Now We Value the Proceeds of Crime for Adding to National Income!Posted: March 20, 2015
Here’s an extract from ‘Solving the Grim Equation‘, soon to be published by Cambria Books. Do we really want to live in a society which values crime for its contribution to national productivity, which prioritises the demands of big international corporations, and which hides crucial discussions under the convenient cloak of ‘confidentiality’?
TTIP and Benefit Lies
“Business as usual, only more so, remains the dominant paradigm of in-power politicians and civil servants. ‘Growth’ is the watchword, and the quest for growth is a significant force behind the controversial Transatlantic Trade and Investment Partnership (TTIP), not yet in being at the time of writing, but looming.
TTIP, a proposed ‘open market’ trade deal between the USA and the European Union, has near miraculous status in the minds of its proponents. Take this paean from an EU question-and-answer document:[i]
‘European companies, workers and citizens would benefit enormously from a more open US market. The EU has many highly competitive firms producing top quality products and services, including many world leaders and top brands. In agriculture, for example, US plant health regulations ban European apples, while their food safety rules make it illegal to import many European cheeses. Getting rid of tariffs and other barriers to trade will enable European producers to sell more to the Americans: that is good for business and good for jobs. Removing EU barriers to US products and investment will mean more choice and lower prices for people here in Europe. What is clear is that both sides will gain from further opening up their markets to trade and investment. It will be a win-win situation.’
Win win for whom, the reader wonders. In 2013 the European Commission asked the Centre for Economic Policy Research (CEPR)[ii] to investigate the pros and cons of TTIP, and the CEPR’s figures indicated financial benefits. As far as the EU Commission was concerned, the CEPR was likely to be a safe pair of hands, and so it proved. The centre receives funding from a long list of banks, including central banks and commercial banks from around the world, and calls upon a network of academic economists to lead research projects.
Academic economists have long prioritised theory over the messy reality of the real world. Particularly, they are reluctant to worry about resource unavailability, on the basis that if one commodity is unattainable, clever humans will find another to substitute. The CEPR asked if TTIP would result in economic growth, and concluded that yes, it would, and is therefore highly desirable.
TTIP is about ‘harmonising’ regulations, which tend to slip towards a lowest common denominator, and also about protecting corporations from governments which change – strengthen – the regulatory environment. The protection will be in the Investor State Dispute Settlement (ISDS) system. This means that foreign companies, or multinationals whose operations in a territory are (even if nominally) controlled from outside the borders, are at liberty to sue governments who do anything likely to threaten the future flow of profits. ISDS cases in the TTIP would be heard in camera by a panel of specialist lawyers.
Too Much Secrecy
The negotiations for TTIP are proceeding in secret. The EU Commission justifies this as follows:
‘For trade negotiations to work and succeed, you need a certain degree of confidentiality, otherwise it would be like showing the other players one’s cards in a card game.’[iii]
This is a weak argument. A trade agreement with the potential profoundly to change European societies – weaker environmental protection, lower wages resulting from more ferocious competition, the likely introduction of technologies such as seeds-and-chemicals packages, to which many people object – is rather more serious than a game of gin rummy or whist.
