Globalisation – the open trading system – is fragmenting

Philip Stephens, an associate editor, in the Financial Times: Globalisation – the open trading system – is fragmenting; it needs an enforcer – a hegemon, a concert of powers or global governance arrangements”.

Evidence: the collapse of the Doha, the demise of global free-trade agreements, and the emergence of regional coalitions and deals. The emerging economies are building south-south relationships and the Brics nations are setting up their own financial institutions.

Colin Hines, co-founder of LWM goes further – and deeper. He advocates the rebuilding and rediversifying of economies by limiting the entry of finance, goods and people from other countries, ensuring local provision of goods, finance and services and weaning themselves off export dependence. Depending on the context, ‘local’ goods would come from the nearest source, the region, the nation state or even a regional grouping of nation states – eg oranges from EU/Spain.

Domestic businesses and funding sources would then meet the needs of the majority in society in all countries. The prospect of such increasing economic security for the majority could gain widespread political support ranging from those on the left, the centre and the greens through to small ‘c’ conservatives.

In 2008, just before the economic collapse, as GND convenor, he presented a mechanism which would have enabled the Green New Deal to prosper. ‘Green Quantitative Easing’ would have made every building in the country energy efficient, and built hundreds of thousands of new, affordable and energy-efficient homes. A massive boost would have been given to economic activity, providing jobs on a living wage in every community in the UK, whilst reducing its environmental impact.

Later this month he will be speaking in Italy at a conference of left economists to float the progressive protectionism agenda and criticise the left, centre and greens for their support of open borders, leaving the extreme right in an ever more powerful position.

City Growth Commission hopes to enable Birmingham to succeed in the global race for urban growth


At the end of October, a City Growth Commissionsupported by Core Cities – was launched by the Royal Society (see video), aimed at recommending policies to boost economic growth and offer ideas for political parties to consider as part of their plans for the post-2015 government.

 

jim o'neillManchester-born economist Jim O’Neill, its chair, is the retiring chairman of Goldman Sachs Asset Group. Business Desk reports at length that CGC is to develop a practical plan for enabling cities to succeed in the global race for urban growth.

He notes in the Financial Times that many ‘successful’ countries – he lists China, Germany and the US – have a number of vibrant cities but the UK is dominated by London. Research he values finds that cities are at the centre of their countries’ economic fortunes and his yardstick for success appears to be the amount of building taking place – he feels encouraged by an 89% increase in building outside London.

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Previous ideas to stimulate regional economic growth – special incentives for business and advantageous tax rates – are set aside in favour of other policies, including:

 

  • improved infrastructure – though not planning to take a stance on the merits of the High Speed 2 north-south rail link
  • ominously – labour market flexibility,
  • better education (as in London)
  • and greater involvement of local citizens – a nod to localism?

 

Brummie Bonds?

Part of CGC’s research will look at the pros and cons of giving core cities powers to determine and activate their own funding needs for growth through financing initiatives such as local authority bond issuance.

Signs of change include calls for substantial devolution, and the government’s “city deals”, beginning to deliver more freedom for cities.

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Should we learn from countries whose companies own our energy providers?

Celia Richardson, director of the Social Economy Alliance, is the lead signatory of a letter in the Financial Times.

 social economy alliance logo

The Alliance was launched by Social Enterprise UK, a coalition of leading social economy organisations, in order to influence the way political parties formulate social and economic policies before the next General Election and increase the impact of the social economy.

ResPublica 9.13 report coverWelcoming Ed Miliband’s focus on energy, she referred to the growing community energy industry in this country where neighbours are collaborating, creating jobs and ‘growing their social capital’.

The latest publication from ResPublica suggests that community energy could grow to eighty-nine times its current size if existing barriers were lowered. The letter continues:

‘Other countries, whose companies own our energy providers, are developing their own community energy and renewables at a fast pace, while the UK suffers – we could learn from their domestic policy.

 

‘Energy is where Britain can tackle serious economic problems at the same time as tackling social problems, as well as our large and growing democratic deficit’.

NOTE

Social enterprises are businesses that trade in order to address social problems, improve communities, people’s life chances, or the environment.  They sell goods and services in the open market, but reinvest their profits back into the business or the local community.

And so when they profit, society profits.

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At a time of ‘austerity’ for so many, are there more beneficial uses for taxpayers’ money than mega airports and HS2?

heathrow

In the FT today, James Skinner, chairman emeritus of the New Economics Foundation, asks fundamentally important questions about a stance often adopted by politicians with an interest in supporting multinational business.

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He was prompted to do so by a recent FT editorial “A better plan for London airports”, which cited the fact that Schiphol offers more flights to China than Heathrow as an example of “Britain falling behind in the global race”. He asks:

  • But what exactly is this “global race”?
  • Where is the finishing line?
  • What is the prize we are competing for?
  • Are we really so desperately anxious that more and more people should come to London to change aeroplanes?
  • What do we get in exchange for the noise and air pollution from increasing air traffic?
  • What compensation is there for further loss of land to the hideous sprawl of airports?
  • Are we sure that extrapolations of growth in air travel are realistic anyway, given that oil prices will rise and alternative fuels are not yet in sight?

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He concludes that there are many more beneficial ways to invest the vast sums needed to build a mega-airport.

