The voice for global solutions in parliament
 

Problems likely to require the Simpol approach

Protection of the Global Commons

 

Issues such as clean air, global warming, unpolluted oceans and adequate clean water availability are increasingly being recognised as factors requiring a global, as well as a local, approach. In many cases, the technologies required to reduce emissions and pollution are available but, because their use often involves increased costs, nations are reluctant to impose the necessary regulations for fear of their industries becoming "uncompetitive" in the global market. With respect to climate change, for example, how often do we hear news of the following type:

"Brown in 'green tax' climbdown.

GORDON BROWN will bow to pressure from big business today by announcing a climbdown over his plans to impose a "green" tax on industry. In his pre-Budget statement, the Chancellor will disappoint the environmental lobby by curbing the climate change levy after lobbying by Britain's bosses, who warned that it would harm productivity and cost jobs." (The Independent. 9th November 1999.) If sufficient nations cooperated by implementing the necessary legislation simultaneously as the Simultaneous Policy (Simpol) proposes, the necessary taxes or stricter emissions regulations could be implemented without any loss of competitiveness or risk of corporations moving employment elsewhere. Furthermore, with Simpol, the prospect of achieving really dramatic cuts in emissions becomes possible, rather than the present very mild and inadequate provisions of the Kyoto Protocol.

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Global Financial Market Regulation

Global regulation of internationally mobile financial markets are increasingly seen as vital for a sustainable financial system. Measures such as the "Tobin Tax" and other restrictions on derivatives and other "financial instruments" have long been recognised as necessary to control the "casino economy". Furthermore, increasing threats from terrorists, drug traffickers and international crime syndicates cannot be dealt with when Tax Havens continue to permit these people to launder money and hedge against differing tax rates in different countries.

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Destructive Tax Competition

Because today's open global market permits corporations to move their operations freely from one country to another, and because governments are keen to attract the jobs and investment corporations bring, governments are locked in a destructive race to the bottom in corporate tax revenues. The tax-take from corporations around the world is consequently in steep decline. The London Financial Times (2nd May, 2003), for example, carried the following article which well describes the problem: The UK’s long-standing appeal as a low-tax location for companies is being chipped away by tax cuts in rival EU states, according to a survey by KPMG, the professional services firm:

"Competition between governments to attract businesses is driving down taxes on companies around the world, intensifying pressure to raise tax on individuals, KPMG found. As companies become increasingly multinational, it has become easier for them to shift activities between states or allocate their profits to countries with lower taxes. … "I believe that corporate tax is in near terminal decline,” said John Whiting, a tax partner at PwC. “Over the next 10 years governments may have to deal with a lot less corporate revenue and will have to raise tax from elsewhere.” "It’s a battle governments will never win," he said."

A study carried out for the years 2002/3 by Citizens for Tax Justice showed that tax payments by 275 'Fortune 500' companies were less than half the statutory 35 percent level and 82% of the companies surveyed paid zero or less in federal income taxes. (Source: London Financial Times, 22nd November, 2004)

With corporate tax revenues drying up as a result of this destructive competition, it is hardly surprising that governments do not have adequate resources to fund proper public services such as schools, hospitals and public transport. Since any nation that dared to move first to raise its level of corporation tax would be certain to put itself at a competitive disadvantage, this global vicious circle can only be broken by simultaneous government action of the kind advocated by the Simultaneous Policy (Simpol).

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Corporate Accountability

Corporations operate in a global market. Major corporations have their shares quoted on global stock markets. While doubtless influenced by the desire of consumers to purchase products made under environmentally and socially responsible conditions, corporations cannot afford to lose out to their competitors. Any corporation doing so invites a reduction in profits, a down-valuing of their share price and, ultimately, the threat of a hostile take-over. As such, in a globally competitive market, it is not an exaggeration to say that corporations can only afford to behave as responsibly as their main competitors allow or, as the corporations themselves put it: "If we don't do it, our competitors will".

Without appropriate global regulation such as the Simultaneous Policy (Simpol) proposes, therefore, it is simply unrealistic to expect any lasting or significant improvement in corporate social or environmental responsibility when corporations are free to move across national borders to wherever labour costs and environmental restrictions are lowest, and potential profits therefore highest.

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Localisation and Food Security

The localisation of production and consumption, as opposed to the long-distance, global transportation of all manner of goods to and from all corners of the Earth, is increasingly recognised as a central pre-condition of a sustainable global economy and environment in the 21st century.

Many of the policies needed to achieve "localisation" depend, however, on global cooperation. Some policies advocated by many of those calling for "localisation", such as the policy of "Site here to sell here", i.e. the unilateral national imposition of regulations to force corporations wishing to sell locally to also site some of their operations locally, will be difficult to implement when financial markets are likely to view any country contemplating such policies as "unconducive to business needs" or "protectionist" thus prompting capital flight, currency devaluation, etc. (even if WTO rules have not already excluded such policies). As such, the achievement of localisation is likely to depend on the re-regulation of capital markets and transnational corporations; i.e. on policies which will require widespread international cooperation as proposed by the Simultaneous Policy (Simpol).

Furthermore, local production and consumption can be promoted by appropriate global Simpol-type policies such as a global tax on fuels. Globally higher fuel prices which such a tax would cause would make long-distance transportation more expensive and would consequently:

  • reduce global warming and other transport-related pollution
  • reduce transport congestion
  • make locally produced goods relatively cheaper and therefore more competitive, thus promoting local economies
  • raise significant tax revenue to fund poorer countries or to compensate oil-producing or other countries who may lose out by such a tax
  • reduce pollution-related health problems and the consequent burden on public health provision
  • conserve fossil fuels

The above tax on fuels is, of course, but one example of how global cooperation - as advocated by the Simultaneous Policy (Simpol) - is a pre-requisite of achieving healthy and vibrant local economies.

