THIRD WORLD Economics TRENdS & ANAlySiS Published by the Third World Network KDN: PP 6946/07/2013(032707) ISSN: 0128-4134 Issue No 655 16 – 31 December 2017 UNCTAD proposes “Global New Deal” Noting that “the prioritizing of narrowly financial interests has created an unsustainable and inequitable world”, the United Nations Conference on Trade and Development (UNCTAD) has put forward the case for a policy overhaul to achieve greater inclusive- ness. The proposed “Global New Deal” would encompass national and international policy measures of recovery, regulation and redistribution aimed at rebalancing globalization. ● A “Global New Deal” needed to rebalance globalization – p2 Also in this issue: Efforts afoot to smuggle Wealth concentration continues e-commerce pluri-talks at WTO to increase p7 p13 The myth that Davos can change Double standards on a taxing the world p11 issue p14 No 655 Third World Economics 16 – 31 December 2017 1 CURRENT REPORTS Economic policy THIRD WORLD Economics A “Global New Deal” needed to Trends & Analysis 131 Jalan Macalister rebalance globalization 10400 Penang, Malaysia Tel: (60-4) 2266728/2266159 A UN development body has called for a “Global New Deal” of policies Fax: (60-4) 2264505 at the national and international levels to tackle the problems of hyper- Email: [email protected] Website: www.twn.my globalization and promote recovery, regulation and redistribution. Contents by Kanaga Raja GENEVA: Rebalancing globalization and In developing countries, these prob- CURRENT REPORTS exiting this age of anxiety needs a pro- lems are compounded by premature 2 A “Global New Deal” needed to found change in the thinking and policy deindustrialization, the diminishing op- rebalance globalization mix that caused these problems in the portunities for export-led growth and a 5 FDI flows fell by 16% last year, first place: it needs a Global New Deal, heightened vulnerability to external says UNCTAD the UN Conference on Trade and Devel- shocks both economic and environmen- 7 Efforts afoot to smuggle e-com opment (UNCTAD) has said. tal. pluri-talks at WTO In a recent policy brief, UNCTAD Other, older problems that long hin- has suggested an interrelated set of poli- dered developing countries are now 8 Continuing impasse over AB cies that it says will be needed to address emerging in even the most advanced selection process the problems of hyper-globalization and economies, such as the surge in informal- 11 The myth that Davos can change help build more inclusive, stable and sus- ity in many parts of the economy, re- the world tainable societies (“Achieving the Global sources lost to transfer pricing, or, after OPINION New Deal we need – Some steps for- years of low investment, the problem of 13 Wealth concentration continues to ward”, UNCTAD Policy Brief No. 63, ageing and inadequate infrastructure. increase December 2017). “Despite this daunting landscape, According to UNCTAD, the broad the default policy regime in most ad- 14 Double standards on a taxing issue aim is to catalyze a big transformative vanced economies has not changed push by breaking with austerity econom- much since a global economic meltdown ics, promoting public investment and was averted following the sub-prime cri- crowding-in productive private invest- sis of 2007-2008,” said UNCTAD. It con- THIRD WORLD ECONOMICS is published fortnightly by the Third World ment, and levelling the playing field for tinues to be a mixture of quantitative Network, a grouping of organisations and working families everywhere. easing, fiscal austerity and market liber- individuals involved in Third World and development issues. While the appropriate mixture of alization; the outcomes have been neither Publisher: S.M. Mohamed Idris; Editor: recovery, regulation and redistribution sustainable nor inclusive. Chakravarthi Raghavan; Editorial Assistants: will vary across countries (and with Having resisted the austerity route Lean Ka-Min, T. Rajamoorthy; Contributing Edi- tors: Roberto Bissio, Charles Abugre; Staff: Linda policy experimentalism of particular for longer, the recent slowdown of Ooi (Administration), Susila Vangar (Design), importance in the developing world), all growth in many developing countries, Evelyne Hong & Lim Jee Yuan (Advisors). policymakers can still usefully recall the along with attendant debt market pres- ● Annual subscription rates: Third World coun- tries US$75 (airmail) or US$55 (surface mail); In- original New Deal of the 1930s, but they sures, is beginning to encourage some dia Rs900 (airmail) or Rs500 (surface mail); Ma- must further translate its message to the policymakers in that direction. laysia RM110; Others US$95 (airmail) or US$75 (surface mail). global level to leverage the opportuni- The heightened sense of economic ties of today’s interdependent world. anxiety has not only stoked a distrust- ● Subscribers in India: Payments and enquiries can be sent to: The Other India Bookstore, Above UNCTAD noted that in many coun- ful, and at times xenophobic, politics but Mapusa Clinic, Mapusa 403 507, Goa, India. tries, governments are