The CETA Trade Pact Will Add to the Groundswell of Discontent

Why We Need More Informed Decision-Making

Servaas Storm and Pierre Kohler

Guest bloggers Servaas Storm and Pierre Kohler wrote the following analysis of the Canada-EU trade agreement for Naked Capitalism, based on their modeling study, ” CETA Without Blinders: How Cutting ‘Trade Costs and More’ Will Cause Unemployment, Inequality and Welfare Losses, ” which was published by the Global Development and Environment Institute (GDAE) as part of its ongoing work modeling trade policy. The study follows earlier modeling on the TransAtlantic Trade and Investment Partnership and the Trans-Pacific Partnership.

Things have changed. Until just a few weeks ago it was easy for economists and trade policymakers to discard the massive waves of protest across European countries against two controversial transatlantic free trade agreements as mere “irrational”, “protectionist” or “dangerously populist” impulses. But not so anymore. About the same time when hundreds of thousands of concerned German citizens took to the streets to protest against the Transatlantic Trade and Investment Partnership (TTIP) and the Comprehensive Economic and Trade Agreement (CETA), a growing chorus of senior policymakers started urging governments to heed the rising discontent, anxiety and economic insecurity among the vast majority of the populations in the advanced world.

Most prominently, in a speech[1] titled “Making Globalisation Work For All” given in Canada on September 13th, I.M.F. managing director Ms. Christine Lagarde stated that many people felt they “lack control” in a “system [that] is somehow against them” and that growing inequalities have “added to a groundswell of discontent, especially in the industrialized world.” Lagarde’s plea for boosting support for low-income workers and reducing inequality came on exactly the same day Mr. Mario Draghi, the president of the E.C.B. stated —in his Premio De Gasperi lecture in Trento, Italy[2]—that the E.U. should pay greater attention to “the demands of those left behind by a society built on the pursuit of wealth and power”, and do more to help globalization’s losers by moderating its outcomes. Globalization has certainly caused dislocation and hardship, as the recent McKinsey report titled “Poorer than Their Parents? Flat or Falling Incomes in Advanced Economies” found: 65 to 70% of households in 25 advanced economies had experienced no real income growth between 2005 and 2014, up from just 2 percent of households with stagnant incomes during 1993-2005. This was known, of course, but McKinsey’s report helped publicize the facts.

The bottom line should be clear: citizens are rightly concerned about the distributional consequences of TTIP and CETA — a concern which policymakers and politicians can ignore only at their own peril.

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Social Democracy, the “Third Way,” and the Crisis of Europe, Part 3

Alejandro Reuss

Historian and economist Alejandro Reuss is co-editor of Triple Crisis blog and Dollars & Sense magazine. This is the final part of a three-part series on the historical trajectory of European social democracy towards the so-called “Third Way”—a turn away from class-struggle politics and a compromise with neoliberal capitalism—and its role in the shaping of the Economic and Monetary Union of the EU. (See Part 1 and Part 2.) It is a continuation of his earlier series “The Eurozone Crisis: Monetary Union and Fiscal Disunion” (Part 1 and Part 2). His related article “An Historical Perspective on Brexit: Capitalist Internationalism, Reactionary Nationalism, and Socialist Internationalism” is available here.

Social Democratic Revivalism?

A deep crisis of global capitalism, its seeds sown in part by a dramatic deregulation of finance, Wolfgang Münchau of the Financial Times notes, would seem tailor-made for a revival of the “centre-left.” Why has this not happened? “The deep reason,” Münchau argues, “lies in its absorption of the policies of the centre-right, going back almost three decades: the acceptance of free trade agreements, the deregulation of everything, and (in the eurozone) of binding fiscal rules and the most extreme version of central bank independence on earth. They are all but indistinguishable from their opponents.” For the most part, however, this has led neither to a general collapse of these parties, nor to a rejection of “Third Way” politics and sharp turn back toward a full-throated social democratic reformism.

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Social Democracy, the “Third Way,” and the Crisis of Europe, Part 2

Alejandro Reuss

Historian and economist Alejandro Reuss is co-editor of Triple Crisis blog and Dollars & Sense magazine. This is the second part of a three-part series on the historical trajectory of European social democracy towards the so-called “Third Way”—a turn away from class-struggle politics and a compromise with neoliberal capitalism—and its role in the shaping of the Economic and Monetary Union of the EU. (See Part 1.) It is a continuation of his earlier series “The Eurozone Crisis: Monetary Union and Fiscal Disunion” (Part 1 and Part 2). His related article “An Historical Perspective on Brexit: Capitalist Internationalism, Reactionary Nationalism, and Socialist Internationalism” is available here.

What Went Wrong?

The rise of Third Way-style leaders to dominance in the social democratic parties of the largest European countries does not mean the parties were transformed root-and-branch to these politics, nor even that all the important politicians in these parties went over to Third Way politics. There were important intra-party struggles in all these parties. In the British Labour Party, for example, there is famously a divide between traditionally social democratic “Old Labour” and Blairite “New Labour.” In the German Social Democratic Party, a similar divide ultimately led to the left split off and the founding of Die (“The Left”). In none of these parties were old-style social democratic politics extinguished.

