Purpose of capital is to ensure economic sustainability

I had written this essay to support my application to St. Gallen Symposium in 2019. It did not get selected, but I am happy to share my thoughts here now.

Just ahead of the recent meeting of World Economic Forum in Davos, The Guardian quoted a report by Oxfam International concluding that the richest 26 people own as much as the poorest 50% of world population [1]. This gap has been continuously widening over the past few years and we are approaching a tipping point in the economic divide. A rational extrapolation from the lessons of the ‘Kuznets curve’ for developing economies shows that we are at the crucial time when the efforts to increase the per capita income could be instrumental in decreasing inequality in global economy (1). However, the available job opportunities are not enough for the increasing number of capable people ready to join the workforce in many developing nations. Recent years have seen governments in many countries struggling with internal as well as international issues resulted from extreme natural and manmade disasters or accelerated military conflicts. Countries around the world have been struggling to prepare balancing policies which protect their internal interests while keeping in line with financial benefits of globalization. Young capable people are either unemployed or face uncertainty in their jobs, yet there are older workers in specific skill jobs which can be potentially automated, putting them at risk of losing their employment. Although the growth of any economy is intertwined with its technological development, need of the hour is training in transferable skills which can be used to ensure employability of such workers. Small industry entrepreneurs require additional support since they not only provide more employment opportunities, but also new ways to achieve sustainability and keep alternative job markets open. From basic infrastructure to technological advancements, global economies need to find avenues for the well 'educated' youth to be well 'employed' as well. In addition to the increasing internal challenges posed to the nations, the two major global outcomes of such conflicts have been mass migrations and major environmental damage. These challenges need to be carefully dealt with by governments and large corporations in order to ensure their sustainable economic growth as well as global impact.

In general terms, the capital is an asset or resource which can generate income and further the development. Hence, in addition to the governments around the world, corporate organizations also have their work cut out for contribution in improving the purpose of capital. An unpreparedness on part of global organizations to manage policy changes would be an indication of compliance and will lead to growth stagnation around the globe. At individual level, entrepreneurs face major capital problems- innovation, globalization, diversity, technology; civil society face issues on fundamental human rights, budget lines, economic growth, infrastructure, and funding. Large corporations have dedicated divisions to handle such important criteria. Hence, they need to step up their involvements in sustainable use of capital and provide grounds for carefully curated vision for long-term economic growth. While the Bill Gates foundation is majorly synonymous with humanitarian efforts in many poor countries, the aims and objectives of Microsoft as an organization are much different. Similarly, while Google is very actively using its innovative technologies for social awareness such as using deep learning to identify disease networks, yet their business model outlook is still separated from such efforts. If high stake owners in these global organizations could combine their social awareness efforts with the financial growth of their organizations, mutual benefit of these together could be a very useful effect in making better use of capital than its current state. Technological advancements should be steered for sustainable growth. The governments and corporations need to come together to positively utilize the huge geographical and population shift over the next decade which poses challenges to trans-national organizations. The availability of cheap labor in migrants should be deftly utilized to find alternatively means to our current practices. It can be an educated migrant who can join the efforts of research and innovation or the workers who can realize these innovations to reality. Human resources need to be developed and evolved instead of looking for ways to keep factory line jobs. Using advent of technology to our benefit instead of being skeptical of unavoidable changes in future of innovation. Most of the global companies do have separate divisions to advance their innovation technology, hire employees, train potential workforce, in addition to providing humanitarian aids and investing to improve economic policies. By navigating their focus on the two issues with environmental sustainability and training capable workers from regions prone to migration, companies and industrialists can streamline their own business growth to long-term benefits to themselves in terms of geographical stability and more productive human resources. Purpose of capital should be to accommodate the shifting global population geography and assimilate working age migrants to society.

Ongoing violent conflicts in many regions in central and east Asia, central Africa, southern America as well as southern Europe have accelerated mass migration of people in search of safer living conditions. To ensure a mutually beneficial purpose of the capital, governments and global organizations need to make careful strategies for the migration shifts which are inevitable due to global crises, be it the Rohingya refugees fleeing ethnic attacks as in Myanmar, criminal violence in Mexico, civil discourse in central Africa or terrorism war in Syria and Yemen[2]. With constant increase in migration to regions which lack sustainable economic planning, we are fast approaching the inflection point whereby the stark difference in economic capabilities between the richest people and most of the working-class people who make up the ‘human capital’ is getting wider. Additionally, an overlooked factor contributing to the negative outlook on mass migration is the unpreparedness of the popular destination countries to deal with large influx of people, who are not hardly considered as beneficial human resources due to gross mismatch in economic outlook of governments and their unpreparedness in the face of a crisis. In today’s globalized world, economic and environmental policies of the countries impact other nations as well. Yet, even the most developed nations are not completely prepared to handle such issues. We are at a time when every action of even individual governments leads to an environmental footprint and directly affects millions of people around the globe. From goal setting to controlling environment temperature, a single countries inclusion or emissions influence the globe which has been very evident from the understanding of the Paris Agreement [3]. Environmental safety should be utmost concern in every new project and endeavors. According to recent report, global temperature/ocean levels has been rising at higher rate than previously estimated.

