Drawing on the Olympic Spirit to Tackle the Economic Crisis

The 2012 Olympics have proven a welcome diversion from the real world economic crisis that engulfs us. We celebrate the athletic prowess and mental strength of individuals and teams, that test and challenge themselves and have the determination to keep going to the very end. We work together across world states, in competition but nevertheless together.

After this break, we will need to face the reality once again, and seek to find a way out of the economic crisis. We can learn from the Olympics- with their birthplace in Athens, one of the cities at the heart of the meltdown - that single minded determination to win that gold, but this time not for team GB or team China but for the wider World. We can learn from the Olympic Committee who succeeded in organising this complex international event.

I've been reading the Stiglitz Report (2010) to try and understand the causes as well as the solutions to this financial and worryingly realistic economic crisis - it's well worth reading if you haven't already done so.

The report blames the current crisis not only on poor macroeconomic policy and microeconomic policy, but also dogma in terms of economic theory with seemingly blinkered beliefs in the free market and general liberalisation. This resulted in inadequate regulation, which in turn allowed asset bubbles to develop especially in the property sector. It meant high levels of risk taking through banks which were too big to fail, and the resultant instability we know too well.

In combination, with neoliberal economic policy involving lower taxation on higher earners  and deepening inequality, we also ended up with a problem of weak aggregate demand. The rich spend less of their income than the poor, and this means less consumption to drive the real economy in the absence of easy credit for lower income groups. Not that as a Green I am in favour of out of hand consumerism, but we clearly need to take on board the impacts of changes in income distribution.

And when the financial crisis began, there was a quick downward spiral as the policy response and that of the banks was to stop spending and lending in many countries, exacerbating the downturn. Banks became more cautious about lending once they had their fingers burnt. Governments chose not to spend as much as they should, seeking to free ride on the expenditure of others.

So what is the way out of this mess?  For the longer term, we need to recognise the importance of good regulation, which needs to be fluid and responsive, and reduce the risks of regulatory capture. We could for example ensure that the financial services sector pay for the regulators, and regulator salaries could be linked to salaries in the financial services sector. International regulation is also needed considering the interdependent global system that  now operates.

But its not only about regulation but about restructuring including the separation of vulnerable sectors and diversification rather than the vertically integrated banks we now have. Through restructuring, we can ensure that regulation is appropriate to the risks of different parts of the sector.

The report also emphasises the reform of international institutions so they have greater developing country representation. They need to  lend without imposing conditions that requires public expenditure to be slashed, often pushing countries into a cycle of decline.
A new global institution, not the IMF nor World Bank, is proposed.
It recommends reconsidering capital  markets liberalisation, questioning the extent to which we can allow free currency flows across borders. The risks of instability are too high. Is this the real issue  for countries like Greece, rather than simply being in the Euro?

It opens up the issue of having a new reserve currency because of the instability caused by reliance on the dollar. Countries use dollars as a reserve currency as a result lending to the US at low rates but also pushing up the exchange rate increasing the US current account deficit. The value of their assets are as a result affected by US domestic policy. Countries also hold high levels of reserves to avoid having to rely on the IMF, once again weakening aggregate demand and lending cheaply to the US. Stiglitz puts the argument once again for an international reserve currency - this is not new as it goes back at least as far as the immediate postwar era and the recommendations of JM Keynes.

Of course we also need rescue packages, and the report emphasises the importance of countries acting together: at present individually governments are not taking sufficient action because only some of the expenditure feeds back to their country, so they are inclined to limit their stimulus. As a local councillor, I see this problem even on a local level as councils refuse to take action such as adopting a living wage, and it appears to be because many of the beneficiaries to live outside the area and to by cynical, are not voters. The report also points out that type of stimulus we use can have distributional impacts. So for example quantitative easing which involves buying bonds from existing bondholders tends to favour banks hat hold these bonds. It recommends parliamentary approval for the mechanisms used. Finally, Stiglitz does not overlook the need to safeguard our natural capital, and recommends that the rescue packages are a green stimulus.

And a thought to leave you with: the NYC museum has a banking exhibition at the moment, and interesting to hear abut bank failures of 1937 also caused by excessive risk taking and asset bubbles. We seem to be replicating this 75  years later despite the steps taken at the time to address the highly integrated banks and the limited banks left on wAll Street after mergers and takeovers. So to address this problem, we need real determination to get there this time. Let's take some inspiration this time from the steely determination of our long distance runners, and see things through to the very end. 

The Spirit Level - huge inequality doesn't make us happy!

