Showing posts with label financial crisis. Show all posts
Showing posts with label financial crisis. Show all posts

Monday, October 31, 2016

A World Parliament: Precisely the Collective Decision-Making Our World Needs

Although obvious, it bears repeating and reflecting on the fact that we live in a world that is deeply interconnected and interdependent.  The strides we humans have made in communications, transportation, trade and finance, have brought to the point in which our destinies are intimately linked together.  Our interconnectedness has, indeed, made of us a single organism.  While there are many benefits to be derived from such an interlinking of destinies, there are also inevitable downsides.  The greatest downside is that we are increasingly susceptible to systemic, collective risks.  We do not have to look far to identify some of these systemic risks.  Chief amongst them are climate change and nuclear proliferation, with all the dangers they pose to our very survival. These risks also include terrorism, migration, global financial crises, genocide and other egregious human rights abuses, to name a few more.

The collective and systemic nature of these grave risks and dangers demands a collectively agreed-upon response.  To arrive at such a collective response, we must consult, cooperate and act together. And yet, we find ourselves in this bizarre position of lacking the very collective decision-making and enforcement institutions that our world so clearly and desperately needs.  Our systems of global governance are extremely primitive. Designed as they were to address the needs of a bygone time, they are astoundingly unfit to address the problems of the 21st century and beyond.  One of the great thinkers of our time, Kishore Mahbubani, has summed up our current state of affairs perfectly.  He likens humanity to a ship carrying 7 billion people.  The ship is divided into 193 cabins. While each cabin has its own captain and crew, the ship as a whole lacks both a captain and crew.  It is consequently adrift on the seas, without anyone to guide it therefore finds itself at the mercy of gales and storms.

So, what can we do?  Before we begin, we need to get clear about one thing:  human institutions, policies and laws are there to serve our well-being and happiness.  It makes no sense for us to sacrifice ourselves to uphold any of these that no longer serves our purpose.  So, if what we really need is a collective decision-making institution to determine determine things like the the kinds of energy we can use going forward to ameliorate global warming; or the means of ensuring that all nations have equitable access to clean energy to meet their needs and to clean water and sufficient food; or effective ways to regulate arms production and put an end to the proliferation of nuclear weapons, and if our current institutions do not have the capacity to do what is needed, then isn't it time to think about creating a World Parliament that can do these things?

The two most important elements we need to think about and watch for in crafting an effective World Parliament are:

1.  Ensuring that the World Parliament has the requisite power and authority to pass binding laws in certain narrow spheres in which all nations and peoples have a collective interest.  These spheres, as mentioned above, include but are not limited to, climate change, the proliferation of nuclear and other weapons of mass destruction, and egregious human rights abuses including genocide.  In other words, we want to give this Parliament the kinds of powers that the current General Assembly of the United Nations (UNGA) lacks.  While UNGA provides a wonderful forum for appointed representatives of governments to come together for periodic consultation and discussion, it simply lacks the authority to pass laws that are binding on the nations of the world, because the UN Charter never gave it such authority.

2. Ensuring that the World Parliament we establish with the requisite authority to pass laws that bind us all in certain narrow areas of collective interest, properly and adequately represents all the peoples of the world and that there is no democratic deficit.  To achieve this end, the members of this Parliament should be directly elected:  The citizens of each nation should be able to elect their representatives to such a Parliament in proportion to the size of their population.  This election can, and ideally ought to be, confirmed by each government.  After all, many of us elect representatives to our local councils, state legislatures and national legislatures.  Given that we have now evolved into a global community, why can we not also elect our members to an international legislature?

Over the years, there have been some proposals regarding interim steps we can take towards the establishment of such a Parliament.  One such proposal made in 2015 is that we begin by creating a UN Parliamentary Network to serve as an advisory body to UNGA.  The idea is that this Network would bring together parliamentarians from national governments to New York at least once a year, in September, to share with UNGA grassroots concerns (including those of the private sector and civil society) about matters that affect global security and justice worldwide, and to inject fresh ideas into the debates at UNGA.  The problem with this suggestion is that it does not address the fundamental deficit of binding decision-making ability at the UN.  In other words, adding a Network that is to function essentially as an advisory body to an existing body (UNGA) that is already toothless in terms of its ability to pass binding legislation for the collective good, does not move the ball forward. On the contrary, it could be viewed as merely adding another cumbersome layer to an already-bloated UN bureaucracy.

