How is the G20 shaping up as the new global steering committee?

The G20 summit takes place in Seoul today and tomorrow, the first such gathering in a non-G8 country. I’ve been following the G20 process from a distance and it’s fascinating – here’s a few reflections.

The moment: the financial crisis of 2008/9 saw the G8 publicly hand over the reins of international coordination to the G20. What happens next? Will it become a kind of global steering committee (which may not be good news if you’re one of the G172 countries not in the room), or just another piece of an increasingly fragmented international jigsaw of power? My money is on the latter – it will become an essential player, but will try and limit its remit to its original area of comparative advantage, the international financial system. There will be a battle to insert new issues onto the agenda (as there was with the G8), but also fears that that could weaken its impact and undermine other parts of the multilateral system (like the UN).

How the G20 works: According to a recent ODI talk by Shriti Vadera, a former UK Minister, and now an advisor to the Korean G20 Presidency, the G20 is more disciplined, internally democratic and more accountable than the G8. The whole membership, rather than just the Chair of the next meeting,  decides the agenda, and any action agreed must have a name and deadline for implementation. If the action is not carried out, it must go back to the next G20 Foreign Ministers meeting for scrutiny. The result is a multi-year action plan attached to the communiqué with names, deadlines and report-backs. (Wonder how they will ensure that all the un-implemented promises don’t accumulate as time goes on into a litany of failure attached to each summit outcome.)

Development Agenda: While the most contentious debate in Seoul is likely to be over China’s currency and American quantitative, one of the big achievements of the Korean presidency has been to make development a core part of the G20 agenda (see, it’s already expanding beyond finance!). There will be a permanent Expert Group on development issues, which has identified nine ‘pillars’ for discussion: infrastructure; private investment and job creation; human resources development; trade; financial inclusion; growth with resilience; food security; governance and knowledge sharing. This is a really interesting list, with little resemblance to the Washington Consensus (eg no mention of liberalization), and rejecting a one size fits all recipe for what the Koreans trendily call a ‘dynamic iPhone model’ – a range of different development apps for every situation. But the list also has some big absences – it claims to be based on the successful experience of Korea, but a neoliberal government has airbushed out the industrial policy (including regulation of foreign investment) and land reform that were crucial to Korea’s take off. See Ha-Joon Chang in the Guardian for more on this.

In terms of process, the G20 isn’t as exclusive as it looks. Vadera pointed out that NEPAD and the African Union have been represented at every G20 summit to date, and thinks that will be institutionalised (‘There will always be two Africans in addition to South Africa’). Like most ‘G’ groups, the numbers at the table are flexible, and hardly ever amount to 20…..

Wider Impacts on Global Governance: When a new international forum appears on the scene, there is inevitably an adjustment process as responsibilities and agenda items migrate to and fro and then settle down. The G20 has to find its place alongside the G8, UN, WTO and a plethora of other lower profile international institutions. Overall, as the international community tries to provide some global governance without global government, the G20 seems another step on the journey from a system of hard institutions and binding treaties to a messier ‘soft power’ world of networks, consensus and peer pressure.

That process of readjustment is bound to create winners and losers, both in terms of actors and issues. In this latest exercise, issues like growth and investment seem to be getting a boost, but on climate change, the G20 is likely to bat the ball back to the UN, while aid will float between OECD, UN and the G8. Nothing wrong with that, except that if the political energy and capital is with the G20, that means even less momentum for progress on climate change and aid.

What’s Next? The G20 presidency passes to France after the Seoul summit, and the French seem very committed to making it work. French officials at another ODI event (I seem to spend my life there) cited reform of the international monetary system, reduction of price volatility and reform of global governance as the three priorities for French presidency. They include innovative forms of finance, such as the Financial Transactions Tax, in that list. Should be interesting.

For more on the summit and the issues, check out the series of posts on the Triple Crisis blog or Oxfam’s Seoul curtain raiser. FT coverage is here, including a dose of well informed pessimism, see Alan Beattie’s weary comparison of the G20 with the paralysed Doha round of trade negotiations. That bad, eh?

