Normative Narratives


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Trump’s War on the Environment

Despite President Trump’s “pledge” to “promote clean air and clean water”, things are not looking good on the climate change front. By targeting key U.S. policies–the Clean Power Plan and vehicle emission standards–and international agreements–the Paris Climate Accord and the Green Climate Fund–Trump’s administration is threatening to undo recent progress made combating climate change.

Trump’s proposed budget would cut EPA funding by 31%. Scott Pruitt, the new EPA head, said he is unconvinced “that carbon dioxide from human activity is the main driver of climate change.” This is an old tobacco industry tactic, justifying inaction by saying that more research is needed–it is not, there is overwhelming scientific consensus on the subject.

Trump’s budget director, Mick Mulvaney, said of investing in climate change mitigation, “we’re not spending money on that anymore. We consider that to be a waste of your money”. Trump is also reconsidering the government’s use of the “social cost of carbon” metric, which takes into account the potential economic damage from carbon emissions that would result from proposed policies.

All things considered, it is not hyperbolic to say that the Trump administration is carrying out a multi-pronged “War on the Environment”

U.S Emissions–The Clean Power Plan and Vehicle Emission Standards:

Pie chart of total U.S. greenhouse gas emissions by economic sector in 2015. 29 percent is from electricity, 27 percent is from transportation, 21 percent is from industry, 12 percent is from commercial and residential, and 9 percent is from agriculture.

Greenhouse gas emissions in the U.S. are highly concentrated in the electricity, transportation, and industry sectors. These three sectors accounted for 77% of 2014 emissions according to the EPA.

While a national cap-and-trade policy or carbon tax would help reduce emissions across the board, partisan disagreement has prevented such a policy from being enacted. To get around this gridlock, the Obama administration targeted key sectors through existing legislation and executive action. Specifically, the Clean Power Plan (part of the Clean Air Act) addresses emissions in the electricity sector, while stricter vehicle emission standards address emissions in the transportation sector. These important new rules are now in the crosshairs of the Trump administration:

“The tailpipe pollution regulations were among Mr. Obama’s major initiatives to reduce global warming and were put forth jointly by the E.P.A. and the Transportation Department. They would have forced automakers to build passenger cars that achieve an average of 54.5 miles per gallon by 2025, compared with about 36 miles per gallon today.

Those regulations are locked into place for vehicle model years through 2021, and just before Mr. Trump took office, the E.P.A. put forth a final rule intended to cement them for vehicles built from 2022 through 2025. However, the E.P.A. did not jointly release its plan to do so with the Transportation Department, leaving a legal loophole for the Trump administration to take advantage of.

The E.P.A.’s Clean Power Plan regulations, which would cut climate-warming pollution from power plants, will probably be much harder for Mr. Pruitt to undo. He will have to legally withdraw the existing rule and propose a new rule to replace it, a process that could take up to two years and is expected to be fraught with legal challenges and delays along the way.”

Undoing the Clean Power Plan and/or stricter vehicle emission standards would have devastating impacts on air quality (and therefore people’s health) and the fight against climate change.

Global Emissions–The Paris Climate Accord and The Green Climate Fund

The Paris Climate Accord, agreed to by 194 countries, is built on the concept of Intended Nationally Determined Contributions” (INDCs). These contributions represent a country’s climate change mitigation targets, taking into consideration its economic ability and level of development. Trump has vowed to pull the U.S. out of the Accord.

Failure by the U.S. to realize our commitments (a certainty if the Clean Power Plan and stricter vehicle emissions standards are scrapped) would not completely undo the Paris Accord–other countries have stated they will press ahead with its implementation. But, as the world’s second largest greenhouse gas emitter, such a failure would surely crimp the Accord’s effectiveness.

Furthermore, as INDCs are to be updated every 5 years, future commitments by other countries are likely to be less ambitious without U.S. commitment, leadership, and funding. Climate change experts are relying on more ambitious future commitments to stave off the worst impacts of climate change. The Accord was seen as a starting point towards stronger future action, now even this starting point is in jeopardy.

What about the commitments of developing countries, many of which face increasing energy needs and have untapped fossil fuels reserves? While it is true that sustainable development is a challenge, there are reasons to be optimistic. These countries have neither the strong fossil fuel lobbyists nor the “sunk” energy grid infrastructure costs the U.S. does. Furthermore, these countries tend to rely more on agriculture for their economic output, placing a premium on predictable climate patterns and environmental protection. Therefore, with a little prodding in the right direction, developing countries may be willing to largely forgo fossil fuel use–this is where the Green Climate Fund (GCF) comes into play:

“The agreement reaffirms an earlier collective pledge from the developed nations to jointly provide $100 billion a year in grants, loans, and investments in developing countries, from public and private sources.

With energy use soaring over the past decade in Asia, it is clear that helping emerging economies avoid tapping their coal reserves in favor of installing renewable sources in solar, wind, tidal, wave, and geothermal energy will be essential in mitigating their carbon emissions without unfairly stifling their economic development.”

Trump’s proposed budget would completely eliminate America’s contribution to the Green Climate Fund. U.S. leadership is needed to galvanize global efforts to even come close to the lofty GCF goal of $100 billion a year. Without this funding, poorer countries will not be able to meet their commitments under the Paris Accord, further undermining its effectiveness.

If absent Green Climate Funding developing countries develop unsustainably, efforts taken by developed countries to lower their emissions would likely prove inadequate in preventing the worst impacts of climate change.

“It’s the Economy (and National Security), Stupid”

Even if you do not care about the environment or sustainable development, climate change has economic and national security implications for the U.S.

“In terms of returns on investment, climate finance is ridiculously cheap for what America gets for it: goodwill and cooperation, less warming, clean and resilient growth, and, importantly, fewer refugees.

What’s more, these renewable energy sectors hold vast business potential for American companies wanting to supply technical expertise and equipment. Establishing the U.S. as a leader in green energy is directly in the Trump administration’s interest as it aspires to slow, or at least balance, China’s expanding global clout.

Aid to help poor rural farmers on marginal lands adapt and thrive can be the key to avoiding a surge of climate refugees flowing either into already crowded urban centers in the developing world or, worse yet, forcing people to set out on dangerous voyages over land or water in search of a livable future. In security terms, the U.S. military and relief agencies alike understand that an ounce of this kind of prevention is worth a pound of cure.”

Some people may dismiss the notion that climate change is a national security risk as liberal-hippy nonsense, but this is simply not the case. Trump’s own Defense Secretary James Mattis stated climate change was a national security risk during his confirmation hearing.

On the economic front, clean energy related activities already are and will increasingly be big employers in the U.S. However, growth in future clean energy employment could be compromised if Trump’s budget for the Department of Energy comes to pass. “The [budget] plan would eliminate the Advanced Research Projects Agency-Energy, which funds ‘high-risk, high-reward’ research.” This is exactly the type of public R&D needed to ensure the U.S. is a leader in the emerging clean energy economy.

