Categories
Thinking

Is the Tobin tax an idea whose time has come and gone? Discourse, power and politics in global economic governance

Update: This story from the Guido Fawkes politics blog suggests the regulatory capture has a more direct route: a promise to veto the tax from the UK Prime Minister to an exchange boss who stood to lose from the FTT. Over dinner, naturally. 31-March

Further to my post on ‘Who’s afraid of the financial transactions tax?’, here’s my full essay on the risks of regulatory capture by private interests in this area.

 (the bank lobby)

Introduction

This is an essay about the failure of an idea in the face of private power. It begins with a brief history of the idea of a financial transactions tax. It then explains how the modern concept came to be a rallying call for activists and several politicians during the ongoing financial crisis.

It examines the economic merit of the European Commission’s conception of the tax, but finds little agreement among scholars and institutions. Despite this lack of agreement, it finds a highly disparaging narrative of the tax in the popular press and in political discourse, particularly in the United Kingdom, which, when coupled with the unrealised nature of the tax, despite the idea’s decades-long existence, suggests that the discourse of the tax has been shaped to reflect its more negative aspects.

To explain this, the essay examines the political situation at the global, regional and national levels, using the Group of Twenty (G20), the European Commission (EC) and the UK as case studies. Here the essay makes a case that there is a significant danger of regulatory capture of these political institutions by the banking lobby.

It uses Doris Fuchs’ tripartite definition of power to show how financial institutions exercise control over political institutions, then uses Walter Mattli and Ngaire Woods’ model of regulatory capture to compare the G20, EC and UK. In this case, it finds that the EC is the institution least susceptible to capture. The essay concludes by considering the case of the financial transactions tax as symbolic of the lack of political action in the face of the power of global private interest, which presents grave problems for global governance.

Summary in tasty bitesize pieces:

  1. The idea of FTT was developed by economists keen to avoid some of the dangerous ‘animal’ elements of the markets, long before it was adopted by campaigning bodies like the (excellent) Robin Hood Tax Coalition. President Sarkozy of France is the only OECD leader vehemently in favour of the tax.
  2. There is no conclusive evidence of the economic effects of such a tax, which is strange because…
  3. UK and European politicians have been at loggerheads over whether this tax will damage the City of London
  4. So if it’s not clear what the economic effects will be, why are certain politicians so opposed to it?
  5. It might be that private power has altered the discourse on the FTT – due to the financial services industry’s instrumental, structural and discursive power.
  6. The EC is the least susceptible institution to ‘regulatory capture’ – unsurprisingly, it’s gone the furthest towards implementing an FTT. The G20 and the UK government can be said to face private capture – and they’re generally opposed to the tax.
  7. This is a worrying case for the quality of global economic governance – there is a risk that nothing will change post-financial crisis – and that at the global political level, private power rules the roost.

Full essay and bibliography (or view it here)

Mild disclaimer – this essay was written in late December 2011. I just never got round to posting it here. I’ve updated it briefly to include Sarkozy’s statement that France will go ahead with the FTT, whether Europe does or not. But there may have been other relevant events I’ve missed. The essential argument about private sector power remains true.

Flickr credit: JimNix

Categories
Thinking

The next generation MDGs or SDGs – it’s not what, but how

The Millennium Development Goals were supposed to be met by 2015. There have been some successes, some failures. Whether the goals actually caused the improvement in some of the indicators is unknowable, but Claire Melamed and Andy Sumner argue that they certainly changed the debate, and that they changed aid spending and political priorities. 

And the thousands of people assembling at Rio+20 this summer will be discussing the idea of sustainable development goals, with the idea of merging social, economic and environmental goals. At Rio they’ll have to agree on some basic priorities. But post-Rio, agreeing on indicators to measure performance on these goals is not going to be easy.

But in all the talk about what should follow in the second round of MDGs or SDGs, nobody’s grasped that the world has changed since the late 1990s when the first goals were drafted.

First – are goals the most appropriate tool for what we’re trying to achieve? See Melamed and Sumner again for a thoughtful range of questions on this subject.

Second – assuming they are – this time they’re likely to be global goals. They will be universal – applicable not just to poor nations. This time, environmental and social goals must be tackled alongside eradicating poverty. Or goals should be found that satisfy all three elements of sustainable development.

So we all have a stake in the goals, and we all have a responsibility to help meet them. Does it not follow that we all should have a say in them?  

Ergo – let’s crowdsource the next round of development goals.