How to halve world poverty – ignore J. Paul Getty

An intriguing new paper from Paul Segal at the University of Sussex kicks off with a great quote from Mr Getty “The meek shall inherit the Earth, but not its mineral rights”. Segal wonders what might happen if governments defied that prediction, and just handed over the income from oil, mining etc directly to poor people as unconditional cash transfers to all citizens (i.e. a universal benefit).

He calls the scheme the Resource Dividend (RD) and actually it may not be that crazy or utopian – Alaska has been doing it for years, handing over $600-$1500 a year to every Alaskan citizen, and Iran is currently considering introducing such a system to pay out $60 per person per month. When Britain first discovered North Sea oil, two FT journalists, Samuel Brittan and Barry Riley wrote, “The simplest and also the wisest answer to the question ‘What should we do with the state’s oil revenues?’ is ‘Give them to the people’”.

Why now? Segal argues that ‘two developments make its more general application particularly relevant today. First, resource nationalism and resource ownership rose in importance amid the dramatic rise in resource prices up to mid-2008. Second, the first Millennium Development Goal, adopted by the United Nations in 2000, is to halve global poverty at the $1 a day line from its 1990 level by 2015. I estimate the global impact of the policy on poverty and find that if enough poor countries were to adopt the RD then it would be sufficient to achieve the first Millennium Development Goal: extreme global poverty would be cut by half.’

Segal calculates the impact using World Bank data on resource rents and $1.25 a day poverty, for two different cases. In the first, governments simply replace the lost revenue with taxes on non-poor people. In the second, everyone, including those below the poverty line, pay taxes proportional to their post-RD incomes (so the impact on poverty is slightly reduced). The overall results are shown in the table.

He sets out the advantages of an RD scheme:

“First, it would substantially reduce poverty. Second, by being levied only on rents, the scheme implies none of the economic distortions or efficiency loss that other redistributive schemes may risk. Third, it provides an incentive to informal workers and individuals with little or no formal interaction with the state to register with the fiscal system. Finally, there is a moral and legal argument that by the nature of rents, no individual has a special claim to them, so the only morally defensible distribution is an equal distribution.” Universal benefits are also relatively simple to administer (no means testing) and the RD has an automatic stabilizer quality, as food prices tend to vary with oil and minerals, so the increased RD would cushion people during food price spikes.

In volume terms, the RD would come in at under 6% of GDP in most countries – less than the cash benefits in the EU15 (6.6%). It’s like a jump start to a welfare state.

He contrasts the simplicity and ready-to-go nature of the RD with the complexity of boosting economic growth – the standard recipe for reducing poverty. The RD scheme does not require growth, or even new taxes – merely the redirection of existing resource rents to poverty reduction.

Interestingly, even countries not known as major commodity exporters would benefit. India, where poverty now affects nearly half a billion people despite high growth rates, would see poverty fall from 42% to around 20%, even though its RD would amount to just $2.90 per person per month.

The obvious flaw is political – why would governments do it, especially if they have to replace the lost revenue with more unpopular taxes? Segal briefly considers this, arguing that “Incumbent governments are likely to be reluctant to give up an easy-to-collect source of revenue. One can imagine it being proposed in a democracy by an opposition party in order to get elected, or by a government (democratic or not) that decided that such a popular measure may increase its chance of political survival.”

Eliminate poverty, don’t reduce it: Victor Hugo disses the MDGs

“I am one of those who think and say that it is possible to destroy extreme poverty. Mark you, gentlemen, I am not saying ‘reduce’, ‘lessen’, ‘limit’, ‘control’, I said destroy. Poverty is a disease of society such as leprosy was a disease of the human body, and can be eliminated just as leprosy has disappeared. Yes, it is possible. Legislators and policymakers must think about it constantly, for as long as the possible is not done, our duty will never be fulfilled.
 
In Paris, in these suburbs of Paris where the wind of revolt once blew so easily, there are streets, houses, sewers, where families, whole families live pell-mell, men, women, girls, children, having no beds, blankets. For clothing they have stinking heaps of rags – the cities, where human beings huddle to escape the cold of winter.

