Human Behaviors Leading to Serious Environmental and Financial Crisis in 2008
The financial crisis in the year 2008 was solely influenced by human behaviors that lead to serious debts. The blame of the crisis was directed to supervisors, imprudent businesses and households, regulators and politicians. Due to their greed, they made several cognitive mistakes that led to flawed compensational structure meant for short term competency instead of long term results. Cognitive errors include over confidence of the boardroom and their failure to research or get any necessary assistance from other relevant authorities.
They only depend on their own thinking and outdated learning experiences and remain bias to their own thinking based on several emotional factors. These factors includes embarrassments, stubbornness and hope, cultural reasons and superstitions. The other reasons included the act of female chauvinism in the UK. The Labor officials suggested that if the problem was to be reduced is by increasing the number of women in the bank’s boardrooms.
On the other hand, the UNEP is trying to bring the idea of “green economy” so as to go in hand with the goals of environmental economics and improve developments and eradicate poverty (UNEP 201). The idea has been aided by widespread economic paradigm originating from several contemporary issues and failed market experiences. The essay explains some of the human behaviors that lead to critical financial and environmental crisis in the year 2008 and relevant solutions taken to curb the emanating problems.
Ann Sibert talks of Sexism and feminine negligence in the banking sector played a vital role in the financial crisis in 2008 (Stiglitz 127). At one time the UK Labor cabinet minister Hazel Blears suggested that “Maybe if we had some more women in the boardrooms, we might not have seen as much risk taking behavior” There was a serious gender imbalance in the boardrooms of the existing American and UK based banks and insurances companies due to male dominance in the executive positions.
Women control less than 20 percent of the corporate employee structure and only 25 percent in the positions in the US insurance and banking industry (Sullivan and Jordan 11). There is an economic works on the consequence of gender on perception of male dominance. In most cases, the idea that men are good at taking risks in investments and they are good in making wise financial decisions. As a matter of fact, men are seen to have the confidence when making transactions in financial markets resulting from previous success in their endeavors.
Several innovative studies done have shown the reasons for stereotype behavior among women and also the reasons behind male dominance in business. Researches on behavior of male traders proved crucial in taking risks based on average daily profit made by the traders. It might have important behavioral consequences leading to negative cognitive impacts (Buchanan 96). Testosterone glands produces receptors throughout the brain that contribute to irrational male financial decision making. Psychology literature states that if a group has individuals who are risk averters, it will mean that the whole group will tend to copy the same behavior.
The author of Towards the Green Economy has discussed the causes of these crises that vary at a fundamental level include the misallocation of capital. The main output of the economics is not to generally drag the economy but to guarantee a process of greening the economies. In cases of new engine growth, there is a net generator of decent jobs that is a vital strategy for the eradication of the high level of poverty. The author also talks of the importance of motivating policy makers in the aim of creating conducive environment for increased investments in transitions to a green economy. The bankers had a flawed compensation structure that only rewarded short term ability rather than long term results. It influenced the banker’s behavior to distort their behavior for transition to a green economy (Hill 675).
The UNEP is an international organization necessary for maintaining, regulating and educating people environmental systems. The UNEP has introduced the idea of “Green economy” as a way of modifying people’s behavior so as to bring sustainable living and eradicate poverty (United Nations Environment Programme 72). It is an idea that has been aided by widespread economic paradigm emanating from many concurrent crises and failed market experiences including the financial and economic crisis of 2008. Though at the same time, people are getting awareness on the causes of financial and economic depressions.
Transitions to green economy has nevertheless sound economic and social justification. Both the governments and the private sector have engaged in this green economy in a way to transform the economy. For the government, it includes a change of strategies to foster greener products by policy reforms and provides new incentives for redirecting public finance, strengthening market infrastructure based and greening public procurements (Holt, Charles and Susan 1653). On the other hand, the private sector needs to have a representative in the green economy transitions across various key sectors. It is also important for the implementation of policy reforms from other levels of financial investments.
Several concurrent crises have either come up in this decade as a result of, food, water climate change, biodiversity, fuel and economy as a whole. Increasing climate change indicate disastrous threat on human beings. The rise in food and commodities prices and fuel price shock of 2008 indicated structural shortcomings and risks which remain unresolved. As regards to food security, we see widespread understanding of nature of the problem globally (Coates and Herbert 6167). These crises have critically affected our ability to sustain developments worldwide and the achievement of Millennium Development Goals (MDGs) for poverty reduction and eradication.
Although the crises vary, at critical levels, the share a common cause that is gross misallocation of capital. In the last decade much of the capital has been spent in property, fossil fuels and structured financial assets. Instead of opting for far cheap alternatives with little environmental degradation such as investing in renewable sources of energy, public transportation, biodiversity, sustainable agriculture and land and water conservation. By depleting the world’s stock of natural renewable resources, often irreversible, and creating more wealth through “brown economy” has not been marginally and seriously addressed (Sabourian, Hamid and Anne 108). Sustainability is still under achieved and will remain a long term goal but most important is to work on greening our economy first.
Transitions to green economy in the article includes creation of an enabling environment that are in line with national regulations, policies, incentives and legal infrastructures. Trade policies and control mechanisms were also streamlined. Currently, the idea of green economy has been felt all over the world. For instance, the reduction of prices of fossil fuels in 2008 and the subsidization has affected changes in the environment where wind and solar have replaced wood and charcoal fuel (Sibert 102). Research shows that there is no tradeoff between environmental sustenance and economic growth.
The greening of the economy only does well in transforming all sectors of the economy. It creates opportunities to the youths hence creation of jobs and employment. It offsets job losses in the process of transitioning. The green economy also changes the human behavior through the eradication of persistent poverty in the society. The improvement of agriculture sectors, forestry as well as the energy sectors is a boost towards a green economy. Sustainable forestry programs and the preservation of water sources are factors that have seen an improvement in soil fertility and water that has encouraged subsistence farming. Nevertheless, this program has facilitated the formulation of policies that serve to preserve the environment from any harmful activities. It has addressed market failures by correction of imperfections in the markets and the consideration of market incentives.
The strengthening of tourism industry has seen it carry social responsibility activities such as helping communities acquire tap water and also carrying out several infrastructural activities. Tourists are the champions of green economy. The industry has created so many job opportunities and generated income to the country’s economy without affecting green economy strategy (Sullivan, Kevin and Mary 219). Nevertheless, reducing deforestation and increasing reforestation is a vital step in attaining green economy and supports agriculture and rural livelihoods. Forest goods and services plays key role in the economy, it offers resilience agriculture health and other bio driven factors. It offers employments and income generated when the products are sold.
In conclusion, financial and environmental crises are usually human behavioral inflicted. To reduce such challenges the economy has to be evaluated and equal opportunities given to all people in participating in economic building. Women in general should be integrated in the financial and insurance industry so as to diversify the way of thinking and management of risks. In the environmental sector, green economy should be embraced due to its more advantages than its shortcomings. This is done by generally increasing prices of fossil fuel and reducing the prices of renewable energy. The government as a whole should ensure its nation is advancing towards green economy as a main goal.