Financial Chincanery Threatens Our Future

While our policy-makers have been striding around their Cotswold estates burning off an excess of Christmas pudding, elsewhere in the world events are occurring that provide further signals that the economic game we have played so effectively for the past two centuries is being superseded.

Do not let your festive white-out blind you from the important decision taken a historic decision to avoid the dollar in their trade relationship. As reported on this blog, for some time China has been arguing for a change in the global terms of trade, a system that has hugely benefited the USA since it was negotiated at Bretton Woods in 1945. The US has refused to negotiate and so China is now taking bilateral action, and Japan appears to be following a similar strategy.

Japan and China have agreed to make direct currency exchanges to settle their external trade balances, rather than negotiate via the dollar. In addition, Japan will buy Chinese government bonds. This shifts the Chinese renminbi towards the status of a reserve currency that China's economic power suggests, although the currency is still controlled entirely by the government, rather than being available for free exchange as the other reserve currencies have been until recently.

The extraordinary fact that the dollar is still the global medium-of-exchange, giving the US completely undeserved and misused global economic advantages, is omitted from discussion of our economic woes. And yet the way that the City operates as the 52nd state leaves us increasingly vulnerable in a world where the powerful economies are those who produce and gain access to resources, rather than those who control currencies.

Another sign of the UK's vulnerability emerges from a report showing that we have been overtaken by Brazil in terms of the global economy league table. As the UK economy shrinks and those of the resource-rich and industrious economies outside the West expand, this is more a shock than a surprise. These economies face another significant advantage over those of Europe: they are able to create their infrastructures in a way not dependent on fossil fuels and hence face significant advantages in terms of a green economic future.
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Time for a Christmas Carol

We are going to have wall to wall Dickens this Christmas. His bicententary has come at an apposite moment: we have never needed his wisdom and his diversion more. He has a strong claim to be our second national writer after Shakespeare, and this must be because we need the moral of his tales as much now as we did when they were written.

Personally I have never got along with Dickens, finding his characters unconvincing and preferring the earthier tales of George Eliot, with the greater depth of relationship and her overwhelming and winning compasion. The ubiquity of Dickens this year has taught me that I was wrong. Dickens's characters are intended to be unreal because his writing is allegorial, not realistic. This is the reason they have daft unconvincing names, but names that tell you immediately what role the character is to play in the morality tale that you are reading (or watching).

The point is most obvious in A Christmas Carol itself, where the unhappy Ebeneezer Scrooge is given the chance to abandon his love affair with his account-book and rejoin the human race. We remember scrooge as a miser, but this is not the role he plays. The Scrooge is actually the businessman driven by the quest for profit rather than people, abandoning love and humanity to commit his time to his enterprise. This book is a tirade against capitalism as powerful as any camp staged outside St. Paul's or any pamphlet from Marx and Engels. It tells how capitalism distorts the human spirit and, most importantly, makes even those who succeed within the narrow and shallow rules of its game, almost as unhappy as it makes the losers. And because capitalism, in its rotten essentials, has not changed, the message is as relevant 200 years on as it was in 1843.

Meanwhile, the characters of Bleak House are fixated by a legal case from which only lawyers gain, the Jarndyce and Jayndyce chancery case standing iconically for the project of any who would dedicate his or her life to the pursuit of financial reward. Many characters in the novel see relationships and health destroyed while they battle for their 'expectations'. The choice of this word throughout the Dickens oeuvre so neatly sums up the way capitalism always offers but never rewards, thereby ensuring a lifetime's unhappy slavery and a perpetual discontent.

At the end of this year during which we saw the 99% who place love and common humanity above profit and power challenge the 1% who are destroying human society and the planet simultaneously, we should congratulate ourselves that this division has been articulated. We must gain in strength as a movement in 2012, but also as individuals we can try to share the Dickensian sense of comfort and joy and remember that both are for life, not just for Christmas.
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The Government that Likes to Say 'Yes'

The parliamentary Communities and Local Government Committee has come out clearly against the plans made by Pickles and his ilk to tear up the Town and Country Planning Act and allow untrammelled development of the countryside. Their report into the National Planning Policy Framework lays bare its fetishisation of simplification and its attempt to prioritise the narrowly 'economic' at the expense of people and planet. As I discuss in a short paper on localism published recently by Green House, this makes a mockery of the government's espoused support for community-led decision-making.

