► The dot.com bubble bursts

► NASDAQ and Wall Street plummet

►The global economy shivers

►Then recovers

►And financial speculation explodes globally

2000

Stocks in companies traded on regulated stock markets

TRADITIONAL CAPITALISM

Corporate bonds Government bonds

Banking system

• Pension Funds Private/Commercial property

Shareholders Employees

Personal and corporate taxation on

• companies raise capital • finance for infrastructure(roads, schools)

Circulates credit

•revenues• assets• capital gains• consumption (VAT)

• Recurrent spending• Debt service on capital/

infrastructure investments

Public sector

CASINO CAPITALISM

HEDGE FUNDSPRIVATE EQUITY STRUCTURED FINANCIALPRODUCTS

house extensions; car; holiday; college fees

OFFSHORE HAVENS

PPPs

Corporate bonds replaceGovernments bonds

Often funded by private equity

for which a major source of finance

MORE BONUSES

HUGE BONUSES ! MINIMIZE TAXES !

MORE COMMISSIONS

PROPERTY è SUB-PRIME MORTGAGES

Unlisted on stock markets Off bank balance sheets

Escape banking Regulations

Buy a house (110% mortgage)Raise your mortgage to finance:

PENSION FUNDS

GLOBAL IMBALANCES

The United States No 1 economyFrom balanced budget (Clinton)

Coming out of « the lost decade »

EU/Euro zone No 3 economyGrowth slowing

Oil/gas producers

Emerging economies

Developing countries

Exchange ratesUSD, Euro, Yuan

Japan No 2 economy

SWFs

To record public deficits (Bush: taxcuts and Iraq war)

Higher unemployment

Russia, Gulf States, Nigeria, Venezuela, Norway

= Financial flows

Big trade deficit

Other OECD countriesEg Australia: Commodities

China

India, Brazil, Chile, South Africaoutsourcing

big trade surpluses

Africa, Asia/Pacific, Central/South America, Caribbean

Global imbalances

+ fundamental underlying imbalances between the financial sector and the real economy

between bargaining power and incomes of employers and employees

So we had debt driven consumption

Source: Ron Blackwell, AFL-CIO

IMBALANCES

AUGUST 2007

Sub-prime mortgages

Structured financial products

Where are the toxic products?

Inter bank lending freezes

THE PARTY STOPS !

DECEMBER 2007

Central banks start to easecredit and money supply

AUGUST 2008

US Fed bails out Fannie Maeand Freddie Mac

15 SEPTEMBER 2008

Lehman Brothers collapses

16 SEPTEMBER 2008

US injects $85bn into American International Group (AIG)

BAILOUTS AIG Banks Auto companies

STIMULUS PACKAGESMonetary Stimulus

Reducing cost of credit (interest rates) Increasing money supply (UK, US, Japan)

Fiscal StimulusIncrease spending Cut taxes

IMF ESTIMATED IN JANUARY THAT 2% OF GLOBAL GDP IS NEEDED FOR RECOVERY

NATIONAL STIMULUS PLANS SHOULD BE COORDINATED TO HAVE BEST IMPACT

PUBLIC SECTOR SPENDING, INCLUDING EDUCATION, WILL HAVE TWICE THE IMPACT OF TAX CUTS

Drop in aid from donor countries hit by financial crises in 90s (Scandinavia)

Source: Roodman (2008), History Says Financial Crisis Will Suppress Aid

Drop in aid from donor countries hit by financial crises in 90s (Japan)

Source: Roodman (2008), History Says Financial Crisis Will Suppress Aid

Source: Global Campaign for Education

IMF CONDITIONS:WAGE CUTS FOR TEACHERS AND

OTHER PUBLIC EMPLOYEESIn 9 out of 23 supported countries

Education on the brinkWill the IMF’s new lease on life ease or block progress towards education goals? Global Campaign for Education. April 2009

THE IMPACT ON EDUCATION, TEACHERS ANDOTHER EDUCATION EMPLOYEES

USAEUROPE

Central and Eastern

Ukraine Hungary LatviaGDP -10% -5% -12%

Japan

Emerging economies

Developingcountries

Western

OPTIMISTIC SCENARIO Recovery in 2 to 3 year’s time

PESSIMISTIC SCENARIO Structural change/Paradigm shift

Social and political upheaval

Interaction with food crisis

Consequences of climate change

LESSONS FROM THE GREAT DEPRESSION

Table 1. Variation among countries

LESSONS FROM THE GREAT DEPRESSION

Source: William D. O'Neil (2009) Wikipedia

Table 2. US Recovery

LESSONS FROM THE GREAT DEPRESSION

« The situation is more complex today »

Joseph Stiglitz:

INSTITUTIONS

IMFTo advocacy for global stimulus

But still applying the old conditions – cuts in public sector

Rescue packages: 13 countries so far and more to come

WORLD BANKBIS

Development and combatting poverty

Central bankers

Financial Stability ForumFSF

OECD 30 industrialized democracies+ 5 candidate + 5 « enhanced engagement » countries 

