Climate Change

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Solving the jobs and climate crises together

Published by Anonymous (not verified) on Mon, 29/06/2020 - 10:19am in

Penny Howard looks at the proposals to create hundreds of thousands of jobs through government stimulus that addresses climate change, and how we can win them

In the coming months significant government spending will be necessary to support an economy entering one of its worst-ever crises. There is a pressing need to create hundreds of thousands of jobs to deal with the growing unemployment.

This situation is also a major opportunity for government stimulus that addresses the climate crisis. Calls for this have been taken up by sources as diverse as the Australian Industry Group and the ACTU, renewable energy companies, and Friends of the Earth.

But the government has largely ignored them. Instead it wants to further increase public money to support new gas and coal extraction and infrastructure.

Gas-fueled recovery?

In April, Energy Minister Angus Taylor declared that plunging global gas prices were an opportunity for a “gas-fired recovery”. Climate NGO have documented a lengthy list of demands put forward by the fossil fuel industry, many of which have already received government support. The government-commissioned review of its Emissions Reduction Fund, the new Low-emissions Technology Investment Roadmap, as well as the Underwriting New Generation Fund all are clearly  structured to allow funding of new gas and coal developments (although the Roadmap does not include coal-fired power).

Scott Morrison’s hand-picked COVID-19 Commission, tasked with helping promote the economic recovery, also appears to be pushing for government subsidies for new gas projects. A leaked report of the COVID-19 Commission’s Manufacturing Task Force calls for subsidies to encourage the development of new gas fields (mainly through fracking) and the construction of new gas pipelines. Gas “completely dominated” taskforce discussions, according to Paul Bastian, National Secretary of the AMWU and member of the Task Force, with, “not enough discussion about [other] opportunities that are presented and the need to focus on renewables.” COVID-19 Commission Chair Nev Power has since distanced himself from the leaked report.

The potential for renewable energy to boost manufacturing has recently been outlined by the Centre for Future Work, the Grattan Institute (focusing on steel) and the Institute for Energy Economics and Financial Analysis (on aluminium).

While some manufacturing uses gas as a feedstock in ways that can’t be immediately replaced with renewable energy, the current use of 166 petajoules of gas in homes could be released through a program of substituting household appliances (as proposed by BZE and Climateworks). This is much more than the 110 pJ of increased manufacturing demand the COVID-19 Commission Task Force claims justifies new gas wells and pipelines.

The government also claims more gas power will be needed to ensure reliability as the use of renewable energy increases. But the Integrated System Plan for the electricity grid by the government’s own Energy Market Operator (AEMO) forecasts that the proportion of gas and coal in the grid will decline over time as renewable energy increases. A recent AEMO study outlined the key actions needed to allow higher levels of renewables in the grid—75 per cent by 2025, and then even higher. None of the recommendations included building gas power generation.

While gas has been touted as a “transition fuel” with lower emissions, the methane that is extracted in Australia is 86 times more potent than carbon dioxide if it is released to atmosphere without being combusted. This can happen through “fugitive emissions” during the extraction and transport process, and these are hardly measured and significantly undercounted. The liquefaction and transport of gas as LNG in ships also significantly increases the energy and emissions from gas. The need to sharply reduce emissions means we need to invest in zero-emissions solutions—not spend billions on infrastructure that will lock in decades of emissions.

Towards a zero emissions future

Horrified by these developments, environmental organisations are rightly starting to flesh out what an investment program to reduce emissions and create jobs could look like. New modelling released in March by ClimateWorks shows that Australia could reach zero net emissions by 2035, and stay within the carbon budget needed to keep global heating to 1.5°C.

The report is clear that achieving zero net emissions even by 2050 requires “direct government intervention” (p.12) and “faster change than under typical market conditions” (p.14).

The need for electricity decarbonisation is well known, and the ClimateWorks report describes this as critical to decarbonising other sectors. In order to meet the 1.5°C pathway, renewable energy should be at 79 per cent of electricity by 2030 (29 GW of generation and 56GWh of storage). The Beyond Zero Emissions (BZE) Million Jobs Plan argues that we should build 90 GW of renewable energy supported by 20GW of batteries in the next five years, and estimates this could provide up to 50,000 jobs per year (including in construction, manufacturing, transmission and batteries).

ClimateWorks break down emissions by the industry electricity is used in, and by the current availability of zero-emissions solutions. Looked at this way, buildings are the next big area for climate action, consuming 21 per cent of energy by end-use.

Buildings and electricity both “have access to mature zero-emissions technologies” (p.13) and should be able to achieve zero or near zero emissions by 2035. Zero-emissions buildings should be insulated, draft sealed, with the most efficient lighting, heating and cooling, and with gas appliances switched over to electric.

But considering the extraordinary cost of housing in Australia, the growing number of renters, lack of public housing, and the deregulation of basic building standards, it is very difficult to imagine how the market could do this.

BZE’s plan for buildings includes 30,000 new zero-emissions social homes per year (87,000 jobs per year) and “deep energy retrofits” of 500,000 homes per year (another 100,000 jobs per year). BZE proposes that government could underwrite the provision of “managed energy agreements” to households. This would pay the upfront costs of energy efficiency renovations and ongoing maintenance (although they envisage it being delivered by a for-profit company). Residents would pay a set fee per month, which would be less than their current energy bills.

ClimateWorks say transport emissions could be significantly improved simply by improving fuel standards—Australian vehicles have 45 per cent more emissions than European ones, with no greenhouse gas emissions standards. Vehicles can be electrified and new forms of fuel developed—but the report has a surprising emphasis on autonomous vehicles and a lack of emphasis on public transport and on increasing the use of ships and trains for freight. This is a political disaster for working class support.

The ClimateWorks modelling also relies on tree planting or “carbon forestry” offset schemes in order to achieve zero net emissions by 2035. This simply delays the spending needed to reduce emissions, and even they acknowledge it could only be a temporary measure.

Politics of a climate recovery

ClimateWorks argues that reducing emissions requires “all-in” commitment from business, government, individuals and technological progress. But under capitalism, businesses only invest in new technologies if they will increase profits. They have billions invested in existing technologies that are still profitable, and the expense of installing new technologies and processes could see them lose market share through increased costs and reduced competitiveness.

Despite these obstacles, both the BZE and ClimateWorks plans are locked within a business and market framework and do not recognise the extent to which we need significant public investment and ownership to deliver the plans we need in the required time frame. BZE are explicit about wanting to get support from business and “capital” but don’t mention unions or workers—only “community” support.

It is essential to heed to lessons of the 2019 election. In order to win, the climate movement needs the working class onside. In the context of much higher unemployment, this means emphasising the number of potential jobs on offer. But climate recovery plans must also be clear about the need for quality jobs to be created, for public investment and to ensure that essential services like electricity will be delivered cheaply. The politics of carbon forestry and autonomous vehicles featured in some plans is problematic. BZE’s decision to create an advisory board for its One Million Jobs plan that includes Malcolm Turnbull and the Secretary of the NSW Liberals’ Energy Environment Policy Branch (also the owner of a number of organic food stores) will make it harder to win working class support. They are only now in the process of adding a few union representatives.