Well, gentlemen, I say that these are things that should not be, I say that society must spend all its strength, all its care, its intelligence, all its will, so that such things are not! I say that such facts in a civilized country, engage the conscience of the whole society,

[For all your efforts] gentlemen, you have done nothing as long as the people suffer! As long as those in the prime of life and work are without bread, as long as those that are old and have worked are homeless! It is not only your generosity that I appeal to, it is your wisdom, I implore you to think. You have made laws against anarchy, now make laws against poverty!”
Victor Hugo, Speech to Legislative Assembly, 9 July 1849

[h/t Matt Davies, plus a combination of Google Translate and remnants of schoolboy French.....]

Sanity is funny; bashing the bashers on fair trade; MDGs for the top billion; a moratorium on geo-engineering?; Africans’ views of China; new diseases and vaccines v clean water: links I liked

The best 50 placards from Jon Stewart’s Rally to Restore Sanity, to go along with the one I put up on Friday [h/t Alex Evans]

Bashing the bashers on fair trade. The Guardian’s John Vidal takes aim at the latest anti fair-trade report

Update: OK, no-one like’s Vidal’s piece – anyone seen anything more rational on the IEA paper?

More on what MDGs for the top billion might look like, c/o the UNDP’s Olav Kjørven. My previous post on this is here

A de facto moratorium on geoengineering is adopted by Parties to the Convention on Biological Diversity, according to Third World Network. Has anyone told the geo-engineers? Not if this week’s Economist is anything to go by.

Update: Fred Pearce in the New Scientist thinks its only a moratorium on projects that could affect biodiversity, and anyway, no-one has a clue how it would be implemented.

What do Africans think of China?

“Donors provided about $0.78/DALY (disability-adjusted life year) attributable to non-communicable diseases (NCDs) in developing countries in 2007, compared to $23.9/DALY attributable to HIV, TB, and malaria.” A new CGD paper looks at the growing but largely ignored development issue of diseases linked to lifestyle – obesity, alcohol, tobacco, inactivity etc.

But vaccines aren’t always the best answer, especially when they’re the result of drug companies hustling the aid industry in search of easy profit – clean water can be a lot more effective (and cheaper) [h/t Catherine Matheson]

And here’s a couple more of those placards…….

What development issues do we need more research on?

Every development research paper I ever absent-mindedly skim pore over with fascination seems to end with NMR (needs more research) – a blatant piece of self-justification, but usually justified (anyone got any candidates for areas where we need less research? Anything

Top placard from Jon Stewart's recent Rally to Restore Sanity

involving cross country regressions or ‘discourse analysis’ perhaps?) But research on what? Research funders are ever-hungry for the next big idea, preferably a few years in advance in order to allow the research machine to lumber into action in time to produce some useful results when they are needed.

So when asked recently for my suggestions to add to the customary list (governance; food security; civil society; technology; beliefs and values; risk and resilience; urban etc) of possible focus areas for research, I tried a change of tack. Rather than thematic areas, what about some cross-cutting ones, for example:

1. The role of shocks in triggering change: research papers are usually written as if policy changes are decided in some University Senior Common Room, by enlightened leaders who debate the evidence and then calmly decide on the necessary changes. In reality, the political process is far more chaotic than that, and big shifts are often linked to big shocks. Examples from the UK include women’s suffrage (World War One) and the creation of the Britain’s National Health Service (World War Two). In the developing world, natural disasters often lead to political change (Ethiopia, Nicaragua), as do wars and civil conflict (Rwanda). So how well do we understand the situations in which different kinds of shocks do/don’t trigger change?

2. The limits of measurement: the metrics fundamentalists are in the ascendant at the moment, arguing that Einstein was wrong and everything that counts can be counted. That may be true in theory (discuss) but in the real world of harassed civil servants, spending cuts and intense pressure for Value For Money, the easily measured (vaccinations, schoolrooms, roads) is highly likely to squeeze out the tricky-but-vital stuff (rights, empowerment, well-being, insecurity). The current debate is unhelpfully polarised between true believers and angry rejectionists, so how about a more distanced look at what measurement can/can’t achieve in a world of limited resources. How far have we got in developing cheap and practical ways to include the tricky stuff in our metrics? What alternatives are there to crude metrics that can help us judge the success/otherwise of a particular intervention, and provide similar levels of accountability?

