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Europe Takes the Lead in Drive to Tax Speculators

March 10, 2011 ·

Protestors in Germany advocating for the Robin Hood TaxHigh-speed rail, universal health care, quality cheese. Let's face it — the Europeans often leave us Yanks way behind. And now they appear on track again, with solid progress this week towards adopting an innovative proposal to pay for the costs of the global economic crisis.

On March 8, the European Parliament voted 360-299 in favor of introducing financial transactions taxes, tiny levies on trades of stocks, derivatives, currency, and other financial instruments. The proposal could generate an estimated $200 billion per year in revenue for European governments to channel into job creation and other urgent needs. At the same time, it would discourage the type of risky, short-term speculation that got us into this economic mess in the first place.

What's most astounding is that the tax proposal sailed through despite the European Parliament's strong right-wing majority. Yes, there are still places in the world where folks from across the political spectrum can have a rational discussion about fair taxation.

The vote came after more than a year of global advocacy by labor union, anti-poverty, environmental, and other citizens groups. On February 17, activists in 25 countries carried out a Global Day of Action. See this video and this map to get a sense of the breadth of this campaign, from Nepal to Mexico in the global South and from Canada to Japan in the North. German activists staged one of the most elaborate publicity stunts. They dressed up as glamorous Robin Hoods and Maid Marians to crash the Berlinale film festival, arriving in a white limousine and then parading down their own red carpet.

While the message seems to be getting through in Europe, U.S. activists have not had much luck. While not publicly offering much of an explanation, U.S. Treasury Secretary Timothy Geithner has reportedly consistently dismissed the idea at G-20 meetings. A WikiLeaks cable from 2009 revealed that then British Prime Minister Gordon Brown was deeply frustrated by Geithner's opposition.

This week's vote signaled that many key European leaders are no longer willing to let the Obama administration hold them back. The Parliament's resolution calls on the EU to adopt transactions taxes, regardless of whether the United States or other major economies take similar action.

On the bright side, the United States doesn't appear to be actively trying to block European progress. This is a pretty big deal, considering that President Barack Obama stacked his European embassies with former financial executives (e.g., former Citigroup Vice Chair Louis Susman in London and former Goldman Sachs executive Philip D. Murphy in Berlin) and the Wall Street lobby would no doubt love the administration's help in preventing what for them would be an unnerving precedent.

The campaign for Europe to pioneer financial transactions taxes is, however, far from over. The European Parliament has clout as a directly elected body, but it does not have binding authority over taxation matters. National governments will make the final decision, and while heavyweights Germany and France are strongly in favor, there are some problematic holdouts, namely Italy and the UK. The European Commission, the civil service for the EU, is also not yet convinced.

Nevertheless, according to Owen Tudor, Head of International Relations for the UK's Trade Union Confederation, the European Parliament vote broke a big logjam. One of the main obstacles, Tudor says, "has been the buck-passing of world leaders, who are always looking for someone else to make the first move, or for everyone else to agree before they will. Apart from the clear failure to understand what the word 'leader' actually means, this is almost always only an excuse for inaction, which lets the financial sector off the hook while public services are slashed, the poor get poorer and the world heats up."

More than 20 years after Europeans could zip along on bullet-speed trains, Americans are still stuck on bumpy railways or clogged freeways. The Obama administration recently announced plans to expand U.S. investment in high-speed rail. It's also high time for them to get on board the international campaign to tax the speculators, in part as a way to pay for things like transportation infrastructure. Otherwise, this could well be one more area where we'll be stuck in the slow lane for years to come.

Organics and the Science of Farming

February 17, 2011 ·

Danilo

Danilo working in his organic rice field.
Danilo made the switch to organic farming
for its economic benefits as well as to
avoid health problems caused by
chemical pesticides.

Photo by John Cavanagh.

This article was originally published on the YES! Magazine website.

