Tuesday, June 29, 2010

Summits cost you $32 and delivered little

The big G8/G20 summits in Ontario look like a ripoff.
The three days of meetings cost Canada $1.1 billion. That's about $32 for every one of us; $128 for a family of four.
In return we got mostly bad publicity, thuggery, mass arrests, a sneak violation of citizens' rights and statements of good intentions from the world leaders.
It's useful for the presidents and prime ministers to gather and exchange ideas and concerns. Even better if they come up with agreements on a co-ordinated approach to problems.
But it's bizarre that the leaders had to bring 8,000 other people along to talk about the importance of reducing deficits.
Prime Minister Stephen Harper said the ugly scenes in Toronto - windows smashed, three police cars set on fire - justified security spending of almost $1 billion.
Among the thousands of protesters, a few hundred were violent. Their actions and locations were predictable. Yet the security measures were inadequate.
What about the results?
Look at a couple of issues. The leaders were trying to figure out how to deal with government deficits and debt.
Some wanted dramatic deficit reductions immediately; others feared that would slow - and maybe halt - the economic recovery. They agreed to cut their deficits in half from current levels by 2013 and stabilize their debt-to-GDP ratios by 2016.
Or more accurately, they agreed that would be a good idea, with varying degrees of enthusiasm.
Deficits are a problem. Like families, governments that borrow have to pay interest. Choices today mean fewer options for coming generations.
But government spending - like Canada's infrastructure fund - eased the impact of the recession by providing jobs. Cut spending too rapidly, and citizens are hurt and the economy suffers.
It was striking that all the coverage viewed this as a commitment by the governments to cut spending.
That's not what the agreement said. It talked about reducing deficits, which could also be accomplished by raising government revenues - collecting more in taxes or royalties.
The fact the current orthodoxy doesn't even acknowledge that approach as a possibility shows an alarming blindness to basic fiscal management.
Which leads to another summit non-commitment.
At a 2009 summit, the G20 agreed to phase out fossil fuel subsidies. The subsidies are costly and encourage energy consumption that produces greenhouse gases.
In Toronto, the leaders agreed again to the "phase out over the medium term of inefficient fossil fuel subsidies that encourage wasteful consumption, taking into account vulnerable groups and their development needs."
Not exactly a rock-solid commitment.
Which is shame. According to the last year's summit, getting rid of the subsidies by 2020 would mean a 10-per-cent reduction in greenhouse gases by 2050.
And it would reduce government deficits around the world by $560 billion a year - the amount spent on various subsidies supporting oil and gas and coal use.
Most of the subsidies go to keep gas cheap for consumers - drivers in Iran pay about 10 cents a litre, which costs the government about $100 billion in subsidies.
Producing nations and provinces also subsidize the industry. They offer grants or build roads or cut royalties to encourage the companies to develop oil and gas in their jurisdiction. They want the royalty revenue and the jobs.
The Pembina Institute, an Alberta energy policy organization, estimates federal government subsidies to the oil and gas industry at $2 billion. The B.C. government provided subsidies of $327 million.
The case for subsidies is based on the need to compete with other jurisdictions for energy industry investment. So if Alberta cuts royalties, B.C. does the same.
If Canada and other jurisdictions were serious about the commitment, the need to sell resources at a discount would be eased.
There was better progress on a plan to improve maternal health in the developing world, with G8 countries promising $5 billion over five years. But that's less than Harper hoped for and governments have failed to honour past commitments.
Footnote: An independent review of security would be useful. The Canadian Civil Liberties Association had 50 observers at the protest and reported police conduct "was, at times, disproportionate, arbitrary and excessive." Mass arrests of 900 people captured peaceful protesters and bystanders without stopping the vandalism and destruction.


Anonymous said...

The G20 decided to cut spending.

Great... now we can have a second recession.

Anonymous said...

Paul Krugman's Myths of Austerity

For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.

Anonymous said...

Well, it's all about Global Government, and Harper, is working very hard, to have Canadian citizens, as poor as Ethiopia's people are. That is what is going to happen, to all of, the not so fortunate citizens, in the entire globe. That's what Campbell is doing. BC is, turning in to a 3rd world province, right now. The constitution, is dead. Our Civil Rights and freedom, has been taken away from us. Democracy and Freedom, are dirty words in BC, and indeed, in all of Canada. We have no rights what-so-ever. To me that seems like, Communism. I read about this some time back. The New World Order, has been worked on, for decades upon decades. The N.W.O. will be, a Communist regime. Has anyone else, heard Harper mention the N.W.O. several times?