Spotlight G20: Speeding from Hopeful to Hopeless

Ilene Grabel, part of our 2011 Spotlight G20 Series

Remember the WTO– the institution that we loved to hate? We haven’t been hearing much from or about the institution since its 2003 meeting in Cancun Mexico. That meeting marked the emergence of open conflict between wealthy and developing nations on a number of issues (such as agricultural protection). The conflict left the institution frozen and irrelevant. It now stands on the sidelines as policymakers crisscross the globe signing bi- and multi-lateral agreements.

The G20 seems to be outpacing the WTO in the march toward irrelevance.  When it was organized in the early days of the financial meltdown, many progressives (including me) viewed the G20 as an embryo from which new and at least somewhat more inclusive discussions of global economic policy could emerge. In its early days the shock of the global crisis seemed to have engendered a genuine “Keynesian moment.” G20 leaders collectively declared the death of the Washington Consensus, indicted the financial sector for its misdeeds, acknowledged the economic firepower of the rapidly growing developing countries that became new lenders to the IMF, and took tentative steps toward amplification of the voice of developing countries at the IMF and World Bank.

Read the rest of this entry »

Spotlight G20: G20 Defers Decision on Financial Transaction Tax Despite Global Support

Kavaljit Singh, Guest blogger

The G20 finance ministers and central bankers have put off an immediate decision to weigh up a global financial transaction tax (FTT) proposal at the forthcoming G20 Summit (Cannes, 3-4 November 2011).

The two-day Ministerial Meeting (14-15 October) in Paris took place against the backdrop of huge protests in US and Europe, galvanized by the Occupy Wall Street movement. At the Paris meeting, G20 finance ministers discussed myriad policy and implementation issues concerning world economy and financial markets. As anticipated, eurozone sovereign debt crisis dominated the discussions and the communiqué pressed Europe to act decisively on resolving the crisis at the forthcoming EU summit next week.

Read the rest of this entry »

Whose country is it? Wall Street occupies the regulatory agencies

Steve Suppan, Guest Blogger

The occupation of Wall Street by protestors against financial “innovations,” such as mortgage derivatives, which have devastated the real economy and its people, is beginning its fourth week; the Wall Street occupation of U.S. regulatory agencies, which are supposed to ensure fair and transparent markets, is into its ninth decade.  A vote tomorrow by the Commodity Futures Trading Commission (CFTC) on a weakened rule to reduce bank and hedge fund control of agriculture and energy markets will likely confirm the continued occupation by Wall Street.

Market deregulation, lubricated by a $5 billion lobbying budget from 1998 to 2008, according to Wall Street Watch, is a major cause of the economic crisis from which we are trying to recover. As CFTC Chairman Gary Gensler noted in an October 3 speech, the unregulated market now is seven times the size of the regulated market.

Read the rest of this entry »

The self-inflicted wound of US foreign aid cuts

and

It’s not every day that foreign aid is front page news in the United States, but it is because slashing foreign aid has become one of the few areas of bipartisanship in the US Congress. Such an act of retreat is short-sighted. Given that China and other emerging markets are ramping up their overseas development assistance, the US should be revamping and increasing aid, not cutting.

Read the rest of this entry »

Spotlight G20: Tax "Bads" and not "Goods"

Edward B. Barbier

A fundamental problem impeding global economic progress, growth and job creation is that all economies base their tax systems on raising revenues from “goods”, such as income, wealth and employment of labor.  And, perversely, governments rarely tax, and in fact often subsidize, “bads”, such as natural resource use, pollution and financial speculation.

The result is two major distortions in the world economy.  First, investment, innovation and job employment are discouraged, while pollution, environmental degradation, and financial speculation are encouraged.  Second, these perverse incentives perpetuate the “no win” political stalemate over whether additional taxes on income, wealth and labor should be used either to reduce chronic budget deficits or boost public spending and aggregate demand in economies.  As I argue in a recent article in the UN’s sustainable development journal, Natural Resources Forum, this policy failure is also inhibiting the long-run transition to more sustainable and “greener” economies.

