How to Mobilise $2.8tr to Finance the Global Sharing Economy

Published on Dissident Voice, by Adam Parsons and Rajesh Makwana, January 15, 2013.

… There is plenty of research available that demonstrates how governments could harness more than enough money to reverse policies of economic austerity, prevent life-threatening deprivation and mitigate the human impacts of climate change. By utilising just the policy options summarised below, governments could mobilise over $2.8 trillion every year to scale up and strengthen the ‘sharing economy’ – systems of welfare and redistribution that have been progressively established across the world to protect the poor and vulnerable.  

This colossal sum amounts to approximately 4% of global GDP – twice as much as required for securing a basic level of social protection for all the world’s poor, according to calculations by the United Nations. It also underlines how the international community could do much more to scale up sharing between nations as well as within them, in order to help poorer countries meet the basic needs of their citizens and strengthen domestic systems of social protection.

Many of these policy measures would be hugely beneficial in their own right by helping to establish a world with less military spending, less corporate welfare, a greener economy, a fairer international trade regime, and more progressive and effective forms of taxation. Achieving these long-standing and widely championed goals would be an enormous step in the right direction for the world as a whole, signalling a triumph for millions of people working towards progressive change, and paving the way for more transformative reforms to the world’s economic and political systems that must urgently follow.

10 policies to finance the global sharing economy:

1. Tax financial speculation – $650bn

  • Speculation in financial markets is increasingly disconnected from the ‘real’ economy (concerned with actually producing goods and services) and has destabilised economies all over the world. The main beneficiaries of speculation are a minority elite of traders, investment banks, hedge funds and other companies that can reap huge profits from market volatility. A financial transaction tax (FTT) could help regulate markets by disincentivising the most destabilising trading practices. If implemented globally, an FTT could raise as much as $650bn a year for governments to tackle poverty, reverse austerity measures and address climate change.

2. End fossil fuels’ subsidies – $531bn

  • The burning of fossil fuels is the main contributor to global warming and is largely responsible for carbon emissions reaching a record high last year. It will be impossible to keep CO2 emissions to safe levels if governments continue to encourage the overuse of ‘dirty energy’ through the massive subsidies it provides to the producers and consumers of fossil fuels. Governments could raise up to $531bn a year if all forms of biofuel and fossil fuel subsidies are progressively phased out by 2020. This colossal sum of money is sufficient to secure universal access to energy, leverage a significant investment in renewables on a global scale, and finance programs that can help countries mitigate and adapt to climate change.

3. Divert military spending – $434.5bn

  • Military spending by governments worldwide has risen by more than 50% since 2001, reaching over $1.7tn in 2011 – equivalent to around $250 annually for each person in the world. As a first step toward ending armed conflict and war, it is crucial that governments introduce substantial reductions to their military budgets. Diverting only a quarter of current global military expenditure would free up $434.5bn annually that could instead be used to save lives, prevent extreme deprivation and strengthen United Nations peacekeeping efforts.

4. Stop tax avoidance – $349bn

  • Strengthening tax systems in countries around the world remains the most pragmatic way for nations to share their financial resources more equitably and protect the poor and vulnerable. Tax avoidance by wealthy individuals and multinational corporations means governments often miss out on huge amounts of additional public revenue. Facilitated by a global network of highly secretive tax havens and ‘legitimised’ by national and international tax rules, tax avoidance is big business. As a minimum step toward ending all forms of global tax avoidance, clamping down on tax havens and preventing corporate tax abuse could raise more than $349bn each year.

5. Increase international aid – $297.5bn

  • Official Development Assistance (ODA) is the main way in which the international community currently finances the global sharing economy.But foreign aid is severely compromised by the self-interest of donor countries and dwarfed by the net flow of money from developing countries to rich industrialised nations. Although an end to poverty will require extensive restructuring of the world economy to share wealth and power more equally between and within nations, increasing ODA to 1% of gross national income (GNI) in the short term could raise an additional $297.5bn per year – a sum much more in line with the urgent needs of poorer countries.

6. End support for agribusiness – $187bn

  • Agricultural subsidies are a foremost example of how governments support an environmentally destructive and socially unjust model of agriculture and trade. Redirecting these perverse subsidies is an urgent priority if the world is serious about addressing the global food crisis, reducing hunger and protecting the environment. Eliminating inappropriate and wasteful subsidies that are geared to supporting wealthy farmers and powerful agri-corporations could raise $187bn each year – money that could instead be used to tackle poverty and increase food security in the Global South. Remaining subsidies should be re-oriented to support small-scale producers and agro-ecological farming practices, in accordance with the principles of food sovereignty.

7. Harness IMF resources – $115.5bn

  • The powerful influence exerted by the International Monetary Fund (IMF) over economic policy decisions made across the world has earned it a deeply controversial reputation. Many civil society groups and millions of citizens throughout the Global South see the IMF and its market-driven policies as a threat to social and economic justice. Nonetheless, the Fund has the ability to raise and redistribute vast quantities of additional finance for poverty eradication and climate finance purposes. Expanding the IMF’s Special Drawing Rights facility (SDRs) could raise $100bn annually, and progressively selling off the IMF’s substantial gold reserves could raise an additional $15.5bn over a period of 10 years.

8. Tax dirty fuels – $108bn

  • Campaigners have long argued that the price of using fossil fuels does not accurately reflect the actual cost of its environmental, social or economic impacts. The artificially low price of burning oil, gas and coal has also encouraged over-reliance on them, exacerbated climate change and prevented the development of alternative forms of energy. Taxing the carbon emissions from fossil fuels could raise $108bn each year in additional government revenues. The tax would also provide an incentive to use fossil fuels more efficiently, help encourage the transition towards low-carbon energy technology, and raise significant funding for international climate finance.

9. Cancel unjust debt – $81bn

  • The unconditional cancellation of all unjust and unpayable developing country debts is essential to achieve a more equitable distribution of the world’s financial resources. Developing countries are indebted to the tune of over $4tr and spend more than $1.4bn every day repaying these debts – 400% more than they receive in aid. These funds should instead be spent on social welfare and public services that many of these countries urgently need. Cancelling illegitimate ‘dictator debts’ alone – currently estimated at $735bn – could free up $81bn a year for public spending in developing countries.

10. Protect import tariffs – $63.4bn

  • Rich nations and global institutions must stop forcing poor countries to adhere to unjust trade rules. Income from taxes placed on imported goods is an important source of government revenue for developing countries, but  they are increasingly being forced to reduce these import tariffs as a condition of free trade agreements (FTAs) or in return for financial assistance. If the current round of world trade negotiations is concluded, poor countries could lose $63.4bn from reductions in import tariffs – more than four times what they are estimated to gain from increased trade. In addition, many FTAs currently being negotiated between rich and poor nations will further reduce tariff revenues for governments throughout the Global South.

Total potential revenue of all 10 policies: $2.8 trillion every year … //

… (full text).

Links:

Socialist Workers Party SWP, an anticapitalist, revolutionary party (UK):

Has the Middle Class Been Saved? on Huffington Post, by Danny Schechter, Jan 7, 2013;

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