The Network if composed of parliamentarians that have been elected in their nation-states, as currently proposed, does, however, go some way towards addressing the problem of democratic deficiency.  Although it would be even better if its members were directly elected by their citizens.  As this proposal evolves, it is important to ensure that the members of the Network are truly in touch with the various grassroots communities in their countries and are able to convey their true concerns and sentiments and are not relying solely or mainly on civil society and the private sector for their information.  Although civil society has an important role to play in international life, the truth is that NGOs are unelected and self-appointed and tend to function more like lobbying organizations.  They generally do not represent the majority or even any minority of people. Yet, by effectively networking and mobilizing their members they can wield a disproportionate influence on decision-making and shaping of global politics.  Moreover, NGOs have their own agenda and sources of funding and their nature, impact and interests have become almost impossible to measure according to scholars.  This should lead us to ask the important question: why should they have the ear of international decision-makers when the citizenry do not?

A different proposal for an interim step to be taken towards establishing a World Parliament,  one that has garnered some support, is that we establish a World Parliamentary Assembly.  Like the Parliamentary Network, the idea again is that this Assembly serve as a consultative body to the UNGA.  The proposed logic is that while the UNGA represents governments (its members being the appointees of member governments), this Assembly would form a second chamber that represents the voice of the people.  The argument is that such an Assembly would be similar to the Common Assembly that served the European Communities (the European Economic Community, and its two sister communities, the European Coal and Steel Community and the European Atomic Energy Community). However, we should stop and remember that the situation in Europe was very different to the state of play of international institutions today.  The three European communities already had a very strong legislative and executive arm (the Council of Ministers and Commission respectively) with the authority to propose, pass and enforce laws that bound their member states.  Under those circumstances it made sense to inject the voice of the citizens of the members states into the decision-making process by creating a Parliamentary Assembly representing the people, and giving it a consultative role that would evolve over time to encompass co-decision-making powers.  By contrast, as of today, we have no institutions at the international level that resemble either the European Council of Ministers and the European Commission in their authority to propose and pass binding laws, therefore begging the question of the value to be gained by adding yet another purely consultative body to the mix of of institutions that lack decision-making powers.

Although the proposal for a Parliamentary Assembly does not address the binding decision-making deficit, it does seem to adequately address the democratic deficit.  The idea being put forward is that the Assembly initially be made up of national parliamentarians or representatives that are directly elected by the citizens of member countries. While this proposal addresses the problem of the democratic deficit at UNGA by providing for direct election, we are still left with the question of how adding a consultative body to UNGA -- a body that lack authority to pass binding international legislation -- will help us arrive at the collective solutions we need, in the form of binding laws, to address our gravest global challenges.

This brings us back full circle to the proposal for a World Parliament made at the beginning of this article, a proposal that addresses both the binding decision-making deficit as well as the democratic deficit.  Is it not worth focussing our energies on a global plan of education to raise awareness amongst the citizens of all nations of the need for and feasibility of creating such a World Parliament whose members are directly elected by the citizens of all 193 nations, with authority to pass binding international legislation in at least one or two narrow spheres of collective interest? It is worth the experiment:  As time goes on and this body develops capacity, confidence and wins the trust of the international community, we can consider adding to its powers in further areas of collective interest that require swift and effective collective decision-making.

Wednesday, July 8, 2015

The Greek Crisis: A Potential Stepping-Stone To Deeper Integration

Over the past five years, the world has been gripped in the suspense of an unfolding drama: that of the Greek sovereign debt crisis.  As the drama has moved towards its climax in the last few months, with Greece and the euro zone countries lurching from one nail-biting scene to another, the world has continued to watch and wait with bated breath, wondering what the ultimate outcome will be and worrying about its potential ramifications for the financial markets in Europe and beyond.

Despite the repeated injection of funds by Greece's creditors, namely the IMF, the ECB and the euro zone countries, Greece's plight remains dire: the country has lost 25 percent of its GDP over the past five years, the general unemployment rate is over 25 percent and double that i.e. 50 percent among the youth.  The country has strained and groaned under the imposition of austerity measures imposed by its creditors.  In the end, on June 26, her elected leaders chose to walk away from negotiations with creditors aimed at providing further bail-out funds in return for further austerity.  There followed a referendum in which the majority of Greek voters rejected bail-out terms offered by those creditors.

The European Union now finds itself in an unprecedented situation in which one of its members may default on a $3.9 billion in bond payments to the ECB on July 20th, having already earned the dubious distinction of being the first developed country to default on a loan from the IMF.  If the July 20 payment is missed, the ECB will likely cease propping up the Greek banks with emergency loans, Greece will plunge into bankruptcy and will have to start paying its bills in IOUs, all of which will probably lead it to exit from the euro. What the effect of such an exit will be on the financial markets in Europe and beyond and consequently on the global economy, is anyone's guess.