Read the rest of this entry »

Spotlight G20: Tax “Bads” and not “Goods”

Edward B. Barbier

A fundamental problem impeding global economic progress, growth and job creation is that all economies base their tax systems on raising revenues from “goods”, such as income, wealth and employment of labor.  And, perversely, governments rarely tax, and in fact often subsidize, “bads”, such as natural resource use, pollution and financial speculation.

The result is two major distortions in the world economy.  First, investment, innovation and job employment are discouraged, while pollution, environmental degradation, and financial speculation are encouraged.  Second, these perverse incentives perpetuate the “no win” political stalemate over whether additional taxes on income, wealth and labor should be used either to reduce chronic budget deficits or boost public spending and aggregate demand in economies.  As I argue in a recent article in the UN’s sustainable development journal, Natural Resources Forum, this policy failure is also inhibiting the long-run transition to more sustainable and “greener” economies.

Read the rest of this entry »

Occupy Wall Street: All the Power To Them, But Get the Targets Right

Kevin P. Gallagher and Mark Blyth

Last week we paid a visit to the Occupy Boston outpost of the Occupy Wall Street Movement.  The group has pretty much taken over Dewey Square in front of the Federal Reserve.  They had a couple hundred people there, but the numbers seem to be growing by the day. We liked what we felt, though not always what we saw and heard.

What we felt was a brewing angst among activists, working people, and students that something is fundamentally wrong with the way the economy is ‘delivering the goods’ and to whom in the US. They may not know what they are for, but they do know who they are for: who they call the “99 percent”—those of us in the US who are not millionaires, and whose jobs and livelihoods are increasingly threatened.

Also admirable is that they have set up a “Free School University” to educate themselves. And that is where we came in. We were asked to lecture on the “first day of classes.”

Read the rest of this entry »

New Website on International Investment Arbitration

Researchers at the Osgoode Hall Law School of York University have launched a new website, International Investment Arbitration + Public Policy. This website, www.iiapp.org, launched last month, aims to showcase research on international investment arbitration in a way that is accessible, independent, and relevant. It was motivated by past questions from governments, businesses, NGOs, and the media related to the rise in so-called investor-state disputes allowed by some trade and investment agreements.

Its purposes are to:

  • provide open access to research on investment arbitration;
  • identify options for governments in responding to investor lawsuits;
  • shed light on the role of investment arbitrators in policy-making; and
  • highlight the case for more openness, independence, and public accountability in the system.

Visit www.iiapp.org for more information.

The Dragon’s Shadow: China’s banking system

Jayati Ghosh

On October 10, the Chinese government announced that it will increase its stakes in the four largest commercial banks, which are already largely public-owned. The move is designed to “support the healthy operations and development of key state-owned financial institutions and stabilise the share prices of state-owned commercial banks”.

But why was this move considered necessary at all? Recently, investors have been dumping Chinese bank shares, anticipating a slowing down not just of the economy as a whole, but in particular the property market, which had experienced a bubble of massive proportions. But the underlying concern about the health of Chinese banks reflects a deeper concern, about the extent of entanglement of these commercial banks with the growing “shadow banking sector”.

Read the rest of this entry »

Coal ash regulation would create 28,000 jobs

Frank Ackerman

Does environmental protection destroy jobs? That may be the strongest argument that the pro-pollution lobby has going for it. No one wants to endorse dirty air and water in so many words, but hey, we’re just trying to save jobs at a time when millions are out of work. In one of the latest reincarnations of this idea, the electric utility industry claims that regulating the disposal of coal ash could eliminate up to 316,000 jobs.

Ever sensitive to industry’s needs and wishes, Republicans in the House of Representatives have drafted a bill to ban federal regulation of coal ash, H.R. 2273. It’s expected to reach the floor of the House for a vote this week. Lobbyists supporting H.R. 2273 helpfully point out that it will stop the destruction of 316,000 jobs.

A quick reality check: regulating coal ash disposal means using earth-moving equipment, which doesn’t drive itself, constructing new facilities which don’t build themselves, and so on. Close your eyes and try to picture this, and you may see some workers on the premises. Environmental regulation generally creates jobs, including lots of blue-collar jobs in construction and manufacturing.

Read the rest of this entry »