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Provision of Adequate Public Services

Financial market liberalisation, which has permitted capital owners and corporations to avoid taxation and regulation by moving their activities elsewhere, has severely tilted the overall burden of taxation away from corporations and onto the mass of ordinary private individuals. This, combined with governments' reluctance to increase the tax burden for fear of losing votes, has resulted in the by now famous "cuts" in public spending, in particular on transport, health and education. It has also resulted in government increasingly looking to privatise or to operate public services by using private companies. Since we live in a global market, virtually all countries are experiencing this phenomenon to a greater or lesser extent despite mounting evidence that private companies are incapable of reliably and safely providing services such as railways, power, water and other vital services.

The WTO's General Agreement on Trade in Services (GATS) is further entrenching this state of affairs as all governments are led to believe that "greater competition" and "greater efficiency" will solve these problems when all the evidence suggests they are only helping to make them worse. Furthermore, opening up public services to private business is increasingly seen by world financial markets as a hallmark of a "competitive national economy conducive to business needs". Governments hesitating to follow such policies risk instant punishment by financial markets.

Measures to increase taxes on corporations simultaneously across national borders, as the Simultaneous Policy (Simpol) calls for, would therefore tilt the burden of taxation back to the corporations and financial speculators thus restoring properly funded and adequate public services.

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Waste Reduction and Recycling

Waste reduction and recycling have long been key requirements for a sustainable economy and environment. However, WTO rules which exclude national discrimination between goods which are packaged in recyclable packaging and those that aren't make the promotion of waste reduction and recycling difficult. This is an inherent feature of the WTO which is primarily focused on increasing (liberalising) trade rather than on environmental issues.

Global regulation, as proposed by the Simultaneous Policy (Simpol), is required either to ensure that environmental considerations are adequately built in to WTO rules or to re-regulate global capital markets and corporations to allow individual governments the necessary freedom to impose appropriate national regulations without fear of capital flight or adverse market reaction.

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International Crime & Terrorism

"The total cost during 2009 of cross-border crime is said to equate to 3.6% of world GDP, according to Juri Fedotow, head of the UN's Drugs and Criminal Prevention agency (UNODC) based in Vienna. Human trafficers alone gain about $32m annually from their activity. "We must recognise that this is a problem that requires a global solution", he said while attending a UN conference on criminality. "No nation can tackle this problem alone". Der Spiegel, 23rd April, 2012.

Chemicals, Pesticides and Hazardous Substances

In a globalised world where governments increasingly fear imposing any measure which might increase the costs of industry or deter inward investment, unilateral action to outlaw or control harmful substances is becoming difficult if not impossible. Even the European Union which is thought to be a beacon for high social and environmental standards is not immune from global market forces and cannot regulate for fear of the consequences. The following example demonstrates the point:

" 'Danger' Chemicals get EU All-clear for Continued Use. Everyday chemicals suspected of causing birth defects, allergies and learning problems in children can still be produced and sold in the European Union under a white paper published yesterday by the European Commission. Shocked environmentalists said it was a victory for the chemicals industry, which had resisted curbs on products unless there was conclusive proof they damaged health. The Commission claimed in a statement that the white paper was a step forward in protecting the public from 30,000 chemicals routinely released untested into the environment in everyday products, such as plastic and car upholstery. At a long and acrimonious meeting in Strasbourg, the commission environment directorate was forced to give way to the industry's lobby, which feared loss of jobs and competitiveness if everyday chemicals had to be tested.... Elizabeth Salter-Green of WWF said: "The politicians have to agree to this [proposal from the directorate], we hope they will be as outraged as we are." Michael Warhurst, of Friends of the Earth, said "Ministers from across Europe must tell the commission to throw away this pathetic document, and instead draft plans that put human health above the vested interests of the chemical industry.".... The industry, the largest in the world, is also dissatisfied with the white paper, albeit for different reasons. While it fully acknowledges large-scale testing is inevitable, it is concerned that any EU rules risk saddling it with red tape and damaging its competitiveness vis-a-vis the United States.... Some in the industry have already warned that if Brussels goes too far thousands of jobs could be at risk." (The Guardian. 15.2.01.)

If such chemicals were the subject of global and simultaneous international agreement, as the Simultaneous Policy (Simpol) proposes, there would no longer be any question of "job losses" or "uncompetitiveness" because simultaneous implementation eliminates those problems.

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Genetically Modified Organisms (GMOs) and Biotechnology

Despite the widespread public outcry against GM foods, genetic modification is seen by global corporations as having vast potential for increasing profits and increasing their market dominance. Amongst other things, genetic modification allows any naturally occurring plant or organism to be genetically modified and, since any such modified plant or organism then qualifies for patent protection, it opens the way to the appropriation of nature for private profit, manipulation and exploitation. National governments are, of course, aware of the dangers but are reluctant to regulate unilaterally for fear of disadvantaging their own bio-technology companies, deterring inward investment or of coming into conflict with WTO rulings.

Once again, widespread international cooperation as advocated by the Simultaneous Policy (Simpol) is required to ensure that proper and adequate regulation of such technologies is imposed without any nation or corporation losing out to others.

If you can think of other areas where the Simultaneous Policy (Simpol) might be applicable, please contact us.

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