That said, it’s neither a correct nor a satisfying explanation to say that the parties were simply steered toward the right by misleaders. Rather, we have to trace the ebb of class-struggle politics in the social democratic parties of Europe—from radical origins, to the robust reformism of the social democratic heyday, to the quasi-neoliberalism of the present—to a combination of causes, some intrinsic to social democratic politics and some rooted more particularly in European and world events of the late 20th century.

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Pensions for All

Jomo Kwame Sundaram and Rob Vos

October 1st is the International Day of Older Persons. Just another day? Perhaps, but it should remind us that the world’s population is ageing, brought about by the combined effects of declining mortality and fertility rates and longer longevity. By mid-century, one out of five people will be over 65 compared to over one in ten now.
This is dramatic enough. What is equally compelling is that eighty per cent of older persons in the world will be living in developing countries by then – within two generations.

This ageing of the world’s population is one of humanity’s major achievements. Yet, significant challenges are keeping in step with this historic and emerging trend. For example, can health systems adapt to growing and new demands for care? What about the sustainability of social protection schemes? How do we keep our pension systems viable? These are serious, but solvable challenges.

The challenges are greatest, of course, in developing countries, where the vast majority of older persons lack adequate income protection. In the absence of pension incomes or other social transfers for older persons, the risk of spending one’s older years in poverty rises sharply. Moreover, in most developing countries, poverty compels older persons to continue working as long as they are able to. But reduced capacities, limited job opportunities, low incomes and other factors often combine to reduce their earnings.

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Leaders Pledge Action to Control Superbugs

Martin Khor

AT the opening of the Summit of the United Nations General Assembly on Sept 20, it sounded much like the swan song of two of the regular stalwarts of this annual affair.

It is the last General Assembly to be attended by UN Secretary-General Ban Ki-moon and United States President Barack Obama.

Both made interesting speeches. Ban listed all the woes afflicting the world, especially terrorism, while praising the Paris agreement and the sustainable development goals as big achievements of his eight years as the UN leader.

Obama, sounding like a professor, gave a lengthy analysis of the state of the world and the role of the United States, earning a laugh when he said it sometimes seemed the United States was being blamed for all the ills of the world and at the same time it was being asked to solve all its problems.

At the lunch for heads of state and organisations, Ban and Obama praised each other for their leadership in the past eight years.

Someone at my table wondered aloud what would happen to next year’s lunch if Donald Trump, who is known to dislike and distrust the UN, won the US election. Perhaps, as lea­der of the host country, he would have the traditional lunch cancelled.

This year’s UN summit will be remembered most for its high-level event on anti-microbial resistance (AMR), held on Sept 22, with many heads of government and ministers speaking on the need to fight this crisis.

The leaders adopted a landmark Political Declaration on AMR that recognised that antibiotic resistance is the “greatest and most urgent global risk” and that “due to AMR many 20th century achievements are being gravely challenged, particularly the reduction in illness and death from infectious diseases…”

This is the first ever statement by the heads of all the countries that recognises the AMR crisis and in which they pledge to take action.

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Social Democracy, the “Third Way,” and the Crisis of Europe, Part 1

Alejandro Reuss

Historian and economist Alejandro Reuss is co-editor of Triple Crisis blog and Dollars & Sense magazine. This is the first part of a three-part series on the historical trajectory of European social democracy towards the so-called “Third Way”—a turn away from class-struggle politics and a compromise with neoliberal capitalism—and its role in the shaping of the Economic and Monetary Union of the EU. It is a continuation of his earlier series “The Eurozone Crisis: Monetary Union and Fiscal Disunion” (Part 1 and Part 2). His related article “An Historical Perspective on Brexit: Capitalist Internationalism, Reactionary Nationalism, and Socialist Internationalism” is available here.

The idea of a united Europe was not unique to neoliberal politicians or financial capitalists, even if their vision was the one that ended up winning out. Rather, this idea cut across the entire political spectrum, from forces clearly associated with giant capitalist corporations and high finance to those associated with the working-class movement. Just as there have been “anti-Europe” or “euroskeptic” forces on the political left and right, there were also diverse forces in favor of European unification, each with its own vision of what a united Europe could be.

Going back to the mid-20th century, leaders of the social democratic, reformist left envisioned a future “Social Europe.” The European Social Charter, adopted by the Council of Europe in 1961, promulgated a broad vision of “social and economic rights,” including objectives like full employment, reduction of work hours, protection of workers’ rights to organize and bargain collectively, rights to social security and medical assistance, protection of the rights of migrants, and so on.

Figures on the revolutionary left, like the Belgian Marxist economist and Trotskyist leader Ernest Mandel, advocated a “United Socialist States of Europe.” This was an expression not only of revolutionary internationalism, but also of Mandel’s view that the working class could no longer confront increasingly internationalized capital through political action confined to the national level.

In other words, the question was not just whether Europe would become united, but (if it did) what form such unification would take.