Charles Kenny, top aid-protagonist at CGD, actually referred to the next round of goals as MDGs 2.0, without going into the 2.0 aspect. Ben Leo, of the ONE campaign, used the same phrase to argue that the poor must decide on the next round of MDGs. 

The debate is underway across twitter and the aid blogosphere. But it has to go beyond the experts, practitioners or academics. Everyone should be invited to think about the “future we want” and have the opportunity to contribute.

So, UN, this is your task. Your website frontpage says ‘it’s your UN’. The first line of the Charter says ‘we the peoples’. Let’s live this – get the world together online to start talking about what the next round of goals should be. Build a platform that allows for drafting, commenting, voting. 

This is an amazing opportunity for public participation and engagement with the goals. The greater the participation, the greater the buy-in from the global public, the greater the chance we’ll meet the goals next time. 

The UN could combine digital crowdsourcing with offline participation opportunities to host the world’s greatest participative agenda-setting event. This would help the UN position itself as the go-to platform for global participative governance. 

We’ve got 3 years to go.

(Start by following #SDGs and #MDGs on twitter)

Flickr credit: MT_bulli

Categories
Thinking

Playing around with OECD health expenditure data (is US public health spending really higher than UK?)

The OECD has loads of data on health expenditure in the 25 or so countries that make up the wealthy and democratic countries.

Inspired by @bengoldacre‘s arguments with someone on whether the Swiss govt provided better value healthcare than the UK govt, I wanted to go look at data on public health spending (i.e. not including private stuff).

The first chart is thus pretty interesting, using IBM’s many eyes easy-visualisation tool…you should be able to play with this to get certain countries involved.

What’s crazy is that the US govt’s health spending seems greater than the UK. Even though we think of US healthcare as a private system and the UK as public.

 Public spending on health per capita (US$PPP)  Many Eyes

(or here cos that’s unreadable)

And Google Data Explorer is great too – I didn’t upload the OECD data set, but it looks like this is all health expenditure, public and private as a proportion of GDP.

What I really want to do is show the relative sizes over time in a snazzy Hans Rosling time-lapse bubble chart, but haven’t the time to keep playing. May return to this. Data is fun.

P.S. Me messing around with numbers is probably less useful than some experts doing it – see this presentation of US/OECD healthcare spending from the Kaiser Family Foundation 2011.

 

Categories
Reading

Mark Zuckerberg’s letter to investors – the governance 2.0 bits

The founder and overlord of facebook on social media and governance. Emphasis added.

Whether any of this can really be upheld in the face of demand for profit, whether Zuckerberg had any specific projects in mind – indeed, whether any of it has actually been an objective for facebook since its foundation – remains to be seen.

There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future. The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on.

We hope to strengthen how people relate to each other.

Even if our mission sounds big, it starts small — with the relationship between two people.

Personal relationships are the fundamental unit of our society. Relationships are how we discover new ideas, understand our world and ultimately derive long-term happiness.

At Facebook, we build tools to help people connect with the people they want and share what they want, and by doing this we are extending people’s capacity to build and maintain relationships.

People sharing more — even if just with their close friends or families — creates a more open culture and leads to a better understanding of the lives and perspectives of others. We believe that this creates a greater number of stronger relationships between people, and that it helps people get exposed to a greater number of diverse perspectives.

By helping people form these connections, we hope to rewire the way people spread and consume information. We think the world’s information infrastructure should resemble the social graph — a network built from the bottom up or peer-to-peer, rather than the monolithic, top-down structure that has existed to date. We also believe that giving people control over what they share is a fundamental principle of this rewiring.

….

We hope to change how people relate to their governments and social institutions.

We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time.

By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. These voices will increase in number and volume. They cannot be ignored. Over time, we expect governments will become more responsive to issues and concerns raised directly by all their people rather than through intermediaries controlled by a select few.

Through this process, we believe that leaders will emerge across all countries who are pro-internet and fight for the rights of their people, including the right to share what they want and the right to access all information that people want to share with them.

Finally, as more of the economy moves towards higher-quality products that are personalized, we also expect to see the emergence of new services that are social by design to address the large worldwide problems we face in job creation, education and health care. We look forward to doing what we can to help this progress.

Full letter via the Guardian

Flickr credit: TonZ

Categories
Adventuring Uncategorized

Every day is a snow day. Waterloo, Ontario

Snow, eh?

Cardinals are cool. Really good camouflage. 