One of the problems with a Greek exit from the euro zone (commonly termed a "Grexit"), is that the monetary union was set up as a "no exit" union, meaning there are no legal avenues for those who have joined to leave it, and yet, as a practical matter, unless Greece and her creditors can come to terms before July 20, such an exit is likely to become a reality.  Even if this happens, however, there is nothing to stop Greece from staying in the EU although this relationship could rapidly become complicated if Greece finds herself unable or unwilling to follow the rules of the single market.  In the end, there is a chance that Greece may end up leaving the European Union.  Such a departure would set a terrible and unfortunate precedent for a Union that was committed to increasing its integration.  As the Economist points out "the long-term effect of an irrevocable union being partially revoked is unpredictable." 

What then, if anything, can be done to save the European Union from unraveling?

The answer may well lie in further integration and closer unity within the European Union.  Indeed, the American experience teaches us that further integration can be critical to solving Europe's financial crisis.  Most of us forget that American began life as a fiscal mess and that one of the main drivers for moving from a loose confederacy to a tighter federation was precisely the problem of the large debts that the thirteen American states had taken on during the revolutionary war and were finding themselves unable to repay. During the war each state had separately borrowed heavily from foreign powers. After the war, the states found themselves unable to repay what had become enormous debts.  The Confederation was hamstrung and unable to help, because it lacked the power to impose taxes and most states were not paying their share of assessments to the confederate government -- a condition that is familiar in the context of the European Union today.  Within the context of the American experience, the problem was further exacerbated because the states were printing their own money at will. The flood of paper money produced wild inflation in American economies.  The only solution was to move towards greater unity and integration by creating a federation with a central government capable of levying federal taxes that it could use to repay the foreign debts, or else risk disintegration.

The parallels with the EU's current dilemma are striking! One of the problems the European Union currently faces is the resistance by its member states to mutualizing liabilities, especially in the absence of mutualized responsibility, for example by being able to raise European-wide taxes to fund bail-outs or the ability to have shared decision-making over budgets, taxes and pensions in the first place.  As eminent economics experts have said, the crisis in Europe is at root a deep constitutional and institutional one rather than one of funding.  The real solution appears to lie in Europeans taking a quantum step toward deeper economic and political union which requires an acceptance that its member states must be willing to cede more sovereignty.

The insistence by EU countries on clinging excessively to sovereignty in the face of the suffering and chaos it is causing them individually and collectively, is not sensible.  Surely, policies and theories of how we organize ourselves as peoples and nations are there to serve our best interests and to lead to our well-being.  If they have ceased to do so and are patently injuring us, is it not time to reconsider and adjust them?  In this instance, giving up a modicum of sovereignty in accordance with clear rules, backed by collectively-created and shared enforcement mechanisms and agreeing upon sanctions for non-compliance that are applied even-handedly to all member states, may well go a long way to relieving the European Union of its current suffering and the Greeks of their plight.  While today it is the Greeks who suffer,  who is to say that in the absence of necessary reforms to the system, tomorrow other European countries like Spain, Portugal, Ireland or even France may not follow in its wake?

It was such a recognition that led the thirteen member states of the American confederation to take the momentous decision to fuse their interests by moving from a confederation to a federation, in which certain limited powers that affected their collective interests were delegated by them to a central government, while remaining powers were retained by the states themselves.  The Europeans might do well to examine closely this historical precedent that has resulted in the creation of a strong, unified country that overcame its debt problems and consider following suit by applying the adopting the principles of federalism to the European Union.  There is still time to use the Greek crisis as an opportunity or stepping stone, to create a watershed moment in the history of the European Union, one in which the obvious vulnerabilities of the common currency are recognized and addressed by taking swift, effective and unified steps to strengthen the EU by taking the next step towards creating a United States of Europe, as envisioned by Winston Churchill in the aftermath of the Second World War.






Saturday, January 3, 2015

Building a World Federation: The Key to Solving Our Global Crises



HOT OFF THE PRESS -- January 1, 2015!




Humanity has been passing through stages of collective growth towards integration and unity.  Our current collective crises––climate change, financial upheavals, proliferation of nuclear weapons, gross human rights atrocities, mismanagement of critical natural resources––manifest our passage through a turbulent adolescence.

Humanity should take the next step towards maturity by establishing collective decision-making institutions that can evolve into a world federation of nation-states.  Only then will we have a truly peaceful world.

If these topics are of interest to you, I invite you to read my new book the front cover of which appears above and recommend it to your friends, family and colleagues.

You can get a copy of the book either in digital form or as a soft cover book at:
Amazon.com (or Amazon in the UK, Germany and other countries) or at Barnes & Noble (BN.com), or at kobo.com. It will also be available on Apple iTunes as an iBook.