The current poor wages and working conditions in a great deal of the renewable energy industry, the fact that fossil fuels remain a significant employer and jobs are generally well-paid and unionised, and the history of programs such as Tony Abbott’s Green Army (paid half the minimum wage) means that any credible jobs plan must address the quality of jobs it seeks to create. Both BZE and ACF have released very jobs-focused plans, but don’t address the quality of jobs.

It is a positive step that the Peoples’ Recovery platform includes a call for “secure and unionised jobs” (while adopting the technical aspects of the BZE plan). Friends of the Earth talk about prioritising interests of workers and the community not corporations in their plan. Workers for Climate Action outline the rationale for public investment in renewable energy in the current crisis, and the United Workers’ Union puts investment in renewable energy in the context of a job and income guarantee and more democratised forms of public ownership.

The Greens have also called for investment and job creation, including a government “job guarantee” employment scheme for people under 30, “paid at industry-standard wages and with full entitlements”, and public ownership of new transmission infrastructure and a government-owned energy retailer.

In vaguer terms, ALP leader Anthony Albanese has also recognised the need to tackle climate change as part of a stimulus, including through social housing, and the possibilities this creates for creating jobs, reducing energy prices, and revitalising manufacturing.

The Australian Government has recently poured hundreds of billions of recovery money largely into the hands of companies through JobKeeper wage subsidies and business loans, with few strings attached. Although this money is supposed to support workers, companies remain in full control of what work is being carried out and there is no examination of whether this is actually in the public interest.

We simply cannot allow decisions about transforming the economy to deal with climate change to remain in the boardrooms of individual competing companies each siphoning off a share of the profit at the expense of workers’ wages and conditions, and jockeying for their own individual advantage.

If billions more are to be invested, this must be done in the public interest, with full public accountability and oversight, and require the creation of good union jobs. This is important both to our recovery efforts, but also for ensuring that we actually achieve zero emissions.

The privatisation, corporatisation and marketisation of Australia’s current electricity system must be reversed. The development of renewable energy in Australia was already in trouble with the end of the subsidies through the Renewable Energy Target and a total lack of planning for new renewable projects resulting in significant problems in being able to connect to the grid.

Now the economic crisis means that 15 new renewable energy projects have been cancelled or postponed. Little wonder, then, that the peak bodies for renewable energy companies have held urgent summits and released reports calling for government investment in renewable energy.

Winning climate action

Faced with the enormous power of fossil fuel interests in our economy, and the degree of economic transformation required, the power to force change will not come from sections of business.

It will require a mass climate movement that reaches into the workplaces and involves workers on a mass scale.

To do so requires winning over the majority of the working class to the need for climate action, alongside much wider social change. The climate movement needs to have a clear focus on good union jobs, on providing affordable basic services under democratic control, and on improving people’s lives. Only with this kind of politics can the student strikes develop to involve mass mobilisations and strikes by workers, and the power to win the change we need.

Discussions are underway about a major climate mobilisation in mid-September, backed by School Strike for Climate, that will call on government to invest in climate action and jobs, and not to subsidise fossil fuel developments. This is a chance to deepen working class support for climate action, and take the next step in developing the climate movement we need.

The post Solving the jobs and climate crises together appeared first on Solidarity Online.

‘What if the Public (really) Understood How Money Works?’ Just think what we could achieve!

Published by Anonymous (not verified) on Sun, 28/06/2020 - 5:54am in

Line graph with downward trend, virus image and word COVID-19Image by iXimus from Pixabay

“There’s something invigorating about people freaking out about modern monetary theory (MMT). They treat MMT as akin to the Ark of the Covenant in the first Indiana Jones movie. They are petrified that knowledge of the financial equivalent of the “holy of holies” will be released to normal people because they project their greatest terrors onto the possibility that the public will be transformed and empowered by their knowledge of matters that much of the financial world has understood for at least a century.”

Dr William Black


After having previously been ignored and disparaged for decades by mainstream economists and politicians, MMT has been making the headlines and finding its way into a growing public conversation.

Two significant publications over the last few weeks are challenging the very basis upon which government policy is determined; ‘does it fit with our political agenda, is it affordable’ and ‘how can it be paid for?’

The Deficit Myth’ by Stephanie Kelton was described by Professor Hans G Despain in a review in the LSE blog as a ‘triumph’ challenging, as he explained, the false idea that ‘deficits are irresponsible and ruinous towards the productive political activity of deciding which spending programmes should be prioritised’.

Hot on its heels came Pavlina Tcherneva’s book ‘The case for A Job Guarantee’ described by James K Galbraith as the ‘next big, common-sense idea for economic reform’. And in the words of Paul Prescod in the Jacobin Mag, the Job Guarantee ‘offers an inspiring vision of what society would look like if we utilized the various talents and skills working people possess’

Both these publications have stirred an already growing interest in that hitherto boring subject of economics, showing that far from being irrelevant to people’s lives it is critical to them in terms of human and planetary well-being.

Hitherto sceptical economists are now saying things like ‘well we knew it all along really’ and sovereign currency-issuing governments across the world have suddenly discovered the fiscal levers they denied us previously, to keep their economies from foundering as a result of the deleterious effects of Covid-19. Until now, there has been a depressing failure to make the critical connection between government spending and economic and societal well-being which are fundamentally two sides of the same coin. Whilst people may not make the technical connection, they are now beginning to understand the impact that government policies and spending decisions have on their lives. They live them every day.

Whether on the right, where politicians defer to the market as the wealth-maker, claiming that public services depend on a healthy economy to generate sufficient tax revenue, or the left, who scrabble for a limited pot of tax revenue, preferably from the rich, or through borrowing at low interest to deliver their political agenda, the orthodoxy prevails on both sides of the political spectrum.

After decades of being in the wilderness, MMT is happily beginning to make headway and that is very encouraging. However, over recent weeks, the Empire seems to have been striking back! Sensing a challenge to its economic and political hegemony, recent newspaper headlines are reinforcing the orthodox narrative of the public finances being like a household budget. Fake news to keep the population compliant in the false understanding that there are real financial constraints to public spending and to prepare them for the possibility of more austerity to pay back the enormous, eye-boggling sums spent by the government during the Covid-19 crisis.

In an article last month, the FT asserted that the Chancellor would ‘face tough choices’, and that ‘at some point, taxes will have to rise’. While tax increases would be an unpopular move, it said this ‘would send a signal that ministers are getting the deficit under control.’

And just this week, headlines aimed at eliciting a negative public reaction have dominated the news.

‘Britain nearly went bust in March says the Bank of England’.


‘Borrowing cost set ‘set to rise’ as Bank sells off stock of gilts’

On the right, John Major waded in with a call on the government to ‘borrow heavily…to improve living standards’ and claimed that ‘taxes will eventually have to be increased to pay for an extremely expensive programme.’