Last week we had the opportunity to listen to an excellent talk on this book, hosted by the Friends of Highgate Library, by the brother of one of the authors. The case of addressing inequality to achieve real well-being is incredibly powerful. But we need to think how to go about getting change. The Greens have some good policies from reducing pay differentials, paying at lease a Living Wage, and getting more people back in work by investing in homes and infrastructure. We led the way in signing up to the Equality Trust's campaign:

http://www.myfairlondon.org.uk/

Another interesting thesis was the interconnection between the green movement and equality. The speaker argued that an unequal society which fed people's desire to keep up with their neighbours made not only for an unhappy society but for a consumerist society at the expense of protecting our planet for fuutre generations. Generally the Greens argue that if we are to have a greener society we need greater equality in order to share out the limited resources equitably. But here is another reason why we need a more equal society.

Mary Portas - the right thing for our high streets?

Camden's Culture and Environment Scrutiny Committee will be considering this issue on 16th April. Its an opportunity for people to put in deputations and make some suggestions. I am keen on a proper public debate on what we can do for our high streets, followed by some meaningful action!

Safeguarding our high streets

In times of recession, our high streets are even more vulnerable to decline adding to the difficulties that they have been having over many years as a result of out of town shops with parking and now with internet shopping as well. In Hampstead we see small independent shops like Pure Fruit under threat. In Highgate, we have seen the high street taken over by estate agents. This is however not an issue for the well-off of Hampstead and Highgate alone but for all of us. Having healthy vibrant high streets helps ensure that there is a heart to our communities and it also means we are not locked into a system which means we need to drive to distant large impersonal shops. That is why the Greens have for a long time called for action to safeguard our high streets and why we support the demands of Hampstead traders and of the Highgate Society for action.

The Mary Portas report comes up with some interesting ideas, and we are calling for the Council to form a high streets team to put together a plan in response to the report. In particular, we will be supporting the request for Council rents on commercial accomodation to be frozen and reduced where necessary. The Council has powers to promote sustainable development and does not always have to push for the highest rents it can get. It needs to think about the shops and services that support the local community and safeguard high streets over the longer term. I will also be calling for a review of parking policy which means that people get free parking if they drive to the 02 Centre or Tesco but find it impossible and expensive to park if they want to shop at a local high street. We would also like to see the potential to use the neighbourhood forums as the basis of strong local groups to work on protecting high streets. This would mean development of the forums so they worked in partnership with Council officers, traders associations and others to develop effective strategies.

There is much that can be done to protecty our high streets which is essential for our local communities and for our local economies, and Camden Green Party is calling for a strong and effective action to achieve this.

Talking to young people - Green politics

I had the pleasure of talking to the bright young girls at South Hampstead High School just last Friday about green politics. They were clearly knowledgeable about the environment as well as about current affairs. The Euro-zone crisis was top on their minds. But I soon realised that there is still a big gap between the idea of the environment being important and seeing it as a political issue.

To them green politics is about an issue that all accept is important and has to be dealt with - but what has it got to do with real politics? That's about real issues like the threat of insolvency to countries, jobs, growth etc. A resident made a related point to me at my surgery - that our talk about the environment is perceived as talking about trees and plants rather than people!

How far from the truth! I should have pointed out that wanting to put the environment to one side and talk about the pressing issues is a bit like wanting to talk about saving your new TV when your house is about to be washed away.

But its clear that we also need to explain better why action is necessary on the environment now and why it is interconnected with everything else. We need to explain why green politics is important not just some work on the environment as an add on.

To many of us it seems obvious. People live within an ecosystem - without it we cannot survive. For the 6bn people ( and expected to be 9bn by 2050) on a planet that is already exploited to its full, which suffers from water scarcity, fuel scarcity and real threats to food security to avoid conflict or famine or both we need to live very differently. Otherwise our fragile ecosystems will collapse.

And there is a way that does allow us to bring things into balance but it is one that challenges consumerism and the idea that owning more and more is the ultimate aim of human existence. It has a different perspective of human beings - as creative and social beings that achieve real well-being through friendship, family, community and creativity.

It places a high premium on a fair distribution of resources so that we don't need enormous amounts of growth so that just a little trickles down to the very poorest. It also places a high premium on respecting the world we live in and depend upon.

This means changing things so improve our democratic structures to challenge the power of the big corporations which are unable to look at the world through a different lens. It involves people coming together to say they want a different approach.

It means managing our economy so that we can ensure high enough levels of employment but without making the economy all about growth driven by advertising and a manic need to buy more and keep up with the neighbours. It means addressing a financial services sector that seeks higher and higher returns without an interest in the longer term, and ensuring that banks aren't so big that we have no choice other than to prop them up and we need a fairer system nationally and internationally. That's essential if we aren't going to be on a constant search for growth.

Thats' not to say that growth isn't needed for Africa - it is - nor that we don't need it now in the UK. We do need it to get out of recession.

So still more work to show why we need green politics and a green perspective not just an environmental policy as an adjunct to business as usual (or at least seeking to save business as usual).

Losing Small Wars, Frank Ledwidge

This is a great book.....