Bizarrely, the original NPPF document relies on the Brundtland definition of sustainable development as 'Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.' I am constantly mystified by the way in which people can spout this without considering at what point development would have to stop. Where between the situation we have now, with species becoming extinct but there still being enough green land to enable breathing, and the future development paradise where every scrap of field and hill is covered with concrete and tarmac, is development supposed to stop? Assuming that future generations will still need air to breathe, there must be a boundary, so how do we know that we have not already reached it? And if not, when will we know we are there?

Gamely, the CLG committee has, in its para. 67, added to this definition of sustainable development to include the concept of limits: 'Policies in plans and decisions on development should be assessed against the principles that the nation and areas within it should live within their environmental limits; should achieve a sustainable economy and should seek to ensure a strong, healthy and just society.' It also requires a locally based and democratic basis to planning: 'The achievement of sustainable development through planning should be based on the responsible use of a sound evidence base and developed through an open and democratic system.'

The presumption in favour of development has nothing to do with national well-being or sustainability: it results from the lobbying undertaken by the big construction companies who dominate Tory policy-making. Note the following quotation from the website of Curtin & Co, who are not only experts in planning but also in 'managing green issues':

‘There is no doubt that the local government and planning landscape will change considerably in the next 12 to 18 months. There are still significant holes in the proposed legislation and Curtin & Co will be monitoring the progress of the bill as well as making representations on its community engagement aspects. Curtin&Co’s founder and chief executive is the author of Managing Green Issues (Macmillan, 2001) which advocates many of the aspirations of the Localism Bill and this is embedded in our methodology.’

On this day which our ancestors celebrated as a festival of hope that life would return after the darkness and cold of the winter season we need to remember that 'there is no wealth but life' and resist the equation of development with progress while utterly rejecting the possibility of future economic growth.
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Make the Rich Pay for their Emissions

An excellent funding programme from the Joseph Rowntree Foundation into the social impacts of policies to address climate change is beginning to bear fruit. They have created a microsite to make the findings available.

As well as the more conventional investigations into the impact on poorer households of rises in energy bills, a research team based in Bristol and Oxford has produced data about how responsibility for CO2 emissions is shared across the socio-economic classes. Put more bluntly, to what extent can we blame the rich for climate change as well as for inequality?

The primary finding is that:

'Mean average CO2 emissions are strongly correlated with income: households within the highest equivalised income decile have mean total CO2 emissions more than twice that of households within the lowest equivalised income decile. Emissions from private road travel and aviation account for a high proportion of this differential: aviation emissions of the highest income decile are more than six times that of the lowest income decile.'

In other words, the concerns that are often raised about alienating those who fly to Ibiza for a summer holiday by introducing aviation taxes are quite misplaced. It is the rich who jet around the world for conferences and business meetings who are most responsible for aviation-related CO2 emissions.

The figure represents mean annual emission of carbon dioxide from all sources across the income deciles. As we move from the lowest 10% to the wealthiest 10% there is a clear increase, class by class, in the amount of CO2 emissions that are produced. More importantly, a larger proportions of the emissions of the richer people in our society are transport related.

The policies implications are clear. Using household energy bills as the focus of increasing the cost of carbon is not only regressive but will also be ineffective:
'if household carbon reduction policies addressed all transport emissions as well as those from household fuel use, there would be far fewer low-income/high-carbon households, and policies which placed a cost on carbon itself would be likely to be more progressive.'
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Carbon Politics Down Under

The final word in my short recent series on the developments in carbon policy in Australia should be given to Clive Spash , who was there on the inside and, as an academic economist of the social-ecological position, in a strong position to analyse the policy outcomes from a planetary perspective.

Spash has produced a paper describing how Julia Gillard was able to depose the previous Prime Minister Kevin Rudd, also of the Labour Party, because of the unpopularity of his carbon emissions trading scheme. The powerful mining sector lobbied strongly against this and the opposition thus generated, most on the basis of untrue claims about the effect on ordinary Australians, allowed Gillard to successfully challenge Rudd and create a new government with support of Green and independent MPs.

Spash describes how the political compromise involved a temporary carbon tax for three years, to be followed up by an ETS very similar to that which had been proposed by Rudd and at considerable political cost:

'That cost extends to allowing major emitters to make guaranteed windfall profits from pollution permits. The emission trading scheme suffers numerous problems, but the issues raised show taxes can also be watered down and made ineffectual through concessions. Taxpayers will get no assets from the billions of dollars to be spent buying-off the coal generators or other polluters. The scheme hopes to stimulate private investors to create an additional 12 percent in renewable electricity generation by 2020.'

