Plenary talk at the Cyprus conference on the UN International Year of Cooperation

1.
Between
Markets
and
the
State
Stavros
A.
Zenios
President
of
UNICA
University
of
Cyprus

2. Outline
§ The State of the World
§ Markets –and the seeds of their destruction
§ States –and the seeds of their destruction
§ The value of COOPetition
§ COOP –and the seeds of their destruction

3. Conclusion
“Anyone can count the seeds in an apple,
but only God can count
the apples in a seed”
Robert H. Schuller, 1926.

4. State of the World: social
§ Constructed uncertainty
§ Technological innovation
§ Complex interconnectedness
§ Social reflexivity
§ Post-traditional societies
(Anthony Giddens, Beyond Right and Left)

5. State of the World: environment
§ Global ecological footprint: 1.5 planets earth
“At the current pace of population growth and consumption,
by the year 2030 we will need 2 planets earth to sustain us.
And of course we have only one.”
§ Ecological footprint of regions:
§ Mediterranean nations need 3 Mediterranean seas
§ Cyprus ???
(Global Footprint Network)

6. Το
Χρυσοπράσινο
Φύλλο

7. State of the World: environmental
§ World Bank Adjusted Net Savings

8. CYPRUS
Adjusted
Net
Savings
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
30,00
25,00
20,00
Axis
Title
15,00
10,00
5,00
0,00
-­‐5,00
POLAND
Adjusted
Net
Savings
30,00
20,00
10,00
0,00
-­‐10,00
-­‐20,00
8
-­‐30,00

9. State of the World: sustainability
§ Club of Rome--MIT
§ Limits to Growth,
§ 1970’s

10. Since
1980’s
Corrections =
increasingly more costly
No correction =
Collapse
10

11. — Hysteresis
— Societal
aOenPon
deficit
— Social
choices
— Lack
of
know-­‐how
Collapse
Trap
11

12. State of the World: economy
“World
economy
is
undergoing
seismic
shi2s.
This
is
partly
because
of
the
success
in
increasing
produc:vity
in
manufacturing,
so
that
a
small
frac:on
of
the
popula:on
can
produce
all
the
toys,
cars
and
TVs
that
even
the
most
materialis:c
and
profligate
society
might
buy”
(Joseph
SCglitz,
Freefall,
2009)
§ Huge trade imbalance EAST-WEST.
§ Manufactured goods automated-no job creation.
§ Manufacturing related SERVICES exacerbate the problem.

13. Markets:
the
seeds
of
their
destrucPon
1. Ignore
negaPve
externaliPes
2. InequaliPes
in
distribuPon
of
wealth
3. Can
not
offer
public
goods

14. 1.
ExternaliPes
do
not
remain
external
Environmental
problems
Banks
care
about
shareholders
not
about
depositors
Management
bonuses
erode
shareholder
value

15. 1.
ExternaliPes
do
not
remain
external
Total
Income
of
Manager
(1000
$)
Shareholder
Value
(million
$)
125 40 35 20 125 40 35 20
Base
salary
1% 8% 10 % 20% 1% 8% 10 % 20%
ParPcipaPon
RaPng
AAA
817.1 605.4 661.3 986.4 103.7 103.9 103.8 103.5
AA
821.7 631.7 690.6 1,007.6 104.0 104.1 104.2 103.7
A
825.6 648.0 705.3 964.2 104.1 104.2 103.9 103.3
BBB
804.8 682.7 722.4 799.0 104.0 104.0 103.9 103.3
BB
892.7 794.1 796.6 636.5 103.3 102.9 102.7 101.6
B
979.9 994.4 977.0 719.0 102.3 101.3 100.9 98.9

16. 2.
InequaliPes
in
distribuPon
of
wealth
“All
animals
are
created
equal.
But
some
animals
are
more
equal
than
others.”
Animal
Farm

17. Increased
inequaliPes:
Household
debt
à
à Reduce
savings
à
Destabilize
à Social
problems

18. 3.
Can
not
offer
public
goods
FIRST
GENERATION:
Healthcare,
educaCon,
security,
transport
SECOND
GENERATION:
Healthcare
standards
Quality
assessments
Food
quality
Waste
management
Policing

19. States:
the
seeds
of
their
destrucPon
1. Non-­‐innovaPve
bureaucracy
2. Dependencies
3. Complacency
4. Inefficiency
5. Fiscal
irresponsibility
6. CorrupPon

20. The
State
of
Cyprus
— 300%
GDP
private
debt
— +70%
GDP
public
debt
— CompeCCveness
on
a
ride
34….40….50….
— Oversized
banking
sector

21. The
value
of
COOPePPon
Love
economy:
16
trillion
USD
vis-­‐à-­‐vis
24
tr.
global
GDP
Shadow
economies:
34.5%
of
GDP
=
8
trillion
USD

22. Genuine
Progress
Indicator
Human
Sustainable
Development
Index

23. Social
Capital
TRUST
Honesty
Keeping promises
Reliability in performing duties
Professionalism
Reciprocity
Values have economic value added

24. COOPs:
the
seeds
of
their
destrucPon
1. Markets
destroy
social
capital
2. Government
intervenPons
destroy
social
capital
3. Can
COOPs
destroy
social
capital?
Diamond’s Collapse Trap?

25. COOPs:
the
seeds
of
their
destrucPon
Causal
link
behind
evidence
that
banks’
lending
to
owners
and
directors
can
result
in
“looCng”.
LooCng
occurs
when
controlling
parCes
are
at
risk
of
losing
control.
Related
lending
is
used
to
transfer
profits
only
in
localiCes
where
the
incumbent
poliCcians
face
significant
compeCCon
for
reelecCon.
Where
the
incumbent
party
has
a
high
probability
of
reelecCon
there
is
no
such
evidence.
Halling,
Pichler,
Stomper
The
Poli1cs
of
Related
Lending
InsPtute
of
Advanced
Studies,
Vienna

26. “Anyone
can
count
the
seeds
in
an
apple,
but
only
God
can
count
the
apples
in
a
seed”
— Karl
Marx
“Society
poses
itself
only
such
problems
as
it
can
solve”
— John
F.
Kennedy
“Our
problems
are
man-­‐made,
therefore
they
can
be
solved
by
men”
— Stavros
A.
Zenios
amendment
“Our
problems
are
man-­‐made,
therefore
they
can
be
solved
by
women”