Dinner Speech Ban Ki-moon – Copyright: DGVN 2014

At the end of January I had the honour of being invited by the United Nations Association of Germany to give a short speech at a dinner with the Secretary-General of the United Nations Ban Ki-moon in Berlin.

Here you can download the script of my speech: Dinner Speech Ban Ki-Moon

Whereas the Select Committee on Globalisation has two and a half years to discuss this wide subject, I have a limit of 10 minutes. That is a bit like the difference between the subjects of globalisation and of housekeeping at Keble College!

1. Would economists please remember what some of their pioneers said?

Over 200 years ago, when Adam Smith set about forming his moral ideas of the free market, he made it clear that the wealth of nations requires a strong state, not a weak one! At least three conditions need to be granted by the state:

• External peace;
• A reliable legal frame. Let’s call it good governance;
• Healthy infrastructure that benefits all competitors but would not be paid for by any individual actor. Adam Smith takes lighthouses as an example.

Another grandfather of modern economists, David Ricardo, also presented assumptions for healthy trade and an international division of labour. One of his assumptions was that capital was not moving. Is it very far-fetched to suspect that David Ricardo, had he been alive today, would be among the protesters in Seattle, Genoa or Barcelona? These protesters say nothing against international trade but don’t like the élite power structures of today’s capital “markets”.

2. The Fall of the Iron Curtain produced the Globalisation paradigm

Since when are we speaking about globalisation? Some believe that globalisation started with the ancient Phoenicians or at least since Cook’s sailing around the world. This is untrue: globalisation is a brand new term. It emerged after 1990 and the collapse of the Iron Curtain, which we all applauded, and simultaneously, in the context of the Internet revolution.

Until 1990, international capital had to seek consensus with national governments and parliaments in the North and South. In the South, governments used to play on the East-West tensions to solicit ODA. In Europe, we had the spectre of ‘Finlandisation’, referring to a dangerous rapprochement with the Soviet Union. Clearly, a consensus society with some elements of a welfare state was seen as more attractive by the owners of capital.

After 1990, despite massive reduction of military budgets (by roughly 300 billion US-$), the amount of funds available for development aid, public goods was shrinking. We have seen a steady reduction of capital taxation in all OECD states. The OECD calls it “harmful tax competition”.

3. Global governance

The private sector benefited and boomed. It may be high time to re-establish a healthy balance between public and private goods.

To be sure, private capital accumulation is a public good in itself. It is a major part of the wealth of a nation. Moreover, international trade helps preserving international peace, better than the nation states have been able to do.

Nevertheless, I see a need for the world to establish an equivalent to democratic state authorities, this time of a global scale. The idea is to have a power structure matching the powers of the private sector, and committed to defending public goods — in line with Adam Smith’s concepts.

In effect, we are speaking about global governance (not: global government!).

4. Three pillars

Global governance would have to rest, I suggest, on three pillars. In classical political science, we had the duality between the state and the private sector. These are then two of the three pillars.

• The state must more and more extend its reach to global affairs, by, inter alia, strengthening the UN system, international treaties, regional authorities (notably the EU). It must also secure a meaningful participation of parliaments. The International Parliamentary Union (IPU) established as early as 1889, is far from being an adequate institution in this regard. Let me inform you about one fascinating initiative called e-Parliament, that tries to link up parliamentarians via Internet to help them in their local and national needs to learn about parallel developments in other countries; the perspective is to enhance the level of competence and thereby of clout of parliaments.
• The private sector has “black” and “white sheep”. UN Secretary-General Kofi Annan has invited the “white sheep” to help him on matters of the UN agenda. Many British and German enterprises have joined this “Global Compact”. Another road is investment portfolios specializing on “white sheep”. Both the UK and German Parliaments have adopted legislation obliging private pension schemes to declare if the adhere to ethical or ecological criteria. It’s a rather new and exciting market with growth rates around ten percent per annum.
• The new pillar is civil society. International Civil Society organizations are booming. Although incredibly diverse, they can be strong.

We have witnessed several struggles between private sector corporations and civil society. Perhaps the most famous struggle in the United Kingdom occurred between Shell and Greenpeace over a North Sea oil platform. Legally, Shell was in the right: the British authorities agreed with the oil company’s plan to dump the platform. However, for moral reasons, Greenpeace objected and forced Shell to bow to them instead of the British authorities. In a sense, this event encouraged both parliamentary and civil society actors to join forces for the common good.

Unless civil society can be persuaded that private sector companies act morally, public suspicion will not disappear and Seattle may reoccur in the future. In addition, parliaments will remain alert to global pacts or alliances between states or international organizations and the private sector.

