Friday, April 30, 2004

Forward With The Euro AND The Pound

I felt this article important enough to post, as it clearly covers the continueing euro-pound debate, plus illuminating theories about it and other reform areas. Anyone wishing an in depth view of these debates is encouraged to read this.

James Robertson

Question 8. Does the euro's democratic deficit seriously matter?

Yes, it does. It affects the lives of Eurozone citizens. It could also have a negative influence on the future shape of political economy

Although political democracy has spread round much of the world in the 20th century, financial democracy has not accompanied it. Unless today's monetary and financial institutions are reformed, political democracy will come to seem increasingly irrelevant. That has probably started to happen already, at least in some of the more "highly developed" countries. The nature of the money system greatly influences the nature of wealth and power, and its distribution. As this understanding spreads, the effects of the money system as it operates today are increasingly seen as perverse - in terms of economic efficiency, social justice and environmental sustainability. Growing numbers of people in the socalled anti-globalisation movement are protesting that the existing system of money and finance:
· is unjust ;
· is regulated by rich and powerful people and nations in their own interests;
· damages the well-being of billions of people worldwide and deprives them of freedom to manage their lives;
· serves the interests of corporate power, backed by rich-country governments and international institutions like the International
Monetary Fund (IMF), World Bank and World Trade Organisation (WTO); and thus
· gives the lie to Western lip service to democratic values.

The need for global monetary and financial reform is increasingly being expressed, not only in negative protest but also in constructive proposals for change. ...Link

And a related article: THE GLOBAL DIMENSION - Robertson

The development of international institutions for dealing with world public revenue, public spending, and monetary management should be based similarly on sharing the value of common resources. In 1995 the Commission on Global Governance recognised the need for global taxation “to service the needs of the global neighbourhood”. It proposed making nations pay for use of global commons, including:
· ocean fishing, sea-bed mining, sea lanes, flight lanes, outer space, and the electro-magnetic spectrum; and for
· activities that pollute and damage the global environment, or cause hazards beyond national boundaries, such as emissions of CO2 and CFCs, oil spills, and dumping wastes at sea.

The Commission also recognised the urgent need for international
monetary reform in a globalised world economy. Since then there has been growing criticism of the present international monetary system based on the 'dollar hegemony' of the United States. Here are two examples from recent reports, one from Asia and one from Ireland.
1) "The dollar is a global monetary instrument that the United States, and only the United States, can produce. .... World trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy.
2) The rest of the world pays a total annual subsidy (or 'tribute'!) to the US of at least $400bn a year for using the dollar as the main global currency. A Pentagon analyst has justified this as payment to the US for keeping world order. Others see it as a means by which the richest country in the world compels poorer ones to pay for its unsustainable consumption of global resources.

A genuine international currency, issued by a world monetary authority, is clearly needed as an alternative to the US dollar (and other 'reserve currencies' like the yen, the euro and the pound). Issuing it would give a source of revenue to the world community, just as national monetary reform would do for national communities. It would also help to prevent national governments manipulating the value of their currencies in order to distort the terms of international trade in their own favour.

Revenue from global taxes and global money creation would then provide stable sources of finance for global expenditures, including international peace-keeping programmes. Some of the revenue could also be distributed to all nations according to population size, reflecting the right of every person in the world to a global “citizen's income" based on fair shares of the value of global resources.

This approach:
· would encourage environmentally sustainable development worldwide;
· it would generate a much needed source of revenue for the United Nations; · it would provide substantial financial transfers to developing countries by right and without strings, as payments for the rich countries’ disproportionate use of world resources;
· it would help to liberate developing countries from dependence on grants and loans from institutions like the World Bank and the International Monetary Fund which the rich countries now dominate;
· it would help to solve the problem of Third World debt;
· it would recognise the shared status of all people as citizens of the
world; and
· by helping to reduce the spreading sense of injustice in a globalised
world, it would contribute to global security. ...Link

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