Category Archives: government

European Spring alliance will advocate a Green New Deal for Europe

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Yanis Varoufakis co-founder of DiEM25 (Democracy in Europe Movement) and former Greece finance minister, has advocated a Green New Deal for Europe.  Towards the end of an article (Dec.2018) he wrote:

This is what Democracy in Europe Movement 2025 – which I co-founded – and our European Spring alliance will be taking to voters in the European parliament elections next summer. See video here.

The great advantage of our Green New Deal is that we are taking a leaf out of US President Franklin Roosevelt’s original New Deal in the 1930s: our idea is to create €500bn every year in the green transition across Europe, without a euro in new taxes.

Here’s how it would work: the European Investment Bank (EIB) issues bonds of that value with the European Central Bank standing by, ready to purchase as many of them as necessary in the secondary markets. The EIB bonds will undoubtedly sell like hot cakes in a market desperate for a safe asset. Thus, the excess liquidity that keeps interest rates negative, crushing German pension funds, is soaked up and the Green New Deal is fully funded.

Once hope in a Europe of shared, green prosperity is restored, it will be possible to have the necessary debate on new pan-European taxes on C02, the rich, big tech and so on – as well as settling the democratic constitution Europe deserves.

Perhaps our Green New Deal may even create the climate for a second UK referendum, so that the people of Britain can choose to rejoin a better, fairer, greener, democratic EU.

Read the whole article here.

Postscript

On Monday, March 25, DiEM25 and European Spring gathered in Brussels to present the women and men from all corners of Europe who will take our common political programme to the ballot on May 25 – like Génération.s’ Benoît Hamon and LIVRE’s Rui Tavares among others – at the BOZAR theatre. This is where we officially launched our European Spring campaign – embodied in a New Deal for Europe, a set of ambitious economic proposals to save Europe from itself by transforming it.

 

 

 

 

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The Green New Deal infrastructure programme

Global weather patterns have increased attention on the adverse effects of climate change and unease grows about the imminence and widespread threats posed by automation.

In the Guardian, Colin Hines, convener of the Green New Deal Group, described the Green New Deal infrastructure programme which would mitigate such adverse effects. He pointed out that the UK could contribute to substantially reducing its domestic carbon emissions while addressing the serious threat of rapid and ubiquitous automation raised by Yvette Cooper. The report may be read here.

Jobs created in every constituency

Two major labour-intensive sources of local jobs were advocated: face-to-face caring in the public and private sector – frequently discussed – and infrastructural provision and improvements. Both are difficult to automate and can’t be relocated abroad

Infrastructural provision and improvements are crucial to tackling climate change, prioritising energy efficiency and the increased use of renewables in constructing and refurbishing every UK building.

In transport the emphasis would be on increased provision of interconnected road and rail services in every community, encouraging electric vehicles for private use.

Hines added that apart from the advantages of improving social conditions and protecting the environment, this programme will have two further very politically attractive effects:

“The majority of this work will take place in every constituency and will require a wide range of skills for work that will last decades. It would help to improve conditions and job opportunities for the “left behind” communities in the UK.”

 

 

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The right to repair

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In a recent New Economics Foundation newsletter, Duncan McCann focussed on what has long been known as planned obsolescence, citing the example of Apple, who, like many manufacturers, makes it expensive or impossible to repair its products. This means that their products have to be thrown away, creating huge amounts of electronic waste.  

The tide is turning

Meta, the news channel of the European Environmental Bureau (EEB), reports that Apple has been fined €8 million by an Australian court for refusing to fix iPhones and iPads that had been previously repaired by a third party.

The Manchester Declaration by the UK community repair movement (follow the link to see a wide range of members) calls for the repair of products, especially electronics, to be made more accessible and affordable, while ensuring that product standards that make products easier to repair are adopted.

The Restarters lobby the European Parliament

Last year Meta reported that the European Parliament voted in favour of measures to make consumer goods, including smartphones, longer lasting and more easily repairable by design. NEF adds that in December 2018, EU member states voted to set new manufacturing standards for fridges and freezers, with additional product groups being considered over the coming months.

Design decisions for products limit or totally preclude repair

Duncan McCann explains that manufacturers often make design decisions for products that limit or totally preclude repair: “Product parts are very often glued or welded together, which makes them hard to replace. Manufacturers use customised screws and fittings: when Apple released the iPhone 4, the phone was put together using a new screw for which you could not buy a screwdriver. This forced users to go through Apple to get the product repaired. Apple also used the repair process to retroactively fit these screws to all iPhones”.