Multilateral clean energy financing also promotes American exports. “…of the top 30 markets for U.S. renewable energy exports—as determined by the Commerce Department—more than half are eligible for GCF [Green Climate Fund] investments. As has occurred in other multilateral environment funds, the GCF is beginning to directly finance some projects that have U.S. sponsors or use U.S. equipment and services.”

China aims to spend at least $360 Billion on renewable energy by 2020 because it understands the value of being the global leader in the clean energy economy. Trump talks about “being tough on China”, however his stance on clean energy investment is anything but.

Resistance Is Not Futile

As with any war, the Trump administration will face resistance in its efforts to undo important environmental protections. Obviously liberals will oppose Trump, and many foreign leaders will try to get him to reconsider his position. The state of California, a progressive thorn in the Trump administration’s side on a number of issues, recently upheld stricter vehicle emission standards in a challenge to the aforementioned rollbacks at the federal level.

Perhaps most significantly, however, is the resistance to Trump’s anti environmental protection agenda that is growing in the Republican party:

The activists’ efforts have not swayed anywhere near a majority yet on Capitol Hill. Only 20 or so of the 237 Republicans in the U.S. House of Representatives have spoken out on climate change this year. But they hope to build a big enough bloc in Congress, or enough influence at the White House, to temper Trump’s agenda.

“It shouldn’t surprise anyone that more and more Republicans are interested in this issue,” said Republican Representative Carlos Curbelo of Florida. “This issue was regrettably politicized some 20 or so years ago, and we are in the process of taking some of the politics out.”

The negative effects of environmental degradation–economic, national security, and health–are felt by people across the political spectrum. If enough Republicans take a stand, it just might be enough to get the fight against climate change back on track.

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Obama’s Final UN General Assembly Address and the Next President’s Foreign Policy

Preventative Peacebuilding and U.N. Security Council Reform

Original article:

“Just as we benefit by combatting inequality within our countries, I believe advanced economies still need to do more to close the gap between rich and poor nations around the globe. This is difficult politically. It’s difficult to spend on foreign assistance. But I do not believe this is charity,” he [Obama] stressed.

“For the small fraction of what we spent at war in Iraq, we could support institutions so that fragile States don’t collapse in the first place; and invest in emerging economies that become markets for our goods. It’s not just the right thing to do – it’s the smart thing to do,” said Mr. Obama.

“We can only realize the promise of this institution’s founding – to replace the ravages of war with cooperation – if powerful nations like my own accept constraints,” Mr. Obama declared “Sometimes I’m criticized in my own country for professing a belief in international norms and multilateral institutions.

“But I am convinced that in the long run, giving up some freedom of action – not giving up our ability to protect ourselves or pursue our core interests, but binding ourselves to international rules over the long term – enhances our security. And I think that’s not just true for us,” he added.

Obama’s final UN General Assembly address included a strong endorsement of preventative peacebuilding. This endorsement is the result of a hard-learned lesson–that investing in conflict prevention is much cheaper than fighting wars and/or paying for humanitarian aid to deal with the spillover of conflicts.

But Obama’s address also included a lukewarm-at-best embrace of UN Security Council reform. America need not worry about “giving up our ability to protect ourselves”–our military supremacy will continue to keep us safe from “traditional threats” (an invasion by an enemy army).

Security Council reform would address the source of the real threats facing America today–failed states and their resulting power vacuums. Failed states allow terrorist groups to take root, and either carry out their own attacks or inspire lone-wolf terrorists remotely.

The current UN Security Council structure shields oppressive dictators from accountability, allowing them to hold onto power as they lose control of their countries. By providing an avenue to override a UN Security council veto, the international community would be much more responsive in addressing failing states. Greater protection of democratic aspirations and human rights, through UN Security Council reform, should be how we “pursue our core interest”–peace and prosperity through economic interdependence.

The Future of American Foreign Policy

If Hilary Clinton is truly the heir apparent to Obama, hopefully she shares his views on preventative peacebuilding. Hillary has taken some flack from the left for being more of a neocon (interventionist) than Obama, but under the right conditions this is actually a good thing. Allow me to explain.

Preventative peacebuilding is a very important element of foreign policy–as previously mentioned it saves on future military and humanitarian spending, not to mention the lives saved and economic damage prevented in the host-countries. However, once a conflict is already underway (prevention is never foolproof), it must be addressed before it become intractable (a la Syria, the issue Obama say’s he has second-guessed the most of any during his presidency and for good reason, because his approach has failed spectacularly).

Trump is right about one (I stress, ONE) thing–our allies need to start paying their share to uphold global security. Furthermore, there must be repercussions for them not doing so, otherwise the status-quo of America footing the bill will persist (Obama’s denunciation of  “free-rider” allies is just rhetoric, it won’t accomplish anything).

This in NO WAY means I support Trump’s overall outlook on international affairs, which includes: praising strongmen like Putin and Saddam Hussein who undermine global security, alienating Muslim allies and providing fodder for terrorist propaganda with blanket statements about Islam, and pledging to dump more money into the military without any coherent plan of how to use it (which could actually harm servicemen and women, vets, and their families).

This last point means that Trump’s plan is not the rebalancing of global defense spending America so sorely needs, but rather a global military build-up. This stance counters the ultimate purpose–American lives and tax dollars saved–of his ONE good idea…

America’s future President should adopt a foreign policy that is a large part Obama (preventative peacebuilding), part Hillary Clinton (willingness to intervene before it is too late), and a little bit Trump (willingness to exert pressure on our allies to pay their fair share for global security). UN Security Council reform would bolster each of these pillars of American foreign policy.

No element of this foreign policy equation can be foregone if global security is to be upheld in a way that promotes sustainable development in the world’s poorest regions, while leaving America with enough resources to adequately and responsibly invest in its own future (its citizenry’s human capital and physical infrastructure).


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China’s Model of Economic Development Cannot be Exported to Africa

Cartoon: Panda Games (medium) by karlwimer tagged china,olympics,panda,bear,growth,progress,darfur,tibet,pollution,karl,wimer

Original article:

However, with China’s more recent rise, what has emerged instead is the so-called “China model” featuring authoritarian capitalism. China is actively promoting this new model of China’s political and economic development in Africa through political party training programs, which constitute a key component of Chinese foreign policy toward Africa.

China has seen remarkable economic growth in the past few decades. About 3/4 of the global  reduction in extreme poverty since the end of the Cold War can be attributed to China. But as impressive as its experience has been, China’s growth model cannot be exported to Africa.

Why not? China has a strong, stable central government and a huge population. Despite the inevitable levels of corruption resulting from an economy dominated by government investment and a civil society which is subservient to the government (lack of transparency, accountability / judicial independence / checks-and-balances, no freedom of press/assembly), the Communist Party is somewhat uniquely dedicated to investing in the human capital of its people and providing some semblance of a welfare system

These positive features that have fueled China’s growth are generally missing in African countries. African economies tend to be natural resource-based, which do not require investment in people for growth but rather patronage politics to keep ruling regimes in power. As a result, the African continent is dominated by poor governance, corruption, poverty and conflict.