One of the biggest myths about organic farmers is that they are “unscientific” and “backward.” After time in the southern Philippines with Danilo and Carlito, we learn something quite different.

Danilo is slight in build, with a deep tan and a shy but engaging smile. We stand at the edge of his hectare of neat, nearly mature, green rice stalks, our gaze drawn to Mt. Apo, the Philippines’ largest peak, rising majestically in the southwest. “It is all ‘zero-chem,’ that is to say organic,” Danilo tells us proudly.

It was the simple economics of organic farming that won Danilo over. He calculates that his costs have fallen from about $400 each planting-to-harvest cycle to roughly $160, and that his yields have dipped only a bit. Bottom line: he is making a lot more money each harvest. Every organic farming family we talked to reported lower costs and, as a result, liberation from the debts that haunted their lives. Health is also a key factor: Danilo describes the spells of dizziness that he used to suffer when spraying chemical pesticides before his switch to organic rice.

As we talk, “farmer scientist” Carlito pulls up on his motorcycle, dressed in a white racing jersey and dark glasses. Carlito works for a local citizens group called the Davao Provinces Rural Development Institute (DPRDI) that is helping farmers shift from chemical to organic rice and providing continued support after they do so. Carlito is not a formally trained agricultural scientist; he is largely self-taught and he scoffs at the chemically oriented mindset of the agricultural schools.

Bibing (left) and other women
making one of the natural
"concoctions" that have 
replaced chemical fertilizers
and pesticides in organic
agriculture. All the ingredients
can be grown at the farm
or purchased at the local
market.

Photo by Robin Broad.

Danilo is concerned that some of his rice leaves have turned red recently, so he contacted Carlito. They fall into a deep discussion about whether to ignore the red leaves for now or spray them with what they are calling a “concoction.” Carlito is a humble yet animated person, with an easy, joking manner. A farmer himself, he knows that decisions about rice are life and death for farmers, and he treats Danilo with deep respect. In the end, they decide to make the final choice the next day when Carlito will stop by again.

We ask more about what’s in the “concoction” they’re thinking of spraying. Carlito invites us to his barrio where his wife Bibing and her neighbors agree to show us how to make the various natural “concoctions” that have replaced chemical fertilizers and pesticides in organic agriculture. We are, of course, game. At their home, Bibing and three friends feed us lunch. Then, they light a fire under a large pot filled with water, and tell us how they began to make these mixtures. “In 1997, the DPRDI taught us how to make eight different concoctions,” one tells us. “Some are made with fermented fruits, some with vegetables, some with fish bones or egg shells, or with seaweed. Some help prepare the soil; some discourage certain viruses or pests.”

Another woman adds: “All the ingredients are grown here or available at the local market. Each member of our group focused on one of the concoctions, and we sold quite a bit in the first few years.” Bibing laughs with pride as she describes their short-lived financial success: “Then, many farmers learned to make them on their own, and our sales went down.”

As the water starts to boil, Bibing stirs in carefully measured amounts of molasses and then seaweed. The fire is hot and, with sweat rolling off their faces, the women take turns stirring. As Carlito cuts bananas to ferment for another concoction, he explains that the recipes came originally from the innovations of Korean organic farmers. After the designated 45 minutes of cooking and stirring, the seaweed concoction is finished and ready for fermentation in an air-tight container.

The next afternoon, we travel back at Danilo’s rice field to see whether he has chosen to spray. He tells us that he and Carlito have decided that the red stalks are not dangerous at this point in the rice growing cycle. Instead, his nephew is now spraying an aged batch of the seaweed concoction cooked by Bibing’s group to make the rice stalks firmer as they grow heavier. 

“The timing of spraying is as important as what to spray,” Danilo explains. At around 5 a.m. and again at 4 p.m. each day, “the vegetation is moist with dew and comes alive with insects.” As we edge into his rice field, Danilo serves as our teacher of the animal life on and around his ripe stalks. In Hollywood, spiders periodically star in horror movies. In Danilo’s rice field, they are friends that eat the larvae of the “bad” stem borers. We discover a batch of bright red snail eggs, but Danilo is not concerned. They are a pest at planting time, he explains, because they eat the young rice shoots; now, close to harvest, they are helping by eating the weeds.