From design and a lack of spare parts, to software and terms and conditions, manufacturers are using a whole range of tactics to block consumers’ ability to repair products.

In order to enable consumers to repair their phones, fridges, and other goods, manufacturers have to provide replacement parts, diagnostic tools and service manuals to all who need it — from individuals to independent repair shops. They also need to recognise the rights of consumers to open everything we own, modify and repair our stuff, and unlock the software in our products.

Software upgrades can be incompatible with older models and force people to buy new products when they expire.

Apple took this further in April 2018 when they disabled all iPhone 8s that had had their screens repaired by independent repair shops. Manufacturers can also control access to the diagnostic software needed to troubleshoot problems, limiting who can repair them.

The final tactic is to use warranties and terms and conditions to advise against or forbid certain actions, like opening the device to fix it.

Sony has various stickers that must be broken to open a Playstation 4 that specifically state that tampering with them invalidates the warranty. Although legally dubious, these signposts are an effective deterrent for people trying to repair their gadgets, and force them through the official repair chain.

Duncan McCann (left) asserts that manufacturers see repair from unauthorised vendors as a direct threat to their revenue, in terms of new product sales and profits from in-house repairs and ends:

“We urgently need legislation that forces manufacturers to design products to improve their repairability, make spare parts available to everyone at reasonable costs, update software responsibly, and not abuse terms and conditions”.

 

 

 

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Prem Sikka: “If austerity is over, the Chancellor must present a plan to invest in our economy”

Chancellor Philip Hammond’s number one focus should be investing in a sustainable economy, argues Prem Sikka, Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex. 

In a recent article, Sikka (below right) observes that in the face of Brexit uncertainties, many businesses are withholding investment. But to meet the challenge, the government will need to abandon almost of its headline polices.

He points out that historically, the private sector has shown little appetite for long-term risks and the state invested heavily in biotechnology, telecommunications, postal, information technology, utilities, shipping, railways, airlines and many other long-term industries.

For the last 40 years, the government has privatised most of these industries and relied on a variety of tax incentives to persuade the private sector to invest.

Sikka’s verdict: the results have not been encouraging – investment slumped

The lowest ratio of investment to GDP in EU countries was recorded by Greece (12.6%), followed by Portugal (16.2%) and the United Kingdom (16.9%). And since the 1990s, the UK R&D expenditure has fluctuated between 1.53% and 1.67% of GDP, well below the EU average.

Successive governments made a deliberate decision to prioritise the service sector though it is the manufacturing sector which generally generates more skilled, semi-skilled and higher paid jobs. Its multiplier effect – the ability to generate additional jobs – is also greater as the items need to delivered, maintained and repaired. Yet the manufacturing sector has continued to shrink and now accounts for around 9% of the UK GDP compared to 30% in China, 20% in Germany, 12% in the US and 19% in Japan.

Without adequate purchasing power, people cannot afford to buy goods and services and that itself discourages investment.

Investment, innovation and R&D need to be accompanied by sustainable demand. Since 2010, the government has been wedded to building a low-wage economy. Workers’ share of the GDP for the second quarter of 2018 stands at 49.3% of GDP, compared to 65.1% in 1976.

At the same time, the increases in gas, water, electricity, rents and travel costs have further eroded people’s purchasing power. The inevitable consequence of squeeze on household budgets has been the closure of shops such as Carpetright, Jamie’s Italian, Maplin, Marks & Spencer, Mothercare, Poundworld, Prezzo and Toys R Us, just to mention a few.

The Chancellor needs to find ways of boosting people’s purchasing power

This could be done by curbs on profiteering by utilities and train companies, raising the minimum wage and state pension, ending gender discrimination and pay rise for women and public sector workers, abolition of university fees, and ensuring that the tax-free personal allowances for income tax purposes match the minimum wage.

Sikka emphasises the urgent need for state investment in providing social infrastructure, transport, house-building, green industries, artificial intelligence, space and other industries and Hines proposes a Green New Deal infrastructure programme, offering jobs in every constituency.

In the Guardian, Colin Hines, convener of the Green New Deal Group, recently wrote about a GND infrastructure programme which would contribute substantially towards reducing Britain’s domestic carbon emissions and also address the serious threat of rapid and ubiquitous automation raised by Yvette Cooper.

Two major labour-intensive sources of local jobs were advocated: face-to-face caring in the public and private sector and infrastructural provision and improvements. Both are difficult to automate and can’t be relocated abroad.