And on the left, the Shadow Chancellor Annaliese Dodds said again this week that ‘it is only right that those with the broadest shoulders’, should make a bigger contribution as the UK recovers from the economic effects of Covid-19.

Whilst the IFS think tank couldn’t resist the following:

It is clear that the COVID-19 outbreak – and the public health response to it – will dramatically reduce economic activity in the second quarter of 2020. This in turn will depress tax receipts and add to government spending, increasing government borrowing and in turn adding to government debt […] A key issue is how quickly – and how fully – the economy, and with it the public finances, recover over subsequent years.

The economic pundits, institutions and politicians are reinforcing, as a deliberate tactic, that at some unspecified time in the future there will be a price to pay for all this spending. As Aldous Huxley, author of Brave New World said; ‘Sixty-two thousand four hundred repetitions make one truth’ the implication being that the more a statement is repeated, the more credible it is seen to be. And certainly, over the last decades in terms of discussion about the public finances, the household budget version rules in the public consciousness – even at the expense of its own well-being.

Just a quick look at recent headlines show the pernicious nature of such repetition on the health of the economy and its citizens, who compare the public accounts with their own finances.

It was reported this week that some of the UK’s largest councils may have to declare bankruptcy unless the government stumps up extra cash to cover the extra expenditure needed to deal with the impact of Covid-19. Nearly 150 authorities have predicted a combined budget shortfall of at least £3.2bn. Having already been struggling to deal with ten years of cuts to central government funding for local government, the chickens are now coming home to roost. Even the government’s proposed additional funding package will struggle with an already slimmed down local government infrastructure which includes people and services. However much money is allocated, local politicians and their officers will not be able to repair those losses to essential services quickly.

Also this week, the IFS reported that families who had become unemployed during the Covid-19 crisis would get £1600 less in benefits, on average, than they would have done without the damaging decade of Tory austerity. It warned that the UK, which had entered the crisis with an already less than generous welfare safety net combined with the worst decade for income gains since the 60s, would not ‘provide a good blueprint for a bounce-back’.

Pascale Bourquin, a research economist at the IFS, said that in the last decade the country had ‘witnessed the slowest growth in household incomes since records began as earnings and productivity stalled and working-age benefits were cut sharply’. And added that ‘we now have the dual challenge of trying to recover the ground people have lost in their careers and employment prospects and addressing the problems we already had’.

The narrative of household budgets is pernicious and yet it pervades the public discourse. On the one hand, the IFS recognises the damage austerity has caused and yet on the other still blathers on about the public finances and the national debt, hinting about the future cost we will all have to bear for this increased spending.

When Helen Barnard at the Joseph Rowntree Foundation, which funded the research, talks about ‘Finding a lasting solution’ she is demonstrating, just like the IFS, a woeful lack of knowledge about how governments actually spend. The solution is staring them right in the face.

The government has the power of the public purse to find solutions to unemployment, low productivity, poverty and inequality, not to mention the coming threat of climate change. It doesn’t matter which end of the political spectrum you sit on, whether you are on the right or the left, a healthy economy and societal and planetary well-being go hand in hand and should be a top priority for both.

This week the IMF warned of a deep global recession. This will, without doubt, lead to further poverty and inequality which will be worsened by the prospect of a world ravaged by human-induced climate change if we fail to act now. It is time for the public, politicians and institutions to put away childish analogies about how governments spend – that is if we really want to secure a stable future for those that will come after us.

In the words of Dr William Black ‘What if the public understood how money works?

Well, there might just be a revolution!










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The post ‘What if the Public (really) Understood How Money Works?’ Just think what we could achieve! appeared first on The Gower Initiative for Modern Money Studies.

Opinion: I’m a Black Climate Expert. Racism Derails Our Efforts to Save the Planet.

Published by Anonymous (not verified) on Thu, 25/06/2020 - 6:09am in

Black Americans are disproportionately more likely than whites to be concerned about — and affected by — the climate crisis. But the many manifestations of structural racism, mass incarceration and state violence mean environmental issues are only a few lines on a long tally of threats. How can we expect black Americans to focus on climate when we are so at risk on our streets, in our communities, and even within our own homes? How can people of color effectively lead their communities on climate solutions when faced with pervasive and life-shortening racism? Continue reading

The post Opinion: I’m a Black Climate Expert. Racism Derails Our Efforts to Save the Planet. appeared first on

How the American Century Ends

Published by Anonymous (not verified) on Sat, 20/06/2020 - 2:08am in

We are deep in the age of disappointment on (as Donald Trump has only accentuated) an increasingly disposable planet. Continue reading

The post How the American Century Ends appeared first on

Rebuild the ramshackle global financial system

Published by Anonymous (not verified) on Thu, 18/06/2020 - 12:50am in

The following appeared in Nature magazine on 17 June, 2020

Economic researchers neglect the role of financialization in global existential crises.

Riddled with comorbidities, the current global monetary and financial set-up precipitates crises with increasing frequency. At first, these were on the fringes of the global economy; in 2007–09 they moved to its very core.

Since 1971, national economies, and all our lives, have been shaped by this ‘system’, which can be described only as ramshackle. In that year, US president Richard Nixon unilaterally dismantled the Bretton Woods international financial architecture, built at the end of the Second World War. No sound replacement was constructed. Largely privatized, what governs the global economy today is mostly deregulated and made up of an ad hoc set of legal arrangements.

The financial system’s role in driving global connectedness has led to many changes: radical innovations in information and transport technologies; the greater integration of trade and business; and rises in living standards. However, the system has resulted in greater fragility. Financialization of the global economy plays a part in transmitting pathogens by financing long supply lines and international transport networks. These impacts are barely understood by policymakers, and are rarely discussed by mainstream economists.

Instead, academics are preoccupied with theories centred on the nation-state. Most focus primarily on microeconomics — the study of individuals, households and firms — and their relation to government. Too few tackle macroeconomic questions of cross-border capital flows; the role of central bankers in overseeing and making global financial markets; or the dominance of the US Federal Reserve in global governance.

Nor is there sufficient interest in the US dollar’s often maligned role as the world’s reserve currency, which must be held by many countries to make payments to other countries. When speculators ‘fly’ from investment in one country and convert their holdings into US dollars, the original currency plummets, raising the cost of imports such as oil or pharmaceuticals. This is not new. Countries are periodically rocked by stampedes of such cross-border capital flows. The ‘exorbitant privilege’ exercised by the US dollar accelerates such stampedes. Action by the Federal Reserve can only briefly ameliorate these shocks, because of this volatility.

New lines of research into financial globalization are needed to manage domestic economies in these challenging times and mitigate the impact of future crises — from pandemics to climate breakdown and biodiversity collapse. Among the most important studies will be those leading to the development of a new, better-managed international financial architecture.