As we jot down the names and descriptions of various bugs and watch Danilo’s nephew spray, it’s clear that organic farming has evolved far beyond simple composting of biomass. It requires a mix of science, math, common sense, and hard work. Unlike chemical farming, with organic farming each day is new adventure of weeding, monitoring insects, making concoctions, and weighing options. To Danilo, this is empowering rather than overwhelming.

Many outsiders believe that the farmers who embrace chemical agriculture are the ones embracing science and progress. But in different farms around the world, we are discovering that the true pioneers of a healthier, debt-free, and more “scientific” food future are organic farmers such as Danilo. 


John and Robin

John Cavanagh and Robin Broad wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Robin is a Professor of International Development atAmerican University in Washington, D.C. and has worked as an international economist in the U.S. Treasury Department and the U.S. Congress. John is on leave from directing the Institute for Policy Studies, and is co-chair (with David Korten) of the New Economy Working Group. They are co-authors of three books on the global economy, and are currently traveling the country and the world to write a book entitled Local Dreams: Finding Rootedness in the Age of Vulnerability. Over the decades, this husband and wife team has worked in a number of countries, including the Philippines, where Robin first lived in 1977-78.

Food for a Rooted Future

January 19, 2011 ·

John with Delia

John preparing local string-beans with
Delia.

Photo by Robin Broad

Our search for rootedness has brought us back to the Philippines, back to communities in the south where Robin spent a year over three decades ago.

We spend time with the family of a rice farmer, Delia, on the southern Philippine island of Mindanao. Delia, her husband Romulo, two daughters, one son, and three grandchildren live in a simple but roomy house on the edge of their rice field. Behind the house is a tilapia-filled fish pond with papaya trees growing on one side. A few pigs are housed by the fish pond, and fifteen chickens have free range of the property. Vitamin-rich greens grow at the far edge of the pond, and two towering jackfruit trees provide shade as well as ingredients for delicious meals. Theirs is an example of what we call a “rooted” life; among other things, they eat mainly what they grow and raise.

So, too, is much of their other consumption locally-based—including our bedding. After dinner on the first night of our visit, surrounded by village kids, we walk five minutes up the road to the house of neighbor Ging-Ging. She is just finishing weaving two rattan mats for us on a wooden loom in her back yard. We chat as she weaves, and she explains the economics of her inputs and her time, convincing us that she still makes money on the one dollar that we pay for each.

  Ging-Ging  

  Ging-Ging weaving our
  bedding.

  Photo by John Cavanagh

Our host Delia is very active in the community, serving on several local committees, and—this is why we are here—is an enthusiastic backer of organic farming. After attending a workshop by a local non-governmental organization a couple of years back, Delia switched one of their three hectares from so-called “high-yielding” seeds dependent on chemical fertilizers and pesticides to organic rice. She was an instant convert: “It is safer and the profit is bigger as expenses fell. With our two ‘chemical hectares,’ the rice traders who give us the loans are getting rich.”

Rice is central to Philippine culture, politics, the economy, and to most rural communities. It is also the biggest employer in the Philippines; over a third of the population still works in agriculture, and rice is still the largest crop. And, as we discover in several rice communities like Delia’s across the country, there are exciting shifts in the orthodoxy over what rice is planted and how it is grown.

After sleeping well on our new mats, we rise early with Delia’s family. It is the 15th of the month, which means that each family in the community must send one member to help cut weeds along the irrigation canal; those who fail to show are fined two dollars. This is one of several community tasks where all families here participate for the greater good, in this case keeping the canals free of weeds that would slow the water flow. The farmers move quickly, offering us their bolo knives so that we can join in.