As the world population pattern is changing, so is the production location. South east Asia is developing as one of the major markets and cheap labour markets. Most South-east Asian nations, also known as ASEAN countries, are among the outperforming emerging economies identified in a recent report from McKinsey Global Institute [4]. Due to an increase in foreign policy conflicts and weakened international trade relations among the developed nations, south-east Asia has received a boost as an emerging economic region both in terms of availability of cheap labor and a relatively unexplored consumer market with more than 650 million people [5]. In addition to human resources, these countries also boast of richness of natural resources due to their geographical location. While the focus on financial growth is very crucial, the conventional ways of earning money are proving to be detrimental to the global environmental health. Many countries in this region are plagued with water problems from lack of drinking water and danger of low-lying areas being prone to constant flooding. Merely to ensure the existence of a viable future market, it is as a matter of fact in economic benefit for large corporations to contribute to the attempts of these governments to improve portable water availability and provide clean sanitary conditions. Also, to meet the ever-increasing water demands of people, dedicated efforts to clean the water bodies and reduce waste dump into south pacific sea should be among the top sustainability goals for future. Just shipping out the non-degradable waste to under developed countries is not and should never be believed as a sustainable way of dealing with excessive industrial output. Replacing conventional forms of fuel and energy to renewable should be a very carefully thought out step with job sustainability as crucial part of this upgrading process.

These outwardly unrelated factors have a huge impact on the economic sustainability of financial prospects and ease of doing business in any region. It is very clear that we are not very immune to consequences of our unabashed exploitation of natural resources. Case in point are the great Pacific Garbage Patch or the Palm Oil agriculture in South East Asia for which forest cover of this rainforest region are being destroyed (2, 3). The detrimental effects of environmental exploitation manifest around the world in many ways, including the very recent polar vortex affecting the American continent. However, their natural ecosystem has been extensively damaged due to lack of efforts in combating pollution by their prominent tourism industry and the decades of offshore transport of non-degradable and electronic wastes from developed nations. Due to constant problems of water scarcity, poor living conditions as well as environment threat to the countries due to recent increase in incidences of natural disasters, these countries are in fact at a great risk of getting lost from the world map. This means that the approach to develop this region as the resourceful alternative market needs an overhaul with careful considerations towards environmental sustainability to complement the projected economic growth. The only way to change the current purpose of capital is to utilize it to ensure a sustainable future, with a positive balance between environment risk triggered by economic growth. This added environmental sustainability factor given significant weight in the Environmental Kuznets curve shows that reduction in the negative impact on environment with increase in per capita income implies the importance and requires sense of urgency to improve living conditions for the labor in open markets (4).

To this end, I believe that economic sustainability should be the main purpose of current capital. There is no stopping the movement of people leaving their homes in the quest of survival. This is not a debate between nature versus nurture anymore. Instead of leaving the problems of today to be solved by our children of tomorrow, we need to step up if we need to survive on this planet. Developing green technologies and providing suitable training as well as transferable skills to people in workforce should be a point of focus for long-term impact. Planning our financial growth in accordance with environmental benefits would ensure open and competitive markets with new innovations being possible by better utilization of the available workforce.

References:

1. Ram R. Kuznets's Inverted-U Hypothesis: Evidence from a Highly Developed country. Southern Economic Journal. 1991;57(4):1112.

2. Dautel SL. Transoceanic trash: international and United States strategies for the great Pacific Garbage Patch. Golden Gate U Envtl LJ. 2009;3:181.

3. Silva SJ, Heald CL, Geddes JA, Austin KG, Kasibhatla PS, Marlier ME. Impacts of current and projected oil palm plantation expansion on air quality over Southeast Asia. Atmospheric Chemistry and Physics, Vol 16, Pp 10621-10635 (2016). 2016:10621.

4. Stern DI. The environmental Kuznets curve. Companion to Environmental Studies. 2018:49-54.

[1] The Guardian. World's 26 richest people own as much as poorest 50%, says Oxfam. By Larry Elliot; 21 Jan 2019. [2] Conflict status updated regularly on the Center for Preventive Action website, US Council on Foreign Relations [3] Terms of agreement and progress updates are available at UNFCCC website. [4] Source: ASEAN countries among world’s outperforming emerging economies. Channel News Asia, 14 Sep 2018. [5] Estimates based on Worldometers.info