The possibility of such a transformation to ensure stability and sustainability is largely absent from academic and public discourse. The ‘rethinking’ after the global financial crisis of 2007–09 led simply to a consolidation of the existing system. As the International Monetary Fund (IMF) explained in its April 2020 Global Financial Stability Report, after that crisis, the US Federal Reserve, far from limiting excessive credit creation, turned a blind eye as private credit markets expanded rapidly and reached US$9 trillion globally. As with the 2007–09 crisis, lax regulation by central bankers lowered borrowers’ credit quality, and weakened underwriting standards and investor protections. These risky credit markets — in high-yield (‘junk’) bonds, leveraged loans and private debt — continued to show stresses through early April 2020, despite the Federal Reserve’s massive cash injection. The stimuli have once again bailed out monetary chicanery more than they have individuals.

Reform is crucial if societies north and south are to mobilize the financing needed to import drugs and equipment to tackle this pandemic and future ones, let alone if they are to fight climate change by investing public resources into alternative and sustainable transport, land use and energy systems. During the COVID-19 crisis, private markets failed to supply timely necessities, such as personal protective equipment. In the same way, before this pandemic, the market proved unable to provide affordable health care, housing and higher education, as well as decent well-paid jobs, for millions of citizens. Private markets are not fit to guarantee the security of populations in the face of increasingly dangerous extreme weather events.

Just as we need a sustainable global ecosystem, so do we need a stable, sustainable international financial system — an important public good. The next practical priority, therefore, is to ensure international coordination and collaboration in designing a new architecture.

When the international system was last reconstructed at Bretton Woods, New Hampshire, in 1944, US president Franklin D. Roosevelt invited only qualified economists to the conference. Bankers and financiers were barred. And the selection of experts was broad — not narrowly focused on Anglo-American academia. Roosevelt ensured that scholars represented diverse geographical regions and interests: 32 of the 44 delegations came from low-income countries. As political scientist Eric Helleiner explained in his 2014 book Forgotten Foundations of Bretton Woods, policymakers were “deeply committed to an inclusive ‘procedural multilateralism’”. It gave a formal voice to all the United Nations, and to other nations that had remained neutral.

Now, as then, we need international, pluralistic academic and political leadership to foster a new procedural multilateralism. That is the only way to build a global monetary system that can help countries to end this pandemic — and to tackle climate breakdown.

Nature 582, 461 (2020)

doi: 10.1038/d41586-020-01507-1

We can get killed.....

Published by Anonymous (not verified) on Wed, 17/06/2020 - 2:16am in

The following are my notes for a contribution to the debate on the post-Coronavirus economy held in the European Union’s parliament on 15 June, 2020. (The Parliament was largely empty as many MEPs were still shielding or self-solating from the pandemic. ) Other contributors included: Pierre-Olivier Gourinchas, Professor of Global Management, University of California, Berkeley, Daniela Gabor, Professor of Economics and Macro-Finance, Lex Hoogduin, Professor at the University of Groningen; Gita Gopinath, IMF Chief Economist; Laurence Boone, Chief Economist OECD. Vladimiro Giacché, Chairman of the Centro Europa Ricerche, Roma
and yours truly: Ann Pettifor, Political economist, author and public speaker. The Chair was Irene Tinagli MEP


1.     We have learned from the coronavirus crisis that we can get killed if we are not better prepared for crises and shocks that scientists have warned us of – shocks like pandemics, climate breakdown and biodiversity collapse.

2.     We were warned of the inevitability of pandemics by, amongst others, experts at Oxford University – Prof Ian Goldin and Mike Mariathasan.

3.     We have learned from the coronavirus crisis that we can get killed if we do not respect nature and instead strip wildlife of a home to make way for farming, mining and housing. 

4.     We have learned that we can get killed if we do not work cooperatively; if we are not willing to make sacrifices; if we do not allow the best of our humanity – altruism and empathy with fellow human beings and with our fellow species – to take priority over greed and self-interest.

5.     We have learned that those who told us “there is no money” were misleading us. Perhaps deliberately.

6.     We have learned from the coronavirus crisis that central banks can mobilise up to $21 trillion in liquidity to support non-bank corporations and the financial sector: Wall St. the City and Frankfurt.

7.     We have learned that like homeowners wanting to invest in a home, governments first raise finance by issuing bonds via central banks, and because EU governments are on the whole strong economies –these bonds are trusted and valued. In fact, as Ms Gabor has explained, sovereign debt is the backbone of the private finance sector as bonds are in demand from banks and other institutions for use as sound, safe collateral.

8.     And like homeowners, governments spend the finance raised into the economy, and spending , as we saw in the case of coronavirus,s helps protects jobs and firms – in both the public and private sectors.

9.     And we all know from our own experience that jobs generate income.

10.  And that the income created by employment, is taxed by governments. And so full, well-paid and skilled employment helps governments pay down their debts, balance budgets, and fix the public finances.

11.  We have learned from the OECD that world economic output has collapsed 7.6% this year; that the OECD unemployment rate has nearly doubled.

12.  The Commission provides evidence that unemployment in Europe is very high – it is expected to be at about 20% in Greece, 18% in Spain, 12% in Italy, 10% in France. At least 14 million people are unemployed…and the crisis of coronavirus means that number is probably much higher.

13.  What high unemployment indicates is that there is a great deal of idle capacity in Europe.

14.  Given these high levels of idle capacity, it is dangerous for economists to raise the threat of inflation. Inflation occurs when the economy is either at full capacity, or exceding full capacity.

15.  Idle capacity determines the low rate of interest across Europe. The weakness of the European-wide economy explains why interest rates are so low. While ECB rates may be low, they have been lowered BECAUSE  of the weakness of the EU economy. ECB rates are not causal. They are a consequence

16.  We have learnt from the pandemic that governments lose tax revenues when unemployment rises. And conversely, governments benefit from full employment, because full employment generates the tax revenues they need for the repayment of bonds issued to finance job creation.

17.  Full employment generates the tax revenues needed to balance European government budgets. Governments have budget deficits BECAUSE of unemployment and unused capacity.

18.  We have learned that the best way to raise tax revenues is, not to increase taxes, but to create jobs.

19.  These are important lessons.

20.  Scientists know that human civilisation is at risk of collapse if temperatures rise above 1.5 degrees Celsius.

21.  Scientists know that temperatures are probably already higher than that.

22.  That as we march blindly towards weather extremes and climate catastrophes - the coronavirus crisis will have been just a minor skirmish.

23.  Economists know that the European Union is at risk of dissolution.

24.  Politicians know that the Green Deal is an attempt at consolidating the Union.

25.  Politicians know that the failure of the Green Deal to tackle climate breakdown in a way that is economically inclusive will risk the future of the European Union.

26.  As with the coronavirus crisis, countries will go it alone – in order to ensure their citizens survive.

27.  The stakes are high.

28.  Scientists know that the Green Deal’s emission reduction target of 55% by 2030 - which is three times faster than during 1990-2020 – is still too modest.

29.  It is a target that will get us killed.

30.  The EU needs a much more ambitious target.

31.  Politicians know that unless the EU is consolidated, the world will be dominated by the power of the United States

32.  Economists know that unless the EU consolidates, the world will continue to be subject to the US dollar as the world’s reserve currency.

