it is not sustainable

WITHOUT TOTAL REVISION OF THE EXISTING GLOBAL

FINANCIAL SYSTEM IT IS IMPOSSIBLE TO IMPLEMENT

SUSTAINABLE DEVELOPMENT CONCEPT

BY KAKAJAN HAYTLYYEV

K. J. – ATTEMPT TO SIT ON TWO CHAIRS

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Our planet Earth

has limited resources

and

with growing population

it becomes clear that the resource base

may not be enough to satisfy our ever-

growing consumption. The issue of limited resources is constantly on the agenda not only because of our insatiable appetite to consume, but also due to the rapid growth of the world population. By 2050, the global population will reach almost nine and a half billion people. Needless to say, that we would potentially face a shortage of drinkable water, energy, and other resources without which our modern civilization cannot exist. Therefore, we are constantly told that a solution for sustainable development shall be in place. Raising awareness by promoting a rational use of such pressures resources and necessity to adopt a responsible attitude to protect our environment became very common. It would be ridiculous to deny that there are resource limits and argue that responsibility and rational


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consumptions are not essential for our survival because it is nothing but “liberal hoax”. However, would it be enough for us to ensure that we will not exhaust the resource base very soon anyway even if we act responsibly? Is our responsible behavior is the only requirement to ensure sustainable development? I begin to doubt that it will be enough because it appears that there is a much bigger issue that would lead to severe shortages of essential materials even if everyone on Earth will start being very responsible immediately. In my opinion, this issue is fundamental and shall be addressed as soon as possible because without the solution we are not going to avoid catastrophic consequences in the future. The main reason for my skepticism is the way the global economy which is based on the existing financial system works. The constant growth is a decisive factor. Governments around the world will promise rapid economic development to its citizens because with development comes prosperity. Global financial markets are very sensitive to information which would show whether a company delivered the forecasted growth numbers or failed to do so. If the company managed to show results that are above or in line with expectations, the share price of such company would either remain the same or start to climb up. However, if the result is below the number that investors were expecting, there is no doubt that the share price will go down.


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Investors’ expectations force public listed companies to continuously expand their business activities. It is also fair to indicate that investors are no longer pleased with company’s profit numbers. Every year or quarter they expect the companies to show the results which beat reported numbers for the previous year or quarter. The constant requirements for companies to deliver growth numbers can be satisfied if, generally, three main components are in place: a resource base; required infrastructure, including physical, legal, and other types, if any; and the size of the market which translates into the size of population that would be able to purchase the product. This is where we begin to see a mismatch with fundamentals of the global economy and widely advertised campaign on sustainable development. I am not sure how we are planning to achieve sustainable development if the driving force behind global economy remains the same? In my opinion, it is not just something which is difficult to deliver but rather impossible to achieve The population growth becomes a priority for many countries because without people it will not be possible to generate the required purchasing power which is essential for the growth of any business. Even if all countries switch from fossil fuel to renewable sources of energy, it might show some positive signs but such improvements will be short lived. Because the growing population would not stop consuming water, food, and other materials. Moreover, with rising standards of


PAGE 4

living, the consumption would only grow. People would want better houses, cars, clothes, and other things which they could not afford previously. Besides the fact that existing system and sustainable development are mutually exclusive, this system potentially leads to all sorts of conflicts. I assume that it is possible because any growth eventually reaches the limit. But due to unique nature of national interests of each country it is unlikely to avoid such conflicts. Therefore, for companies to ensure that investors are happy, they shall be able to find new ways to expand. But because the population in any country is not something easily stretchable, companies shall ensure their presence overseas. I believe this is the reason we ended up with globalization concept as it opened new opportunities for hungry investors by providing industries with the much larger consumer base. With the bigger size comes a bigger level of complexity. When it is too complex, a certain clarification shall be in place to avoid confusion and inevitable collapse. To address the issue, governments implement all range of lengthy and complicated regulations which are revised time to time. The revision takes place when economic conditions require it, or so we are told. Since nothing is perfect, any regulations would have loopholes. The range of such “legal emergency exits” would rise proportionately to an increasing number of existing regulations and their level of complexity. It allows companies to use such “exits” and manipulate existing legislation. As a result, a substantial amount of


PAGE 5

money does not reach the budget and citizens do not have a chance to improve their living conditions. The requirements for business to grow continuously very often collide with statutory requirements. Because the existing legislation provides companies with a different set of requirements aimed to protect the environment, minority shareholders, employees and other interests of all members of the society. However, such regulations inevitably establish obstacles for so needed growth. Unwillingness to face investors’ frustration, businesses use every possible avenue to influence governments’ decision to revise existing regulations. I suspect that thriving business of lobbying firms maybe a result of it. And although it is a legal business, it exists in the grey area. In my opinion, it might be equivalent of legitimized corruption. Because it drives the transformation of democracy to something totally unrecognizable. Our modern days’ reality is a wonderful illustration of a solid “friendship” between business and politics. This “friendship” is not friendly to ordinary people because the nature of its interests does not match with interests of people. However, there is the limit for it too. Business expansion does not make our planet bigger in size. When companies face the wall, they begin “to think outside of the box”. I assume that such “thinking” created an increasingly visible merger of international business with international politics.


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I suspect that the current financial system might be behind many military conflicts. When growth potential is exhausted by using a legitimate international set of rules, it creates an obvious conflict of interests. Military intervention opens additional options for companies to satisfy investors’ appetite. A long list of facts shows that it causes a huge number of refugees, the murder of millions of people or destroyed countries. But it seems that it does not bother much those who are involved in unfriendly “friendship”. I wonder whether we care at all about sustainable development. Because our actions do not match with what we say. Basically our actions vividly demonstrate something opposite. They speak louder than the official statements with respect to the urgent need of responsible ways of doing business. I believe that for us to be able to resolve this issue, we need to understand that a complete revision of the current financial system shall take place immediately. To think that only introduction of additional legal requirements would not be right because it is nearly enough. In fact, it is counterproductive. Because instead of providing effective solutions, a new set of rules will only deliver additional limits and produce circumstances which would force business to be more creative in order to overcome a new obstacle. I would think that it must be done as a package. The issue of the global financial system is very complex and therefore it is impossible to think that simple solution


PAGE 7

would help. I also do not believe that to develop such package of measures is a task of relatively short period of time. However, if we continue using this faulty system and do not do anything about it, we shall forget about sustainable development as it would be impossible.

it is not sustainable

Environment