Info Service on WTO and Trade Issues (Sept17/12)
21 September 2017
Third World Network
Nations: Need for a global new deal that is anti-austerity
in SUNS #8533 dated 18 September 2017
15 Sep (Kanaga Raja) - There is need for a "global new
deal" that is anti-austerity and puts reflation, full employment
and decent jobs ahead of tackling inflation and government debt,
a senior official at the UN Conference on Trade and Development
(UNCTAD) has said.
at a media briefing on 11 September ahead of the launch of UNCTAD's
Trade and Development Report (TDR) 2017 on 14 September, Richard
Kozul-Wright, Director of the UNCTAD Division on Globalization
and Development Strategies, said that there are plenty of alternatives
out there (to the neo-liberal agenda) and they are urgently
needed given the kinds of economic and social imbalances that
is currently being faced.
Trade and Development Report has called for a twenty-first century
make-over through a global new deal, ending austerity, clamping
down on corporate rent-seeking, and harnessing finance to support
job creation and infrastructure investment being key to such
a make-over (an article on the main themes highlighted by the
TDR will appear in a future issue of SUNS).
media briefing, Kozul-Wright highlighted the frustration with
the traditional view of looking at the challenges around globalisation
as a trade versus technology debate.
we (UNCTAD) just do not think that those get to the real systemic
challenges that the kind of globalisation that we have been
facing now for thirty years really addresses. And issues of
a more macro-economic nature and in particular issues of economic
power need to be seriously addressed if we are going to achieve
the more inclusive and sustainable growth path that everyone
claims is the objective of policymaking in the twenty-first
to the chapter in the TDR on the impact of robotics on developing
countries, Kozul-Wright said that "we basically argue that
the kind of anxiety and paranoia that has been promoted by the
press in recent years" is certainly overdone in the case
of most developing countries.
not to say that there are not problems with automation and robotics,
but those are problems that are derived from the combination
of automation and slow growth and austerity, he said, adding
that "we are not technophobes".
believe that new technologies offer real opportunities including
for the South but if you combine these technologies with slow
growth, premature de-industrialisation and austerity tendencies,
then there are grounds to be anxious," he emphasised.
don't see a threat yet from robotics in poorer countries which
have a weak industrial base and where the sectors that they
are concentrating in are sectors like textiles and low-skill
industries that are not likely to be knocked out by robotic
technology in the near future," Kozul-Wright noted.
at the end of the day, most technology - and it will be true
of robotics - is embodied technology and for it to spread and
to make a positive contribution socially and economically, it
must go along with high rates of capital formation.
need to invest to put theses machines in place. And the problem
right now, certainly in the North and in many developing countries,
is not a problem of technology and robotics per se, it's a problem
of a shortage of investment."
that problem has to be solved and it can only be solved - we
argue in this report - by changing the macro-economic policy
stance in both North and South away from a fixation with inflation
and austerity and towards a much more expansionary macro-economic
policy that addresses the shortages of aggregate demand, which
we continue to emphasise, is the main constraint on faster growth
in the global economy in general and in individual countries
in particular," Kozul-Wright said.
A lot of
these problems of a more macro-economic nature about the nature
of globalisation stem not from so much on the trade side of
the globalisation story as on the finance side of the story.
we call hyper-globalisation is a form of globalisation that
has been dominated by un-regulated financial flows of one kind
or another," he said.
don't really appreciate the discussion that we need to defend
globalisation or we need to defend multilateralism because it
is not a very precise way of understanding the kind of global
arrangements that have emerged over the course of the last three
decades, which are not the same as the kind of globalisation
that emerged in the first two-and-a-half, three decades after
the end of the second world war."