At the edge of the irrigation canal, Delia proudly shows us her hectare of “zero-chem” rice and we discuss the traditional seeds she has planted. Part of the high expenses of chemical agriculture is that farmers must buy new hybrid seeds each planting season, a costly proposition. The traditional seeds that Delia and other organic farmers here are using are saved from the previous harvest or “in-bred” locally to work best in this particular area. Delia complains that the government’s agricultural extension agents sometimes give out free hybrid seeds, and that they mainly give seminars on chemical agriculture rather than providing support for “zero-chem” farming.

Delia and other organic farmers we meet are aware of the larger argument against traditional and inbred seeds and against organic agriculture overall: that it is “backward,” unscientific and can never compete with the high yielding seeds of chemical agriculture. Thus, it is often argued by proponents of chemical agriculture, it cannot feed the world. Africa is starving, the supporters of chemical farming say, and China is buying up farm land in other countries to feed its own people. Hence, higher yields are essential to feed a hungry world—or so goes the argument. 

The older farmers we meet say that yes, when the new rice varieties were first introduced in the 1960s and 1970s “green revolution,” the expensive seeds and chemical fertilizers and pesticides often produced increases in yields. But they also tell us of falling productivity over the years as soils became compacted and depleted of the nutrients that get replenished with organic farming. And, farmers were often forced to take on more debts to pay for the inputs or else, though economic desperation, to cut back on the pesticides and fertilizers, cutting yields further. Some even had to sell their cherished land.

As we see for ourselves, Delia and her zero-chem neighbors are anything but backward; they are impressive scientists in their own right, constantly experimenting with different seeds and different amounts of water. Instead of chemical fertilizers and pesticides, they cook their own non-chemical “concoctions” to handle everything from rats to stem-boring insects to plant viruses (more on this in a later blog).

After using the zero-chem techniques for a couple of seasons, several tell us their yields are just below what they were with chemical farming. Others say their yields have stayed the same or actually gone up.

The successful initiatives of farmers like Delia to take back control of their lives and gain food security are significant for this community and for the Philippines. But they are more than that. What we find here—people rejecting a half-century of conventional “wisdom” in favor of more rooted alternatives—is happening in many parts of the United States and other countries as well.

 


John Cavanagh and Robin Broad wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Robin is a Professor of International Development atAmerican University in Washington, D.C. and has worked as an international economist in the U.S. Treasury Department and the U.S. Congress. John is on leave from directing the Institute for Policy Studies, and is co-chair (with David Korten) of the New Economy Working Group. They are co-authors of three books on the global economy, and are currently traveling the country and the world to write a book entitled Local Dreams: Finding Rootedness in the Age of Vulnerability.

Deal on U.S.-Korea Trade Would Expand Excessive Investor Protections

December 10, 2010 ·

Approval of a White House deal on a trade agreement with Korea appears increasingly uncertain, as several labor unions and key Democrats have announced their opposition.  The deal, announced December 3, includes revisions to the pact negotiated by the Bush administration in the areas of market access for automobiles and beef.  These changes resulted in a split in the U.S. labor movement, with the United Auto Workers and the United Food and Commercial Workers coming out in favor of the deal but the AFL-CIO, Steelworkers, Communications Workers, and the Machinists opposed.

One of the most disappointing aspects of the “deal” is the failure to address widespread concerns over excessive investor protections.  Current U.S. trade and investment agreements allow private foreign investors to bypass domestic courts and sue governments in international tribunals over actions, including public interest regulations, that reduce the value of their investment.

On the campaign trail, President Barack Obama made several promises to revise these rules.  For example, he stated “With regards to provisions in several FTAs that give foreign investors the right to sue governments directly in foreign tribunals, I will ensure that foreign investor rights are strictly limited and will fully exempt any law or regulation written to protect public safety or promote the public interest.  And I will never agree to granting foreign investors any rights in the U.S. greater than those of Americans.”

