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The Need for Major Structural Changes

In keeping with the discussion that I have been involved in over the last decade, ‘structural changes’ should be today’s key phrase—not just for the telecoms sector but for every sector in our economies.

It has been clear for a long time that structural change is well overdue. It doesn’t really matter which sector you pick, you will see that some of these reform debates go back at least a decade—and often longer—in healthcare, education, environment, energy, finance and banking and media.

In our democratic societies, however, it has become more difficult to set these changes in motion, and that is the key reason for these delays. It is not that we don’t know what is needed—increasingly it is the political system that is stopping these changes from being made.

The vested interests are heavily involved around the making of government policy for structural change—or at least in successfully influencing that process.

The most significant examples are to be found in the USA, where there is now an established plutocracy that has made its political system totally dysfunctional. Australia is also moving dangerously in this direction, with ultra-right conservatives simply saying no to any structural changes, and sectors such as the mining industry, for example, wielding extraordinary political power.

In Europe the situation is slightly different, but making structural changes in a market where there needs to be consensus across 27 countries is practically impossible. The result is half-baked solutions that will eventually break down, as is now happening with the European Monetary Union, which was developed without a fiscal union. (When the euro zone was created, over a decade ago, many financial experts warned against the problems that the EU is facing today.)

For most people it is clear that structural changes are needed. At the 2009 conference in Copenhagen the people of the world were ready to sign the UN climate change framework protocol, but their political leaders failed them.

After the GFC in 2008 the people of America (and indeed in many other countries) were more than ready for the government to restructure their finance and banking industries—but again they failed. The same ‘experts’ that created the GFC advised the government that it should continue under the ‘business as usual’ scenario. No structural changes were made; no-one was prosecuted; and the same people who had created the disasters were reappointed. This, of course, is also evidence of gross incompetence within the American political leadership.

The enormous change in inequality in American wealth, where since the 1960s 20% of the people were able to slowly move to a situation where they now own 80% of the wealth; the uprisings in the Middle East; and the riots in the UK—all these point to very serious structural problems that need to be addressed. Countries such as India and China are also facing similar problems. Social unrest is the largest single risk factor for a possible collapse of China, and the 700 million people in poverty in India, without adequate policies in place to address the structural issue, is also a major concern.

Many politicians on the right believe that all of this will simply blow over—that it is cyclical; that the market will correct it as long as it is left alone; and that, by just hanging in there, growth will automatically be restored. The near arrival of a second GFC in August 2011 should be a warning sign that this is not a cyclical event—that we need to fix the problems, and that serious reforms are needed to put us on a far more sustainable track for the times ahead.

While telecoms is a minor issue in this big-picture scenario, in articles discussing structural changes the telecoms reforms in Australia are used as an example that structural change can be made and that this does not necessarily result in a collapse of the capitalist system; and that it can be used as a tool to create new jobs, new business opportunities and new growth—but this time in a much more sustainable format.

The same applies to climate change and energy reforms. These reforms will also lead to the creation of new jobs, new business opportunities and new growth.

Hopefully the financial crisis in August will be seen as a clear sign that solutions cannot be based on ‘keeping one’s head down’ and ‘business as usual’. Decisive leadership is required from politicians, businesses and the wider community (people power). The cheap political messages that are coming from the ultra-right faction are not helping to bring people together to find the solutions. And some of the left are equally naive in their attitude, which is why it is so important that, together, we find solutions.

Polarising the issues is counter-productive. Cooperation and collaboration is needed. By fuelling the fear debate, not to find solutions but simply for political point-scoring purposes, we will only move further away from the very complex solutions that are needed.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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