Spash sets a much more stringent target of a wholesale shift to 100% renewable energy within a decade, the only proposal he considers 'serious' given the urgent nature of the issue of climate change. His working paper explores the difficulties of implementing meaningful greenhouse gas taxes in Australia.
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Unified Continent not Single Currency

The first time that I was in the uncomfortable position of agreeing with Conservatives was some ten years ago when, on behalf of the Green Party, I joined the national campaign against Britain joining the Euro. The pro-finance and little Englander Tories felt the need for a bit of breadth and so invited Euro-sceptic former foreign minister David Owen, a couple of anti-European Labour MPs and a representative from the Green Party to join them.

Around the same time I published a chapter in a book called Implications of the Euro: A Critical Perspective from the Left. In my chapter I discussed the ways that a single currency would force the pace of political change in a way that the institutions could not follow and would alienate the peoples of the countries involved. This, and the growing tensions between nations that would be created, could threaten the future of the European project as a whole. The self-interest of finance could overwhelm the common interest of peace.

This morning I believe we have seen these predictions come to pass. This is why I believe that David Cameron was right not to join the treaty although, just like the Tories on the anti-Euro committee a decade ago, we could not be further apart in terms of the economic route Britain should follow. Cameron's interest is almost entirely to protect the City and to avoid its spivs and speculators from being forced to consider the social consequences of their actions. However, some in his party are articulating concerns about democracy that I still believe have merit.

It is tempting to believe that the European institutions might impose acceptable standards on the City, just as they have forced us to improve our environmental standards and reduced exploitation at work. But the problem every time has been that we have not had the power to make these decisions democratically. We do not elect people with sufficient power to make decisions at the European level and so these decisions have no more political authority than the current unelected prime ministers of Italy and Greece.

The democratic deficit is more threatening to the aims of the EU than the collapse of the euro. For many years the single market and then the single currency were ambitions driven by business to serve its interests. They have utterly distorted the institutions of Europe and have alienated many of the people of Europe from this organisation that was designed to protect their peace and prosperity. How else can we interpret the huge votes in many of Europe's most loyal members for parties of the nationalist right?

Although the details of the new treaty are as yet unclear we do know that it will involve allowing unelected European officials to set levels of spending and rates of taxation in countries over which they have no democratic mandate. The Euro always constrained monetary policy and therefore reduced the room for manoeuvre in terms of fiscal policy. But as the fiscal straitjacket is imposed, and austerity follows, it is Europe and the other nations that make up the continent that will be blamed by the citizens of the countries who suffer.
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Divided We Fall

It is rather ironic that the main question the media has drawn from the latest publication of Social Attitudes in Britain is whether we are more Thatcherite now than we were in the days of Thatcher. If we were we would certainly not have these data to mull over, since Thatcher was notoriously opposed to social research and abandoned the most valuable tool for the social researcher: the National Child Development Survey, as well as virtually eliminating sociology from our universities.

So having survived the Thatcherite axe the social researchers, though privatised, are still funded to tell us that we care less about each other than we used to and that we have utterly lost faith in our public institutions. While we did hear on the BBC about the fall in support for a government role in redistributing wealth we did not hear about the decline in trust for that institution itself: from 72% to 49%. The politicisation of the BBC has destroyed its role as a public-service broadcaster. The only public institution to have gained trust is the National Health Service. There are no data about the extent to which people's faith in statistics has been undermined by the privatisation of those who seek the data: NatCen (a company limited by guarantee) would have no interest in such a question and its results would not reach a high market value.

This sort of data is, as the Spanish say of history, a field in which all can make hay. I would be interested to see some socio-economic breakdown of the responses to the questions about welfare. It seems that those most vulnerable, including many dependent on benefits themselves, are some of the most vociferous in criticising the dependency culture. This represents another example of the cognitive dissonance that is a necessary skill to survive in late-capitalist Britain.

The media emphasis was on the declining levels of support for redistribution, which was matched by a growing sense of injustice about the unequal way in which hard work is rewarded. This chimes with the findings of another report released this week, by the OECD. Called Divided we Stand it rang alarm bells about the negative social consequences of rising rates of inequality withing societies. Hardly the message one might have expected from the club of the world's richest nations and a traditional cheer-leader for globalisation.

Angel Gurría, OECD secretary-general, is quoted as saying that 'the social contract is unravelling', and this seems to be reflected in the responses to the Social Attitudes Survey as well. The interesting question is why the OECD should suddenly have become interested in the social impact of growing inequality. The real struggle is between the greedy and thoughtless elites and those who realise that capitalism has always relied on the consent of the masses and that without a social contract that consent cannot be guaranteed.
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