As Rep. George Miller (D-CA), chair of the House Education and Labor Committee, points out, however, such changes were not made in the Korea deal.  According to Miller, “The rights granted foreign investors are far too broad and allow foreign corporations to skirt the rule of American law, such as for health and environmental protections, and American courts by using private arbitration panels to demand compensation from US taxpayers for upholding our own labor standards and other essential regulations.”

The Communications Workers of America also drew attention to the problems with the deal’s investment rules:  “This agreement gives investment and legal protections to large multi-national corporations which shift jobs offshore in search of the lowest labor and environmental costs and highest profits.  With no counter balance, multi-national corporations whipsaw workers and nations to prevent and eliminate bargaining rights.”

Several major U.S. environmental groups have also emphasized the problems with investor protections.  According to Friends of the Earth, “The Korea trade pact replicates some of the worst aspects of NAFTA (North American Free Trade Agreement), providing foreign investors the right to challenge U.S. public health and environmental regulations that could put a dent in their current or expected profits. Like NAFTA, the agreement would also allow South Korean companies to challenge U.S. environmental laws in secret, unaccountable trade tribunals that completely bypass the U.S. judicial system.”

One little-known aspect of the investment chapters of U.S. trade agreements is that they ban the use of capital controls, a tool that has been used effectively by many countries to prevent or mitigate financial crisis.  New Zealand academic Jan Kelsey has pointed out that recently adopted capital controls by the government of Korea would likely be in violation of the trade pact’s investment rules. According to Kelsey, “a number of measures adopted by South Korea in its national interest appear to conflict with the agreements it has signed with the US and the EU and also reveals inconsistencies in Korea’s obligations under the two agreements and with other international instruments that allow them more flexibility.”

As Boston University professor Kevin Gallagher stated in his article Obama must ditch Bush – era trade deals, “South Korea will join the growing group of nations that have recently resorted to currency controls in the wake of the global financial crisis. As a rash of new research has shown, such controls are legitimate tools to prevent and mitigate financial crises. Yet if the pending South Korea-US free trade agreement had been ratified by now, South Korea’s actions would be deemed illegal.”

Despite strong opposition from civil society groups in the United States and South Korea, the White House is expected to seek Congressional approval of the U.S.-Korea trade deal in early 2011.

Finding Rootedness in the Age of Vulnerability

December 10, 2010 ·

This article was originally published in Yes! Magazine on December 6th, 2010.

It seems that almost everyone we know is feeling vulnerable these days—whether they are rich or poor, employed or unemployed, their lives are feeling fragile. So we are setting out to discover places where people are finding ways to counter that vulnerability, creating more secure paths of living based on a concept we are calling "rootedness." We are learning from communities in the United States and also abroad—in the Philippines, Trinidad, and El Salvador.

Fifty years ago, when our parents deposited money in the bank, it was almost certainly a local bank, which then lent the money to people and businesses in that very community. Today, money goes to giant financial institutions that partake in casino-like activities that undermine local economies. Fifty years ago, most farmers grew a variety of crops from traditional seeds and most regions were largely self-sufficient in food; today, most farmers produce a single crop with seeds purchased from global firms.

Indeed, today, so much of what we eat, invest, borrow, and purchase is the product of global assembly lines. As a result, all of us are vulnerable to external shocks. So when the 2008 Wall Street crash spread like wild fire around the world, it hit families and communities everywhere, accelerating unemployment, suffering, inequality, and uncertainty. That same year, billions of people in poorer nations found that wildly fluctuating prices of wheat, corn, rice and other key food products increased their chances of going hungry. And extreme weather events related to climate change have been hitting people hard, in all parts of the globe.

In the United States and around the world many people and some governments are working to reduce their vulnerability to these global shocks by becoming more rooted.

This year, the two of us are taking a pause from our other work to dig into a fascinating array of communities and countries that are finding rootedness in this “age of vulnerability.” We are discovering the same yearning for roots and community in such far flung places as the Philippines, Trinidad, and El Salvador that we are seeing in communities across the United States. We feel it ourselves in our community of Takoma Park, Maryland.