It is a
different kind of globalisation that is being experienced now
and that is largely because finance dominates the contemporary
globalisation world in a way that we think produces the kinds
of imbalances and policy problems that has been talked about
in the TDR.
of the things I think we have been innovative in highlighting
in the TDR is the way in which that kind of financialised globalisation
tends to generate a highly unequal global economy. It leads
to serious internal distributional problems," said the
out of the middle class and the rise of the super one percent
have gone hand in hand with a much more fragile set of economic
arrangements that are subject to shocks and crises of one kind
or another - shocks and crises that tend to exaggerate the existing
inequalities in society.
are now in a world of vicious circles in which un-regulated
finance, growing inequality, financial and economic crises of
one kind or another have become self-reinforcing."
also referred to the Financial Stability Board (FSB) and its
chairman Mark Carney (in presenting the last report from the
FSB) essentially saying problem solved - that the financial
system now is safer, securer and fairer.
to Kozul-Wright, they are pointing the finger at China because
they see structured investment vehicles and high levels of private
debt that they think will lead to crisis in China.
China to some extent for not really undertaking what they see
as the necessary regulations to bring about a more stable financial
system in that country.
is not a position that I would necessarily agree with,"
he said. What he and the TDR do not agree with is the belief
that the financial system in the advanced economies have solved
the problem of stability and fairness.
said one of the reasons for that is while the FSB fixated on
the big banks, a lot of the contemporary financial system has
drifted into the shadow banking system which is largely un-regulated
and has not been subject to the same scrutiny that the FSB has
applied to the banking system.
it is true in most countries that big banks are bigger today
than they were in 2006 and 2007. They might be slightly better
capitalised and slightly more liquid in terms of the assets
that go into that capitalisation, but they are much bigger and
more powerful institutions than they were in 2007, and they
are already pushing back against Dodd-Frank (regulatory reform
legislation instituted in the United States) and other financial
initiatives that have been pursued since the crisis.
context, he highlighted the issue of economic power: financialisation
has focused attention on the power of financial institutions
to manipulate and rig markets in one way or another.
we wanted to do in this report, beacuse we think it is often
neglected, is not to focus as much on financial firms and the
financial sector but on non-financial firms and the corporate
sector where we think rent-seeking has become rife as a strategy
for enhancing profits."
context of rent-seeking behaviour in the corporate sector, he
highlighted the use of intellectual property rights, often fictitious
intellectual property rights, or "what Donald Trump might
call fake intellectual property rights, as a tool, not for innovation,
but as a tool for excess profit-making."
said whilst we are all fully behind the Sustainable Development
Goals (SDGs), unless these issues are tackled seriously, then
it will be very difficult to meet the goals on inclusiveness
and structural transformation.
highlighted the need for political will, vision, and a serious
amount of dedicated policy effort and finance to achieve these
kinds of goals.
need a global new deal. We need a deal that is anti-austerity,
that puts reflation and full employment and decent jobs before
tackling inflation and government debt. It needs a serious regulation
of abuse in both the financial and corporate sector. And it
requires serious re-distributional measures both fiscal and
more innovative measures."
that most people are beginning to recognise that hyper-globalisation
is beginning, in a very serious way, to haemorrhage trust in
the political system because most people believe that the political
system is now serving a much narrower economic and social interest
groups than it should be, and that is reflected in recent political
he would see the world moving away from austerity to a global
new deal, Kozul-Wright said that "one would like to think
that given the kinds of problems that we do identify, there
would be an outpouring of rational kind of thought and action,
but that's obviously not going to happen."
be interesting to see in the case of the United States where
the Democratic Party has begun to move towards a platform that
has elements of this (moving away from austerity) in it, how
that would evolve moving forward.
point in time, it is more likely to come from countries like
the United States than it is to come from mainland Europe. Mainland
Europe at this moment in its history, seems to be extremely
resistant to this kind of agenda.
that "maybe it's because the Anglo-Saxon world is being
subject to this kind of stuff for much longer that you're actually
seeing this kind of backlash already in the Anglo-Saxon world
more than you're seeing it in mainland Europe, for example."
said that the developing countries are already thinking about
these issues. They are worried, for example, about the growing
influence of corporate power in shaping their economies.
like to see stronger competition policy and they can try to
do that at the national level.