But I’d be interested in hearing from you guys – what development topics have you been reading/thinking about that might warrant that awful cliché ‘out of the box’. Candidates from this blog include obesity, ageing and disability, interestingly all issues that transcend old ‘North-South’ distinctions. What others have you got up your collective sleeves?

And yes, I realize that this obsessive search for funky new ideas is a bit of a problem if the real obstacles to development are the age-old themes of poverty, skewed land rights, lack of health and education, gender injustice, discrimination etc. All very boring, unless you happen to be experiencing them directly. It’s harder to get research funding (or academic credit) for ‘more of the same’, even if that’s what needs doing. Anyone seen any good advice on how to dress up old issues as new ones in order to secure funding?

Honourable mention (and who knows, maybe massive injections of funding) for the best suggestions. I may even take it to a vote……

Is the IMF getting serious about inequality? Looks like it

Is the IMF going socialist? Hardly, but on Monday Dominique Strauss-Kahn, its Managing Director, gave a pretty extraordinary (and welcome) speech, entitled “Human Development and Wealth Distribution”. Here are a few excerpts:

“Adam Smith—one of the founders of modern economics—recognized clearly that a poor distribution of wealth could undermine the free market system, noting that: “The disposition to admire, and almost to worship, the rich and the powerful and…neglect persons of poor and mean condition…is the great and most universal cause of the corruption of our moral sentiments.”

This was over 250 years ago. In today’s world, these problems are magnified under the lens of globalization….. Globalization had a dark side. Lurking behind it was a large and growing chasm between rich and poor—especially within countries. An inequitable distribution of wealth can wear down the social fabric. More unequal countries have worse social indicators, a poorer human development record, and higher degrees of economic insecurity and anxiety. In too many countries, inequality increased and real wages stagnated—failing to keep up with productivity—over the past few decades. Ominously, inequality in the United States was back at its pre-Great Depression levels on the eve of the crisis.

Inequality may have actually stoked this unsustainable model. In countries like the United States, borrowing seemed to allow ordinary people to share in the rising prosperity. Like the Great Depression before it, the Great Recession was preceded by an increase in the income share of the rich, a growing financial sector, and a major rise in debt. Inequality could also be behind the Chinese export-oriented model, since solid domestic demand needs a healthy middle class, while a low exchange rate goes hand-in-hand with a low real wage. Of course, the unbalanced pattern of growth had a variety of causes, but we would be foolish to ignore the distribution of wealth.

Inequality goes against notions of fairness and solidarity, but it also threatens economic and social stability. This is especially true in poorer countries. Inequality can dampen economic opportunity, by preventing the poor from accessing the financing needed to pursue profitable investments. It can divert people toward unproductive activities. It can make countries more prone to adverse shocks—with fewer people able to dip into savings during bad times, the decline in growth is larger.

The invisible hand must not become the invisible fist.

An immediate task is to end the scourge of unemployment. The crisis threw over 30 million people out of work, and in the coming decade, more than 400 million young people will be looking for their first job. So clearly—growth is not enough, we need growth for jobs. And jobs are not enough, we need decent jobs—so that all can benefit from the rising tide.

We need labor market policies to focus on job creation. We need opportunities for all to prosper, through better education and training, as well as help for small businesses.

Tax and expenditure policies can support fairness and economic stability. Adequate social safety nets are essential, including decent unemployment benefits. We should also make sure that workers have adequate bargaining power, especially if this lies at the root of rising wage inequality. Collective bargaining is important. But we must avoid dual labor markets that create stark divisions between protected insiders and excluded outsiders.

The last great period of globalization—in the decades leading up to the First World War—held a lot of promise, but it ultimately came crashing down with thirty years of brutal war and economic devastation. It happened once, and it can happen again. The recent crisis was a wake-up call. We avoided a second Great Depression, and we learned many lessons. But we still have a long way to go.”

