The Put People First march Jules Evans
March 25, 2009 | More on Climate and resource scarcity, Economics and development, Influence and networks, London Summit | 5 comments
People in the City are muttering about being invaded by a horde of Swampies this weekend, for the Put People First march. There’s sure to be a lot of angry rhetoric – and rightly so – about the failure of free market capitalism.
But what exactly is the protest demanding?
Here are some of the protest’s policy points:
1) Compel tax havens to abide by strict international rules.
2) Insist on fundamental governance reform of the World Bank and International Monetary Fund (IMF).
3) Make all financial institutions, financial products and multinationals transparent and publicly accountable.
4) Ensure a massive investment in a green new deal to build a green economy based on decent work and fair pay.
5) Invest in and strengthen public provision of essential services.
6) Push for a deal at Copenhagen to agree substantial, verifiable cuts in greenhouse gases, which will limit temperature increases to well below 2°C.
It strikes me that most of the proposals are already government policy. Brown is already pushing for reform of the IMF (ie get rich emerging markets to stump up more cash), and he’s already pushing for closure of tax havens.
The EU has already committed itself to ’substantial verifiable cuts’ to limit global warming to 2 degrees (although most scientists now say we’re already facing over 2 degrees warming). But what global level of CO2 ppm is the protest demanding governments aim for? 550, 450, 350? Just demanding ’substantial cuts’ is letting the politicians off the hook.
The ‘protest’ seems actually to support government policy, rather like a fake grass roots march organised by the Kremlin. Not so much grass roots as astro-turf.
I am, however, interested in proposal 3:
Make all financial institutions, financial products and multinationals transparent and publicly accountable.
To make the entire economy ‘publicly accountable’ – does that mean making sure they obey laws (this is a form of public accountability that already exists) or putting a representative of government on their boards, and in effect bringing the entire economy under government control?
This might be a bit steep, but the protestors would be on much firmer ground calling for the nationalisation of the banking system.
Even the FT’s Martin Wolf has suggested that banks may have to be run as, in effect, public utilities in the future, because their function has been proved too critical to the public good to be left to private risk-takers. So too have the economist Nouriel Roubini and Pimco CEO Mohammad El-Erian.
As Wolf points out, if banks are too big to fail, then they shouldn’t be privately-owned because, clearly, the profits are privatised while the losses are socialised.
This is a basic, simple point that we have not yet fully grasped as a people, which the Left certainly hasn’t fully grasped, and which the government is terrified of dealing with, because the UK economy created over the last 30 years relies so heavily on financial services and the City. If the City was nationalised, how would the UK make money? From the Premiership and reality TV?
One part of the City which does look set to prosper is the European Climate Exchange, in Liverpool Street, which is the site of a Climate Camp protest this Saturday. The climate camp’s website says:
We will convergence [sic] on the European Climate Exchange, Hasilwood House, 62 Bishopsgate, EC2N 4AW at 12:30 exactly.
Bring a pop-up tent if you’ve got one, sleeping bag, wind turbine, mobile cinema, action plans and ideas…let’s imagine another world.
I interviewed the CEO of the climate exchange yesterday, Patrick Birley, who was bemused by the targeting of the exchange for protests. The EU emissions trading scheme , which makes up the majority of the exchange’s business, is easy to criticise, and certainly had major faults at the beginning of the scheme.
But most intelligent environmentalists support some form of cap and trade system – George Monbiot does, Oliver Tickell does, Global Commons Institute does, Jonathan Porritt does. It has been proven in the EU, and in the US (for the Montreal Protocol) as a practical way to incentivize business to reduce their emissions.
What alternatives does the Climate Camp propose, before it abolishes cap and trade?
The most obvious and rational alternative is to simply not do it. There are a wide variety of ways to reduce emissions that are appropriate for different individuals, communities, companies and countries. Any of many ways forward should be evaluated (along with important factors like equity and social justice) on the criteria of whether or not it allows us to move away from extracting and consuming large amounts of fossil fuels. Carbon trading does exactly the opposite of this – it sanctions further fossil fuel burning. Climate justice now!
Great. Thanks guys. Meet you next to the wind turbine. Let’s convergence.
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Twitter - David Steven
I know, it’s a shockingly weak policy position: just warmed up leftovers from Make Poverty History. (“Everything has changed! So… er… um… more aid and ban conditionality!” cont. p. 94)
As to Put People First’s climate stuff, where to start? As you say, two degrees is much less relevant to policy than a concentration level in ppm CO2e or an emissions target in GtC – and there’s also the small matter that two degrees has only been EU policy since, er, 1998. As importantly, their position and says nothing about the real political issue, i.e. how to share out the emissions budget.
On adaptation finance, meanwhile, they say it should be additional to ODA, but manage to avoid saying how MUCH more is needed for adaptation, thus reducing the statement to pure posturing with no actual content attached.
Perhaps I’m being unfair. The Stop Climate Chaos coalition has managed to keep itself content free for about four years so far (well done there; well done indeed), so maybe it’s unreasonable of me to expect Put People First to hammer out anything substantive given just a couple of months. Still, you have to wonder: if NGOs struggle this much to find anything to say beyond the motherhood and apple pie stuff, how are they supposed to demand that policymakers do any better?
I think Alex and Jules are being unfair and sloppy. If you read the full report rather than just the executive summary you will find that there are actually a lot of policy details that they fail to mention.
