Hey, world leaders, I don’t need to tell you about the sorry state of the world right now.
Your own communiqués — a paper trail leading from last year’s summit to this one — outline a lot of the problems pretty clearly.
And they point to a number of potentially powerful solutions that, if actually implemented, could do wonders for our messed-up planet. So it’s time to get off your butts and get moving.
Of course, to do that, you will have to continue ignoring the wrong-minded obstinacy of your host, Stephen Harper, who has tried so hard to send you off in the wrong direction. But you already know that, too. Bravo on putting climate change on the agenda against his wishes and forcing him, just two days ago (June 22), to back down on the idiotic “alternative” to a bank tax that his finance minister, Jim Flaherty, had been pushing so hard.
Most of you well know that the oil-mad austerity politics he’s pumping are economically and environmentally dumb and dangerous. Don’t worry about being polite — his minority government does not speak for most of us either.
Hold the vision. In Pittsburgh you talked about the danger of a jobless recovery. You promised to “act to ensure that when growth returns, jobs do, too.” Well, the UN’s International Labour Organization estimates that over 300 million new jobs will need to be created to return to pre-crisis levels of employment, so there’s a lot to be done.
And remember at your last summit, only nine months ago, you acknowledged the economic danger of reducing public spending too quickly.
You highlighted the need for major financial reform, promising to tackle the root causes of the crisis and transform the system of global financial regulation, including “reforming compensation practices to support financial stability” and other measures “to reduce incentives for banks to take excessive risks.”
And you asked the IMF to consider how the financial sector could make a “fair and substantial contribution” toward paying for burdens associated with government interventions to repair the banking system.
You asked the World Bank to “focus on human development and security in the poorest and most challenging environments” and to contribute to financing the transition to a green economy through investment in sustainable clean energy generation and use, energy efficiency and climate resilience.
As a group of nations, you committed “to phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” And you asked the IMF and finance ministers to offer up “a range of possible options for climate change financing.”
You may want to ask yourself what the fates had in mind, gathering you all together again in North America at terrible expense when this continent, where the buffalo once roamed, is now facing ecocide in the Gulf of Mexico. The thirst for oil that is destabilizing the world climate has now spawned a liquid killing field immense beyond human imagination.
At the same time, another bad dream is being realized in Europe, where the financial crisis has evolved into a wave of speculation against a major currency and sovereign states.
These emergencies point to the fact that more than ever we need you to take political actions that will address the government debt crisis and the environmental crisis at the same time. Plus, they need to foster job growth and seriously tackle poverty.
Your actions have to do all these things at the same time. They also need to add new revenue streams to the overstretched public purse and/or create alternative green investment dollars to replace the stimulus as direct government spending winds down. It sounds impossible, but it isn’t.
Luckily, you guys have five good proposals, four of which were prepared by the IMF staffers you asked to research these issues, right in front of you. So this is no über-radical wish list.
1. Implement carbon pricing immediately.
The crisis has left public finances in many countries in poorer health than before, write IMF staff economists Benjamin Jones and Michael Keen. And “lower energy prices [that have resulted from lowered world demand] present an opportunity to introduce and lock in some element of carbon pricing. It alone cannot solve these deep fiscal [government revenue] problems, but it can make a significant contribution.”
These economists argue that carbon pollution should be paid for by its producers and not be foisted onto the public purse.
Bottom line: “Greater climate resilience can promote macroeconomic stability and alleviate poverty, and carbon pricing can help strengthen fiscal positions [tax revenues] which many countries need.”
What are you waiting for?
2. Reverse fuel subsidies — asap.
“Elimination of fuel subsidies could reduce greenhouse gas emissions by about 12 per cent by 2050,” say our IMF experts. They are “currently valued at $300 billion a year.” That’s a lot of spare change that could be doing much better things for the world. “Fuel subsidies are widely recognized to be an inefficient way to help the poor (because energy is often disproportionately consumed by wealthier people) and to create incentives for emission-intensive energy use.”
Hey, I have an idea. Let’s do this instead of further deregulating off-shore drilling.
3. Create a Green Fund to help finance climate adaptation and mitigation in the developing world.
The Copenhagen Accord committed to anteing up $100 billion a year by 2020 for the developing world. One IMF staff paper envisions using an initial capital investment by governments in the developing world to begin issuing highly rated (and hence low-cost) “green bonds” that could be sold to private and public investors.
As a result, the Green Fund would be able to mobilize a multiple of its paid-in capital. (And then pension funds could buy green bonds instead of BP shares!) The research paper estimates that a $120 billion capital injection could generate $1 trillion in bonds over 30 years of operation. That’s a start.
4. Impose new taxes and levies on the banking sector.
While the IMF has not come in behind a financial transaction tax (FTT), don’t think it isn’t recommending some serious extra taxes on the banks. Its leaked report to the G20 proposes a Financial Activities Tax along with what it calls a Financial Stability Contribution. The FAT would be levied on profits and remuneration paid out by financial institutions, and go into general government revenue.
The FSC aims to create a capital fund that would be available to finance future bank disasters and would likely but not necessarily remain distinct from general revenue. However you do it, the banks must be taxed. Government debt is rising because of the effects of the financial meltdown. Our health, education and climate can’t pay the whole price.
5. Screw the IMF and implement the FTT.
Okay, the IMF recommendations favour the above bank tax alternatives, but even its critique of the Robin Hood tax, which proposes to take a tiny bite out of mostly speculative trading, is far from harsh. The FTT would bring in the dough you need to keep the credit rating agencies from your doors, and finance the changes that will make you heroes of history.
Here’s the thing, G20 leaders. This is an emergency. Your planet and your people need you to act now.
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