AnAssessmentofPublicPolicyResponsetotheGlobalFinancialCrisis.docx

1、AnAssessmentofPublicPolicyResponsetotheGlobalFinancialCrisisAn Assessment of Public Policy Response to the Global Financial CrisisByUkertor Gabriel Moti (Ph.D)(Senior Lecturer)Department of Public Administration,University of Abuja.ABSTRACTMost prevailing discussions on the Global Financial Crisis (

2、GFC) focus on the roles and impact of the global crisis on the private sector and how it has been able to survive the turbulence or how it is trying to manage the crisis and whether corporations and businesses could come out of it or become submerged into liquidations or takeovers. It is important t

3、o realize that the issues about the financial downturn relate to regulatory issues and thus ultimately have an enormous bearing on governance, government institutions or public administration in general. Whichever way the crisis is looked at, governments or public administrations are not innocent in

4、 the matter. The issue can be examined in relation to public administration with a view to determine to what extent, policies or lack of policies, action or inaction, decisions or indecisions of governments contributed to the emergence of the crisis. It is equally necessary to diagnostically analyse

5、 the extent to which the situation has impacted public administration. Moreover, and probably more importantly, it is necessary to examine what could be done by public administration to avert, minimize or mitigate the impact of the financial crisis. There are increasingly persistent questions about

6、the role of and the effectiveness of government interventions. There also appears to be confusion and disagreement about what government or public administration should and can do to ameliorate the situation. The paper argues that public administration has a role in financial crisis in terms of caus

7、es, impact and remedies. The on-going financial crisis has created a global problematic situation that requires immediate mitigation. The argument further is that public administration through the knowledge, skills, competence, professionalism, commitment, strategic foresight and the action of its h

8、uman resources has a critical role in finding and implementing the mitigating remedies to the crisis. The paper concludes that public administration needs to reassess and reaffirm itself as a guarantor of the public interest and protector of the citizen from any threat financial and otherwise. In we

9、ak African countries, this role is more critical. What is required now is to take advantage of the crisis to re-assert the role of public administration as an instrument through which the state satisfies and protects the public interest against dangers of market failures, private greed and imported

10、crisis such as the current one.Key Words: Financial Crisis, Public Administration, Mitigating, Government, Remedies.1. IntroductionThe global financial crisis since the late 2007 has had a significant negative impact on the income, wealth and living conditions in both developed and developing countr

11、ies. The crisis has also had an impact on public administration, especially on the implementation of social and economic policies and its economic functions more generally. Public administration is in need of reform, transformation and the adoption of measures that will not contribute to a recovery

12、from the crisis in the short or medium terms, but also, help achieve better sustainable, inclusive and equitable development. The crisis has thus resurrected a debate about the economic role of public administration. Since the late 1970s, the debate has been strongly tilted towards the private secto

13、r and market-driven management approaches. The call to reduce state interventions in economic matters was followed in many countries, privileging the private sector as the engine of economic growth. 2. Statement of the Problem and ObjectivesThe questions then arise: how has the crisis affected Publi

14、c Administration and how are Public Policies responding to the crisis? What are the opportunities for Public Policy in the wake of the crisis? The objective of the paper is to examine the impact of the crisis on Public Administration, the response of Public Policy to the crisis and the challenges an

15、d opportunities the crisis has for Public Administration.3. MethodologyThe study is a review and relies on documentary evidence which provided data from official records, reports of international conferences/workshops as well as literature reflecting informed opinions of academics and practitioners.

16、4. Literature Review and Theoretical PerspectivesThe current global financial crisis is perhaps an issue that has attracted the loudest brainstorming in recent times. Scholars have attempted to understand the cause, impact and of course, solutions to the crisis. From the Keynesian background, a few

17、scholars have argued that the crisis is a result of governments failure in regulating the economy. They explain that the state had become rather loose in the application of proper and effective regulatory measures required to manage the periodic instabilities in the economic system (Moyo, 2009).Keyn

18、es in his “General theory” had advocated a modified capitalism which should ensure the full employment of all resources but would require an extension of the agenda of the state. Roper (1987) quotes Keynes to say the government needed to act as a prime bulwark of the system through its orchestrating

19、 of the macro economy by means of not only fiscal and monetary policy but also direct public investment expenditure when required in order to maintain aggregate demand at the level. It seems that the argument of Keynes has become one of the grounds upon which scholars explained that states policy ma

20、chineries left their role of orchestrating the macro economy by means of fiscal and monetary regulation.Thus, scholars explaining the cause of the global economic depression from the standpoint of the Keynesian General theory argue that it is the inability of States where capitalism is allowed to th

21、rive to detect and counteract possible distortions of the market through necessary interventions that has led to the problem.Conversely, critics of this view trace the problem to the “fanancialization” of the global system. Amin (2009) explained the term “fanancialization” of the global system to me

22、an the current capital system that is vastly dominated by a handful of Oligopolies that control the basic decision making in of the world economy. It is a system in which the main source of economic decision has been transferred from the creation of surplus value in production towards the redistribu

23、tion of profits between the oligopolies for which reason the system requires the expansion of financial investment. In that respect, as added by Moyo (2009), the major market, the one which dominates all other markets, is precisely the monetary and financial market. According to her, this scenario i

24、s fundamentally flawed because it has created a situation in which speculative capital in the form of financial transaction far outstrips real production in terms of gross domestic product (GDP), a system that cannot be sustained.5. Factors Responsible for the Crisis The origins of the recession can

25、 be traced back to major problems in the financial sector in the United States of America. A large quantity of bank assets consisting of mortgage loans were converted by financial intermediaries into a variety of innovative secondary securities, which in turn were sold in the financial market, attra

26、cting large amounts of savings from investors around the world. Since the exchange of assets proved very profitable, the phenomenon continued and grew considerably, creating a financial bubble. Motivated by high profits in those secondary financial operations, financial intermediaries of various typ

27、es, in particular large banks, pushed the supply of loans for housing until interest rates were very low even lower than the loan rates offered to high-quality debtors (i.e., prime rates), although loans were being granted to creditors with higher-risk qualifications. Risk analysis was widespread, b

28、ut attention was concentrated mostly on the secondary instruments risks and much less on the risks of the underlying house loans. Thus, buyers of secondary securities were not fully aware of the total risks as these financial instruments became increasingly complex, and neither private rating compan

29、ies nor public authorities provided sufficient information for the market participants. It was later recognized that official regulators had not acted promptly at the time the financial bubble was growing, assuming that the financial intermediaries themselves would have acted out of self-interest to

30、 adopt measures to prevent a crisis. At the same time, it became clear that the rating agencies had a conflict of interest, as they had a close, ongoing working relationship with the largest mortgage-backed security and collateralized debt obligations issuers. The current crisis is thus the result o

31、f regulatory failure.The collapse of a leading finance house, Lehman Brothers, had a system-wide domino effect, leading to a series of defaults on mortgage loans. As a result, a number of big banks began to go into severe balance-sheet disequilibrium, resulting in bankruptcy or near-bankruptcy, not

32、only in the United States but also in other countries where banks acquired the complex United States financial assets. It was only then that government decided to intervene; contributing with public funds to strengthen the capital of major troubled banks to avoid further repercussions such as might

33、result from generalized bank runs or a financial crash.As non-institutional financial investors became aware of the losses incurred in terms of wealth, they had to rapidly increase precautionary savings to deal with the impact of the financial crisis. This meant that they had to cut expenditure on goods and services. The decline in n