This blog was conceived to tie in with my studies. Since I’ve now completed my master’s, it’s time to wrap up the blog. For the record, From Davos to Seattle has been live for a year and five months. In that time it has been visited 11,697 times. If anyone wants to contact me, my details are here.
I received an email today from One.org. As regular readers will know, I’ve often spoken well of this charity, having found them to be pretty right on most of the time. The email says that today is the global day of action against extreme poverty. So far so good. What does One.org want me to do? Write to my MP? Organise a march? Write to my local newspaper? Give some money, perhaps?
Not at all. That’s just not sexy anymore. They’d prefer I tweeted:
I’m standing up to end poverty today with @ONEcampaign. Pls RT and join me. #standup09
or posted a Facebook status:
I’m standing up to end poverty today with @ONE. Please post this as your status and join me.
How does this constitute standing up to end poverty? Saying that I’m against poverty? How original. How productive.
The last 2 years we’ve set a new world record, and if everyone takes part and spreads the world, we may very well go down in the pages of Guinness again this year. So start right now. Stand up.
Now I know that the average person doesn’t have time to get involved with in-depth activism. And I know that raising awareness is important. But I wonder if this kind of request isn’t actually counter-productive. If all NGOs can muster for the global day of action is twittering, I simply despair. I see a race to the bottom, with organisations competing against each other to see who can ask for the least committment and the least meaningful action from their supporters. Am I being too cynical?
The Davos to Seattle Award for Best Crisis-Themed Song goes to The Destroyers for their tune ‘Where has the money gone?’ The Destroyers are ‘a 15-headed conflagration of instrumentalists, vocalists and composers, specialising in turbo-folk mélanges of Gypsy, Balkan, Klesmer and beat poetry.’
It’s always hard to know how much was decided in advance, but damn near all of it would be a pretty good guess. The final communiqué is now available and it’s clear to see that the expanding role of the G20 itself is the most significant outcome, on the face of it, at least. More on that later. Interesting as well to see Nicholas Sarkozy continues to speak in quite progressive terms about banking reform and the decline of (what he would call) the Anglo-Saxon economic model (‘le laisser-faire, c’est fini’). Together with Angela Merkel, he’s been leading Europe’s push for firmer regulation and bonus caps. In comparison to these right-wing leaders, Gordon Brown (leading a social democratic party) has been dragging his feet somewhat on the caps, though seems to have relented in the end. However, The Economist believes that the outcome was a ‘fudge’:
Going into the summit they [France and Germany] had pushed hard for firm numerical limits on bonuses as a proportion of revenues or capital. The language of the communiqué, however, was closer to the Americans’ position.
Other key outcomes of the meeting included a declaration of intent to reform IMF voting structures by 2011. Any change will be at the expense of European board members, who will have to give up at least 5% of their voting weight, in part to China. Blake Hounshell is:
interested to see if Geithner’s ideas for reforming the IMF gain any traction. The micro story is a technocratic one, but the macro story could be yet another sign that China is being welcomed into the inner circles of global power. The scuttlebutt is that the Treasury secretary hopes to persuade China to sign on to his priorities on capital requirements and other reforms in exchange for getting a larger share of control of the fund. Anyone know the Chinese word for “bribery”?
The Fund is also getting another funding boost of $500bn. The IMF’s twin – the World Bank – was also discussed and noises (though no committments) have been made about small voting changes there too. More details will be available in the run-up to the Bank’s spring meeting next year.
Broader questions about banking regulations got a good deal of attention, though nothing firm came out of the meeting. However, it is important to note that since the London Summit, G20 leaders haven’t taken the easy route and gone quiet on the subject. This is presumably partly due to the domestic political benefits of looking tough on bankers. Somewhat surprisingly, though, the G20 does seem to be serious about real united reform and progress on tax havens has been substantive. The idea of ‘living wills’ for too-big-to-fail institutions has also been addressed in order to set up special regulatory regimes for systemically crucial firms.
On fiscal stimulus, politicians seem to be taking the necessity of working in concert more seriously. The EU fears that the US will ‘turn off’ its stimulus too early, perhaps fostering a much-feared ‘double-dip’ recession. However, the Group pledged not to pull pack on countercyclical policies just yet. The FT heralded ‘a striking area of consensus, given the arguments about stimulus that raged ahead of the previous G20 heads of government meeting in London in April.’
Outside, the protests apparently lacked focus, which is no real surprise. This is the danger of setting yourself up as ‘The Movement’. It’s not meant to be a secret society. On the other hand, Pittsburgh did witness what seems to be the first public use in a democratic country of the sonic blast cannon.
The really interesting point, as mentioned above, is the ascendance of the Group itself. Pittsburgh, in its own words, ‘designated the G-20 to be the premier forum for our international economic cooperation’. This is a body that theoretically represents 90% of world economy and 2/3 of its population. Summits will take place in Canada and South Korea next year and – in theory at least – annually thereafter. Brookings has a paper out on this (but I’d skip straight to the bottom of page four if I were you). Martin Wolf writes (FT leaflet) that ‘for the first time since the industrial revolution, economic power is no longer concentrated in western hands.’ One would have expected Wolf to be more sceptical of the idea that de jure power will translate to anything meaningful. Paul Collier certainly is:
In a world that needs collective action but is composed of 194 governments, the overarching problem is free-riding. The burden of global leadership inevitably will fall on those few governments that are manifestly too big to free-ride. There will be only five such governments: America, China, India, Japan and the 27-in-one European Union. Over the next decade each of these governments will realise that it can be a deal-breaker: if it tries to free-ride, the other four will refuse to step up to their responsibilities. These five will be the G5, the group that runs the world.