I think there is also a measure of difference between the rhethoric of the prime minister and the actual policy positions being taken in negotiations by the officials and ministries in the UK. The PM has indeed made rhetorical commitments on many of the items in the Put People First policy paper – but none of the policy commitments have been made or are even likely to be made.
Lets go through some of the points.
Tax Havens: The report calls for several things. Automatic multilateral tax information exchange systems. There is no indication yet that the government will commit to this, and especially not through a global institutions with full global membership rather than a limited institution such as the OECD. The second call is for country-by-country reporting which is a key element on cracking down on tax evasion especially as it relates to corporate tax abuse through transfer mispricing or royalty payments. Finally there is no indication that all data on beneficial ownership and trading entities will be put on public record. This could be done instantly for overseas territories of the UK – but the UK has avoided talking about UK jurisdictions and focussed instead on Switzerland and Lichtenstein.
Fundamental governance reform of the IMF and World Bank – the UK has been on of the leading blockers on voting reform at the IMF and World Bank for example. The policy paper called for voting weight to recognise shares of population – the UK has consistently rejected this. It also calls for “parity of voice and vote” for the World Bank – ie as groups developed and developing countries should have equal weight in the sinstitution. The UK has consistently rejected this as well. The UK’s position is not “comprehensive reform” but piecemeal reform.
Green New Deal – the UK stimulus is one of the least green being implemented. HSBC has released a report on the greenness of the global stimulus packages, rating the UK as having only 7% of stimulus green. This is dwarfed by continental countries as well as by China, South Korea and others. Some of the UK stimulus actually is being used to further “brown” rather than “green” projects such as massive road building. The UK stimulus at 1.4% of GDP is much lower than the estimate by the Stern report of what is needed to react to climate change. Extrapolating the numbers from Stern would indicate you need green stimulus in the range of 1.5% – 2% of GDP. Instead we have 7% of 1.4% of GDP – you do the maths…
On investing in public services – one touchstone included in the policy paper is a massive investment in ecologically sound social housing. The exact policy demands are not in the policy paper – due to ongoing work by a subgroup. But the 2020 housing group – including many members of Put People First – put out a call for 100,000 new socially rented homes to be constructed. There is no indication that the government will get anywhere close to meeting this target.
On climate change – you have picked out the point about pushing for deal at Cophenhagen. You ignored the reference in the paper of $80 billion a year need calculated by the UNDP. Not included in the paper – but part of much of the record of Put People First member work climate change – are demands about the structure of climate finance: funding will be governed through UN mechanisms; that it should be grants not loans; and should be additional to what industrial countries need to do at home.
Now on the point about transparency and public accountability. The text of the report unpacks the headline recommendation: all financial institutions should be regulated including hedge funds, sovereign wealth funds, and over-the-counter products. There should be limits on derivatives trading and damaging speculation. Public reporting and listing requirements for multinationals should include information about governance arrangements, human rights impacts, social impacts, and environmental impacts. And that multinationals operating abroad be held accountable if they breach international human rights and environmental standards – there is no mechanism for doing this now. Do you think any of this is government policy?
Hi Peter,
The two critical issues the protest can and should push for, it seems to me, are the need for a global CO2e target of 350-450ppm; and serious reform of the financial system.
The main question at the heart of the financial crisis is not regulating hedge funds (though thats a good idea) – they didnt cause the crisis, banks did. Its not regulating sovereign wealth funds (though the UK and IMF have already got SWFs to sign up to a transparency agreement, which was quite an achievement.)
It’s this: do we let our banks keep the profits and socialise the losses?
The reform of the financial sector you propose is not radical enough. It’s not about more regulation or more disclosure. It’s not about limiting trading in some instruments.
It’s a fundamental question of ownership and control.
The weird thing is, at the moment, only people in the financial services community recognise this. The Left still hasn’t woken up to it.
Once the government owns and controls the banking sector, some of the other proposals you pursue – investing in public services, environmental housing, closing down tax havens, investing in renewables – will naturally fall into place, because bank activities will be more directly aligned with government policy.
Jules, you are absolutely right that the control of the financial sector is a fundamental point. The recommendation we have on incentives and regulation to deliver a justice and sustainable economy covers these areas. It talks about using tax and financial incentives and regulation and reporting requirements (rather than direct ownership of banks) as the mechanisms to control both financial sector and non-financial sector corporate activity. These should incentivise/require companies/banks to meet environmental/social goals
However we have not spelled out in great detail in the policy paper the exact stratcuture of these incetnives and regulatory requirements. This is a work plan going forward for the members of Put People First. A report with more detail about this subject will be developed this year. But of course such a diverse colalition will make coming to consensus difficult – so it might take us a while…
And control of finance being fundamental does not make it comprehensive – there are issues at the international level that go much beyond the control of the financial sector/banks. Tax abuse by multinationals can occur without the banks. And developing country problems stemming from currency, capital and commodity proice volatility would still be problematic. And control of banks also does not suffice to tackle both national and international inequality. And the question of distribution of climate rights is entirely separate and politically decided.
The agenda is very broad. And certainly hard to condense into an 8 page paper.
If people are starving then emergency aid is needed. In the long run though I think aid money would be best used to steer countries towards building their own infrastructure that will allow for a strong economic base, such as a renewable energy power grid.
Mind you, the West needs poor people to stay poor, so we can stay rich. Aid does that to a tee.