33.  The first step the EU should take, as previous speakers have indicated, is to issue safe assets – European-wide bonds - demanded and needed by capital markets – to finance the Green Deal - a radical transformation of the EU economy to end our addiction to fossil fuels.

34.  These bonds can raise sums comparable to those raised to tackle the Coronavirus crisis, meaning it will not be necessary to raise taxes on European citizens.

35.  The second step is to abolish fossil-fuel subsidies to big corporations of 250 billion euros per year. As Professor Servaas Storm has shown, this will raise revenue for member states’ governments by an estimated 100 billion euros per year.

36.  The third step should be to introduce a tax on carbon of 75 euros per tonne of CO2. This will generate some 270 billion euros as annual tax revenue  - some of which can be used to compensate the poorest households for higher energy prices.

37.  Because corporations will benefit hugely from the stimulus of the Green Deal, the fourth step must be to raise the rate of corporate profit taxation back to the level of the late 1990s. This will raise annual tax revenues by 55 billion euros.

38.  Finally, let us not forget: lack of preparedness for crises predicted by scientists – will get us killed.







Green Structural Adjustment in The World Bank’s Resilient Cities

Published by Anonymous (not verified) on Tue, 16/06/2020 - 9:25am in

Cities across the world are facing a double-barreled existential problem: how to adapt to climate change and how to pay for it. Over the next thirty years, more than 570 coastal cities are poised to face frequent catastrophic flooding owing to sea level rise and more intense storms, while as many as 3.2 billion urban residents may run out of water by 2050. Other looming crises include soaring urban temperatures, the urgent need to transition away from fossil-fueled energy and transport systems, and plummeting rates of local biodiversity.

Responding to these problems will, international bodies project, require a virtually unprecedented buildout of infrastructure, from hardened municipal water and sewage systems, to urban afforestation, to renewable energy systems. This massive infrastructural program coincides with global economic conditions marked by the lingering ideological stranglehold of austerity, unprecedented levels of capital concentration, and now, myriad uncertainties produced by COVID-19.

In response to the twin problems of resilient infrastructure needs and public fiscal constraints, the World Bank and an array of partner institutions from the Rockefeller Foundation to USAID have been ramping up programs to facilitate private investment in urban resilience. From a baseline of $10 billion across 77 cities in 2016, the World Bank aims to ‘catalyze’ investment of more than $500 billion into urban resilience projects across 500 cities by 2025.

But the vast majority of this money is not being distributed in the form of grants, as would befit a just adaptation regime respecting the loss and damage that will be borne by people least responsible for climate change. Nor is it ‘vanilla’ development lending, where states borrow from the World Bank for approved projects while receiving ‘capacity building’ for administering the project. Instead, this resilience funding is targeted at reformatting municipal governments to enable them to execute urban resilience projects through private-sector oriented pathways. These initiatives are focused on cultivating cities that can plan investor-friendly infrastructure projects, then access global debt markets to finance infrastructure that is meant to achieve resilience.

We call the process through which vulnerable cities of the Global South are being rendered investable in response to climate change Green Structural Adjustment (GSA).

We use the term Green Structural Adjustment to signal connections between 20th Century Structural Adjustment and contemporary World Bank urban-climate programming. Structural Adjustment formally ended in 2002, after the Bank, along with the International Monetary Fund, administered more than 500 Structural Adjustment Programs (SAPs) in almost 100 countries in the 1980s and 1990s. While the language of structural adjustment was phased out in favor of the more gentle sounding ‘development policy lending’ in 2004, the underlying faith in the power of markets to create desirable change, a commitment to technocracy, and mistrust in Southern states to pursue the ‘right’ objectives through the ‘right’ governance mechanisms, persists. But there are important twists from the 20th Century formula: the unit of policy intervention is the city, rather than the nation-state; the aim is to create access to debt, rather than fixing sovereign balance of payments crises and overwhelming debt; and, the primary objective is climate resilience to secure development, a departure, at least rhetorically, from environmentally calamitous Structural Adjustment.

While 20th Century SAPs were often violently imposed – and successor policies administered by the IMF still are – the violence of GSA is less direct. The Bank is the herald of investors, bearing the message that if city governments are not reformed in investment-friendly ways, those cities will continue to be cut off from more than $100 trillion swirling on global capital markets. This is a modern, environmentally-inflected version of TINA; as the World Bank sees it, ““public investment alone, even when combined with [official development aid] is inadequate” to remake cities that can protect residents from environmental change; only financiers have the power to pay for resilient infrastructure at the scale necessary. So the criteria of investors, such as balanced municipal budgets, a regional or internationally recognized credit rating, and a pipeline of investable projects planned with accepted forms of environmental data must be achieved if cities are to gain access to these vast pools of capital.

The second connection between the SAPs and the GSA is causal; Structural Adjustment contributed to many of the problems that GSA aims to counter. For example, SAP-induced agricultural ‘rationalization’ contributed to rural-urban migration, driving urban growth, rates of informality, and associated vulnerability to environmental change. Trade liberalization facilitated hydrocarbon and raw material extraction and export, turbocharging rich world consumption and associated greenhouse gas emissions and degrading local environmental conditions. Meanwhile, spectacular levels of global inequality has led to unprecedented levels of wealth for the investor class.

It is precisely this concentrated wealth that GSA aims to channel into urban resilience, in line with the broader World Bank project of ‘Maximizing Finance for Development’. GSA offers a path to climate-proofed infrastructure provision operationalized in line with the ‘Wall Street Consensus’, an austerity-drenched logic of, and set of tools for, using public funds to subsidize private sector investments. In turn, these investments are to be channeled into familiar financial mechanisms, including public-private partnerships, municipal borrowing through labeled green bonds, or land-value capture, but using the World Bank balance sheet and expertise “in innovative ways to catalyze trillions”.

Our paper looks at examples from Can Tho (Vietnam), Jakarta, and Kampala, but these processes are playing out in cities in virtually every corner of the Global South. And the scope of these interventions is growing: if Bank spending gets close to the $25 billion per year it aims to leverage by 2025, GSA-aligned investments would be one of the biggest lines of ‘climate finance’ in the world.

While GSA operates at the interface of global institutions and the city, its practices have structural ramifications. Overaccumulated northern capital has been desperately seeking profitable investment in a high liquidity, low yield world. GSA, through its technical assistance and derisking activities, aims to produce a pipeline of investable frontiers. As more cities gain access to debt markets and their needs for adaptation grow, GSA offers a multi-sited spatial fix: physically fixing Northern capital in Southern infrastructure and staving off crises of overaccumulation, producing new geographies of accumulation and the ability to absorb the ravages of a changing climate.