This comes on top of other interesting signs of a changing culture at the Fund, e.g. its relatively progressive stance on international financial taxes. Anyone would think DSK wanted to be President of France or something…….

[h/t Steve Price-Thomas]

Annual cost of global environmental damage? 11% of world GDP. And investors need to sort it out.

Ever wondered how much global environmental damage is caused by human activity? A new study puts it at 11% of global GDP ($6.6 trillion), a third of it caused by the world’s 3,000 largest companies.

The study was commissioned by two UN-backed initiatives, Principles for Responsible Investment and the UNEP Finance Initiative with a clear purpose in mind. They are trying to get the really huge institutional investors to take environmental stewardship seriously.

Their argument is, I think, a good one: the big investors, like large pension funds and insurance companies, hold shares in companies operating in every business sector, and increasingly with a global spread. That means they are ‘universal owners’ – the fate of their investments depends on whether the global economy as a whole prospers or sinks, not on whether one or other company does better or worse. That means if a company does well by messing things up for everyone else (e.g. by pollution, or dodging competition rules, or evading tax), a universal owner should be worried about the impact on its overall portfolio. In effect, it should think more like a responsible government, than a short termist investor. In economic terms, there are no externalities for a universal owner. The bible on this issue is ‘The Rise of Fiduciary Capitalism’ by James P. Hawley and Andrew T Williams, which I recommend.

Here’s how they reached the $6.6 trillion figure – as you can see two thirds of it came from carbon emissions, but water abstraction is a notably high second place.

So what should universal owners do? The report recommends they first make it their business to evaluate the impacts and dependence on natural resources of the companies they hold shares in.

They should then incorporate information on environmental costs and risks into their engagement with the companies, the way they vote at shareholder meetings etc in order to try and reduce the environmental impacts of portfolio companies.

They should also join forces with other investors to engage both with individual companies and with public policy makers and regulators, to encourage policies that promote the internalisation of costs and establish clear regulatory frameworks.

If their shareholdings are managed by investment managers, universal owners should demand regular monitoring and reporting on how they are addressing fund exposure to risks from environmental costs and how they are engaging with portfolio companies and regulators.

They should also encourage rating agencies, sell-side analysts and fund managers to incorporate environmental costs into their analysis.

and, (of course), they should support further research – anybody ever seen a research report that concludes no further research on the issue is required?

[h/t Hugh Cole]

P.S. The vote box on the right for yesterday’s post went up late, so I’m running it til the end of today – click on whether NGOs should spend more money campaigning with older people

Are Grey Panthers the next big thing in campaigning?

It’s probably a sign of my advancing years, but I’ve been wondering whether NGOs are missing a trick by endlessly targeting young people to become their activists. Sure, they’re the leaders of tomorrow, but what about us wrinklies? This all came to a head when I went out for a beer with a friend of mine who recently turned 60. He has money, contacts in the music business and elsewhere, he’s an entrepreneur, and a progressive, with decades of history in the co-op movement. And now he’s retired with time on his hands. But all he ever gets from NGOs like Oxfam is appeals for money, never for his time or experience.

Think about it, the 60s generation now passing into retirement has money, skills, networks and time. Students have none of those. There are plenty of examples of  ‘old men (and women) in a hurry’ who are remarkably effective lobbyists, from retired CEOs to the formidable nuns I used to work with at CAFOD, with decades of activism under their belts. Why aren’t we harnessing them properly?

So what might a ‘Grey Panthers’ movement look like? It would have to be very different from your standard NGO campaign. GPs are too savvy and experienced to want to just send off standard emails, join demos or sign up for Facebook pages. Tactics would have to be more tailored to their experience. For example, here’s how an elite influencing GPs model could work:

1. Find a few champions – typically retired captains of industry who now want to give something back. Find an appropriate mission for them – if they were in the construction industry, set them loose on corruption in contracts; if they were civil servants, maybe a lobby of their former departments; if ex-bankers, the Robin Hood Tax beckons.

2. Ask them to pull together a group of like-minded GPs (maybe trawl your database for a few candidates to add to their own contacts) and draw up a two year strategy for lobbying and advocacy on the relevant issue.