Infrastructural provision and improvements are crucial to tackling climate change, prioritising energy efficiency and the increased use of renewables in constructing and refurbishing every UK building. In transport the emphasis would be on increased provision of interconnected road and rail services in every community, encouraging electric vehicles for private use. Hines added that the advantages of this programme include:

  • improving social conditions,
  • protecting the environment,
  • offering opportunities in every constituency,
  • requiring a wide range of skills for work that will last decades
  • and helping to improve conditions and job opportunities for “left behind” communities in the UK.

Sikka ends: “Neoliberals will no doubt respond with the usual comment ‘we can’t afford it.’ But can we afford stagnation, economic decline, social conflict and instability? The answer is a clear no. A government which can bailout banks with billions oquantitative easing, appease corporations and wealthy elites with tax cuts and guarantees profits through the Private Finance Initiative (PFI) and subsidies to film companies, can also find resources for economic welfare. If it chooses not to, it should make way for someone who can”.

 

 

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Yunus advocates an additional financial system

Quartz magazine’s  Eshe Nelson spoke with Nobel prize-winner Mohammed Yunus at the One Young World summit at The Hague, which brings together 2,000 young people from 190 countries who are working to improve their societies, and the world at large, by fighting to end sexual violence, improve access to education and demand justice and human rights accountability from governments. The conversation has been summarised for this website.

Yunus believes that the whole capitalist system has failed: “The very number of poor people shows that it has failed. It pushes all the wealth to the top continuously and the top became very fat and owned by few people. What kind of system is that? We have to redesign the system”. He continues:

“Today, there’s only one kind of financial institution, which are banks for the rich. You are asking the banks for the rich to lend to the poor. The very system is designed in a completely different way. This machine doesn’t work for them. The way to really address the problem of the rejected people from the financial system is to create a new financial system. Capitalism went wrong because it started with the wrong premise. It misrepresents human beings and says we are driven by self interest. But human beings are both driven by self interest and selflessness.

The economic system forgot the selflessness part, and once we include it into the business, you have two kinds of business:

  • business to make money
  • and business to solve problems.

Then the economic system becomes different”.

In the 1970s, Yunus began work on what would become Grameen Bank in Bangladesh, which provides small loans to entrepreneurs, primarily women, who otherwise couldn’t access funds due to a lack of collateral and other resources. Grameen Bank takes deposits to finance the loans it offers; it decided in 1995 that it wouldn’t accept donations – for Yunus, ending poverty isn’t about charity. Last month, the 10-year-old US division of Grameen announced that it had provided more than $1 billion in loans to 106,000 women. Over the next decade, it plans to provide $1 billion in loans every year, and nearly double the number of branches, to 42. He comments:

“Microcredit still remains the same as when we started in Bangladesh 40 years back. But many more people around the world have started microcredit programs. Some took advantage of credibility of the word “microcredit”—they used it to make money for themselves, turning into loan sharks. After 42 years it’s not gone into the mainstream. Microcredit has remained at the NGO level, a footnote in the financial sector.

“Earlier this year, the World Bank showed how little progress there has been: The proportion of people with active accounts has stagnated and the gap in financial inclusion between men and women has stayed the same.

The very word “inclusion” is suspect. This is not about inclusion; it’s about having a separate kind of banking institution to address the people at the very bottom.

“Governments are used to giving grants to poor people for survival. Whether you are a rich country or a poor country, every country does that. Instead of giving grants, it’s much cheaper to do it as a loan. The money comes back, covers its own cost, and is sustainable. It’s a market-based system. Whichever way you do it, it has to create income. In order to create income you have to encourage people to become entrepreneurs”.

His view on giving cash transfers to entrepreneurs versus credit

“If it comes as a grant then there’s no responsibility, and the money can be misused easily. A loan comes with responsibility: you have to create a return from it. People become very relaxed if they are guaranteed money because they will get it again. If you fail, the second round of cash transfers will come, so why make an effort?

“The welfare system never produced any entrepreneurs. The welfare system in every country, you don’t see anybody coming out. They go in and stay there because you take care of them. Universal Basic Income is the same thing; it’s a welfare system. Charity doesn’t create activity. Charity is a dependence creation. Dependence creation is always a negative thing for a society. Systems should be geared towards creating activity. Creating entrepreneurship rather than dependence. Taking risk. That’s what human beings are for”.

 

 

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Brexit: moving away from globalisation towards self-reliance

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Colin Hines has drawn attention to a 2017 report written by Victor Anderson and Rupert Read entitledBrexit and Trade Moving from Globalisation to Self-reliance’, published and launched by Green MEP Molly Scott Cato.