Visit to India

Just back from Goa (and a day in Mumbai). On a superficial level, at least, much has changed since my last visit 4 years ago with large amounts of construction - apartment blocks where not seen before and new roads some in slightly surprising places.



On the positive side, people do not seem unduly worried about finding work - hope I was talking to the right people as based on a slightly small sample of friends, people I bumped into, drivers, and the odd shack owner. At least in the tourist business all looks good. Now very often Russian tourists as well as Indian and western tourists. And some of the tourist areas despite like the Palolem strip though jammed from end to end (or almost because there is one protected area with amazing forest coming almost to the shoreline) seems reasonably well organised and the water clean.



There is also a new vibrant community of artists, writers and others. I went to a book launch at Litterati by a world renowned photographer Dayanita Singh, who now lives in an old house in my mother's village - and in fact previously the family house of her great uncle's family. It was a great setting outside in the garden at the back of another old Goa house - this one crammed with books and not just the old moth eaten, monsoon battered books that we would read as children in our parents house. The reading was attended by a collection of writers one even all the way from West Africa, another who is a well-known biographer of Graham Greene, but also architects (one of whom arrived in his electric car) and an assortment of the new Goa intelligentsia. And it’s an intelligentsia from all of India and from Goa too - cosmopolitan and breaching all those sectarian divides.



The old city of Panaji is now better protected and Fontainhas always a pretty part of the town near the old Rua D'Ourem reasonably well looked after but without being a dead village of holiday homes as we see far too often in the pretty old towns of the West. We visited architects here as well as going to a lovely little tea shop and outdoor restaurant. The old Portuguese Secretariat, previously the palace of Adil Khan an earlier ruler of Goa, is to be restored as well bringing this landmark building back into public use.



That was all the good part - and of course much much more! But there are also lots of challenges which it seems as if Goans are seeking to tackle but they are not easy to resolve. The constant talk is about corruption and a political system which operates through people building up vote banks by buying people over - jobs, money etc! How to break out of this system is the intractable problem that none of us know the answer to. Whilst Sri Anna Hazare goes on hunger strike for the whole of India, Goans struggle to figure out how to deal with this issue locally. My feeling is that we need political parties with a real clear mission, and by that I don't mean the BJP, but people who are putting forward a real platform not simply to be less corrupt than the last lot. In that way, perhaps they can build up a real following not simply one based on how much money one has to pay out. But we also need the people who constantly complain about the politicians not to expect them to bend the rules in their favour. So two limbs here - new political parties and a social compact amongst ordinary people. How much easier it is to say things than to get them done!



As you would expect, I noticed the environmental challenges too. The most obvious not surprisingly is the waste issue with huge amounts of waste strewn all over the place sadly even in some beautiful spots like the lake outside Karmali station where we went for some early morning birdwatching. Though there are some collection systems this doesn't seem to be the case in all places. And though there are some signs of waste being scavenged and recycled there is still a lot that isn’t. I wonder whether Goa doesn't need to be taxing plastic bottles or at least seeking to bring some sort of plant that uses recycled plastic as a resource into the area. Or otherwise even a waste to energy incinerator would be better than burning plastic in the fields! Lots of opportunities here and Goan politicians are aware of this - a very long serving politician who had been an Environment Minister said to me a few years back that he had tried to commission a waste to energy incinerator many years back but there had been too much opposition! It looks as if the NIMBY issue is a worldwide one!



I also worry about the water quality even in the sea especially on the long tourist strip in the north. It seems to be affected by the large number of boats in the area and possibly poor infrastructure in the surrounding area. But it’s still beautiful - and I’m sure action can be taken to improve it.



The destructive open cast mining system is temporarily halted as a result of public interest litigation. So well done to campaigners here and good results from the court system as well!



The other issue is highways construction which seems to continue – too much to gain here for the politicians with the potential for cuts and lots of contracts to award. The most worrying is widening of a national highway that cuts across this populated coastal strip. I fear that it will bring HGVs along this route cutting up villages and towns. Surely we don’t need a large highway through such a densely populated area! Local people have mixed feelings because of congested roads with some being keen and others worried about devastation to their areas.



The plans for additional smaller roads cutting across fields is also a worry to people who fear losing the last quiet tracts of land – and these can be beautiful with coconut trees and paddy fields, kingfishers and herons, mango and cashew blossom etc. I hope that just as with how waste can and should be dealt with, Goa leapfrogs the Western world and goes for a system of clean and quiet trains and maybe folding bicycles for journeys at either end. I fear this is a yearning for a quieter more peaceful era of my childhood holidays, but it will be so much more pleasant and safer too.



So I hope with courage, determination and imagination Goa manages to leapfrog the West in terms of systems of transport, waste, energy use etc. It has all the potential for doing so – with an educated and aware middle class, entrepreneurship, capital availability etc – and being at that crossroads where it is possible to take the path that avoids being locked into a system of high energy needs and other serious environmental problems.