As Wolf acknowledges:
The whole point of the G20 is to allow the world’s most important leaders to have a proper discussion about the world’s most difficult problems. But with 29 people, plus support staff, in the conference room, it will be very difficult to break through the formalities. One diplomat involved in the planning for Pittsburgh points out that if everybody around the table insisted on making a three-minute opening statement, it would take an hour and a half before the discussion could even begin.
Marc Weisbrot has suggested that the move from the G8 to the G20 is not as significant as has been made out, since the G20 lacks any (formal) power of enforcement. For Weisbrot, the G20 issue distracts from the structural iniquities of power at the IMF, World Bank and WTO.
The G20 is not a permanent body, nor does it have a headquarters or secretariat. This might help it in terms of flexibility – in global governance, there’s actually something to be said for ad hoc decision making (what wonks call variable geometry – but it won’t do much for equality between rich and poor countries. There’s also a danger that as ‘the premier forum’, the G20 starts to feel entitled to make decisions affecting non-members without consultation. Before this becomes too gloomy, though, it’s worth saying that 20 voices are better than 8 in democratic terms, so at least this is a move in the right direction, more or less.
From the scene, Paul Mason wrote that ‘bit by bit the world is moving from an order based on treaty and formal sanction to one based on consensus, horse-trading and the diffusion of power’, adding that ‘here inside the Pittsburgh G20 Summit it feels like being there at the birth of a postmodernist medieval empire.’ Has Mason been reading Hedley Bull? Either way, I suspect he’s right.
Kindred Winecoff (IPE at UNC) responded on Monday to an op-ed by Dani Rodrik, which advocated the Tobin Tax once more. This was in turn a response to the comments made by Adair Turner in last month’s Prospect and briefly discussed here at Davos to Seattle. (See also comments by the German finance minister). Kindred was sceptical, stating that:
if the tax is successful in limiting cross-national transactions (“throwing some sand in the wheels of international finance”), then the revenue from the tax will be less significant. Only if large, frequent, cross-national flows persist will the revenue come in, and if that happens then the other goal of the Tobin tax (protection from “hot money” flows) will be betrayed.
This is fair enough as far as it goes, but I’d suggest that the second goal is more important than the first. Indeed, I’d always interpreted the first goal as simply the means to achieve the second goal, rather than an end in its own right.
Additionally, I’d question what’s meant by “large” in this context. Obviously the Tobin Tax would have a minimum threshold so that it didn’t apply to the average holidaymaker at the Bureau de Change. But the limiting of large cross-national flows needn’t necessarily mean the tax would be utterly ineffective, as it would still apply to plenty of smaller (though still large in comparison to holidaymakers’) commercial transactions. It could raise significant money from such exchanges, even if the biggest “hot money” flows were limited. There’s an ideal equilibrium point to be found.
The post at IPE at UNC also argues that:
Rodrik says that a small Tobin tax would raise “hundreds of billions” worldwide. Presumably these will used on all sorts of really great projects that everyone loves (he lists “foreign aid, vaccines, green technologies, you name it”). But the vast majority of these taxes will be recouped by the countries with the biggest financial sectors (who receive the most inflows): the U.S., U.K., Germany, Japan. In essence, then, we would be taxing investors from poorer countries in order to redistribute to citizens of richer countries.
I’m willing to be corrected, but my understanding had always been that the Tobin Tax would be raised nationally, but pooled, administered and (re)distributed at a global level and then spent on projects of “net global benefit”.
So while the Tobin Tax is certainly not ‘the answer’, it might well be an answer. At the least, it has the potential to become a progressive and effective tool in global economic governance. The strange thing is that however much it might irk the city and financial institutions, the Tobin Tax is an idea that never quite seems to go away. Its simplicity and elegance, together with the fact that it’s not a tax that (directly) impacts much on the ordinary citizen make it perennially popular. One gets the feeling that however much structural power is wielded by those who stand to lose by it, every idea that manages to be both good and popular at the same time will have its time come eventually.
This is an automated message. By the time you read it I will have handed in my dissertation and as such, will have finished my master’s. Like Vince Lombardi said:
any man’s finest hour, the greatest fulfillment of all that he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle – victorious.
Overdramatic, perhaps. But it has been a long slog and I am pleased to say that my dissertation not only reflects my genuine views (my essays rarely do this), but it also has practical proposals, which at least makes me feel that I’ve contributed something tangible and meaningful, even if only about five people are ever going to read it.
Books issued from university library: 400*
No. cups coffee/tea: 1460 (approx)
Blog posts: 151
Blog views: 9,697
No. of dissertations: 1
The future is unclear – I’ll keep you posted.
* Not quite sure how this happened. That’s more than one per day…