Although it regrets our leaving the EU and wishes we wouldn’t, the report is written as an alternative approach assuming we are outside the EU. Its Executive Summary states: “This report puts on to the political agenda an option for Brexit which goes with the grain of widespread worries about globalisation, and argues for greater local, regional, and national self-sufficiency, reducing international trade and boosting import substitution”.

Hines continues: “As I am aware it is the first time a report from a politician isn’t clamouring to retain membership of the open border Single Market”

It details the need for an environmentally sustainable future involving constraints to trade and the rebuilding of local economies. Indeed the report actually calls for ‘Progressive Protectionism’ rather than a race to the bottom relationship with the EU. Some of the points made on page 14:

  • Reducing dependence on international trade implies reducing both imports and exports.
  • It is therefore very different from the traditional protectionism of seeking to limit imports whilst expanding exports.
  • It should therefore meet with less hostility from other countries, as it has a very different aim from simply improving the UK’s balance of payments.
  • It could be described as ‘progressive protectionism’, or ‘green protectionism’.

For detailed proposals on how this could and should be done, see http://progressiveprotectionism.com/wordpress/

He adds, “Also ground-breaking in Green Party literature of late is its discussion of the arguments for and against managed migration. Its sensitive handling of this contentious issue for many in the Greens does mark an important step forward and hopefully will help to start an internal debate about whether or not the party should reconsider its open borders approach”.

Hines feels that we won’t leave the EU – and central to that happening will be a realisation across Europe that to see off the extreme right they must manage internal migration and protect domestic jobs. At that point the reasons for supporting Brexit for most are no longer valid.

He ends: “This timely report makes a crucial input to the debate, one that will rage for the next two years”.

 

 

 

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What is the main solution to the UK’s weak productivity growth?

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Chris Giles (FT) is examining why Britain is suffering from weak productivity growth. As part of his series, he wants to hear what readers think is the main solution to the UK’s weak productivity growth since the financial crisis of 2008. Share thoughts directly with him at ask@ft.com. Some may be published in a follow-up piece.

Prem Sikka, Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex, who tweets here, has already published thoughts on the subject. Briefly:

UK company dividends are high & investment low

This lack of investment and innovation means that the country’s productivity is low. The output per hour worked in the UK is about 16% below the average for the rest of the G7 advanced economies. The UK productivity is around 27% below that of Germany – despite the UK labour force working almost the longest hours in the western world and the country is neither rebuilding its manufacturing base, nor developing new technologies.

He itemises the boardroom dominance of accountants:

Sikka then argues that short-termism, leading to the neglect of the long-term prosperity of companies and the economy, has been accelerated by the boardroom dominance of accountants.

Compared with other developed countries, UK companies are paying out the highest proportion of their earnings in dividends.

According to the Bank of England’s chief economist, in 1970 major UK companies paid £10 in dividends out of each £100 of profits – but by 2015 the amount was between £60 and £70. 

And at the same time as paying this large percentage in dividends many companies were downsizing labour and reducing investment, lagging behind the EU average:

Sikka asserts that the most effective way to disrupt the accounting-think prevalent in boardrooms is by appointing directors who are focused on the long-term – appointing employees and consumers so that they can challenge the obsession with short-term returns and promote investment in productive assets.

Giles quotes Lord Andrew Tyrie, new chair of the Competition and Markets Authority, who told companies in July to stop “ripping people off” or face the full force of the watchdog’s sanctions. His focus is mostly on regulated markets such as banking and energy, where companies are accused of exploiting vulnerable households by extracting a “loyalty penalty” if they do not switch suppliers.

Lord Tyrie told MPs during his confirmation hearing for the CMA in April that retail banking and auditing were parts of the economy that did not work in the interests of the public or productivity.

Scott Corfe, chief economist at the Social Market Foundation, a think-tank, claimed that pro-competition moves had some potential for raising productivity growth rates. He suggested that consumers should be switched between energy suppliers automatically after several years to stop companies exploiting customer inertia.

See this video: https://www.ft.com/content/ae25a5bc-9405-11e8-b747-fb1e803ee64e (possible paywall)

After noting that since the mid-2000s, British industries have become more concentrated, with fewer companies enjoying larger market shares, Giles focusses on this ‘one key question’:

Is inadequate competition contributing to Britain’s feeble growth in output per hour worked? 

 

We look forward to the next article in the series.

 

 

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