Paper by David Steven, Bruce Jones and Emily O’Brien that examines impacts of the major transformation in international energy markets that has begun. The United States is poised to overtake Saudi Arabia and Russia as the world’s largest oil producer and, combined with new developments in natural gas, is on track to become the dominant player in global energy markets. Meanwhile, China is in place to surpass the United States in its scale of oil imports, and has already edged out the U.S. in carbon emissions. (April 2014)
The IMF has attracted plenty of favourable attention from unfamiliar places with two ‘staff papers’ (we’re enjoined to consider them as the personal opinions of the authors, not the IMF itself, an injunction that we all merrily ignore). The first argues that inequality reduces growth, while redistribution is an effective tool for reducing it; the second explains how governments should use taxes and public expenditure to achieve this goal.
Inequality campaigners are over-the-moon to have the IMF on their side. Oxfam International hails the IMF for “mashing myths and debunking dogma in economic policy,” while the Oxfam inequality guru, Nick Galasso, is fulsome in his praise of an “ideological sea change” at the Fund (“if If it sounds like I have a crush on the IMF’s Managing Director, Christian Lagarde…”).
— Oxfam International (@Oxfam) March 16, 2014
But what tools does the IMF think we should use to shrink inequality? Oxfam’s tweet leads to a Reuters article covering a speech by IMF deputy managing director, David Lipton. The speech is definitely worth reading in full – it’s a digestible summary of emerging IMF thinking, while the table on page 43 of the IMF report provides an overview of its suite of policy prescriptions.
Key recommendations for developed countries include substituting means-tested benefits for universal ones; raising the retirement age and making the rich work longer than the poor; charging more for university education in order to spend more on schools; and making income tax more progressive, while eliminating tax breaks.
Many of these are good policies, but let’s not pretend they’re all politically palatable. Take the last one as an example. In the United States, President Obama and the Republicans are locked into fruitless combat on eliminating a few of the most egregious pro-rich tax breaks. A recent revenue-neutral tax reform plan from a Republican has provoked a blizzard of protest from Wall Street and has been roundly condemned by his colleagues.
But the IMF is not interested in these small-bore controversies, it has the big one in its sights: the 37 million Americans who benefit to the tune of $70bn or so from tax relief on their mortgages. And that’s a political live wire. I’d speculate that any presidential candidate – Republican or Democrat – who ran for 2016 on a “tax the homeowners” platform would have as much chance of winning the nomination as I do.
This is not just an American problem. Look at the IMF’s core policy prescription for the United Kingdom – one good enough that it makes it into Lipton’s speech as well as into the report. The UK should move to a flat rate of VAT on all goods and services, Lipton argues, and use the money to increase benefits.
That would mean imposing a 20% tax on food (raising £16bn or so), and on rent and house construction (another £13bn), while increasing tax on household electricity and gas from 5% to 20% (£5bn). Tax would also go up on books, children’s clothing, tampons, condoms, stamps, charities like Oxfam, and… funerals. Yep – the IMF is proposing a burial tax.
All in all, this would give George Osborne £60bn to play with (table 4), more if he axes universal benefits in favour of greater means-testing (goodbye child benefit, winter fuel allowance etc). This would be enough to double benefits for working-age low earners and the unemployed (table 8.2).
Good news for inequality, maybe, but an act of political insanity. In the UK, we once had a manifesto that was derided as ‘the longest suicide note in history’. Flat rate VAT (for all its merits) would be the shortest. VAT on food? On books? On coffins? Just look at the disaster that befell the British government when it tried to tax Cornish pasties to see how badly this would go wrong.
There are equally obvious political bear traps when you look at the problem from the point of view of low and middle income countries. And the task ahead of them is daunting, given that inequality levels are higher in Asia and the Middle East than in the West, and much higher again in Africa and Latin America. A European minister told me that he was hoping for a post-2015 goal that would inspire the whole world to be as equal as his country by 2030. I shudder to think of the collective apoplexy this prospect would cause in the G77.