TTIP may be profitable for the world’s big corporations, their owners, lawyers and advisers, but the very concept of ISDS, privileging capital above all other considerations, is profoundly regressive. There are voices against TTIP, although they lack the clout of TTIP’s cheerleaders. The Austrian Foundation for Development Research, Vienna produced a report called ‘Assessing the Claimed Benefits of the Transatlantic Trade and Investment Partnership’,[iv] which is more balanced and draws out disadvantages, such as the compensation payments governments would have to make to corporations if they strengthened regulation, the loss of income to governments when tariffs are abolished, welfare costs if workers become unemployed, and lower tax revenues. The report concludes:
‘Last but not least, an investor-to-state dispute settlement mechanism, if included in TTIP, could lead to compensation payments by governments and have a disciplining effect on future regulation in the public interest. A qualified public debate on the need for such an arbitration mechanism as currently proposed, and a discussion about alternative forms of international investment arbitration, which is both transparent and equilibrated in its treatment of investors’ rights and the prerogatives of public policy, is urgently needed.’[v]
It’s All for the Mega Corporations
The Centre for Economic Policy Research, happily assuming minimal drawbacks, reckoned that TTIP would bring €119 billion to the EU and €95 billion to the USA, which would equate to €545 for a family of four in Europe and €655 for a family in the USA. Equivalence is not actual income, though, and it is possible that families would not see any of the claimed benefits. The aim is not to make all families more prosperous, but to open doors for business. Even before TTIP, tariffs between the EU and the USA average less than 3% — and even more to the point, at least a third of transatlantic trade is intra-company, i.e. companies sending their own goods from one side of the Atlantic to the other, for whom the removal of tariffs has immediate cash flow benefits.
The North American Free Trade Agreement (NAFTA) has lessons for TTIP. NAFTA, a deal between the USA, Canada and Mexico introduced in 1994, has increased the power of major corporations, free to move capital and production wherever they want, a freedom which intensifies job insecurity and damages conditions for workers. Free markets, however, are still in vogue among the upper echelons of governments around the world.
Illegal Activities Valued for Contributions to National Income!
The world’s unfettered free markets are hardly bastions of ethics. The dry-sounding ‘Changes stemming from improved comparability of Gross National Income measurement’, published by the UK’s Office for National Statistics on May 16th 2014, includes these startling, shocking sentences:
‘…illegal activities (e.g. prostitution and production of drugs) fall within the production boundary of national accounts. The sources and methods used need to be reviewed in order to ensure that illegal activities are properly included in the national accounts. The UK already includes estimates in the national accounts for smuggling of alcohol and tobacco, so this reservation will be addressed by including prostitution and drugs within the national accounts framework.’
The announcement was one of a number from statistics offices in the European Union, as members moved to harmonise a way of inflating economic growth by estimating the amounts changing hands illegally! Criminal activities such as drug pushing are good for the numbers, because buyers who are addicted will pay the price asked, even if they have to turn to more crime to get the money. Governments evidently value crime as a pillar of economic output.
Is this the end of ethics in government? How can politicians expect people to behave ethically when criminal activities are valued for contributing to national income? The European Commission pushed member states down this road when in December 2013 it included the proposals in the ‘European System of National and Regional Accounts’. This shows the Commission’s priorities – economic growth above all other considerations. Maybe the European Union is not such a force for social good after all.
Complaints in the media were muted and, it seems, short-lived. For the mainstream media too, the imperative for economic growth is unquestioned. Nearly all activities, including childcare — parents paying other people to look after their children while they work to earn the money to pay the childminders – have already been monetised, prompting the powers-that-be, in a desperate gamble, to co-opt the underworld.
The UK’s boost to gross domestic product from the addition of illegal activities was thought to be £10 billion, about £155 per man, woman and child. The £10 billion figure is, of course, only a guess as no one really knows. The figure is probably inaccurate as well as reprehensible.”
[i] European Commission, http://ec.europa.eu/trade/policy/in-focus/ttip/questions-and-answers/
[ii] ‘Estimating the Economic Impact on the UK of a Transatlantic Trade and Investment Partnership (TTIP) Agreement between the European Union and the United States’. Final project report by the Centre for Economic Policy Research, March 2013
[iii] European Commission, as above.
[iv] ‘Assessing the claimed benefits of the Transatlantic Trade and Investment Partnership’ by Werner Raza and Bernhard Tröster, Austrian Foundation for Development Research, Vienna, 2014, http://www.guengl.eu/uploads/plenary-focus-pdf/ASSESS_TTIP.pdf
[v]Part V, Conclusions and policy recommendations, http://www2.euromemorandum.eu/uploads/raza_assessing_the_claimed_benefits_of_the_transatlantic_ttip.pdf