2017-12-21
Carol Green
Our vision has taken shape and the future is clear, The Greens (WA) want a sustainable green economy, an economy designed to achieve our policy aspirations. If our vision is to be realised a new economic direction must be considered; collaboration with other progressive/centre parties for an economy of the future will facilitate success.
We live in a world, a country, a state, and all are slowly being poisoned from the effects of, for example, pollution, depletion of natural resources and over-population, plus climate change and global warming are threatening the very existence of every living organism on our planet. We have world and industry leaders who fail to acknowledge that tough constructive decisions need to be made; inequality permeates throughout many populations. David Meyer (Fortune) (1) states that the richest 1% now owns more than half of all the worlds wealth, according to analysts at Credit Suisse, and inequality is only going to get worse over the coming years, with millennials having a particularly tough time.
World and industry leaders continue to invest in fossil fuels and the top-end of town receive tax incentives, which only serves to perpetuate an already very unequal society and appease shareholders. It is not difficult to comprehend that this is unsustainable. Capitalist economies favouring the rich and the powerful persist, along with Governments who are willing to build their popularity on it. Capitalism is not going anywhere very fast, so what can we do? Perhaps we need to 'work with it in order to change our economic direction.
Furthermore, it appears that many politicians in our Governments have been or are playing politics to garner support from the top end of town and elsewhere. They are not doing the hard graft to create a solution that would promote economic growth, rather they are using the prospect of a downturn to appease the already rich and powerful and give justification to the masses for doing so. Over the past few decades and more, inequality has risen the most in places where progressive policies such as high top tax-rates have been weakened, surely this must not continue.
Although a necessary system for generating income for Governments and policy fruition, capitalism is in my understanding, the economic driving force that has lead the world, and more specifically Western Australia, to the economic, unequal and wasteful position it finds itself in now. Without decisive action, capitalism in its present form will endure for some time to come and our future will be bleak. Therefore, there exists a need to rethink its direction.
It appears that by far, the most helpful piece of literature for describing a renewed way forward is 'Rethinking Capitalism: Economics and Policy for sustainable and Inclusive growth (Michael Jacobs, Mariana Mazzucato) (2). Dmitri Zenghelis and Carlotta Perez (3) suggest in 'Rethinking Capitalism, if we have any hope of meeting global emissions targets and delivering sustainable and inclusive growth, we need more than just clean energy. We need to reduce the material density of the whole economy.
This means creating new business models that focus on durable products, maintenance-as-a-service and remanufacturing. On the consumption side, it means promoting renting over owning, and broadening the sharing economy. Governments therefore need to take the initiative, helping companies/entrepreneurs with the upfront costs of resetting production systems and rethinking how we build cities, and move goods and people around.
Business, and Government departments, need to establish ecosystems for collaboration and consider the role of 'State Investment Banks' (SIBs), or 'National Investment Banks.
If our future economy transitioned to one that is built on sustainability and green growth, what benefits can we expect? 'Rethinking Capitalism goes on to explain that,'not only would it restart economic growth, creating jobs for those displaced by technology, for instance. It would also open the door to sustainable prosperity. Early deaths attributable to pollution would fall. Political tensions that exist because of the uneven distribution of fossil fuels would ease. In addition, we would begin to realise a 'green future, with the concerns of global warming being unequivocally targeted and addressed by the transition.
State/National Investment Banks are already operating in some countries for example:
- The European Investment Bank (EIB) (4) is a European Union bank and is projected to be adding 2.25 million jobs by 2020. The EIB has, up to 2016 has loaned The Netherlands EUR 9.4 million for projects including energy 14%, small and medium-scale projects 47%, and education, health and agriculture 9%. A 'criticism of the EIB has been, 'the worlds biggest lender to energy and climate action projects, almost doubled the funds given to fossil fuels between 2007 and 2010. This has lead to the EIB being labelled 'hypocrites (5). Plus, a report in 2010 (6) alleged that the EIBs lending practices in Africa facilitated tax evasion and corruption.
- In the USA the Advanced Research Projects Agency-Energy (ARPA-e) (7) provided loans that helped Tesla, Nissan, and Ford to build electric vehicles, however, there are plans by the present Government to close this department. Tesla was loaned US$465 million in 2009 and through its success was able to pay back the loan 10 years early (8).
- Germanys 'KfW (SIB), invests in energy projects and renewables. It is taking the lead in high-risk, capital-intensive technologies that seem unattractive to private investors, such as 'offshore wind (3).
- UKs Labour party has an SIB plan, which is predicted to help fix the countrys damaged financial system (10). An article in The Telegraph confirms that Whitehall officials revealed that a new SIB is being seriously considered in the corridors of power (11)
As Zac Tate (3) states, the financial rewards from 'green growth can build public wealth. The State could establish public wealth funds that manage the royalties from the technologies it sponsors and the returns from shares held in 'green companies. This would be similar to Norways sovereign wealth fund (pension fund), which to date has amassed US$1 trillion for the first time – that sum equates to $190,000 for each citizen (9). Whatever is in operation, whether it is a SIB or a Fund, the strictest of guidelines must be in place to reduce the risk of tax evasion, corruption, and fraud.
Having reflected upon our present economic situation and considered all of the above, and 'then some, I would suggest that without delay we need to 'Rethink Capitalism. We need to stop high-end tax incentives, we must transition away from fossil fuels, we must foster equality, and we need to establish a State Investment Bank (SIB) to ensure that all of what The Greens (WA) are endeavouring to achieve, can be realised. With many examples of SIB creating successes in other parts of the world, the question must be, why wouldnt we want our own?
References:
1 World Economic Forum. 'The richest 1% now owns half of all the worlds household wealth. David Meyer (writer for Fortune). 15 November 2017. https://www.weforum.org/agenda/2017/11/the-richest-1-now-owns-more-than-half-of-all-the-world-s-household-wealth
2 Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth. Michael Jacobs and Mariana Mazzucato. Wiley Blackwell. 2016
3 World Economic Forum. Zac Tate (economic strategist, Hottinger Group) 'Capitalism is losing support. It is time for a new deal. 16 November 2017. https://www.weforum.org/agenda/2017/11/capitalism-losing-support-we-need-a-new-deal/
4 www.eib.org/about European Investment Bank
5 The Guardian. 'European Investment Bank criticised for 'hypocrisy of fossil fuel lending. Damian Carrington. 9th December 2011
6 The Telegraph. 'EU money earmarked for African development winds up in tax havens and African banks, report claims. Leah Hyslop. 1st December 2010
7 Source: White House (pdf) via Green Car Congress, Reuters. 'Trump budget kills off loan program that helped Tesla, Nissan, Ford build EVs. March 2017
8 National Geographic. Christina Nunez. 'Teslas Musk promises to halve loan payback time to DOE, jokes about 'Times feud. 26th February 2013
9 http://money.cnn.com/2017/09/19/investigating/norway-pension-fund-trillion-dollars/index.html
10 New Statesman. 'Labours Investment bank plan could help fix our damaging financial system. https://www.newstatesman.com/print/node/308274
11 The Telegraph. Kamal Ahmed. 'A state investment bank? It just might work. 20th February 2010
The Guardian. Damian Carrington. Environment. 'How a green investment bank really works. 24th May 2012
CNBC. Matthew Rosemain & Gwenaelle Barzic. 'Frances startup scene gains traction, led by state investment bank. 15th June 2017. https://www.cnbc.com/2017/06/15/reuters-america-frances-startup-scene-gains-traction-led-by-state-investment-bank.html
Header photo: Wall Street bull. Credit: Michael Marquand/Lonely Planet Images/Getty Images