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Source: http://www.ft.com/cms/s/0/dd76e03e-bef3-11e2-87ff-00144feab7de.html#ixzz2TqmT5R1M

 

“Humanity is conducting a huge, uncontrolled and almost certainly irreversible climate experiment with the only home it is likely to have”: Financial Times

We summarise the thoughts of Martin Wolf, the FT’s chief economics commentator here, because Localise West Midlands’ aims and policies are designed with his ‘politically sellable vision of a prosperous low-carbon economy’ in mind. He wrote, yesterday:

“Last week the concentration of carbon dioxide in the atmosphere was reported to have passed 400 parts per million for the first time in 4.5m years. It is also continuing to rise at a rate of about 2 parts per million every year. On the present course, it could be 800 parts per million by the end of the century. Thus, all the discussions of mitigating the risks of catastrophic climate change  have turned out to be empty words.

“Collectively, humanity has yawned and decided to let the dangers mount . . . clutching at straws “

“(H)umanity is conducting a huge, uncontrolled and almost certainly irreversible climate experiment  with the only home it is likely to have. Moreover, if one judges by the basic science and the opinions of the vast majority of qualified scientists, risk of calamitous change is large . . . ”

Meanwhile, Wolf notes, ‘deniers’ clutch at straws: “It is noted, for example, that average global temperatures have not risen recently, though they are far higher than a century ago. Yet periods of falling temperature within a rising trend have occurred before”.

Bequeathing a planet in climatic chaos is a rather bigger concern than leaving a burden of public debt

“What makes the inaction more remarkable is that we have been hearing so much hysteria about the dire consequences of piling up a big burden of public debt on our children and grandchildren. But all that is being bequeathed is financial claims of some people on other people. If the worst comes to the worst, a default will occur. Some people will be unhappy. But life will go on. Bequeathing a planet in climatic chaos is a rather bigger concern. There is nowhere else for people to go and no way to reset the planet’s climate system”

So why are we behaving like this?

  • The first reason is that, as the civilisation of ancient Rome was built on slaves, ours is built on fossil fuels.
  • A second reason is opposition to any interventions in the free market. . . to admit that a free economy generates a vast global external cost is to admit that the large-scale government regulation so often proposed by hated environmentalists is justified. For many libertarians or classical liberals, the very idea is unsupportable. It is far easier to deny the relevance of the science.
  • A third reason may be the pressure of responding to immediate crises that has consumed almost all the attention of policy makers in the high-income countries since 2007.
  • A fourth is a touching confidence that, should the worst comes to the worst, human ingenuity will find some clever ways of managing the worst results of climate change.
  • A fifth is the complexity of reaching effective and enforceable global agreements on the control of emissions among so many countries.
  • A sixth is indifference to the interests of people to be born in a relatively distant future. As the old line goes: “Why should I care about future generations? What have they ever done for me?”
  • A final (and related) reason is the need to strike a just balance between poor countries and rich ones and between those who emitted most of the greenhouse gases in the past and those who will emit in the future.

What might shift such a course?

Wolf: “My view is, increasingly, that there is no point in making moral demands. People will not do something on this scale because they care about others, even including their own more remote descendants. They mostly care rather too much about themselves for that . . .

“A necessary, albeit not sufficient condition, then, is a politically sellable vision of a prosperous low-carbon economy. That is not what people now see. Substantial resources must be invested in the technologies that would credibly deliver such a future . . .

Institutions must also be developed that can deliver it

Neither the technological nor the institutional conditions exist at present. In their absence, there is no political will to do anything real about the process driving our experiment with the climate.

Yes, there is talk and wringing of hands. But there is, predictably, no effective action. If that is to change, we must start by offering humanity a far better future. Fear of distant horror is not enough.

martin.wolf@ft.com


Read the whole article here (free registration):  

http://www.ft.com/cms/s/0/c926f6e8-bbf9-11e2-a4b4-00144feab7de.html#ixzz2TLKEQjvu

Note also news of the sea-levels forecast submitted to the IPCC from ICE2Sea, a four-year programme of study by scientists from 24 leading EU institutions.

 

 

The Financial Times reports a co-operative revival

Andrew Bounds has reported ‘a co-operative revival’ in the Financial Times – a trend first noted in this blog in 2010. He notes that the number of share offers and co-operative members in new societies doubled between 2009 and 2012 as the economic downturn has continued, according to figures from Co-operatives UK, the umbrella group for mutual societies.

Unlike most of the large retail co-operative societies, smaller co-ops are democratically controlled by their members, have low income differentials and some offer training for job rotation.

The Daily Bread Co-operative

A fine example is Daily Bread in Northampton – above. News of other worker co-operatives may be seen here.

Wind farms, hydroelectric projects, book shops, village stores and pubs,are among assets now owned by their communities. Of the 114 funded (2009-2012), there were 28 shops and 35 power schemes (see the LWM blog), raising in all £20.9m from 23,700 members.

An earlier article noted that Oliver Letwin, at the cabinet office, works four hours a month behind the counter in Thorncombe village shop, in his Dorset constituency. He is a founder member of a co-operative that took over the store in 2009 when it was threatened with closure.

William Hague joined 150 members of his constituency to reopen a pub, buying shares in a co-op that took over the George and Dragon in Hudswell, North Yorkshire.

The co-operative renaissance, kick-started by the 1976 Common Ownership Act and its revolving fund, led to a boom with worker co-ops opening every week, which slowed down to a trickle as recession set in. Now, as banks are reluctant to lend and are offering very low interest rates for savers, local investment opportunities which serve the community are attracting more people.