3. Give them some kind of franchise to campaign on your behalf and use your brand, but as a semi-autonomous group. They would need to report back, and be accountable to the organization, but they would have a high degree of independence and initiative so they can use their experience to maximum effect.

The only example I’ve come across is the Amnesty International Business Group, which was founded by a classic

Sir Geoffrey (third from right) networking

old-man-in-a-hurry, Sir Geoffrey Chandler. A former senior manager at Royal Dutch/Shell, Sir Geoffrey was a force of nature, more than willing to march into boardrooms and unleash his cut glass accent to promote human rights in the private sector. And if there’s one thing such people understand, it’s how to get round internal obstacles to progress, and spot management excuses for inaction (whether in the lobby target or, indeed, the NGO).

The story of the AI Business Group also shows the difficulties (sorry, I mean ‘challenges’) that can go with working with a bunch of self-confident, assertive older people. It was wound up three years ago, partly because, as one insider told me ‘a semi-autonomous group of grey eminences that report back and consider themselves to be accountable was rather more than some of them were prepared to accept, especially when there were differences of strategy/approach with regard to business and human rights’. NGOs hosting GPs may have to manage a trade-off between effectiveness and the brand risk posed by a bunch of stroppy mavericks doing their own thing.

Some of this is happening already. At the global level, there are ‘the elders’ (they sound a bit like a bad sci-fi plot, but the intentions are clearly good); groups like HelpAge International organize older people to campaign on ‘their’ issues, like pensions. But it shouldn’t stop there. I’m not a campaigner these days, but it seems like the Grey Panthers are a huge, untapped resource that is only going to grow as our societies age. So why aren’t there more such groups? Over to you for ideas, suggestions or examples of GPs in action, and for would-be GPs to say what would work for them.

Also, in a flagrant steal from Simon Maxwell’s blog, I’m going to start running the odd online poll. First up, should NGO campaigning devote more resources to older activists? And no easy ‘both – and’ responses allowed: more time on grey panthers means less on students and youth. If the technology works, there should be a poll at the top-right of this post. Over to you.

Update: The comments have been very helpful in clarifying what NGOs are/aren’t already doing. They involve lots of older people in grassroots campaigns, but they do not seem to be using them in an ‘ambassadorial role’ as described in the post, a la Amnesty Business Group. That’s the bit I think we should reconsider.

My first podcast; Jeff Sachs v the rest; Stiglitz meets Robin Hood; disability and development; men and gender; women’s economic empowerment and Africa’s middle classes: links I liked

Want to hear me rant on about food security, hunger and development? Now’s your chance on this Guardian podcast. Interviewer is Felicity Lawrence, clips from Olivier de Schutter, Jayati Ghosh and Raj Patel.

Very promising wonk-wars building over quite what the Millennium Villages Project is trying to achieve, and how it will assess its success, judging by these latest posts from Aid Watch and Chris Blattman. Late news: an online petition to reschedule a cancelled debate between Sachs and his critics. That is as rough as it gets in aid-land……

Joe Stiglitz, nobel laureate and enfant terrible of the international economics circuit held a press conference recently to discuss financial transaction taxes and the state of the international economy.

Lawrence Haddad reviews a book on a Cinderella issue in development – disability. About time.

“The way men and women are portrayed in the field of Gender & Development (GAD) does little to encourage men to see gender equality as their issue too”, argue Andrea Cornwall and Emily Esplen in the latest edition of the ejournal ‘Contestations’. After 30 years of feminist engagement with development, they say ‘it is proving harder than many of us had hoped for gender and development policy and practice to move beyond familiar stereotypes – women as abject victims or splendid heroines, men as all-powerful perpetrators’. It may have an esoteric title, but Contestations clearly knows a thing or two about marketing. The last edition, entitled “Sexual pleasure empowers all!”, got more than 240,000 hits when it was translated into Chinese. [h/t Guardian]

Yay, another online consultation, this time from DFID on women’s economic empowerment

Africa’s middle classes – a photo project [h/t Texas in Africa]