currently grasp- a sense of alarm each time interest rates ● Subscribers in Malaysia: Please pay by credit ing for a “quick fix” to the problems of rise by infinitesimally small amounts, card/crossed cheque/postal order. hyper-globalization – whereby, over currency and equity markets wobble or ● Orders from Australia, Brunei, Indonesia, Phil- three decades or more, the prioritizing commodity prices take a dip, and there ippines, Singapore, Thailand, UK, USA: Please pay by credit card/cheque/bank draft/interna- of narrowly financial interests has cre- is a growing fear that technological ad- tional money order in own currency, US$ or euro. ated an unsustainable and inequitable vances, such as robotics, will only work If paying in own currency or euro, please calcu- late equivalent of US$ rate. If paying in US$, please world in which too many people in too for the few rather than the many. Quick ensure that the agent bank is located in the USA. many places feel left out. fixes, from tax cuts to public-private part- ● Rest of the world: Please pay by credit card/ Stagnant wages, vertiginous levels nerships (PPPs), have been tried but have cheque/bank draft/international money order in US$ or euro. If paying in euro, please calculate of debt and recurrent financial crises are failed. equivalent of US$ rate. If paying in US$, please the most visible manifestations of a dan- “Rebalancing globalization and ex- ensure that the agent bank is located in the USA. gerously unbalanced world. But rigged iting this age of anxiety needs more than Visit our web site at http://www.twn.my. markets, corporate rentierism and a tinkering around the edges, it needs a Printed by Jutaprint, No. 2, Solok Sungei Pinang dearth of productive investment are also profound change in the thinking and 3, Sungai Pinang, 11600 Penang, Malaysia. hobbling economic recovery and longer- policy mix that caused these problems © Third World Network term transformation. in the first place. It needs a Global New 2 Third World Economics 16 – 31 December 2017 No 655 CURRENT REPORTS Economic policy Deal,” said UNCTAD. short of cheap money, not least in the ing households. post-crisis era, but it has been short of Inclusive macroeconomic regime demand, particularly in advanced econo- Regulatory reversal mies. Even so, the idea of a Global New It noted that an enduring lesson from Deal quickly faces talk of budget con- The UNCTAD policy brief notes that the original New Deal is the need to es- straints and financial impropriety. But as rolling back regulations on the move- tablish and nurture a pro-growth, inclu- Keynes recognized, by taking care of jobs ment of capital while restricting the abil- sive macroeconomic regime which uses (and rentiers), much of the concern about ity of labour to organize collectively has, all the levers of aggregate demand not budget pressures at the national level over recent decades, led not only to a just to absorb under-utilized resources will take care of itself. sharp decline in the wage share but also and boost incomes but to raise produc- In some parts of the world, fiscal rev- to equally significant increases in mar- tivity by supporting structural transfor- enues are already sufficient for what is ket concentration and a proliferation of mation. needed but should be better directed; in “rentierism”, whereby the world’s larg- It said that the policy mechanisms others, even a small change in fiscal est corporations protect their privileged are many and vary depending on coun- policy could have positive effects on market position and power through a try conditions and circumstances, but boosting government’s spending capaci- variety of exclusionary (and on occasion include short-to-medium-term proactive ties. predatory) mechanisms in search of sur- counter-cyclical policies alongside long- While the case for lowering taxes has plus profits. term investment in social and physical little empirical support, UNCTAD finds “Such a world is a long way from infrastructure. They need also to be sup- that raising taxes by 5%, on the top in- the textbook paradigm of perfect com- ported by a bold political and social vi- come decile in 43 countries that either petition and is linked with excessive sion that goes beyond cautious techno- belong to the OECD or G20, could gather financialization, whereby easy specula- cratic tinkering. additional revenues of around $1 trillion. tive gains are privileged over patient in- “This calls for rejecting austerity According to UNCTAD, inclusive vestment and job creation in the produc- while prioritizing spending over tax cuts macroeconomic proposals include the tive economy.” to maximize multiplier effects and using following: Rising corporate debt levels have public investment programmes to ● For developing and advanced pumped up the market capitalization of crowd-in private investment to priority economies alike, placing job creation the largest firms, with bloated dividend sectors.” with decent remuneration as top prior- payments and excessive share buybacks Government spending should be ity over other targets.