No-one is pretending that IMF-branded policies represent the final word on inequality. Oxfam issued a media brief this week, which proposes the UK tackles inequality by cracking down on tax dodgers, implementing a Tobin tax and a tax on land, and increasing the minimum wage.
But what the Fund’s excellent report does is underline the importance of going from high-level aspirations to detailed scrutiny of the policies we want governments to implement to bring inequality down. Only then can we understand how today’s high level debate on inequality will play out in the bruising world of retail politics. It would be good to see Oxfam’s proposals costed and their likely impact on inequality audited, so we can see what they’ll deliver and who’d foot the bill. Without that the politics remain hard to read.
A greater focus on policies and implementation, and the politics of both, is especially important for those arguing that we should stop being “belligerent” about the “unrealistic goal” of ending sub-$1.25 a day poverty and instead build a post-2015 agenda on the the more sustainable political foundations that inequality offers.
Sure, we have an ‘emerging consensus’ that something needs to be done to bring inequality down. But will that consensus hold when publics around the world, and assorted lobbyists, get a better sense of what that something looks like?
Late last week, New York University’s Center on International Cooperation published A Laboratory for Sustainable Development? Latin America, the Caribbean and the Post-2015 Development Agenda, a report that I co-authored with my CIC colleague, Alejandra Kubitschek-Bujones.
It was commissioned as an input to a retreat for Ambassadors from the Group of Latin American and Caribbean Countries in the United Nations, their negotiators from capitals, and representatives from the UN in the region, along with its companion piece What Happens Now? Taking the Post-2015 Agenda to the Next Stage
While Alejandra is an expert on the region, I am not. So here’s an outsider’s perspective, based on a series of interviews with people from the region who are immersed in the post-2015 agenda, and others who see it within a broader geopolitical context.
1. Latin America has exerted disproportionate influence in the early stages of the post-2015 debate and could play a decisive role over the next two years.
In the run up to Rio+20, Colombia and Guatemala published a joint proposal that put sustainable development goals on the international agenda. This is a classic example of how countries can drive global policy by articulating ‘big picture’ concepts in a format that creates broad debate. As host of Rio+20, meanwhile, Brazil played an important role in shaping the SDGs, while the current President of the General Assembly is from the region.
Over the next two years, Latin American countries will be the swing vote on many key issues. Whether they drive progress, or hold it back, will have a significant impact on whether or not the UN agrees a worthy replacement to the MDGs.
2. Latin American countries will be most influential if they build on their experiences as ‘laboratories for sustainable development.’
We pretend it’s not – but, at its worst, the post-2015 debate, and sustainable development more generally, is mind-numbingly formulaic and abstract, a tedious litany of phrases intoned by negotiators and various hangers on.
What was striking, talking to Latin American governments, is that many of them have strongly held beliefs about how development should be done differently – in the real world, and at a scale that makes a difference to the lives of large numbers of people. Coming from Europe, where governments are fiddling around the edges and hoping things will get better in a decade’s time, it’s very refreshing to hear Latin America countries argue about which of the many models that coexist in the region has most to offer its people.
By drawing on this diverse and innovative track record, the region’s governments and leaders from civil society and business have a real chance to push the new agenda away from empty language and towards a debate about the concrete policies that are needed at a time when prevailing assumptions about how the global economy works are widely discredited.
3. But the region cannot continue trying to push critical issues to the side of the negotiations.
Most Latin American countries are engaged in a struggle to build the institutions and social structures they need if they are to meet the long-term needs of predominantly urban and increasingly prosperous populations.
But many of its citizens live in conditions of chronic insecurity. Mexico has fewer people than Japan, but while the latter has around 500 murders a year, over 27,000 Mexicans were killed in 2011. You’re ten times more likely to be murdered in Nigeria than the UK, but seventy-six times more likely to be murdered in Honduras! Human security and a broader set of questions of how to build institutions that offer citizens justice and fairness are fundamental to Latin America’s future. There is also an inescapable transboundary dimension, given the role played by organized crime in driving violence and, once again, a ‘laboratory’ of innovative responses, especially in some of the more forward thinking cities.
