems. The framework would close the gap and give asylum seekers dignity.

The policies as they stand right now are unsustainable. Refugee numbers around the world are increasing. And in generations to come people will question how we lost our reputation as the safest place in the world for refugees and our capacity to welcome outsiders. And how we colluded with the moral vacuum.