2023-07-06 16:25:01
The Paris summit convened by Macron at the end of June to finance the fight against poverty and climate change, a stroke of the sword in the water? The French president is a specialist in announcement effects, less in strong gestures. And as economist Jeffrey Sachs explains, the United States is reluctant to loosen the purse strings. However, a new financial pact without money… Wicked, the Americans? Sachs explains to us the structural reasons that prevent Washington from investing in these noble causes. (I’A)
Barbados Prime Minister Mia Mottley and French President Emmanuel Macron have invited world leaders to Paris on June 22-23 to strike a new “global pact” to fund the fight against poverty and human-induced climate change. Everyone welcomes the ambition, but little money has been put on the table. To a large extent, the world’s continued inability to finance the fight against poverty and climate change reflects the failures of American policy, since the United States, at least for now, remains at the center of the global financial system.
To understand American politics, one must begin with the history of the British Empire. As Britain grew into an imperial power and then the leading world power in the 19th century, British philosophy changed to justify the emergence of the British Empire. British philosophers have advocated a powerful state (Thomas Hobbes’ Leviathan), the protection of private wealth rather than redistribution (John Locke’s right to “life, liberty and property”), markets rather than government (Adam Smith’s “invisible hand”), and the futility of helping the poor (Malthus’ population law).
When humanitarian crises erupted in the British Empire, such as the Irish famine in the 1840s and famines in India later in the century, Britain refused to provide food aid and left millions of its subjects starve, when food supplies were available to save them. This inaction was part of a laissez-faire philosophy that saw poverty as inevitable and helping the poor as morally unnecessary and practically futile.
In other words, the British elites had no interest in helping the poor subjects of the empire (nor for that matter the poor of the country). They wanted low taxes and a strong navy to defend their investments and profits abroad.
The United States learned its trade as a state at the knees of Great Britain, the motherland of the American colonies. America’s Founding Fathers modeled the new country’s political institutions and foreign policies on British principles, even as they invented the role of the president in place of the monarch. The United States overtook Britain in terms of world power during World War II.
The principal author of the American Constitution, James Madison, was a strong supporter of Locke. Born into a family of slaves, he wanted to protect the wealth of the masses. Madison feared direct democracy, in which the people participate directly in politics, and championed representative government, in which the people elect representatives who are expected to represent their interests. Madison feared local government because it was too close to the people and too likely to favor the redistribution of wealth. Madison therefore championed a federal government in a distant capital.
Madison’s strategy worked. The US federal government is largely isolated from public opinion. The majority of public opinion opposes wars, supports affordable health care for all, and comes out in favor of higher taxes for the wealthy. Congress, meanwhile, is content to wage wars, offer overpriced private health care, and give tax cuts to the wealthy.
The United States calls itself a democracy but is in fact a plutocracy. (The Economist Intelligence Unit calls the United States an “imperfect democracy”). The rich and corporate lobbies fund political campaigns, and in return the government offers the rich low taxes, freedom to pollute, and war. Private companies dominate the health sector. Wall Street runs the financial system. Big Oil runs the energy system. And the military-industrial lobby directs foreign policy.
This brings us to the global climate crisis. The most powerful nation in the world has a domestic energy policy that remains in the hands of the big oil companies. Its foreign policy aims to preserve American hegemony through wars. And its Congress is designed to shield the wealthy from the demands of the masses, whether it’s fighting poverty or fighting climate change.
The American leaders who participated in the Paris summit, John Kerry (US President’s Special Envoy for the Climate) and Janet Yellen (US Treasury Secretary) are people of remarkable ethics and deep and long-standing commitments to the fight against poverty and climate change. Yet they are unable to implement current US policy. Congress and the American plutocracy are standing in the way.
Leaders gathered at the Paris Summit recognized the urgent need for a massive expansion of official development finance by the Multilateral Development Banks (MDBs), i.e. the World Bank, the African Development Bank, the Asian Development Bank and others. However, to increase their lending to the necessary proportions, the MDBs will need an increase in paid-in capital from the United States, Europe and other major economies. But the US Congress opposes investing more capital in MDBs, and US opposition (so far) blocks global action.
Congress opposes the capital increase for three reasons. First, it would cost the United States quite a bit of money, and the wealthy campaign funders aren’t interested. Second, it would accelerate the global fossil fuel transition, and the US big oil lobby wants to delay, not accelerate, that transition. Third, it would give more political influence to the global institutions in which China participates, while the military-industrial complex wants to fight China, not collaborate with it.
So while developing countries need hundreds of billions of dollars in additional loans from MDBs each year, backed by additional capital from MDBs, the United States and Europe are pressuring MDBs to lend a little more with their existing capital. The MDBs could perhaps obtain $20 billion in additional loans each year with their current capital, a tiny fraction of what is needed.
The exasperation of developing countries manifested itself in Paris. Brazilian President Lula da Silva and several African presidents have made it clear that there are too many summits and too few dollars. Chinese Premier Li Qiang spoke calmly and courteously, promising that China would do its part alongside developing countries.
Solutions will eventually be found when the rest of the world moves forward despite US procrastination. Instead of allowing the US to block increased capital to MDBs, the rest of the world should move forward with or without the US. Even America’s plutocrats will realize that it is better to pay the modest price of fighting poverty and climate change than to face a world that rejects their greed and belligerence.
Source originals: Jeffrey Sachs blog
Translated from English by Stop on Info
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