These issues make some of the region’s governments feel uncomfortable (though others are calling loudly for a post-2015 focus on security and governance challenges), but it’s surely better for the region as a whole to get ahead of this agenda, rather than get stuck in a defensive posture.
4. Caribbean countries could keep the world’s eyes focused on the environment.
The UN is so determined to show that sustainable development is about more than the environment that there’s a good chance the new goals will be heavily skewed away from core environmental challenges.
This is especially problematic for the island states of the Caribbean, which face existential threats from climate change. These countries, along with other small island states, have long been highly influential in the climate process, but are now gearing up to try and make sure the post-2015 framework makes a contribution to environmental sustainability that goes beyond the usual pieties. This is no easy task and will require visionary thinking about what kinds of global goal have the potential to drive change in a way that adds to what is already going on in the international system.
Many of the issues discussed in the paper, as well as the points made above, apply across the Latin American and Caribbean region. However, I believe that Caribbean countries have a unique opportunity to push for a strong – and tangible – regional position on the environment, and then to advocate for it globally. They can also help answer the question of how the post-2015 and current climate negotiations should interact, given that both these processes are intended to finally be agreed at summits for leaders at the end of the same year.
Read the whole paper here.
The Latin American and Caribbean region has a unique opportunity to exercise leadership and influence over the post-2015 development debate. The region’s countries have shown a commitment to the Millennium Development Goals by creating new approaches to achieving prosperity and delivering high standards of social welfare. Recently, the region has successfully captured the leadership positions at the UN in the lead-up to the 69th General Assembly, allowing it to advance its innovative development policies and models within the debate and lobby for its concerns.
A Laboratory for Sustainable Development?, written by David Steven and Alejandra Kubitschek-Bujones discusses the opportunities and obstacles to agreeing on a post-2015 agenda that will benefit the region and explores ways in which regional players might influence the agenda. More about the report and CIC’s work on post-2015 here. The reports are available for download below – English version on the left and Spanish on the right.
Today the UK is debating whether or not to alter a legally enforceable carbon budget for 2023-2027 (Carbon Brief has an excellent explanation of the issues at stake). This will be the fourth budget and is designed to keep the country on track to reducing emissions by 80% by 2050 from a 1990 baseline.
Implementation in the UK may often still be disappointing, but no developed country has been so willing to create a legal framework that provides clear ‘signals from the future’ to investors about where they should put their money.
It’s a path that more countries will need to follow if the world is to have any hope of delivering the promise to stabilize the climate which was first made over twenty years’ ago.
The UK also has an independent statutory body – the Committee on Climate Change – that exists to advise ministers on the 2050 target and the budgets needed to get there. Think of a monetary policy committee – but with advisory powers rather than the ability to act on its own to set interest rates.
The Committee today published a report on whether the 2023-2027 budget should be revised and concluded that it shouldn’t. The budget is feasible and cost effective, it concludes. If anything, it would be cheaper for the UK to make bigger cuts in the short term, rather than waiting until neater to 2050.
So far so good.
But I want to quibble with one aspect of the Committee’s report. Actually it’s more than a quibble. I was enraged by the complacency with which it discussed whether other countries were matching the UK’s commitment.
The Committee’s report blithely asserts that progress towards a global climate deal is “broadly as expected” (really?) and that other countries are taking ‘comparable’ steps to reducing emissions, including the world’s largest emitters: China, the United States, and the European Union. Continue reading
Lead permanently damages young brains
The impact of lead poisoning is devastating, especially just before and after birth:
The nervous system of the fetus and infant is especially susceptible to lead, which can cross the placenta and penetrate the blood-brain barrier. Lead interferes with neuronal migration, cell proliferation and synapse formation during critical periods of early vulnerability. The consequences are loss of intelligence and disruption of behaviour. Because the brain has little capacity for repair, these effects are permanent and untreatable. The most recent research indicates that lead can damage the infant brain even at blood levels as low as 5 m/dl.
Exposure to lead leaves children less able to learn in school and makes them more likely to display aggressive, anti-social and hyperactive behaviour. Do read Kevin Drum’s excellent account of the evidence showing that even low levels of lead poisoning can lead to lower IQs and more violent behaviour.