We plan to share our musings with you through a regular blog. We are also exploring these concepts in the United States with a New Economy Working Group that has emerged through the collaboration of the Institute for Policy StudiesYES! Magazine, the Business Alliance for Local Living Economies, and the People-Centered Development Forum. The work we do on this blog, plus your reactions, will help us write a book on finding rootedness in the age of vulnerability.

But how does one define and measure rootedness? There are, we would suggest, several ways:

  • There is economic rootedness, which focuses on producing as much as possible locally, then nationally, then regionally, and only then globally. This notion is sometimes called subsidiarity, and it is very different from old-fashioned protectionism.
  • There is environmental rootedness, wherein communities control their water, their forests, and other natural resources, and hence have a vested interest in managing them sustainably.
  • And there is social rootedness, wherein (among other things) a society is more healthy if it is more equal and it also has a stronger sense of community.

To write this blog, we will visit Filipino rice farmers who are abandoning chemical farming in favor of organic farming, and finding that their finances, their health, and their environment are all benefiting. We will travel to Trinidad, where fisherfolk are fighting to protect their local fishing grounds against giant shrimp trawlers and oil drilling. We will visit communities in El Salvador that have rejected the get-rich-quick promises of gold mining firms in order to preserve their fresh water and their communities. And, we will report on several U.S. communities that are re-rooting different aspects of economic life, such as the rapidly expanding “slow food” and “slow money” movements.

We will also pay attention to nations like Mexico that were overly dependent on global markets and, as we are discovering, are faring the worst in this crisis—exactly the reverse of what mainstream economic theory predicted.

Our insights build on 30 years we have both spent taking on conventional economic wisdom. In particular, we have fought the myth that most community economic activity is inefficient, and that most communities and nations should specialize in a few things they do well and trade widely for the rest. We have always thought that “rooted” communities and nations made more sense than ones that are vulnerable to the whims of global markets.

Our world views have been shaped by the extraordinary range of people from diverse walks of life whom we have met during 35 years of traveling and living in different communities. We have had the privilege of living in some of the world’s poorest communities and visiting the halls of wealth and power in several countries, and we have gotten to know insightful people in both spheres. Imagine: We just spent a month in the Philippines and half of it was living with three different communities where farmers are shifting to planting organic rice. Then, we spent t

Robin is a professor at American University and has worked as an international economist in the U.S. Treasury Department and the U.S. Congress. John has worked at the United Nations in Geneva and, for the past quarter-century, at a leading multi-issue progressive think tank: the Institute for Policy Studies. We have written books on the grassroots environmental movementglobal corporationsthe global justice movement, and rethinking progress.  

We know that many of you have experienced the downside of economies made vulnerable by their reliance on globalization. We invite you to share your own experiences as you travel with us on a search for rootedness in this age of vulnerability.

he other half in the Philippine Congress discussing with lawmakers how to speed the transition from chemical to organic farming, and how to reduce the country’s dependence on call centers and electronic exports.

We were lucky to begin our travels decades ago. Just out of college, Robin spent a year living with indigenous people in the southern Philippines who were fighting against a pineapple agribusiness firm. At the same time, John landed a job in Geneva working with some of the best minds from poorer nations at a UN agency whose mandate was to close the gap between rich and poor. We then met in graduate school, married, and we are raising a son, who is now 13.

 

John Cavanagh and Robin Broad wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Robin is a Professor of International Development atAmerican University in Washington, D.C. and has worked as an international economist in the U.S. Treasury Department and the U.S. Congress. John is on leave from directing the Institute for Policy Studies, and is co-chair (with David Korten) of the New Economy Working Group. They are co-authors of three books on the global economy, and are currently traveling the country and the world to write a book entitled Local Dreams: Finding Rootedness in the Age of Vulnerability.

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