DAN GLAZEBROOK is intrigued by a new approach that seeks to stop the global ‘race to the bottom’
The Simpol Solution
by John Bunzl and Nick Duffell
(Peter Owen, £14.99)
WHAT ties together the tepid and lacklustre government responses to climate change, corporate tax evasion, sweatshops, global poverty, arms sales and the HSBC Mexican drug-money scandal?
For the authors of this compelling book, the answer lies in what they term “destructive global competition” (DGC). In each case, governments fear that any attempt to tackle these issues — more stringent regulation and higher taxes being an example — could fatally damage their international competitiveness.
John Bunzl and Nick Duffell point to the Greek Syriza government’s adoption of the austerity measures they opposed in opposition and French Socialist President Hollande’s eventual capitulation to neoliberalism to underline the point.
In both cases, they argue, the threat of severe “punishment” by global bond markets and investors forced these governments to implement policies to which they were fundamentally opposed.
This threat has effectively produced a worldwide paralysis in policy-making, leaving governments incapable of dealing with any of the major problems they face. They are forced instead to continue with more of the same even if they and their electors are convinced of the need for change.
The answer, Bunzl and Duffell claim, lies in what they call Simpol — simultaneous policy implementation. All, or at least a critical mass of, nations must implement appropriate policies simultaneously, to ensure that none are left at a competitive disadvantage by doing so.
But this can only be done in the context of a “multi-issue framework,” so that nations that might lose on one issue can gain on another.
Each nation would submit its priorities for simultaneous implementation, which could then be negotiated at an international level in order to arrive at a final programme.
To pressure governments into working towards such a solution, voters should make it clear to their representatives that they are more likely to vote for a candidate who has signed up to the Simpol pledge.
It sounds idealistic and doubtless it is. But that doesn’t render it any less necessary or unachievable.
A more serious criticism is that the book’s argument that governments are effectively powerless to challenge neoliberalism perhaps lets them off the hook too easily.
Cambridge economist Ha-Joon Chang has convincingly argued that the mobility of capital has been overstated and that corporations cannot simply relocate the moment they sense that a tax rise or new environmental regulation is round the corner.
Rather, they operate in a particular country due to a whole package of legal and institutional infrastructures.
Those industries which can be easily relocated to low-wage economies have already been moved long ago.
This gives governments more leverage than they often care to admit — there is a lot that could be done on global issues unilaterally.
If the US were to pass a law banning any company which uses tax havens from doing business in the US, for example, the industry would effectively be shut down overnight. Governments do not need to wait for Simpol.
But this book’s proposals are well worth taking seriously. And its incorporation of psychology — using the five stages of grief to explain our collective reluctance to accept the reality of DGC — adds another level to its appeal.