Thursday, 13 October 2011

Deficit Reduction vs. Growth Stimulation: a false dichotomy in a globalised world.

The government says deficit reduction, the opposition says go for growth.

Doing the former, Chancellor Osborne tells us, will keep interest rates low and so, in time he hopes, help the economy to grow. But given future growth is heavily dependent on the growth of other national economies around the world, the only thing to be said for deficit reduction is that it will prevent us from being eaten alive by the markets, at least for now. But doing the latter—going straight for growth, as Shadow Chancellor Ed Balls would have us do—would give deficit reduction a lower priority and so likely incur the wrath of global bond markets, push up interest rates, and so make growth much more difficult or impossible anyway! So whichever way we go, there’s no solution in sight. I’m not an economist, but when each argument is as self-defeating as the other, one does have to wonder if our economists and politicians are really looking in the right place for solutions. A genuine solution, in other words, probably lies on an entirely different plane altogether.

Indeed, both arguments depend for their success on what happens in the wider global economy; on the health of the economies of other nations. If other nations don’t grow, there won’t be sufficient demand for our exports. If they don’t grow, then, we can’t grow—regardless whether the deficit is reduced or not. And even stringent deficit reduction won't necessarily prevent us from being eaten by the markets. For it’s important to understand that any nation’s standing with the markets is an entirely relative affair. That is, there’s no absolute state of affairs that guarantees market approval. Rather, it’s whichever nation is most vulnerable that will get eaten; whichever nation that, regardless of its absolute economic health, fails to keep ahead of its competitors that will be sucked under, dismembered, and consumed. So whether it’s keeping the markets happy or keeping GDP up, both approaches are predicated on events and forces no nation can control.

It's here, then, that we see the fallacy upon which both approaches are based. National political parties, we see, are in the business of getting us to believe that national governments can actually deliver solutions; that they still have relevance in a globalised world. But the truth is that the factors determining success lie well beyond any individual government’s control. The blunt truth, then, is that while we may like to believe our governments are in the economic cockpit, they’re just sitting in First Class along with the transnational corporations and hedge-fund managers, buffeted and shaken by global market forces no one is in control of. But the disastrous effects are felt most in Economy Class, of course; by the poor in both rich and poor nations alike. Politicians may pretend to be in control, and we may want to believe them, but the fact is that in our globalised world it's the overwhelming impersonal forces of global markets that determine what happens; forces that are running out of any democratic control or accountability.

Solutions, we must realise then, no longer lie within the gift of individual national governments, but can only be achieved through widespread international cooperation; cooperation strong and broad enough to reign the markets in. As the governor of the Bank of England, Mervy King, also acknowledged in a recent interview, the underlying problems in the global economy which caused the current sovereign debt crisis, “cannot be dealt with by any nation alone. … They won’t be tackled,” he says, “unless countries, as a group, come together to ensure that the world economy can keep growing.” One might also add, that nations won’t stop themselves from being eaten alive by the markets until they come together to agree robust global rules and taxes to ensure global markets start to operate in the common good rather than just for the benefit of the globally mobile few.

So there are solutions, but we won’t find them by listening to governments or economists. Only when we take on board the truly global nature of our problems will we realise, both that solutions can only be achieved in the realm of global international cooperation, and that we, citizens, are the ones who will have to drive our respective governments towards it.

A tall order, you might think, and rightly so. But there are some people who’ve taken up this monumental challenge. Over two general elections, in 2001 and 2005, a small group of UK citizens campaigning for global cooperation succeeded in getting 27 Members of the UK parliament and countless candidates from all the main political parties to pledge to implement the campaign’s global policy package simultaneously alongside other governments. In some UK electoral areas, more than one candidate signed the pledge, meaning the campaign gained support in parliament regardless which of those candidates won the seat. This showed the campaign was capable of transcending party-political divides and was global in scope.

But how could a very small number of citizens achieve such big results in so short a time? The answer, it seems, lies in their discovery of a new, powerful way to use their votes. They do this by writing to all parliamentary candidates in their electoral area, informing them that they’ll be voting in future national elections for ANY politician or party—within reason—that pledges to implement the campaign’s policy package simultaneously alongside other governments. Or, if they have a party preference, they encourage their preferred politician or party to sign that pledge. In that way, campaign supporters still retain the ultimate right to vote as they please, but they also make it clear to all politicians that they’ll be giving strong preference to candidates that have signed the Pledge, to the exclusion of those who haven’t. So, politicians who sign the Pledge stood to attract those votes and yet they risked nothing because the policy package is only to be implemented if and when sufficient governments around the world have signed up too. But if politicians failed to sign the Pledge they risked losing votes to their political competitors who had, and so risked losing their seats.

With many parliamentary seats and even entire elections around the world often hanging on a relatively small number of votes, it’s not difficult to see how, with this novel way of voting, only relatively few campaign supporters could make it in the vital interests of all politicians to sign up for global cooperation. And therein lies the power that citizens who join this campaign already have to ensure their governments cooperate. As increasing numbers of citizens in all democratic count learn to use their votes in this way, one can imagine how more and more governments could be driven towards global cooperation. As more signed up, others would come under pressure to follow.

Whether democratic or not, and whatever their level of development, the worsening world predicament is in any case making it in the interests of all nations to solve problems cooperatively, as Mervyn King suggests. But what this campaign uniquely seems to provide is an appropriate framework for that to occur, and a way for enlightened citizens to take the lead. Moreover, the campaign is spreading: some Members of the European, Australian and other parliaments have signed up alongside their UK colleagues. The campaign presently has supporters in over 70 countries and endorsements from some leading statesmen, economists and ecologists. So maybe global cooperation is simply a matter of time; and of how quickly world citizens realise that voting in this new way may well be the most potent way forward. The campaign’s name? The Simultaneous Policy (Simpol)

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