From neo-liberal

ILO Employment

UNESCO Education

WTO Trade

The UN

FSB Financial Stability Board G20

G7 G8

G14 [BRIC]

Canada, France, Germany,Italy, Japan, UK, US

Canada, France, Germany,Italy, Japan, UK, US

+ Russia

Canada, France, Germany,Italy, Japan, Russia, UK, US

+ Brazil, China, Egypt, India, Mexico, South Africa

Brazil, Russia, India, China

VARIABLE GEOMETRY

G20Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russia, South Africa, UK, US,

Argentina, Australia, Indonesia, Saudi Arabia, South Korea,Turkey, European Union

+

SUMMITS

G20Washington, November 2008London, April 2008

PITTSBURGH SUMMIT, 24 SEPTEMBER, with

IMF BIS WB OECD WTO+ ILO

Global Unions, NGOs

UNGENERAL ASSEMBLY, NEW YORK, OPENS SEPTEMBER 26

NGOs

G8/G14 ITALY, JULY 2009 Global Unions

Stiglitz Commission

Summit on the crisis June 24-26

VET

ECE

K-12

H. ED & R

INVESTMENT IN PEOPLE THROUGH EDUCATION

DEFENDING RESOURCES FOR EDUCATION

STAFFING Teachers

Support Staff

INFRASTRUCTURE BuildingsFacilities

- qualified for quality education- key actors in safe schools and colleges

Hire, not fire

In a downturn, its timeto upskill

The next generation –every nations’ future

An equal start and equityfor families

KEEPING TEACHERS AND SUPPORT STAFF WORKING IS A STIMULUS PACKAGE IN EVERY COMMUNITY

Investing in human progress + capacity for innovation

REASSERTING VALUES

VALUES

EI’s VISION FOR EDUCATION AND SOCIETYEducation is a public good not a commodity.Education is central in our societies in many ways;

Quality education requires quality teachersEducation unions should be key actors

Education is a human right.

• social and economic;• building and defending democracy;

• individual fulfillment;• community development;

Education should promote

• equity• non-discrimination• understanding among peoples

Keeping a global, long-term vision

Reducing poverty at a time when one billion people live under $1 a day

Social justice at a time of growing inequality within economies and societies

Peace at a time of intolerance and conflict within countries

Sustainable societies at a time of global warming and climate change

Adapting to the unknown at a time of economic uncertainty and continued technological advances

“Choosing a type of education means choosing a type of society”

UNESCO ADG EDUCATION NICK BURNETT

Reaffirm the centrality of education

Education is a catalyst for development. It:

• Contributes to economic growth

• Reduces poverty

• Improves health, nutrition, income and livelihoods

• Promotes citizenship and democratic participation

• Is a condition for achieving all the Millennium Development Goals

Knowledge, skills and values to promote informed choices and a more sustainable future

UNESCO ADG EDUCATION NICK BURNETT

Jobs + Income +EquitableIncome

Distribution

Investment in public education wins on all three

Mike Kahn – NEA Research

Investing in education creates jobs…

A $100 million tax cut results

in…

…a net loss of 2,200 jobs…a net loss of 2,200 jobs

A $100 million investment in

public education results in…

…a net gain of 2,200 jobs.

…a net gain of 2,200 jobs.

Source: School Funding, Taxes, and Economic Growth, April 2004

Mike Kahn – NEA Research

Every $1 invested in pre-school education provides an economic return of $7

Investing in Public Education is a smart economic development strategy

America’s economy will grow by

$309 billion if all high school students graduate

A high school graduate’s contribution in income tax revenues would result in

savings of $37,388 in healthcare costs and

$167,990 in crime costs over his/her lifetime

27

Source: The Price We Pay, Economic and Social Consequences of Inadequate Education, (2007) Brookings Institution Press Mike Kahn – NEA Research

MOBILIZATION

A clear vision for education and society

Powerful arguments for investment in people

Capacity to mobilize Globally Nationally Locally

A strategy of proposition

World Teachers’ Day: 5 October

EI Action Plan:

COALITIONS

THE GLOBAL CAMPAIGN FOR EDUCATIONhttp://www.campaignforeducation.org/

GLOBAL ACTION WEEK, APRIL 2009

http://www.ei-ie.org/globalactionweek2009/en/index.php

13.3 million took part in « The Big Read »

GLOBAL UNIONShttp://www.global-unions.org/

200 million members in some 170 countries worldwide

www.ei-ie.org/handsup

http://fundingeducation.blogspot.com/

Blog:

NEA GLOBAL EDUCATION SUMMIT

San Diego, June 27, 2009

Gracias Merci

Thank you

Bob HarrisEducation International

bob.harris@ei-ie.org