China also happens to be reaching the limits of its government-investment and export fueled economic growth model. Because of the Communist Party’s unwillingness to expand civil liberties, China’s greatest avenue for sustainable growth –it’s people’s innovative potential (really the only avenue for long-term sustainable growth for any country, but especially China due to it’s huge population)–remains underutilized. In short, while China’s model can (in the best case scenario) bring a country from low to middle income, it cannot bridge the gap between middle and high income (and as previously stated, the conditions needed for the Chinese model to bring Africa into middle income-dom simply do not exist).

The Communist Party is facing resistance at home, due to the twin forces of increasing demands for political rights (an inevitable result of advances in communication technologies and globalization) and slowing economic growth. Instead of loosening its grip at home to promote economic growth, the Chinese government is tightening its grip abroad. It is effectively trying to buy more time at the expense of regular African people–this is neo-colonialism.

But isn’t this the same as America’s goal of promoting democracy abroad? Perhaps ostensibly, but not functionally. Democracy is based on the concept of self-determination–of people determining their own future and having a government that carries out that vision. Decades of failures and hard-learned lessons in development reinforce the idea that effective democratic governance is the path to peace, stability, and sustainable growth. This is why the United Nation’s new Sustainable Development Goals (SDGs) are based on accountable, inclusive governance and the protection of human rights–i.e. effective democratic governance.

The Chinese model of political economy, on the other hand, places little to no emphasis on the African people.  It will enrich Africa’s autocratic leaders and Chinese businessmen in the short-run, leaving the host countries with rising inequality, continued extreme poverty, human rights violations, and conflict. 

The only thing the Chinese and American visions for governance and development have in common, aside from being based on capitalism, are that they are visions being offered by outside powers. Other than this, they could not be more different.

China states that the training programs are strictly exchanges of opinions rather than an imposition of the China model on African countries. In other words, China invites African political party cadres to China to study the Chinese way of governance on issues they are interested in, but whether they eventually adopt the Chinese way is purely at their own discretion.

The original article suggests that perhaps China is just offering best practices, take ’em or leave ’em, but other recent actions compound the idea this is part of a larger play. Considering increased military assertiveness by China (South China Sea) and Russia (Crimea, Syria), combined with the economic backing of new Sino-Russo-centric development institutions (the Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB)), and China’s sharing of “best practices” (best for China, anyhow) look like the “soft power” component of a larger “hard power” play to actively and aggressively promote its interests.  

Contrast this with likely European (Brexit and other internal EU concerns) and potential American retrenchment (who knows what a Trump presidency could mean for our foreign policy), and an even more concerning picture emerges.

Western backed international organizations, though still the dominant players for now, will face increased competition from organizations (AIIB, NDB) that have lower standards for governance and human rights, potentially compromising what is already a lukewarm embrace of the human rights based approach to development (the IMF, still trying to shake the legacy of failed “Washington Consensus” policies, has embraced more pro-poor, context-sensitive, flexible, ex-ante conditionality; the World Bank, on the other hand, is dragging its feet on mainstreaming human rights into its operations).

Global democratization–which has the benefit of near universal popularity among the civil societies of nations–is facing authoritarian headwinds. Overcoming these authoritarian forces requires strong, principled, long-sighted leadership. Lets hope said leadership is somewhere on the horizon.

 


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Green News: Properly Managing Natural Resource Revenues–A Focal Point of Sustainable Development

Following the adoption of the Sustainable Development Goals (SDGs) by the UN General Assembly, I would like to highlight a focal point of sustainable human development–utilizing natural resource revenue as a tool for sustainable human development.

Post-2015 Development Financing:

“There’s only so much amount of aid countries can rely on. Indeed, often you can’t rely on aid in the sense of relying on certain amounts every single year… it goes up, it goes down… governments fall in and out of love with the donors… so it’s not so reliable,” said Mr. Nolan.

“At the end of the day, a State operates on the basis of its own revenue collection. And a developmentally-oriented State, a State that actually wants to promote development through infrastructure, health, education spending, needs to raise most of the money itself.”

He added that raising revenue does not necessarily mean going into the rural areas and heavily taxing people. “It actually means taxing the better off in the society and also taxing companies, both domestic and foreign, more effectively.”

Tax rates, he noted, are very low in many low-income countries, in some cases under 15 per cent of gross domestic product (GDP). This could easily be increased by a series of reforms, as well as by better structuring of taxation in the extractive industries and greater attention to the transfer of money out of the country.

Meeting UN-backed climate goals requires leaving the vast majority of natural energy resource in the ground. But sustainable development is contingent on both the intrinsic (electricity) and market value of natural resources; one would be hard pressed to find a development practitioner that does not believe this revenue source is an essential piece of the development financing puzzle.

Developed countries have had decades, if not centuries, of using natural resources limitlessly in their pursuit of development; reliable access to energy is an indispensable part of poverty alleviation, economic growth, and modernization. We are essentially asking the worlds poorest countries to forgo the cheapest form of electricity available in the name of environmental sustainability (do as I say, not as I did). To reconcile this clear mismatch between ability to pay and necessity, the developed world must do more to reach it’s target of $100 billion per year by 2020 to help poorer countries fight climate.

The “Natural Resource Curse“:

The “Natural Resource Curse”–the misappropriation of resource revenue–robs the worlds poorest countries of a needed source of development finance. Often times the natural resource curse finances armed conflicts, which cause immeasurable human suffering, roll back development gains, and make future development much more difficult (conflict is often associated with poverty and malnutrition which stunts physical and cognitive development, can prevent children from going to school, and can cause trauma that leads to lifelong psychological issues).

The Natural Resource Curse is not inevitable, but fighting it requires good governance and the security capacity to counter those who wish to extract revenues for their own privilege. Battling the Natural Resource Curse also requires effective sanctions regimes–by driving ill-gotten natural resource revenues to the black market, and attacking that black market and related international money laundering, international criminals and terrorists would lose an important source of funding.

Sanctions, of course, require broad based cooperation. There is a risk that in this era of disorder and instability, the international community might “ease up” on bad-but-stable governments. The importance of good governance of natural resource revenues shows this would be a short-sighted and ultimately counter-productive strategy for fighting international crime and promoting sustainable human development.

If the world is to simultaneously address the needs of Least Developed Countries (LDCs) and reach climate targets, we must focus on making sure LDCs leverage all the resources they do extract to maximize social welfare. Effective “South-South Cooperation“–the sharing of best practices between developing countries–would greatly enhance this effort.

Given the importance of the source, the propensity for corruption (“Resource Curse”), and the need to leave much of the existing deposits in the ground, when it comes to properly managing natural resource revenues for sustainable human development, there is little margin for error.

Natural Resources and the SDGs:

Fortunately, proper natural resource revenue management is addressed many times throughout the proposed SDG text:

Goal 1. End poverty in all its forms everywhere

1.4 by 2030 ensure that all men and women, particularly the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services including microfinance.