by pointing out these problems, developing countries too can
begin to think about the kind of multilateral framework that
they would like to see moving forward.
are in this moment where the advanced economies are abandoning
the multilateral framework and developing countries are emerging
as its defenders. I don't want the developing world to be defending
the kind of multilateral structures we have now in place because
I think they are part of the problem," said Kozul-Wright.
would like to see the developing countries do is given the kinds
of problems they face, to think hard about the limits and weaknesses
of the current multilateral system and to begin to articulate
ideas of a global competition authority, which is an idea that
UNCTAD has raised a couple of times in the past TDRs.
is something that we would like developing countries to get
behind. The old chestnut of an international sovereign debt
workout mechanism, which UNCTAD has raised endlessly, is being
a gaping hole in the international financial system, [and] needs
to come back on the agenda and we hope the developing countries
will begin to rally around that."
was asked if he saw inequality as the biggest threat right now
and are there any lessons learned after the 2008 crisis.
also asked to comment on UNCTAD Secretary-General Dr Mukhisa
Kituyi's travels with Alibaba Group founder and executive chairman
Jack Ma (who is also Special Advisor to UNCTAD for Youth Entrepreneurship
and Small Business and he had visited Nairobi and Kigali in
July). Is there a sort of a disconnect with what he is supposed
to do and what he is not doing?
issue of inequality, Kozul-Wright said that it is a growing
problem in the North and the South.
think what the report is trying to do is to highlight features
that we see have been neglected in that discussion rather than
to just rehash on inequality as a problem. It is looking at
the macro-economic factors behind inequality. It is looking
at issues of market power and how those feed into the inequality
is not just to say inequality is bad and we need to tackle it.
We need to go beyond that discussion as I think we need to go
beyond the discussion of trade versus technology as being the
ingredients of inequality."
said that governments still have a lot of room at the national
level to address issues of inequality and there are things that
can be done at the national level, and "we need to insist
upon this as part of any sort of inclusive and sustainable growth
said, you need to recognise the sources of that inequality before
you come up with the solutions and too much of the "inclusiveness"
debate doesn't really get to the heart of the issue on inequality.
said that market power and the emergence of new corporations
from the South like Alibaba is an interesting feature of the
contemporary global economy that you are getting the emergence
of large players from the South and what that means for developing
countries is a complicated question.
want to see more successful firms from the South ... and that's
what UNCTAD was set up to do."
between the North and South is reflected in the production sphere
where big firms from the North still dominate the most profitable
we have seen this emergence of firms from the South. That per
se is something we welcome."
said that big firms in the South can cause problems in the South
as well, "so the need to regulate big firms from the South
should be part of the Southern agenda too - a Southern inclusive
that's inconsistent or not with having Jack Ma as an advisor,
I don't think its inconsistent as long as Ma himself recognises
there is an important role for government regulation in sectors
like e-commerce and the digital economy, and there is no reason
that he should resist that per se, at least if he is development-friendly."
we insist that inclusive sustainable development cannot be left
to market forces. That's an UNCTAD position," Kozul-Wright
underlined, adding that having big firms from the South is not
inconsistent with having big governments that regulate.
that the Chinese government is a big government that regulates.
to the question about the UNCTAD SG and Alibaba, Kozul-Wright
said "so I think it's a question of where your emphasis
falls, probably. I can't speak for the SG, but I don't necessarily
see an inconsistency as long as we know what it is we are trying
to get at here."
further indicated that it's a Group B (developed countries)
the capture of democratic processes and power by big corporations,
for example, in India today, Kozul-Wright pointed to what Chicago
economist Zingales has called the "Medici complex"
- the idea that economic entities as they grow will capture
the political process and then use the political process to
reinforce their dominant economic position.
that this is something that UNCTAD recognises in this report
and warns about. He noted that the originator of this idea is
essentially Adam Smith, who warned about economic power grabbing
political power and reinforcing economic power.
is a worry that goes back to Adam Smith and it's certainly a
worry that is central to the message in this report," he