Lead poisoning may have caused a global surge in violence
In the late 20th century, lead in petrol caused a significant increase in lead poisoning. And as people drove more (and spent more time idling in traffic), levels of violent crime went up, before falling a few decades after unleaded petrol was introduced.
In a 2000 paper (PDF) [Rick Nevin] concluded that if you add a lag time of 23 years, lead emissions from automobiles explain 90 percent of the variation in violent crime in America…
Nevin collected lead data and crime data for Australia and found a close match. Ditto for Canada. And Great Britain and Finland and France and Italy and New Zealand and West Germany. Every time, the two curves fit each other astonishingly well. When I spoke to Nevin about this, I asked him if he had ever found a country that didn’t fit the theory. “No,” he replied. “Not one.”
The worst impact is on cities – and especially on slums
Traffic is worst in cities and people live close to roads. The biggest and most congested roads cut through the poorest parts of these cities. Bad housing lets in more pollution, while children spend more time playing in the streets. Other sources of lead – from paint, pipes etc. – also tend to be worse here.
Violence saw the steepest increase and the steepest decline in cities. Last year, New York celebrated a full day without a murder, assault or any other incident of violent crime. In 1990, 2245 people were murdered. In 2012, that had fallen to 419. Crime in the UK is now more than 50% below its peak in 1995, with London’s murder rate at a 42 year low.
Lead poisoning could be a significant factor driving Pakistan’s epidemic of violence
In 2002, a study of 430 children in Karachi (from Sadar in the city centre, two suburbs, a rural community, and Baba Island) found that 80% had blood concentrations over 10 mg/dl (twice the level now thought to be ‘safe’) and average levels of 15.6 mg/dl.
The children with the worst lead poisoning lived near busy traffic intersections, had poorly educated parents, lived in houses that opened into prevailing wind, and were more likely to eat food from street vendors. They were also more likely to use traditional remedies or makeup (e.g. surma), with very high concentrations of lead, or to live in houses that use lead paint.
If research linking lead to surging violence holds up, then lead poisoning could explain part of the epidemic of violence Pakistan is currently experiencing, especially in Karachi and other big cities.
Violence in Pakistan might fall rapidly after 2020
The United States started to phase out leaded petrol in the mid-1970s, a process that was substantially complete ten years later.
Pakistan acted later. There were four petrol-producing refineries in Pakistan at the turn of the century. They reduced lead content between 1997 and 2000 and phased it out between 2000 and 2002.
Given that car use and city centre congestion was increasingly rapidly at the time (and continues to do so), children with the highest levels of lead poisoning will be reaching adulthood throughout this decade.
After 2020, however, young adults will have suffered much lower levels of antenatal and infant lead poisoning. Levels of violence could then fall dramatically if they follow the pattern seen in the United States and other developed countries.
We don’t know enough about the impact of lead on Pakistan or other fragile states
There was some research into the impact of lead poisoning around the time Pakistan began to remove leaded petrol from sale, but little ongoing work to understand the impact of lead’s legacy on educational achievement or violent behaviour (that I know of, at least).
I suspect this pattern is repeated for other low and middle income countries, where 99% of the children affected by lead poisoning are believed to live.
Does lead poisoning explain some of the very high levels of violence seen in Karachi and other Pakistani cities? And, if so, how great is the impact likely to be? When do levels of lead exposure suggest ‘peak violence’ is likely to be hit? And what are the policy implications?
The same question could be asked for other fragile and conflict-affected states, each of which will have experienced different levels of pollution in the years where leaded petrol was widely used and will have seen reduced use of leaded fuels start at differing dates.
Update: While the impact of lead on young brains is established, the links between lead poisoning and levels of violence are less well understood. Again, I recommend Kevin Drum’s review, but Scott Firestone and Paul Illing have written useful overviews of the evidence.
Illing points out how few studies we have to rely on and concludes that “this shows how little we know about the neurobehavioural effects of many chemicals and how difficult it is to investigate them.”
I find it staggering that we’re groping in the dark given that this could be one of the worst ever environmental catastrophes – and one that is still unfolding in the fastest growing cities in the world.