It remains to be seen how much private investment in public infrastructure GSA ultimately will generate; to this point, GSA is still much more about beginning to restructure city governance than tracking trillions in Global North investment into Southern built environments and the (mal)adaptive impacts those infrastructures produce. As a World Bank staffer told us, ““right now less than 2% [of investable private capital] gets invested in urban infrastructure. So, these are pension funds, sovereign wealth funds, mutual funds, and they’re out there, they’re looking for reasonable returns, in a very low return market right now. So, we think there’s an opportunity to tap some of that”. This sums up GSA as it empowers technocrats and financiers to shape what kinds of infrastructure are realized and how it is financed, producing cities and infrastructure as investable enclaves while rents flow to investors.

Ultimately, we reject the reframing of ‘climate debts’ enabled by GSA from a radical claim to righting past and ongoing injustices that produce uneven climate risks into a technocratic syntax that heaps financial debt onto vulnerable cities in the Global South. There is much scope for (geographical) political economists to envision other modes for producing future-ready infrastructure, and the institutions to facilitate those futures. The move toward normalizing discourses of global green Keynesianism are welcome, but insufficient. Instead, our next steps are to figure out how the highly concentrated finance that the GSA mobilizes can be repurposed to facilitate the decommodification of climate resilience and mitigation.

Cover image: Jakarta, Indonesia (100 Resilient Cities)

The post Green Structural Adjustment in The World Bank’s Resilient Cities appeared first on Progress in Political Economy (PPE).

Chatbots at the End of the World

Published by Anonymous (not verified) on Tue, 16/06/2020 - 12:08am in

Silicon Valley proves useless in a crisis

Nothing is written in stone. There is an alternative. Let’s make this the era of people power; we can do this!

Children wearing school uniform holding a chalkboard with the slogan "We are the future"Image by Gerd Altmann from Pixabay

‘Our economic and social prospects in the coming decade depend on today’s policies. The recovery will not gain steam without more confidence which will not recover without global cooperation.  Governments must seize this opportunity to engender a fairer and more sustainable economy. Prospects come from dialogue and cooperation at national and global levels.’

Laurence Boone – OECD Chief Economist

In the week that it was reported that in April the UK economy suffered a record slump with GDP plunging by 20.4%, the OECD suggested that it would likely suffer the worst damage from the Covid-19 crisis of any country in the developed world. It also noted in its most recent report that the global economy was now experiencing the deepest recession since the Great Depression in the 1930s, with GDP declines of more than 20% and a surge in unemployment in many countries.

It is clear that whilst many countries are now coming out of lockdown, the fear of a second wave and ongoing public and business uncertainty will continue to impact on future economic activity. Just this week there has been a slew of redundancy announcements.  BP is planning to cut its workforce by around 10,000 worldwide and in the UK British Gas by 5000 and the Chemicals firm Johnson Matthey by 2500. Heathrow is also launching a redundancy programme as the number of flights and passenger traffic has plummeted, with no sign of any recovery as travel restrictions continue.

This, unfortunately, represents just the tip of an iceberg threatening to sink economies around the world without continuing and adequate state intervention through increased spending. The ManpowerGroup, in its employment survey published this week, found that companies in all the major sectors of the economy are more likely to cut jobs than to hire over the next 3 months and revealed that it was the weakest forecast since records began in 1992. It has been estimated that the unemployment rate in the UK could reach 10% during the second quarter of 2020.

A report by Pro-Bono Economics also published this week reveals that despite the government bailout in April, one in 10 UK charities are facing bankruptcy by the end of the year as a result of financial shortfalls triggered by mounting demand for their services and lost fundraising income due to shop closures. The study said that two-thirds of smaller, local charities had made significant cuts to their services and one in eight were expecting to have to terminate their operations. According to the report it had also forced some big-name charities to use public donations to support those services provided under contract to local authorities and central government (we will return to this later on).

Alongside the economic consequences of the pandemic, Sara Caul, Head of Mortality at the ONS (Office for National Statistics) noted in the statistical report of deaths occurring between1st March and 30th May, that people living in more deprived areas had experienced Covid-19 mortality rates more than double those living in less deprived areas.

Not only are we faced with the very real tragedy of Covid-19 and its effects on the lives of those who have lost loved ones and those that have witnessed the ravages of the disease in our hospitals and care homes, the IFS (Institute for Fiscal Studies) in its Deaton Review observed this week how existing deep-rooted inequalities lay at the heart of the current disparities identified between UK regions.

The IFS then suggests that inequality can only worsen if ministers fail to act, and risks entrenching already deep divides. But confusingly and at the same time as recognising this, then goes on to suggest that the crisis is likely to leave challenging legacies for inequality given that the government’s capacity will be constrained by record peacetime levels of debt.


Whilst the IFS deplores the existence of inequality and identifies some of its causes, it fails to grapple with the primary reason why inequality has risen and indulges in a false story which suggests that addressing it will be hindered by the already high levels of government debt.

What the report fails to mention, is that those disparities exposed via the pandemic are linked to the systemic frailty of a decaying economic paradigm. The decades of low wage growth which have left households unprepared financially to face involuntarily imposed unemployment as a result of Covid-19, the stark inequalities that have arisen as a result of an economic system which has penalised working people and impacted on access to good healthcare, education, housing and essential public services. It reveals how government, via its policy decisions and through a decade of austerity and cuts to public spending, has left a landscape ravaged by rising poverty and inequality. It has impacted communities across the country, particularly in the South West and the North, where cuts to local government spending, combined with increasing job insecurity and low wages have affected both poor white and ethnic populations to also create fear and societal division.

David Cameron’s big society, namely the charitable/voluntary sector, has also been affected by fallout from austerity, combined with the economic effects of Covid-19 on its finances.  Years of cuts to local government grants have, in their turn, affected many local charities who were already financially stretched. Closure of fund-raising avenues has left many faced with difficult decisions. This highlights what happens when government shifts responsibility for the provision of essential services to the charitable, voluntary sector whilst at the same time cutting public expenditure.

We are facing a disaster of monumental proportions. The economic fallout from Covid-19 is bad enough, but when combined with the threat posed to human existence by climate change, it is ethically and morally indefensible to hide behind false narratives which are designed to limit the actions a government can take to address these issues.  The crisis is systemic and it is incomprehensible that our leaders, along with think tanks such as the IFS and media hacks, are still working hard to keep the hierarchies of power in place with false narratives about how money really works whilst a credulous and uninformed public accepts the dominant paradigms as being unquestionable and unassailable.

For the moment the public purse has been opened to avert economic disaster but as GIMMS has discussed before how long will it be before the old narratives about unaffordability and paying the debt back creep back into the political and public discourse?

As Professor Prem Sikka wrote in a recent article ‘the right will try and push for a new round of cuts after this crisis. It would be economically illiterate to do so…It’s time to bust some neoliberal myths about debt’

If we continue to allow such myths to dominate, the consequences will be dire for the current and future generations.

As Covid-19 has dominated the news for weeks, it has already been made clear that health and wealth inequalities have played a tragic role in deaths, which combined with the future challenges posed by climate change will be a make or break moment for real and sustainable change.

In an open letter this week the UK Health Alliance on Climate Change, formed in 2016, urged the government to follow its six principles for a healthy recovery from Covid-19. It made clear its position that the health of the planet and the health of people are intimately connected and as such future government action must prioritise the health of both.