Goal 5. Achieve gender equality and empower all women and girls

5.a undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance, and natural resources in accordance with national laws

Goal 12. Ensure sustainable consumption and production patterns

12.2 by 2030 achieve sustainable management and efficient use of natural resources

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

16.4 by 2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime

16.5 substantially reduce corruption and bribery in all its forms

16.6 develop effective, accountable and transparent institutions at all levels

16.7 ensure responsive, inclusive, participatory and representative decision-making at all levels

Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development

Finance

17.1 strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection

17.3 mobilize additional financial resources for developing countries from multiple sources


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The Evolution of the Post-WWII International Order

As representatives from the IMF, World Bank, and the G20 converged on Washington last week, there was a sense that America may be losing its position as the main guarantor of international order:

As world leaders converge here for their semiannual trek to the capital of what is still the world’s most powerful economy, concern is rising in many quarters that the United States is retreating from global economic leadership just when it is needed most.

Washington’s retreat is not so much by intent, Mr. Subramanian said, but a result of dysfunction and a lack of resources to project economic power the way it once did. Because of tight budgets and competing financial demands, the United States is less able to maintain its economic power, and because of political infighting, it has been unable to formally share it either.

Other experts and historians, however, say too much can be made of the moment. Walter Russell Mead, a professor of foreign affairs at Bard College, noted that the rise of China as an economic force was inevitable, and that its establishment of a rival lending institution was far different from the international behavior of the Soviet Union and communist Chinese during the Cold War.

Then, he said, America’s rivals were trying to destroy and replace the economic order established by the United States and Britain after World War II. Now, emerging powers are emulating it, however imperfectly.

Sure other countries have risen in prominence since America stood as the lone super-power after the Cold War, but has this really resulted in America’s decline? I would argue that building up strong allies to help promote America’s vision of international order–one based on democracy, human rights, economic and defensive interdependence, and more recently environmentally sustainable economic development–was exactly why the U.S. took the lead in setting up the United Nations and the Brenton Woods Institutions (the World Bank, IMF, and GATT).

Therefore, in assessing America’s influence over international order, we should consider how these institutions have evolved. While they were all conceived with the best of intentions, good intentions do not always lead to good outcomes. Have these institutions been able to learn from their mistakes and make meaningful contributions to maintaining international order? Lets consider them on a case by case basis:

The International Monetary Fund (IMF):

The IMF was originally conceived to promote currency stability and help countries overcome short-term balance of payments issues. But as technological advances made the world smaller, the IMF took on a much larger mandate, and began extending loans to help developing countries modernize. The so called “Washington Consensus” linked development loans to “ex-post” (after the fact) conditions such as hitting fiscal targets (reducing the size of government) and liberalizing trade.

While these policies by and large do promote growth in already developed countries, they ignored the historic lessons of the world’s developed countries. Every advanced country relied on some degree of protectionism to cultivate its own industries and government spending to build both physical infrastructure and a skilled workforce as it modernized.

The “Washington Consensus” programs did not allow for policy space based on the historical experiences and current realities in the countries they intended to help. As I have often written, economics–particularly development economics–is highly context-sensitive; the “Washington Consensus” was simply to rigid and narrow-sighted to work.

The “Washington Consensus” was a consensus failure, and left many countries worse off than before they accepted this “help” (see “the lost decade” in Latin America). Thankfully the IMF abandoned this flawed set of policies.

The failure of the Washington Consensus led to IMF to reconsider how it does business–the “conditionality” attached to its loans. Instead of relying on a rigid set of targets a country must meet in order to continue to receive support, the IMF now focuses on pre-set “ex ante” conditionality. If a country has a sound macroeconomic position, it can tap into IMF financing while maintaining the policy space needed to address the needs of its citizens (and ultimately maintain its legitimacy).

The IMF will have to deal with the specter of the Washington Consensus for some time, but going forward it has evolved in meaningful ways.

The World Trade Organization (WTO):

The General Agreement on Tariffs and Trade (GATT) officially became the World Trade Organization (WTO) in 1995. The WTO sets rules for global trade and provides a forum for airing grievances. With membership covering 96.4% of global trade and 96.7% of global GDP, the WTO is unquestionably an important institution.

Critics often argue the WTO is ineffective, but any organization whose stated goal is the resolve international trade disputes is by definition going to be contentious. I would argue that the WTO has helped keep trade disputes trade disputes, and that without it many of these disputes could have ended in armed conflict.

In recent years, international trade news has been dominated by two proposed regional agreements, the trans-pacific partnership (TPP) between the U.S. and Asian economies, and the trans-atlantic trade and investment partnership (TTIP) between the U.S. and Europe.

There is no consensus as to whether regional free trade agreements (FTA) such as these undermine the global free trade movement, or if they are building blocks towards this goal. But one thing is for certain–free trade agreements create winners and losers. The winners tend to be the wealthy who are positioned to benefit from greater market access; the losers tend to be wage earners.

In the context of political dysfunction and simmering class-warfare in America and beyond, it is necessary that policies to transfer some of the gains from the “winners” to protect the “losers” of any FTA are baked into the agreements themselves. The ability of governments to address the inequality and environmental impacts of any FTA will greatly affect its historical legacy.

The United Nations (UN):

The United Nations is arguably the most important of the international institutions. In addition to providing a forum for countries to address one another, the UN also serves a global policy adviser, giving it the strongest normative mandate of any of these organizations.

The Millennium Development Goals (MDGs) are 8 specific goals whose intent is to guide the trajectory of the developing world. The successes of these goals has been uneven–some countries have a great record, while others not so much. As these goals are set to expire at the end of 2015, they are commonly viewed as beneficial but imperfect. Their successors, the Post-2015 Sustainable Development Goals (SDGs), aim to build on their successes while learning from their short-comings.

There are a number of ways the SDGs deviate from the MDGs. For one, they are much more inclusive and consultative. Seen as being drafted behind closed doors by the global elite, the MDGs were hampered from the start. Conversely, the SDGs are being drafted with input from numerous thematic and national consultations with the very people they are intended to benefit.

There is also greater emphasis on the roles of various stakeholders (governments, private sector, NGOs, civil society, and international organizations) with regards to both financing the agenda and being accountable for their operations in the developing world. “Who Will Be Accountable?” highlights these common but differentiated responsibilities, providing general guidelines for holding those who violate the SDGs accountable.

Between the launch of the Post-2015 Development Agenda (the SDGs) and the 2015 UN Climate Conference in Paris (which is expected to result in the first universal global climate treaty), 2015 will prove to be a pivotal year for sustainable human development initiatives.

One area the U.N. has not reformed sufficiently is in promoting global security. Given that security is a necessary precondition for sustainable human development, the significance of this shortcoming cannot be understated.

Nowhere has this problem been more acute than in the Middle East, where armed conflict has left 1 in 4 children out of school, led to immeasurable economic, physical, and psychological damage, and has completely overwhelmed the international humanitarian assistance network. The inability to protect children is especially alarming, as it plants the seeds for future conflicts.

The United Nations needs to respond more decisively against regimes that commit gross human rights violations. The concept of national sovereignty is meant to protect a country from outside invasion, not act as a shield for human rights abusers.

The Responsibility to Protect (R2P) was supposed to put peoples rights before national sovereignty, but it has proven to lack the teeth needed to provide meaningful protection. The need is clear, as I have called for in the past, for the UN General Assembly to have a mechanism for overruling UN Security Council vetoes. Such a reform would give the R2P the power it needs to fulfill its important mandate to prevent / end gross human rights violations.