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September 29, 2016 | Posted in: Uncategorized | Comments Closed

Battling Apple and the Giants

C.P. Chandrasekhar

On the 30th of August European Competition Commissioner Margrethe Vestager dropped a bombshell at the tax doors of the world’s leading multinational corporations. After a lengthy investigation she ruled that Ireland must recover from the local Apple subsidiary up to 13 billion euros ($14.5 billion) in unpaid past taxes, adding on interest on delayed payments, which could take the total to as much as 19 billion euros ($21 billion).The ruling was based on a decision that tax benefits provided to Apple’s subsidiaries in Ireland through two tax rulings amounted to ‘state aid’ that was illegal under EU rules.

The penalty, though huge by past standards, is not the issue here. With as much as $230 billion of cash and liquid securities (which can be easily converted to cash) at hand, Apple would not have to stretch itself to meet this bill. The real issue is whether Apple’s tax accounting, which is considered legal by the Irish government, can be challenged by investigators acting on behalf of the European Commission. It is taken for granted by the world’s biggest companies that they can transfer profits earned anywhere to locations that are tax havens as part of their “tax planning” decisions. The method through which this is often done is to charge inflated book prices (“transfer prices”) for goods or services sold by the parent or a third country subsidiary (depending on which is located in a country that imposes lower taxes) to the subsidiary in the country from which profits are to be transferred out. This inflates costs and reduces profits on paper in the country from which incomes are being siphoned out. The practice could mean both, that the effective income tax incidence on these companies globally is less than that on smaller companies and even individuals, and that some countries from where the profits of these multinationals are earned would be deprived of tax revenues on those incomes. These problems have been accentuated in the neoliberal era, since countries pursuing neoliberal trajectories are keen on attracting foreign investors into their economies, and are competing with each other to offer them a range of concessions, including concessions that facilitate this kind of tax avoidance, which is legal and does not constitute tax evasion.

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September 27, 2016 | Posted in: Uncategorized | Comments Closed

The Clean Power Plan’s Day in Court

Elizabeth A. Stanton

In one week, the D.C. Circuit of the U.S. Court of Appeals will begin hearing oral arguments regarding the Clean Power Plan—that’s the Environmental Protection Agency’s rule limiting carbon emissions from existing power plants that the Supreme Court put on hold in February. In staying the rule, the Supreme Court flagged concerns that EPA had failed to take the rule’s economic impacts into account. The 27 states challenging the rule have focused their arguments instead on its legal niceties claiming that the federal government is overstepping its authority.

Of the 27 states suing the EPA, 21 have already achieved their 2024 emission reduction targets and 18 have enacted policies that put them on track to reach their 2030 targets. Reuters quotes EPA Administrator Gina McCarthy as saying, “We are seeing reductions earlier than we ever expected. It’s a great sign that the market has already shifted and people are invested in the newer technologies, even while we are in litigation.” Economics are driving large-scale adoption of wind and solar generation around the country at the same time that low natural gas prices mean less reliance on coal-fired generators.

Carbon emission are falling and will continue to fall in the electric sector—without help from federal climate regulation. But in the absence of a strong national climate policy these reductions will not cut emissions quickly enough for the United States to play its essential role in keeping global warming below 2 degrees Celsius. It is no exaggeration to say that the decisions made by the D.C. Circuit and U.S. Supreme Court will set a precedent for federal regulation of carbon pollution that will have long lasting impacts felt around the world.

The quality of public debate sparked by the Clean Power Plan’s day in court will benefit from a grounding in facts not just about climate change and the U.S. role in changing the composition of our global atmosphere, but also in the legal issues at the core of the challenge to and stay of the rule. Here’s some recommended reading to that end:

·        A helpful blog piece from the Institute for Policy Integrity explaining the challenge in the context of U.S. law and history

·        A brief history lesson from the Law360 website describing the U.S. legal decisions that paved the way for the Clean Power Plan

Cross-posted at the author’s blog, lizstantonconsulting.com.

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September 22, 2016 | Posted in: Uncategorized | Comments Closed

The End of U.S.-Led Economic Globalisation?

Jayati Ghosh

There is much angst in the Northern financial media about how the era of globalisation led actively by the United States may well be coming to an end. This is said to be exemplified in the changed political attitudes to mega regional trade deals like the Trans Pacific Partnership Agreement (TPP) that was signed (but has not yet been ratified) by the US and 11 other countries in Latin America, Asia and Oceania; and the Trans-Atlantic Trade and Investment Partnership Agreement (TTIP) still being negotiated by the US and the European Union.

President Obama has been a fervent supporter of both these deals, with the explicit aim of enhancing and securing US power. “We have to make sure America writes the rules of the global economy. We should do it today while our economy is in the position of global strength. …We’ve got to harness it on our terms. If we don’t write the rules for trade around the world – guess what? China will!”, he famously said in a speech to workers in a Nike factory in Oregon, USA in May 2015. But even though he has made the case for the TPP plainly enough, his only chance of pushing even the TPP through is in the “lame duck” session of Congress just before the November Presidential election in the US.

However, the changing political currents in the US are making that ever more unlikely. Hardly anyone who is a candidate in the coming elections, whether for the Presidency, the Senate or the House of Representatives, is willing to stick their necks out to back the deal.

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September 21, 2016 | Posted in: Uncategorized | Comments Closed