Queen's Speech

Lord Rana Excerpts

Wednesday 2nd June 2010 Lords Chamber

[Lord Rana]

My Lords, I, too, add my best wishes and congratulations to the ministerial team. They have a challenging job ahead.

Let us consider some causes of the economic crisis that we are all suffering. Over past decades there was a basic shift in the idea of wealth creation, which we now know was misguided. Individuals, financial institutions and Governments accepted a false idea that simply by adding inflated values to property we were creating real wealth. We came to believe that simply adding numbers—whether to derivatives on the financial markets, to property values or to the creation of service industries—was enough to create national wealth. People working in banks were led by sheer greed and lured by the attraction of earning huge bonuses for uncontrolled and unsafe lending.

We also encouraged uncontrolled consumerism, based on exploiting poor people in the developing world who were paid near starvation wages for producing goods for developed countries. We created an economic system based on inequality, injustice and exploitation. We tried—and failed disastrously—to build a modern economy based on financial services, property values and speculation. We now know that this model is not sustainable; it leads to boom and bust cycles.

I am not opposed to property as a means of creating wealth, but it is not enough to generate national wealth. We must shift our focus back to strengthening manufacturing as the primary generator of wealth and economic well-being. We need a more balanced approach to economic development that embraces manufacturing, service industries, banking, financial services, and IT and knowledge-based industries. The Government should focus on developing initiatives and incentives that will stimulate our manufacturing base.

We live in a global village where manufacturing skills are being transferred to developing nations at an alarmingly fast rate. We need to ponder how we can maintain a long-term wage differential when a worker in a developing country earns less than one-tenth of what is earned by his counterpart with a similar skill living in the UK. We continue to demand that workers in these nations provide us with the products that we need at ever cheaper prices. As a result, the gulf between the rich and the poor, and between nations, grows fast. People who toil to produce agricultural or industrial products, especially in the developing world, are not paid a fair wage.

We talk about global warming but we pay only lip service to addressing the problem, although we know that the real cause of global warming is uncontrolled consumerism, overconsumption and the sheer waste that people living in rich countries have got used to. Twenty per cent of the world’s population in the highest-income countries account for 86 per cent of total private consumption, while the poorest 20 per cent account for a minuscule 1.3 per cent; the richest fifth consume 45 per cent of all meat and fish, while the poorest fifth consume just 5 per cent. The United States, for instance, with about only 5 per cent of the world’s population, consumes 25 per cent of the world’s commercial energy and natural resources. The richest consume 58 per cent of total energy; the poorest fifth consume less than 4 per cent. Two billion people exist on less than $2 a day. Finite resources are being sucked from low-income countries with little benefit to them, further accelerating environmental degradation in those countries and removing the resources that the people there need to live on.

This situation is not sustainable. Society should be encouraged to be thrifty, with people eliminating wastefulness from their lifestyles and using only what is absolutely necessary for sustainable living. We should help to create a system whereby the 2 billion poor who receive less than a subsistence wage for their labour are paid a fair living wage. Multinational corporations that buy goods from suppliers in the developing world should press those suppliers to pay a fair wage to the workers whom they employ. By such actions, we will enable them to afford manufactured goods and have better food, better living conditions and better education for their children. By taking these measures, we will be increasing the global consumer base rather than asking the western consumer to spend more to regenerate the economy.

The economic downturn is a rude awakening for us. It should stir us to reassess our lifestyles in order to develop a society in which we respect nature and evolve a more caring and sharing world. We should partner developing countries to help them to grow out of the present recession. The future economic global planning strategy has to be to work together with the developing countries of Asia, Africa and South America to create a more balanced and sustainable economic order that will benefit all. We need a more balanced strategy—one underpinned by a fairer, more equitable, more measured approach, with equal opportunities for wealth generation and sustainable economic development.