The World Bank Group (WB):

The World Bank Group is responsible for financing development projects in the developing world. While its existence has been a “net benefit” for developing countries, the World Bank has had issues enforcing “good governance” standards on its projects, often resulting in adverse consequences for the worlds most vulnerable people:

The World Bank regularly fails to enforce its own rules protecting people in the path of the projects it bankrolls, with devastating consequences for some of the poorest and most vulnerable people on the planet, a new investigation by the International Consortium of Investigative Journalists, The Huffington Post and more than 20 other media partners have found.

The investigation’s key findings include:

  • Over the last decade, projects funded by the World Bank have physically or economically displaced an estimated 3.4 million people, forcing them from their homes, taking their land or damaging their livelihoods.
  • The World Bank has regularly failed to live up to its own policies for protecting people harmed by projects it finances.
  • The World Bank and its private-sector lending arm, the International Finance Corp., have financed governments and companies accused of human rights violations such as rape, murder and torture. In some cases the lenders have continued to bankroll these borrowers after evidence of abuses emerged.
  • Ethiopian authorities diverted millions of dollars from a World Bank-supported project to fund a violent campaign of mass evictions, according to former officials who carried out the forced resettlement program.
  • From 2009 to 2013, World Bank Group lenders pumped $50 billion into projects graded the highest risk for “irreversible or unprecedented” social or environmental impacts — more than twice as much as the previous five-year span.

Days after ICIJ informed the World Bank that the team’s investigation had found “systemic gaps” in the bank’s enforcement of its “social safeguard” rules, World Bank Group President Jim Yong Kim acknowledged “major problems” with the bank’s resettlement policies and vowed to seek reforms.

Being a “net benefit” for the developing world is not a high enough standard for the World Bank, it must adopt a “do no harm” principle in all its projects. To achieve this goal, the World Bank should emulate the UN in consulting with those who will be affected by their projects.

The World Bank has an important role to play in promoting the SDGs, but first it must get its own house in order.

Some may point to the recent rise of parallel international organizations such as the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) as further signs of the deterioration of an American led international order. Indeed, there are serious governance questions these institutions must address, lest they be counter-productive in the pursuits of promoting peace and eradicating extreme poverty.

It would be most constructive to have the UN promote these values (accountability, good governance, etc.) to emerging international institutions, not the US. The UN has international legitimacy; the same message coming from the UN would likely be much more well received.

US-centric international organizations are free to work with these parallel institutions or not, and their positions can evolve as these new institutions reveal their values through their actions. But as professor Walter Mead aptly points out, these institutions are not challenging America’s Post WWII vision of international order, they are doubling-down on it. As the saying goes, imitation is the greatest form of flattery.


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Conflict Watch: The End of Team America World Police (Part 7)

Obama’s Strategic Plan For National Security:

The latest installment of my ongoing series “The End of Team America, World Police” focuses on President Obama’s second and final National Security Strategy (full document can be found here):

“The question is never whether America should lead, but how we should lead,” Mr. Obama writes in an introduction to the document, a report that seems to mix legacy with strategy. In taking on terrorists, he argues that the United States should avoid the deployment of large ground forces like those sent more than a decade ago to Iraq and Afghanistan. In spreading democratic values, he says, America should fight corruption and reach out to young people.

“On all these fronts, America leads from a position of strength,” he writes. “But this does not mean we can or should attempt to dictate the trajectory of all unfolding events around the world. As powerful as we are and will remain, our resources and influence are not infinite. And in a complex world, many of the security problems we face do not lend themselves to quick and easy fixes.”

“There is this line of criticism that we are not leading, and it makes no sense,” said Benjamin J. Rhodes, a deputy national security adviser. “Who built the effort against ISIL? Who organized the sanctions on Russia? Who put together the international approach on Ebola?”

The strategy lists eight top strategic risks to the United States, starting with a catastrophic attack at home but including threats like climate change, disruptions in the energy market and significant problems caused by weak or failing states.

Regardless of your opinion on how effectively the Obama administration has handled foreign affairs, it is hard to argue the United States is not leading from the front on major global issues. Yet it is important that our future leaders recognize, as President Obama has, the limits of both our government’s resources and our ability to sustain democratic revolutions through unilateral military intervention.

In a highly interconnected world, confronting global problems is in America’s economic and security interests (not to mention ethical considerations). This does not mean, however, that we should rush headlong into battle without carefully considering the probability of success and costs of alternative courses of action. There are other tools in America’s foreign policy toolkit–the other components of the D.I.M.E (diplomatic, intelligence, military, economic) framework–which should be considered before sending our military (and particularly ground troops) to war.

Military interventions are never quick, easy, or cheap. Even when successful, they leave a power void that must be carefully managed, lest that void be filled by ineffective leaders or extremist groups (or, as is often the case, both). When mismanaged, even the most well intended interventions can be counter-productive, fueling anti-Western propaganda and empowering the very ideologies we seek to destroy.

American tax dollars are a precious resource. Every dollar we spend abroad is a dollar we cannot use for nation building at home. The American government is solely responsible for managing America’s domestic affairs, but we have many allies who share the same ideologies and interests as us (and who should therefore more proportionately shoulder the cost of defending them).

A NATO By Any Other Name…:

NATO was established in recognition that global security was part of the “global commons” (and remains even more-so today). This brings us to recent comments on NATO’s future by outgoing Secretary of Defense Chuck Hagel:

Hagel, making his final appearance at NATO as U.S. defense chief, said the alliance faced several challenges, including violent extremism on its southern rim, Russian aggression in Ukraine and training security forces in Afghanistan.

“I am very concerned by the suggestion that this alliance can choose to focus on only one of these areas as our top priority,” Hagel told a news conference. “And I worry about the potential for division between our northern and southern allies.”

“The alliance’s ability to meet all these challenges at once, to the east, to the south and out-of-area, is NATO’s charge for the future,” Hagel said.

“This is a time for unity, shared purpose and wise, long-term investments across the spectrum of military capability,” he added. “We must address all the challenges to this alliance, all together and all at once.”

Often times, one can speak most candidly when their tenure at a position is coming to an end. Those who oppose the ideals of NATO will not coordinate their attacks one at a time. In fact, knowledge that NATO resources are strained (due to say, simultaneous humanitarian crises, a wear weary American public, or underinvestment in the global security commons by the rest of the international community) is only likely to embolden our enemies. While NATO needs to be able to effectively counter more than one major threat at a time, this does not mean the American army alone needs that capacity.

As the world becomes “smaller”, the exclusively Northern Atlantic nature of NATO should be reconsidered. Two major democracies–India and Japan–are not members of NATO, limiting the groups ability to fulfill its goals. Furthermore, having regional actors involved in security operations helps builds legitimacy, underscoring the strategic importance of greater Indian and Japanese involvement.

President’s Obama and Modi recently met and discussed, among other things, defense cooperation. India must become a major partner in promoting peace and democracy in the Middle-East (particularly in coordinating the fights against the Afghan and Pakistani Taliban) even as it itself modernizes.

