The Era of Muddling Through
It took me a while to define what I felt about the Global Economic Symposium 2011. While in there, I was immersed in the energy of the speakers, in the enthusiasm of the Global Economic Fellows, in the diversity of topics covered – from resource governance to migration to cyber-security – and I admired the intense networking that was taking place between participants. In a way, it reminded me of the Aspen Institute events that I had the privilege of attending both in Romania and in the United States – in the sense of the intense, candid “peer” dialogue between business, civil society, political and academic leaders. Consequently, I felt things were indeed given a push. As my fellow blogger covering the event Craig Willy said, such an exchange of ideas can have immense ramifications, whose consequences for the everyday life of policy-making will be seen years later.
What I totally liked about the GES2011 was its focus on solutions. True, challenges oftentimes seem more daunting than the solutions advanced seem promising. Skepticism might seem a natural reaction, as my colleague Aniko Meszaros openly expressed. Before the event kicked off, I asked GES2011 Director Alessio Brown whether they’ve followed up on any of the solutions proposed at previous editions of the symposium. I was pleasantly surprised when I was told that indeed such follow-up takes place and that, although claiming ownership for ideas is often just vanity, the GES seems to have given birth to some ideas that were implemented in practice: agreements for circular migration, coco bonds, and debt rules are just some of them (for further info, read pages 127 – 135 of GES Magazine Thrive).
In the meantime, 1 billion people still live in poverty, 1 billion don’t have access to water and 2 billion don’t have access to sanitation. We are exploiting our planet’s finite resources and the gap between the rich and poor is growing. Normally, you’d think radical transformations are desirable and needed. Unfortunately, we are still struggling with empty signifiers like “sustainability” and “globalization”. We don’t know what we mean by “sustainable finance” or by “proper market regulation”. It would be an interesting thought experiment to put something else in place of global capitalism. But it’s utopian to think we can. Instead, we’ll continue to meet at GES-like events and we’ll find incremental solutions. We’ll implement some of them, in some form or another. We’ll socialize into being better global capitalists. But we won’t escape the era of muddling through.
That good ideas take a lot of time, a lot of meetings, pushes and nurturing, can be seen with coco bonds as much as with financial transaction taxes or the hidden subsidies to nuclear power. That muddling through is the normal course of life in complex societies and especially democracies and that revolutions are only rare kick starts to new phases of muddling through is obvious.
Events like the GES should provide the chance to step out of the muddle of daily life and ask whether our efforts are suitable and strong enough to keep us moving in the right direction. Let’s assume all GES participants (as much as the writer of the blog and the organizers) agree that the only possible and right direction is democracy and global capitalism. Then the question is, have we moved any closer to a world that favours its majorities, selects based on beneficial competition, and promotes freedom.
The answer is not a clear yes or no. Industrialisation in Asia and the commodities boom in Latin America have taken millions of people out of poverty and into the global middle class, innovative businesses and governments have improved products and lives enormously, and the internet is one of the drivers among a wave of big and small democratic revolutions around the world. But moving from industry and civil society to the financial markets the answer changes completely.
The richest 1% of the world population owns 40% of global wealth, but what is worse, more than half the world’s bank assets are hidden in small secrecy jurisdictions completely out of the control of democratic government and the world’s majority (according to the IMF, a few small island states hold 18 trillion dollars – a third of world GDP and about 15% of global wealth alone). Multinational corporations and big banks with the help of the so-called tax havens created a global race to the bottom of deregulation, leading to ever bigger crises, bail-outs and higher taxes or worsening services for those left behind – the most successful company being that which pays the lowest tax rate (according to Bloomberg, Goldman Sachs Group only paid $14 million or 1% on $2.3 billion profit and $10.9 billion on compensation and benefits for its employees in 2008) and enters the highest risk (the same company getting $10 billion and debt guarantees from the US taxpayer for its risky operations in that year). These big companies in turn spend billions of dollars on lobbying for laws to cement their preferential position against regulation and competition ($4.6 million in 2010, again Goldman Sachs). When they speak of freedom, they speak of the freedom to move their assets and profits freely from the societies that made them possible to those that tax them least, and they speak of the freedom of the privileged few at the cost of the many that suffer from budgets in austerity, that don’t have the cash to get their voices heard, and that can’t employ a lawyer and an accountant to optimize their tax bill.
In terms of equality, re-regulation of the financial markets, and political capture it looks as if we’re not only moving too slow but that our efforts have not been strong enough to keep us from moving in the wrong direction – towards less democracy and less capitalism, globally.