Whilst those principles are vitally important and essential to any future governmental policies it will be, as Prem Sikka has already observed, only be a matter of time before the issue of affordability and increasing government debt to pay for it will be raised.

However, without a sea change in the political market-led ideology which currently guides government policy, along with the acceptance of the very real resource constraints which all governments face when making their spending decisions, then those six principles will see little chance of being enacted to deliver those public purpose goals to secure the future.

Furthermore, whilst we remain mired in the household budget version of how government spending happens, we will equally accept its spending limitations and thus our own demise as a species.

This is our wake-up call to protect future generations, not from tax burdens as the orthodoxy prescribes, but from the burden of environmental decay and increasing climate uncertainty.

An economic recovery will depend on a new economic paradigm which puts people and the planet first – not more of the same with an environmental extra tagged on.  A Green New Deal combined with a Job Guarantee to allow a smooth and just transition is the way forward. That can only be underpinned by an understanding that government is not limited by money, but by the resources it has at its disposal to deliver its objectives. We can’t allow past narratives to dictate the future.

As a nation, it will be up to us to decide whether we go forward or stay stuck in the exploitative and destructive paradigm which is currently dictating the economic recovery in terms of more unsustainable growth, more futile consumption to feather the bank accounts of global corporations and more eco destruction.

Our future depends on understanding what is possible and what is not. And getting informed is the first step towards a better understanding of the choices we have.

As such, GIMMS can’t end this blog without a mention of two important books which were published this week, and which complement many others before them.  Firstly, The Deficit Mythby Stephanie Kelton shatters the myths that prevent us from taking action because we can’t get beyond the question of how we can pay for it. Whilst written for an American audience, it is equally applicable for the UK.

And secondly, ‘The Case for a Job Guarantee’ written by Pavlina R Tcherneva, which challenges the idea that unemployment is unavoidable and necessary for an efficient economy and invites us to imagine quite a different world where unemployment is eliminated and which has implications for the wider context of a Green New Deal.

And if you missed this first time around, readers interested in historical background and learning more about how money really works in the post-gold-standard era couldn’t do better than ordering Bill Mitchell and Thomas Fazi’s jointly co-authored book Reclaiming the State’.

And finally, don’t forget GIMMS website, which is a fount of information for anyone – from beginners through to those wanting more detailed information. Starting with our information sheet An introduction to Modern Monetary Theory’.



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The post Nothing is written in stone. There is an alternative. Let’s make this the era of people power; we can do this! appeared first on The Gower Initiative for Modern Money Studies.

Urgent need for governments to deal with urban decay and green up our cities

Published by Anonymous (not verified) on Tue, 09/06/2020 - 1:32pm in

For various reasons, I am often in Melbourne and over the last few trips I have avoided public transport (trams) for obvious reasons. In my wanderings to various destinations in the inner city I have noticed that many shops that have been trading since I grew up in that city have now disappeared as a result of the coronavirus lockdowns and the shift away from store-based retail. They were struggling before the virus hit and have now gone. Whole retail shopping strips are in trouble (the famed Chapel Street, Bridge Road, and now Victoria Street, to name just a few retail areas in serious decline). When I arrive at the airport and move into the city I get this overwhelming feeling that all this infrastructure we have built is becoming redundant in a post-Corona world. It also reinforces my view that governments are going to have a major role in transforming these urban spaces to be better suited for the needs of whatever future there is to be. This view was strengthened when I read a recent report from a research group at Cambridge University in the UK – Townscapes: England’s health inequalities (released May 2020) – which found that health inequalities in England are rising as a result of the pattern of urban development over the period of austerity. In some of the “most deprived set of towns” residents are “much worse off than the least deprived on a number of key measures”. I suspect, similar outcomes would be found in Australia and elsewhere, should the research be done. With the virus fast-tracking major shifts in the way we relate to retailing and service delivery, now is the time to implement a new urban plan to green up our urban spaces, ensure there is viable employment bases in all cities, and maintain a close link between the social and economic settlements, a link that has been increasingly broken under neoliberalism.

There are many commentators who have suddenly found that unfettered globalisation (particularly of capital) is not the path to nirvana.

And there are all sorts of calls now for nations to return to more self-sufficient positions.

In the Australian case, this means that the manufacturing industry, that has been in terminal decline for years now, is revitalised.

What goes round comes round!

All these characters that touted the ‘free market’ are now favouring government intervention and financial support for failing capitalist firms and sectors.

We read, almost daily, how government should invest billions here or millions there to save some firm or sector.

The federal government has even created a – National COVID-19 Coordination Commission to “minimise and mitigate the impact of COVID-19 on jobs and businesses, and to facilitate the fastest possible recovery of lives and livelihoods.”

Did I say planning!

Yes, the wheel turns.

One of its plans it to restore profitability and jobs to manufacturing.

I will discuss that topic separately because, while many unions and progressives hanker for the days when factories purred and created relatively high-paying, secure jobs, the validity of the proposition is far from straightforward.

There were reasons manufacturing declined so thoroughly and they were not all related to poor policy or lack of government support.

It may be a good idea to introduce an industry policy designed to stimulate manufacturing, particularly in renewables and other future technologies, but dreaming of a return to large-scale, dirty-type manufacturing production is probably a step too far.

We should also realise that the sector is still one of the largest employers (about 7.1 per cent of total employment and rising).

But I will leave that for another day.

When I was in Manchester in February this year, I couldn’t believe some of the changes to the inner city. I had studied in the city during the 1980s when Margaret Thatcher was just warming up and saw the devastation of some of the urban areas that came with a hollowing out of state services and rising joblessness.

It looked worse to me in February, although it was a typically cold and wet Manchester day, which might have coloured my judgement. I also didn’t go out to my old haunts down Oxford Street and beyond.

But I think what is happening across most nations is part of a similar trend.

The report from the Bennett Institute for Public Policy at Cambridge University on the growing inequalities across the English urban landscape focuses our attention on the future.

I think it also explains, in part, why the Yes vote won in 2016, although I am sure the urbanite Left in London won’t agree.

The Bennett Institute have what they call their ‘Townscapes Project’, which seeks to explore the fortunes of towns, principally, but not exclusively in Britain, in a globalised world, exacerbated by the mindless austerity policies that have inflicted on regions and peoples.

We have known for a long time that the way in which the globalised economy has evolved has created differential spatial patterns of economic development, particularly in terms of concentrating high-paid, more secure work in the major city centres and starving the regional centres, which in part grew up as service centres for manufacturing, of jobs and opportunities for youth.

The ‘Townscapes Project’ is about exploring very “granular” data to get beyond the ‘north-south’ stereotypes and to expose the drivers of spatial inequality and the likely policy responses that will attenuate them.

The point that cannot be avoided is that societies will only tolerate a certain degree of inequality before they crumble.

The events on the streets in the US and beyond at the moment tend to reinforce that assessment.