More Turkey Please:

An Op-Ed published in the NYT today by two Arab professors teaching at American Universities was very supportive of Turkey’s level of involvement in the Middle East:

There have been sharp disagreements over the 2013 coup in Egypt, the Israeli-Palestinian conflict and the need for intervention in Syria. Turkey’s critics have called into question its reliability as a NATO ally, including in the fight against the radical Wahhabi group known as the Islamic State.

But much of this concern is misguided. The ongoing crises in the Middle East have only underscored Turkey’s pivotal geostrategic position: It’s no surprise that Pope Francis, President Vladimir V. Putin of Russia and Prime Minister David Cameron of Britain have visited Ankara in the past few months. And Turkey’s detractors, partly because they do not understand the sources of its new assertiveness, fail to see that its transformation actually serves America’s long-term interests.

The United States has long allowed client states like Saudi Arabia, the United Arab Emirates and Israel to pursue shortsighted goals in the Middle East. This has only brought despotism and strife. Washington’s failure to fully support the democratic government of Mohamed Morsi and his Muslim Brotherhood in Egypt contributed to its collapse, and so to the instability and violence that have occurred there since. And it was President Obama’s cynical abandonment of the Syrian opposition during the first two years of the uprising against Mr. Assad that set the stage for the advent of the Islamic State.

To avoid any more such calamities, policy makers in Washington, and other Western capitals, should abandon their counterproductive approach: They should embrace Turkey’s growing, and positive, engagement in the Middle East.

I could not agree more.

But I do not think America’s leaders are opposed to Turkey asserting itself in the Middle-East. Indeed, as a primarily Muslim democracy and NATO member, it must play a large role in Obama’s plan of relying more heavily on regional partners in curtailing Islamic extremism.

I agree the Obama administration was wrong on Syria and Egypt, I am on the record saying as much. But in this case, two wrongs don’t make a right. Turkey cannot afford to play the moral high ground on these issues while the dogs of war bark at it’s door-step. Furthermore, Erdogan’s delayed and half-hearted support of the Kurdish peshmerga reeks of political calculus, not someone who considers ISIS a serious threat to regional stability.

So I am not exactly sure what these professors are talking about–they appear to be building a straw-man just to knock him down. I think it is pretty clear the Obama administration wants more Turkish involvement, including ground forces, in the fights against Assad and ISIS, not less.

Japan and Germany (Finally) Begin to Shed Their Post-WWII Identities:

Updating a previous blog about Japan and Germany shedding their post-WWII pacifist identities, Prime Minister Shinzo Abe is pushing Japan to change it’s pacifist Constitution:

Prime Minister Shinzo Abe has said that he wants to start the process of revising Japan’s Constitution as early as next year, a senior lawmaker in his party said Thursday, giving the clearest indication yet that the Japanese leader will seek to change a document that has undergirded the country’s postwar pacifism.

Mr. Abe told Hajime Funada, the leader of a group of Liberal Democratic Party lawmakers, on Wednesday that the best time to begin the difficult political task of amending the Constitution would be after elections for the upper house of Parliament, scheduled for the summer of 2016…

The Constitution, which also prohibits Japan from possessing the means of war, was written by American occupiers after World War II to prevent the defeated nation from ever again engaging in militarist expansion. The document proved so popular among Japan’s war-weary people that it has never been amended.

But Mr. Abe has seized on the murders of the Japanese hostages to make some of his strongest appeals yet for unshackling the nation’s military. Saying Japan was unable to save the hostages, he has called for easing restrictions on its purely defensive armed forces to allow them to conduct rescue missions, evacuations and other overseas operations to protect Japanese nationals.

The hostages, Kenji Goto, a journalist, and Haruna Yukawa, an adventurer, were beheaded a week apart by the Islamic State, a militant group in Syria and Iraq that had demanded a $200 million ransom for their release. The murders outraged and sickened Japan, which had seen itself as largely immune to the sort of violence faced by the United States and other nations that have been involved militarily in the Middle East. Since 1945, Japan has adhered to a peaceful brand of diplomacy that has seen it become a major donor of economic and humanitarian aid to the Middle East and elsewhere.

It remains unclear whether the shock of the killings will swing the Japanese public in favor of Mr. Abe’s harder line. Since the murders, opposition politicians have stepped up attacks on the prime minister, accusing him of provoking the Islamic State by allying Japan more closely with the United States-led efforts to destroy the militant group. Just days before the ransom demand appeared, Mr. Abe pledged $200 million in nonmilitary aid to countries in the region confronting the Islamic State.

However, on Thursday, the lower house of Parliament unanimously adopted a resolution condemning the killings and calling for increased coordination with the global community to combat terrorism.

Germany to Play a More Active Role in Global Security?:

Germany must ramp up defense spending starting in 2016 to ensure its military is able to take on a bigger role in crisis zones, according to two top lawmakers in Chancellor Angela Merkel’s coalition.

Germany spends about 1.3 percent of gross domestic product on the military, short of the 2 percent level pledged informally by North Atlantic Treaty Organization allies.

Merkel’s spokesman has said no additional funding will come in the short term as the government struggles to hold on to its target of balancing the budget next year and with 2015 spending already largely negotiated.

Germany must engage in international missions “earlier, more decisively and more substantially,” Gauck told the Munich Security Conference on Jan. 31.

Fiscal responsibility is usually good, but like anything, overzealous attachment to an ideology can preclude pragmatic policy. Economics is context sensitive, and in the current context, Germany’s dedication to running a balanced budget has left holes in the Eurozone economy and the global security commons.

A large scale increase in German defense spending would bolster global security efforts (particularly in countering Russian aggression in former Soviet Republics), while simultaneously providing a partial answer to Europe’s economic stagnation (by “buying European“).

Please do not confuse my views with war-mongering or advocating for the military-industrial complex, I just recognize that there are bad actors in the world who only understand realpolitik. In order to provide room for the forces of human dignity and freedom to flourish, these bad actors must be marginalized.


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Awareness, Self-Interests, People Power, and The End of Poverty

bmgastes

Inside the Bill and Melinda Gates Visitor Center in Seattle, WA

While finishing up my first business trip in Seattle, WA, I walked by the Bill and Melinda Gates Foundation. Due to my studies and interests, I was familiar with the organization’s important work in the related fields of Education, Healthcare, and Poverty Eradication both in the US and abroad. Intrigued, I went in.

While walking around the visitors center, I was struck by something I read. Explaining the origins of the foundation, a plaque stated that Bill and Melinda gates started their mission by providing Internet access to public libraries in America. Then, in the 1990s, Bill and Melinda “learned” of the extreme poverty affecting children around the world (specifically lack of access to medical care), and expanded the scope of their work.

This line took me a while to comprehend. Growing up during the age of globalization and global news coverage, the plight of people in the developing world was something I had always taken as obvious. How could it be that someone, let alone one of the smartest people in the world, would have to “learn” about these injustices later in life?

