SMALL IS BEAUTIFUL, BIG IS SUBSIDISED How our taxes contribute to social and environmental breakdown Steven Gorelick, Principal Author With an Introduction by Helena Norberg-Hodge ACKNOWLEDGEMENTS Like many products of non-governmental organisations, this report is the result of a team effort. The core analysis was first presented in a series of lectures by ISEC’s Director, Helena Norberg-Hodge. Peter and Mimi Buckley suggested that we try to find ‘hard data’ to substantiate the arguments, and offered to fund the necessary research. We are extremely grateful to them for their support. Special thanks are also due to Andrew Blackwood, who helped substantially with research and wrote the first draft. Without him, the project would never have got off the ground. We would also like to acknowledge the help of Richard Douthwaite, who chased up some key facts and figures, and the contributions of Carola Buhse, Les Blomberg, Beth Burrows, David Edwards, Janey Francis, Suzanna Jones, David Korten, Todd Merrifield, Julian Oram, John Page, Andrew Rowell, Miyo Sakashita and Deborah Tull. Steven Gorelick is ISEC’s US Programmes Director. October 1998 Second printing July 2002 © ISEC – Please feel free to reproduce and distribute with appropriate credit. Design & layout by Fiona North, 3 Counties Design Ltd. Tel: (01305) 259280. Photograph page 46 by Tim McCabe/USDA. All other photographs by John Page. Printed by L. Brown & Sons, Barre, VT. SMALL IS BEAUTIFUL, BIG IS SUBSIDISED How our taxes contribute to social and environmental breakdown Principal Author StevenP Gorelick Contents INTRODUCTION by Helena Norberg-Hodge – Page 2. 1. It’s Evolution, Isn’t It? – Page 5. 2. The Big Get Bigger – Page 8. 3. Growth Made Easy: Infrastructure and Scale – Page 12. 4. Subsidising Long-Distance Transport – Page 15. 5. Communicating Globalism – Page 19. 6. Finding the Energy – Page 23. 7. Learning to Serve the Global Market – Page 27. 8. Research: Who Pays, Who Profits? – Page 32. 9. Expanding Infrastructures: The Race to Nowhere – Page 36. 10. The Rules of the Game, Free Trade – Page 40. 11. Lots of Regulations, Little Effect – Page 45. 12. So why Do They Keep Doing It? – Page 50. T HE I N T ERNA ti ONAL S OC I E T Y FOR E COLOGY & C UL T URE 1 S MALL is B EAU ti FUL , B I G is S U bsi D is ED INTRODUCTION by Helena Norberg-Hodge ith the demise of communism, it result is that all of our choices – from education, energy use, is generally assumed that the world transport and communications – are being shaped and distorted has only one option: an unregulat- to suit an ever more centralised, ever more globalised economy. ed global market dominated by Combined, these costly subsidies and investments make for an giant corporations. extremely inefficient system. Any appearance of efficiency is maintained only because our taxes cover many of the costs at Many people believe that deregulation frees large, transnational the expense of small, local producers who, left to their own Wcorporations to provide consumers with an unprecedented resources, are thereby made to seem comparatively inefficient. variety of produce from every corner of the globe. Thanks to Large TNCs also benefit from their ability to pressurise the global economy, we are able to fill our shopping baskets governments into passing regulations favouring large producers with apples from Kenya, cheap butter from New Zealand and often in the deliberate attempt to destroy smaller competitors. a whole range of exotic foods. If this produce is cheaper than An additional factor which paradoxically ends up favouring locally-produced alternatives, then that is because suppliers are large over small is the fact that large scale, intensive production operating on a larger, more efficient scale. Sophisticated PR is often inherently more polluting. and advertising campaigns persuade us that the bigger the com- Consider the case of factory farming. Where large numbers pany, the safer the food. of animals are made to live in close confinement, conditions are In addition to these consumer benefits at home, many peo- ripe for the outbreak of virulent disease. In this situation, more ple seem to think that the spread of Western-style economic controls and regulations are required than is the case for small- development will be accompanied by Western-style democracy er producers. The latter, however, are forced to comply with abroad. Globalisation has brought about cheap air travel and these same stringent – and, for them, unnecessary – safeguards, closer communication between diverse cultures, and it is hoped that this will herald the emergence of a peaceful ‘global village’ ‘As we have tried to show in this booklet, and eliminate warring strife between nations. however, the truth of the matter is that Similarly, because environmental crises – from climate change to species depletion – clearly transcend national bound- ‘efficiencies of scale’ are a myth: big is not aries, globalisation is also seen as a necessary step towards inter- necessarily ‘cheaper’ or more ‘efficient’.’ national collaboration to solve global problems. Beyond these supposed beneficial effects, the global econo- at a cost that few can afford to bear. my is declared inevitable – it will continue to grow whether we Government support for transport and high-tech commu- like it or not. It’s the consequence of an insatiable consumer nications make it possible for multinational corporations to culture. It’s what giant corporations want, or, more to the point, destroy smaller local competitors. A local shop in a village in it’s what no one has the power to stop. In the final analysis, glo- England that buys most of its goods locally, does not need sat- balisation is often portrayed as a kind of economic ‘manifest ellites, mainframe computers, large-scale transport infrastruc- destiny’ dictated by ‘economic laws’ beyond the reach of human tures, container ships, heavily subsidied airplane fuel, and so on. intervention. These laws are said to naturally favour large pro- In contrast, a large hypermarket could not exist without them. ducers over small, centralised global production over dispersed From the point of view of the consumer, it can look as local production. Big, it turns out, is cheap; big is efficient, big though goods from the other side of the world are cheaper, is better! As we have tried to show in this booklet, however, the when all of these subsidies are invisible. But we need to start truth of the matter is that ‘efficiencies of scale’ are a myth: big is looking, not only at the money in our pockets, but how our not necessarily ‘cheaper’ or more ‘efficient’. taxes are used against us. More and more people are left little If we allow ourselves to look beyond the assumptions and choice but to eat processed, long shelf-life food from far away, narrow confines of this conventional wisdom, it becomes clear because it is cheaper. The tilted playing field means that they that giant corporations are the product of government support cannot afford fresh local food. through a range of both direct and indirect subsidies. At the heart of the modern industrial economy is the prin- ciple of ‘comparative advantage’ according to which it is always in a nation’s interest to specialise production for export rather TILtiNG THE PLAYING FIELD than promote diversified production for local and national For generations now our tax money has been used to create an needs. As a consequence, economic policies encouraging trade economic framework that favours the big over the small. The have supported trading institutions which have merged to 2 T HE I N T ERNA ti ONAL S OC I E T Y FOR E COLOGY & C UL T URE I N T RODUC ti ON become the giant transnational corporations that we know As people pour into the city in search of jobs, only a tiny today. By now, each of the major commodities on the world fraction are successful – usually in a sweat shop, mass-producing market – e.g.: coffee, cocoa, cotton – is controlled by a handful consumer goods for an unstable Western market. The Times of of corporations. India (26.8.98) describes the process well: This support for international trade has given global players “Women and children are emerging as the new ‘human an unfair advantage over local producers and businesses. The cash crop’ in South Asia as rapid globalisation drives more and result is a tilted playing field favouring monopolies which are more villagers to distant cities to make good. But most of them growing larger and more powerful every day. In recent years, end up providing cheap labour or get caught in the sex trade.“ their power has been boosted dramatically by a series of ‘free- In addition to the human suffering, the shift of production trade treaties’, such as NAFTA, Maastricht, GATT, and the from North to South has heralded a massive increase in local Multilateral Agreement on Investment (or MAI). Known as the air pollution, toxic waste and other environmental hazards, in “Multinationals’ Charter”, the MAI will elevate the rights of cities like New Delhi, Bangkok and Mexico City. companies above those of nations and their citizens. This will Whatever the superficial attractions of a global economy give companies the power to sue governments if domestic leg- dominated by giant corporations, the price is high: a deterio- islation interferes with trade. These agreements are not about rating environment, increasing poverty, greater insecurity and trade between countries but about the rights of transnational greater inequality. World-wide, globalisation also leads to a loss corporations to move unimpeded into every domestic market. of both economic and political control. This disempowerment Negotiated in secret, wrapped in highly complex and tech- inevitably leads to frustration and anger and an increase in eth- nical language, these treaties are rarely read, much less under- nic conflict.