I have written in the past about the declining regions of Australia as neoliberalism hollows out the economic settlement and concentrates jobs in the large urban centres.

Many regional cities then start losing their critical mass of services, the youth move to the major centres, and the, previously vibrant regional cities virtually become geriatric centres, dying with the remaining older residents.

For example, these blog posts cover related topics:

1. Brainbelts – only a part of a progressive future (July 25, 2016).

2. The urban impact of the failure of austerity (January 26, 2016).

In the mid-1980s, as progressives were floundering around to find some answer to the dominance of neoliberalism they came up with some ridiculous ideas.

Remember Tony Blair’s ‘Third Way’ nonsense.

There was social entrepreneurship.

And the was the so-called ‘New Regionalism’, which was largely driven by case studies documenting economic successes in California (Silicon Valley) and some European regions (such as Baden Württemberg and Emilia Romagna).

The interlinked ideas that define this approach to ‘space’ were consistent with the oft-heard claim from neo-liberals that the ‘national’ level of government gets in the way of development.

It also fed into the Left narratives that globalisation had usurped the power of the nation state and that international solutions to inequality were necessary.

Thomas Fazi and I considered all that in our book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).

New Regionalism claimed that ‘the region’ had become the “crucible” (to use the words of British regional scientist John Lovering) of economic development and should be the prime focus of economic policy.

In this way, the claim was that regions had usurped the nation state as the “sites of successful economic organisation” (Scott and Storper’s words) because supply chains (in the post Fordist era) had become more specialised and flexible given the need to deal with uncertain demand conditions.

New Regionalism advocates argued that regional spaces provided the best platform to achieve flexible economies of scope that allow nations to adjust to increasingly unstable markets.

These socio-spatial processes allegedly would require localised knowledge creation, the rise of inter-firm (rather than intra-firm) relationships, collaborative value-adding chains, the development of highly supportive localised institutions and training of highly skilled labour.

These dynamics then demanded that firms to locate in clusters, often grouped by new associational typologies (for example, the use of creative talent or untraded flows of tacit knowledge) rather than by a traditional economic sector such as steel.

The new post-Fordist production modes emphasise new knowledge-intensive activities encouraging local participative systems. By achieving critical mass of local collaborators, a region could be dynamic and globally competitive.

Most these claims were based on induction of regional ‘successes’ without regard for the specific cultural or institutional contexts, and lack any coherent unifying theoretical underpinning.

It is highly disputable whether the empirical examples that were advanced to justify the claims made by New Regionalist proponents actually represented valid evidence at all.

For example, John Lovering (1999: 382) examined the claimed made in the 1990s about Wales and concluded:

If one factor has to be singled out as the key influence on Wales’ recent economic development … it is not foreign investment, the new-found flexibility of the labour force, the development of clusters and networks of interdependencies or any of the other features so often seized upon as an indication that the Welsh economy has successfully ‘globalized’. Something else has been at work which is more important than any of these, and it is a something which is almost entirely ignored in New Regionalist thought … It is the national (British) state.

(Reference: Lovering, J. (1999) ‘Theory led by policy: the inadequacies of the New Regionalism’, International Journal of Urban and Regional Research, 23, 379-395.)

That is, a supportive macroeconomic policy framework – read deficit spending from the currency-issuing government.

While many criticisms can be levelled at New Regionalism, its major weakness has always been that it perpetuated the notion that regions can entirely escape the vicissitudes of the national business cycle through reliance on a combination of foreign direct investment and export revenue.

It is a different spin (a variation) on the ‘business cycle is dead’ notion and amounts to a denial that macroeconomic policy – that is, at the national level – can be an effective response to global trends that penetrate via the supply chains defined by trade patterns to the local region.

New Regionalism thus supported neo-liberal claims that fiscal and monetary policy had become impotent and, in turn, it constructed mass unemployment as an individual phenomenon.

By ignoring the fact that mass unemployment demonstrates the unwillingness of the central government to spend sufficient amounts of currency given the non-government sector’s propensity to save, the neo-liberal position was left unchallenged and was actually reinforced.

A new style of – Say’s Law – emerged with claims that post-Fordist economies need to focus on ‘supply-side architectures’.

And now some decades into this abandonment of regional and urban planning, we are seeing the consequences in our towns and cities.

And urgent and planned government intervention is required.

The Bennett Report focuses on the health inequalities that have emerged that are directly traceable to the way in which urban settlements have responded to the trends noted and the rising austerity imposed on nations by neoliberal governments since the 1990s.

The main findings are:

1. “there are some marked, and worsening, health inequalities within the English townscape”.

2. Citizens in England’s “most deprived towns” endure “Shorter life expectancy, worse self-reported health, and the higher relative incidence of a number of illnesses mean that people who live in these different places have much lower wellbeing than their counterparts in more affluent places.”

3. Importantly:

… the ongoing coronavirus pandemic will … these inequities worse, not least because of its impact upon the employment prospects of those in the lower part of the income distribution.

4. Government must address issues such as “access to green spaces and associated issues like air quality, but also in terms of the retail options available to residents.”

5. The declining “high streets” (shopping precincts) require attention given they influence health outcomes.

6. As the inner cities decline, the quality of the shopping provided declines – we see a rise in $1 shops selling junk, increased tattoo and sex shops, and a proliferation of “convenience and fast food” shops that undermine health outcomes.

This is because rents fall as the quality of retailing falls and low-cost, low-productivity ventures enter.

7. Available services, particularly in health care, vary widely across different towns which impacts on the health outcomes of the residents. In the towns in decline, the professional services are among the first to go.

This is exacerbated by shifts in government policy towards supporting public health (shift to user pays etc), which makes it impossible for health services to survive in regions where jobs and incomes have dried up.

8. Towns that have abandoned green spaces – selling it off to developers so they can profit – face poor health outcomes.

The Report says that:

The COVID-19 crisis is having a major impact upon England’s towns. Access to green space, which is crucial to the mental and physical health of a population, especially during lockdown, is very unevenly distributed within them. There is an overriding need for policies to address the large and widening gaps in the health and economic fortunes of many towns, and these should be integral to the ‘levelling up’ and economic recovery agendas.

A major problem in Australia, for example, is the cuts in funding to local governments, who are then forced to party with developers to generate funds for service provision.

The distortion of the urban landscape that has followed is now delivering shocking health outcomes as exposed by the Bennett Report for Britain, which has experienced shocking cuts to local government grants from the national government.


The bottom line is this.

If regions are left to decay, the children perform worse in school, become obese because the food outlets available are all unhealthy and the green spaces disappear, and then form gangs because there are no jobs.

Society can only stand so much of that before it breaks.

It is breaking all over the world after several decades of this slow burn destruction of our job opportunities and urban infrastructure.

There is no shortage of government cash and with the COVID-19 pandemic making matters worse, now is the time for governments to be bold and start repurposing the declining retailing districts and improving services and generating work.

That is enough for today!

(c) Copyright 2020 William Mitchell. All Rights Reserved.