Then I began to think about what growing up in a hyper-connected world meant. For those who grew-up in previous generations, understanding the plight of people in the developing world required an active and time consuming search for information. Conversely, growing up in generations Y / Z, with globalized news coverage and internet access, not knowing about the existence of extreme poverty requires willful ignorance.

There are many self-interested reasons for wanting to  promote sustainable human development and end poverty, including: stopping violent extremism, stemming the “offshoring” of jobs to lower income countries through economic convergence, and creating new markets for sustainable trade-based growth (the Great Recession was a perfect example of the unsustainability of relying too heavily on financial innovations for growth).

But universal awareness will also play a large role in ending poverty (much like the first step to finding a solution is admitting there is a problem). The “silent majority” of the global community believes in basic rights and human dignity for all. It is in the long run interests of the global community, and resonates with mankind’s central tenets as ethical, social beings. Ultimately, it is this awareness which will galvanize the global effort to end poverty.

The Post 2015 Development Agenda is an important element of the fight to end poverty, as it will help direct trillions of dollars of public and private development resources over the next 15 years. Building on the successes (and learning from the shortcomings) of the Millennium Development Goals (MDGs), the Post 2015 Development Agenda is being drafted in an inclusive and consultary manner. Incorporating input from the very people it is intended to help, the agenda recognizes the importance of civil / political rights, good governance, multi-sectoral accountability, and self-determination in ending poverty. With human rights and empowering the world’s most vulnerable people at its core, the Post 2015 Development Agenda is poised to make great strides in poverty eradication.

As the world continues to get “smaller” and more interconnected, the costs of environmental degradation, human rights abuses (in relation to terrorism and protracted social conflict / genocide), and economic inequality will more acutely impact not only to the world’s most vulnerable, but also people in first-world countries (who have historically have considered themselves largely immune to such issues).

While it will not be easy, ours is the generation that must make meaningful strides towards ending poverty and promoting sustainable human development in the worlds least developed countries (LDCs). Failure to do so would gravely affect us all, and this (now) common knowledge is (slowly) creating unstoppable momentum towards positive, sustainable change.


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Green News: The U.S. and China Discuss Energy Poverty, Sustainable Development in Africa

“Common But Differentiated Responsibilities”:

During the recent APEC summit, President’s Obama and Xi Jinping announced what could be a landmark environmental agreement. The U.S. pledged to reduce carbon emissions by 26 percent to 28 percent from 2005 levels by 2025. China pledged to reach peak emissions by 2030, while increasing its renewable energy consumption to 20% of total consumption (China currently gets about 10% of its energy from zero emission sources).

This announcement has been received well by the international community. With the two largest GHG emitters on board (in gross emissions, the map above shows per-capita emissions), many believe this announcement could galvanize support for a legally enforceable climate treaty, to be finalized during the 2015 UN Climate Change Conference in Paris.

Another potential area of cooperation, which has received far less attention but is nonetheless significant, were discussions between the U.S. and China regarding clean energy investment in Africa (original article):

The United States is considering partnering with China on improving electricity in Africa and the proposal could be part of bilateral discussions when President Barack Obama visits Beijing next week, two sources involved told Reuters.

The 48 countries of sub-Saharan Africa, with a combined population of 800 million, produce roughly the same amount of power as Spain, a country of just 46 million.

The shortage imposes a massive burden on economies in the continent, constraining growth and leading to hundreds of millions of people remaining mired in poverty.

China’s policies in Africa have also been described by some African leaders as “neo-colonial” – lending money to impoverished states to secure natural resources and support state-owned Chinese construction companies.

U.S. Secretary of State John Kerry hinted this week that discussions during the APEC conference to conclude a Trans-Pacific Partnership (TPP) would involve energy agreements in other parts of the world.

“The TPP is not only a trade agreement but also a strategic opportunity for the United States and other Pacific nations to come together, to bind together,” Kerry said in a speech in Washington on Tuesday.

“Second, powering a clean energy revolution will help us address climate change while simultaneously jump-starting economies around the world,” Kerry added.

Approximately 1.3 billion people in the world live without access to energy, 95% of which live in Sub-Saharan Africa or developing Asia. Without access to energy, it is impossible for a society to modernize; energy access is an indispensable component of poverty reduction. How those who currently live without access to energy fulfill their energy needs will be a primary determinant in meeting global emission targets.

According to the International Energy Agency, 2/3 of known fossil fuel reserves must stay in the ground in order to reach global emissions targets. This will require both ambitious climate agreements from large emitters such as the U.S. and China, as well as aggressive investments in clean energy in countries that do not currently emit as much.

(For more reading on Africa’s Energy and Economic landscape, check out the 2014 World Energy Outlook Special Report on Africa)

Natural Resource Revenues, Accountability, and Development:

The Post-2015 Development Agenda, while appreciating the role of official development aid (ODA) in financing development initiatives, also recognizes the limits of relying on such a volatile source of funding. In order to reliably secure the finances needed for sustainable human development, developing countries will need to mobilize natural resource revenues in a responsible way.

This is admittedly  tall order. Historically, the “natural resource curse” has led natural resource revenues to be extracted by corruption rulers, cementing the rule of regressive, extractive regimes. Nigeria’s Sovereign Wealth Fund, while imperfect, provides a model for bringing transparency and accountability to natural resource revenue management.

Neocolonialism and corruption will not lead to development. When it comes to investing in Africa, the “return on investment” is in creating stable, resilient allies, who can positively contribute to global security and become new markets for trade; it is a long-game, not a short-game.

Lots of people have their hands out to grab resource “rents”. Therefore, a strong network of accountability is required if natural resource revenues are ever to benefit a countries poor / marginalized. This network includes social accountability (individuals, civil society organizations, and NGOs); corporate accountability (businesses operating in developing countries); and good governance at all levels (local, national, and international).

The Extraterritorial Responsibilities of Global Leadership:

During the APEC summit, President Obama urged China to be a partner in ensuring world order:

U.S. President Barack Obama said on Monday a successful China was in the interests of the United States and the world but Beijing had to be a partner in underwriting international order, and not undermine it.

“Our message is that we want to see China successful,” Obama told a news conference. “But, as they grow, we want them to be a partner in underwriting the international order, not undermining it.

He urged China to move “definitively” to a more market-based exchange rate and to stand up for human rights and freedom of the press.

At the risk of sounding cliche (or like a Spiderman move), with great power comes great responsibility. If China wants to be recognized as a global leader, it must show the world it is capable of fulfilling the obligations associated with such a role.


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Economic Outlook: The Flawed Logic Behind New Bank Rules on Liquidity and Municipal Debt

Original article:

Municipal bonds will no longer be part of the easily sellable assets that banks can use to show they are able to survive a credit crunch, Bloomberg reported, citing a person familiar with the matter.

The final liquidity rule will be approved by regulators, including the Federal Reserve, on Sept 3, the news service reported the person as saying.

The most recent draft does not list debt issued by states and municipalities as high-quality assets that could help sustain a bank through a 30-day squeeze, the report said, citing the person.

The regulations could affect the municipal bond market by giving banks less incentive to buy bonds that finance schools, roads and public works, Bloomberg said.