The World Summit on Sustainable Development (WSSD) is the third event in a row.

The first was the UN Conference on the Human Environment, Stockholm, 1972. In its wake, the UN Environment Programme, UNEP, was founded in Nairobi, and some UN agencies made some moves towards an ecological significance of their programmes. Ten years later, a meeting was held to assess progress since Stockholm and ended in disappointment. Continuing deterioration of the environment was reported chiefly in the developing countries. As one consequence, the World Commission on Environment and Development was created to study the reasons for that lamentable state of affairs, and Dr. Gro Harlem Brundtland, the Norvegian Prime Minister was appointed Chairperson. After three years of intensive work, the Commission published its report which was submitted for discussion at the UN General Assembly in 1997. As a result, the UN decided to convene another UN Conference, this time on Environment and Development, to be held in Rio de Janeiro in 1992.

The Rio de Janeiro “Earth Summit” was the second in the series of UN conferences. It had three major results: The Framework Convention on Climate Change (FCCC), the Convention Biological Diversity (CBD) and Agenda 21 with its fourty chapters. Agenda 21 was seen by many observers as a prescription leading – if properly applied – to sustainable development, a term already found in the Brundtland Report. Another five years later, the UN General Assembly held a special session in New York with a view to look back and assess progress made since Rio. Once again, the assessment was rather depressing from the point of view of the environment, and once again the UN decided to hold major conference, this time called World Summit on Sustainable Development, in Johannesburg, South Africa, in September 2002.

It is difficult to avoid the impression that UN conferences and reports have not been able to slow down let alone stop or revert the destructive trends. To be sure, pollution control has made major progress in the OECD countries. But then pollution is no longer the main ecological concern.

• Global warming seems to go on unmitigated. The Intergovernmental Panel on Climate Change fears that the added greenhouse effect might lead to a rise in average temperatures by some 1.4°C to 5.8°C during the 21st century. This could theoretically have disastrous effects on world agriculture and potentially on the global sea water table. If we want to halt this trend, it would be wise to stabilise CO2 concentrations at preindustrial or, less ambitious, at 1990 levels. This, however, would mean to reduce world wide CO2 emissions by at least 50 percent. Development aspirations, however, rather point at a doubling of CO2 emissions.
• Biodiversity losses have hardly slowed down; some 50 plant or animal species are said to become extinct every day! The major cause seems to be land conversion for civilisational use. One way of measuring this land use was given by William Rees and Matthis Wackernagel as the “ecological footprint”. It represents the direct and indirect land use for living, farming, clothing, transport, industry, recreation, energy etc. OECD countries have typical per capita footprints sized 4 hectares. This leaves most OECD countries too small to accommodate all of their footprints. They therefore have to export much of those footprints to less populated and less area-demanding countries. To accommodate six billion OECD type footprints we would need at least two planets earth. As we have only one, we should reduce OECD footprints at least by a factor of 2, — under the plausible assumption that developing countries have equivalent rights and aspirations regarding wealth and well-being.

Both trends and challenges have a massive bearing on Agenda 21 and the perspectives of sustainable development. If we need to reduce both CO2 emissions and ecological footprints by a factor of two at least while simultaneously aspiring at least to double world-wide wealth, we seem to be confronted with the need to perform at least four times more efficiently with the use of natural resources.

Fortunately, this goal it not as outlandish as it may sound at first. Amory and Hunter Lovins have coauthored a book with me, “Factor Four” which features fifty examples of a fourfold resource productivity. Automobiles can do 150mpg, cooling systems can do with 25% of today’s typical electricity consumption. Buildings can be designed for close to zero external energy input. Farm produce can be made with one quarter of the typical European energy inputs. Materials can be saved by large factors using re-manufacturing techniques. Water can be used four times more efficiently than today in many industrial, agricultural and private uses.

In addition, energy and materials used can be ecologically optimised as is already happening in several countries. Renewable sources of energy are a booming industry in many European countries. And materials can be selected to be perfectly recyclable.

Prices for the use of environmentally scarce resources should be gradually moved upwards so as to create an incentive for introducing “factor four-technologies”. An ecological tax reform or tradeable permits for resource use should be seen as chief candidates for instruments leading to that goal. Both can be designed in a socially and economically acceptable way. Tax-caused price increases can be tied to the pace of progress in average resource productivity.

Aggressive strategies to invcrease resource productivity may show the way for a true harmonisation of environmental and developmental goals thus ending the ecological frustrations we have experienced since the 1972 Stockholm Conference.

For further information visit the UN Chronicle’s website: http://www.un.org/Pubs/chronicle/.