Wasn’t really this blue.

Categories
Adventuring Uncategorized

New York City, New York (part two)

(or see as a slideshow without the comments)

…Meanwhile, in Times Square. Shafts of light and that. 

Obviously most of the time we hung out at the US Armed Forces recruiting station. Woop.

So. Many. Adverts. Must. Watch. Everything. Buy. Everything. 

Did you miss the Flag in the last one? Yeah, I’m capitalising Flag.

Fifth avenue. 

To Serve and Protect and Give Directions.

Church Flag Bus!

Oh, here’s the UN set against an amazing sky. Easy.

The interiors look like Zaha Hadid! 

I feel an interminable speech coming on…

Thoughts of Dag

Chamber of Secrets.

This was hidden on a pillar somewhere in the lobby. A memorial ‘to those astronauts and cosmonauts who have given their lives in the exploration of space for the benefit of mankind.’

This gun would have been too big to use anyway.

Beacon of bureacratic hope.

…And night night New York.

Bueno. Back soon please.

Categories
Reviewing

Review of ‘Inside Fortress Bill’ on BBC Radio 4

The point about global governance is that it ain’t a government. It’s just a jumble of people, organisations and states doing things that constitute governance. This includes very rich people essentially providing global public goods like healthcare. The Gates Foundation is a great example of this – in the absence of sufficient WHO/UN spending on health provision, the foundation steps up, with vastly larger budgets. But what does this mean for the private-public divide? Who’s accountable to who? Should global health governance really be set by the whims of a very very wealthy couple?

This radio programme (available until 10 January) was billed as a documentary in which “Katie Derham takes a ‘warts and all’ look at the Bill and Melinda Gates Foundation and examines the immense political power and global influence that it now wields.”

Except she didn’t really. She gathered a few critiques (relying heavily on Laurie Garrett of the Council for Foreign Relations) and put some of them to senior staff at the foundation.

They responded as you’d expect: acknowledging that improvements could be made, yet not dealing with the real issue about private foundations – they’re unaccountable to the people.

As the description of the programme put it (which was far more interesting and cutting than the actual interviews): 

“[Gates’ philanthropy] is a sharp contrast with his former persona of ruthless businessman flaunting competition law, buying off rivals and pursuing his goals with a vengeance. Critics believe his market-led philosophies can distort the picture, allowing Governments to be let off the hook, causing a brain drain in countries where they are backing aid, and the way that funds are distributed seems to be at the whim of the co-chairs who are beyond any form of accountability.”

A few points of interest from the programme below.

On the foundation…

  • the money is, of course, staggering: Gates has given $26.1bn, Buffett $36bn. 
  • the foundation sees itself as a catalyst – leveraging its funds by partnering with governments, corporations (which led it to Monsanto, upsetting many)…
  • …and it leverages Bill, too. His media value brings attention to stories otherwise untold. 
  • it places a strong focus on innovation and entrepreneurship (as befits its $500m campus, which the presenter shrugged off as ‘Bill’s own money’ – except that the foundation is Bill’s own money too, so that distinction doesn’t make sense)
  • and it places a high focus on tech solutions, such as spending on vaccine research that wouldn’t come from big pharma (e.g. leprosy, TB)
  • as the CEO put it: “we believe in capitalism as an effective approach to allocating resources in a society”

But…

  • Medecins Sans Frontieres choose not to accept funding from the foundation; a ‘strategic decision to keep some form of independence’ and they had ‘concerns about engagement of private sector and resulting conflicts of interest’ (MSF spokeswoman)
  • a majority of funding for global health programmes comes from the foundation, which leads to tremendous vulnerability for associated programmes and fields (Garrett)
  • what matters in global health is is increasingly decided by a small group of Americans in Seattle (Garrett). Ultimately the foundation answers to Bill and Melinda Gates and Bill Gates Snr.
  • “previously you trusted governments to do development, but now things have completely changed” (spokesman of a charity funded by GF) – has it?
  • ‘it shares very little substantive info on what it’s doing and how it’s work is going’ (GiveWell spokesman)

So…

  • there is a ‘responsibility for all of us to hold them to account; for us to help them succeed and stop them doing crazy things that billionnaires sometimes do’ (Matthew Bishop of The Economist and author of Philanthrocapitalism)
  • at least Bill Gates is spending, but perhaps he needs competition from another foundation – perhaps a Larry Ellison or a Steve Jobs Foundation might have done things differently (Matthew Bishop)