On the surface, this new rule make perfect sense–it is a natural response to the unprecedented explosion of municipal bankruptcies and the economic decision underpinning them (poor investment of public funds, unsustainable public worker benefits, overly generous subsidies to attract private sector jobs, etc.). “Easily sellable assets” are supposed to be liquid and stable in price, in order to assure banks can “wind down” their holdings in the event of a financial crisis.

But upon further consideration, the decision to not include municipal bonds as “easily sellable” assets is representative of a larger [artificial] divide between the “financial” and “real” economies. It is also incredibly shortsighted.

In the aftermath of the “Great Recession”, America realized two economic recoveries. One was a financial recovery which, buoyed by a financial sector bailout, happened very quickly. This recovery resulted in 95% of economic gains between 2009-2013 went to the top 1%–the people who own the vast majority of financial assets. This recovery continues to be marked by record high values for many popular stock indexes.

The second recovery, which 6 years later is only partially complete, is the recovery of the labor market. Unemployment is low (especially compared to levels in certain European countries), but wages remain depressed and many people are still forced to take jobs below their skill level.

In theory, the financial sector should act as a barometer of sorts for the strength of the real economy; when the real economy is doing well, the financial sector should boom. In reality, throughout the past few decades the financial sector has become synonymous with terms like “bubbles”, insider information / fraud, and offshore banking / tax inversion. Financiers, accountants and lawyers are employed to figure out illegal / quasi-legal loopholes to ensure the rich get richer regardless of their productivity or contributions to society as a whole.

In the aftermath of the Great Recession, the type and amount of “safe” assets banks must hold has to be reexamined. But pricing municipalities out of financial markets is not the answer to this problem.

In the long run, economies do well when we invest in everybody–when no person is left behind. This concept goes by many names; the two most common I have heard are “the human rights based approach to sustainable human development” and “progressive politics”. Regardless of what you call it, this concept is not only ethically and socially just, it is economically viable. Furthermore, we end up paying for those “left behind” in the form of higher police, prison, and welfare expenditures anyways.

The decision to not include municipal debt as “easily sellable” assets will drive up the price municipalities pay for providing essential public services. Of course municipalities must do their best to set economically sustainable policies, perhaps with the assistance / oversight of state and/or federal officials. But America cannot afford to let the current mishandling of municipal policies lead to a further deterioration in local service delivery–it is unfair to the people affected by these policies and the American economy as a whole.

Spending less money on education, social programs, and infrastructure, while perhaps “fiscally responsible” in the eyes of some people, is incredibly harmful to America’s economic prospects in the medium and long runs. Unless this liquidity decision is part of a larger plan for the Federal Reserve to act as a backstop / “lender of last resort” for municipal debt–an idea I have heard nothing about–then it will only further exacerbate the rift between the real and financial economies, setting America up for both future financial crises and a loss of global competitiveness.

During my time interning at the UNDP, there was an organizational slogan I took to heart; judge a society not by the strength of its strongest, but by the strength of its weakest. In America, those at the bottom of the socioeconomic ladder depend the most on municipal services to realize “the American Dream”. This slogan holds holds as true with regards to the sustainable human development of American’s as it is for people in less developed countries.

America should have the resources and political will to enable everybody to realize their full economic potential. This should be the new American dream.

 


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Green News: The Roles of “Rich” and “Poor” Countries in Combating Climate Change

Major Polluters: 

A rule proposed by the Enivironmental Protection Agency would cut carbon pollution from power plants 30 percent from 2005 levels by 2030 – the equivalent, according to the agency, of taking two-thirds of all cars and trucks in America off the road. Here are some things to know about the rule:

• The E.P.A. expects that under the regulation, 30 percent of electricity in the United States will still come from coal by 2030, down from about 40 percent today.

• The rule is not an executive order. Under the Clean Air Act, the E.P.A. is required to regulate any substance defined as a pollutant, which the law defined as substances that endanger human life and health. A 2007 Supreme Court decision led to an E.P.A. determination that carbon dioxide is a pollutant, thus requiring that the agency regulate it or be in violation of the law.

• The rule will not, on its own, lower greenhouse gas pollution enough to prevent catastrophic effects of climate change. But, in combination with other regulations, it would allow the United States to meet its commitment to the United Nations to cut carbon pollution 17 percent by 2020 and press other major polluting countries, particularly China and India, to follow suit.

Energy production accounted for 26% of global GHG emissions in 2008, the largest source by sector. If the United States can cut its own emissions from energy production by shifting towards renewable energies and natural gas, and pressure other leading emitters to follow suit, this could significantly mitigate the environmental damage caused by carbon dioxide emissions. Countries such as China and India will point to comparatively high levels of U.S. per capita emissions to counter pressure from the U.S. to reduce their emissions.

Least Developing Countries (LDCs):

Access to energy is an essential component of modernization, poverty alleviation, and economic development. According to the International Energy Agency, 1.3 billion people (18% of the global population) live without access to electricity, 95% of which live in Sub Saharan Africa or developing Asia. In order to reconcile two fundamental components of sustainable human development–environmental sustainability and [extreme] poverty alleviation–the worlds least developed countries will need to satisfy their energy needs from low / zero emission sources.

There are a number of reasons to believe LDCs will rise to this challenge. As largely agrarian economies, LDCs face the negative impacts of climate change directly; food / water insecurity and communicable disease patterns are directly affected by changing climate patterns. Furthermore, because traditional energy infrastructure by definition does not exist in places without access to energy, the perceived “sunk costs” associated with renewable energy are largely non-existent.

However, LDCs face one large impediment to clean energy production–cost. As refined production techniques, market penetration, and creative financing drive down the price of renewable energy in the developed world, it is imperative that the technology gap be bridged to include LDCs in the renewable energy revolution. If the 18% of the global population without access to energy instead gain access to dirtier forms of energy, the actions of developed countries to combat climate change could be almost entirely negated.   

Despite this cost gap and shortfalls in pledged financing from developed countries, developing nations accounted for 43% of new renewable energy investment in 2013 ($93 billion out of a global total of $214 billion). However, only $9 billion of this investment came from Sub-Saharan Africa. Efforts to provide financing for renewable energy to those who currently lack access to any form of energy are at crux of sustainable human development, and must be scaled up immediately.

To this end, developed countries have pledged $100 billion per year in “climate aid” by 2020–if realized this would more than double investment in renewable energy in LDCs. Developing a global network of carbon taxation / cap and trade policies (or even a less ambitious patchwork of policies by the worlds largest emitters) can provide a steady revenue stream to ensure such aid is delivered.

Which countries are considered “rich” (and therefore are donor countries), and which countries are considered “poor” (and therefor aid recipients)? Once consensus is reached on this contentious issue, the question of how much aid each specific donor country should contribute remains (between historically high emitters / high per capita emitting “rich” countries, and current high emitting “emerging economies” such as China and India). These are the  challenges world leaders must work together to overcome while drafting the Post-2015 Climate Agreement / Sustainable Development Goals (SDGs).

Neither “rich” nor “poor” countries can adequately address global environmental risks alone–concerted action is needed.