When he took on the G summits, Stephen Harper was obviously hoping to play out his inner white knight. He grabbed the G8/G20 for Canada so he could use his hosting heft to set the world right and put neo-con politics back at the centre of the world stage.
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I think history will see his performance as the last hurrah of a bygone era.
Harper might rake in some points on the home front, but the scorecard on this one is not ultimately about retail politics. It’s about where the inexorable push toward more global governance in our deeply interconnected world is going and who is leading. Here are five reasons why Harper’s cachet as a world player is a whole lot weaker than it looks.
1. They’re only being polite.
Please don’t get too excited when President Barack Obama (or any other world leader) says things like “The success of these summits is a tribute to Canadian leadership.” That’s called being a courteous guest. It’s the reward you get for being host, and it means nothing to anyone except a domestic press starved for something to say.
2. It’s mostly happy talk for the bond market.
Harper’s biggest claim to a neo-con victory was a commitment by all countries except Japan to halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016. This was supposed to be a win over the U.S. concern that withdrawing stimulus could stall recovery.
But at his closing press conference, President Obama told reporters quite clearly, “We had already proposed a long time ago that we were going to cut our deficits in half by 2013. And so the time frame and the measures that have been adopted are consistent with our view that in the medium and long term we are paying attention to the big deficits and debts that we have out there.”
So the “target” adopted was entirely consistent with the U.S. plan. And the timelines adopted are “voluntary” and don’t kick in for a couple of years.
Yes, everyone agrees that deficit reductions are going to be necessary, but Obama’s plan calls for new tax initiatives, boosting trade and job creation, not social service cuts, as the core approach.
Frankly, the G20 deficit agreement is aimed primarily at soothing skittish bond markets.
And they were smart to offer up the happy talk. The markets are threatening to suffocate indebted national governments. These are the same ruthless financial guys who caused the problem in the first place, and dammit, they still have the power to mess us all up again.
3. Bank levy light-weight.
The much-touted bank tax that Harper pushed off the table isn’t a big deal. The banking sector certainly deserves to pay more taxes for all the reasons we already know and some more that we don’t.
Organization for Economic Co-operation and Development tax policy director Jeffrey Owens said at a press conference during the weekend that his work suggests that the effective rate of taxation of the banking sector is below other corporate-sector taxes due to “aggressive tax planning.”
Translation: even without the cost of the meltdown, the banks aren’t paying their due. He also highlighted the fact that, due to the crisis, the sector has racked up more than $800 billion in losses that it is likely to write down against taxes owing on rebounding profits for years to come, while government balance sheets around the world are bleeding. Ouch.
But here’s the truth: the bank levy wasn’t the one we wanted to go global.
The fact is, bank ownership, regulation and tax regimes around the world are diverse and difficult to control from afar. It’s not necessarily a bad thing to leave the Americans, British, French and Germans to set the example and lead other, less bank-identified world leaders than ours to institute best practices.
In the meantime, what we need to unite around is the financial transaction tax, aka the Robin Hood tax, which is a different matter altogether. It lends itself to a global application, is relatively easy to police and has the potential to raise hundreds of billions the world needs to solve our global climate, poverty and government debt crises. This leads to my next point about the new role of taxation.
4. Neo-cons, take note.
Raising, not cutting, taxes is now key to national deficit reduction targets. No one but Harper thinks it’s time for tax cuts, not even Bank of Canada head Mark Carney. Even other conservative government leaders like the UK’s David Cameron and Germany’s Angela Merkel are raising taxes and spending less to get their books more balanced.
5. Watch out for South Korea.
That country’s ready to spar with Canada for the crown of “little country that punches above its weight,” and in just five months it’s hosting the next G20 summit. This is the match to watch.
That’s when a new financial regulatory system is supposed to be adopted. And the issue South Korea is putting on the agenda, backed by the team of countries it’s leading, is development. Don’t expect the Asian nation’s perspective to have anything in common with Harper’s dumb maternal health propaganda.
This former “Third World” country has suffered through decimating war, poverty, underdevelopment and currency collapse to become one of the fastest-growing economies on earth. Home of UN leader Ban Ki-moon and fiercely committed to a new green economy, this emerging world leader won’t offer retread neo-liberal solutions.
If you’re looking to see where new leadership will emerge on the world stage, the smart money is betting on Asia.
alice@nowtoronto.com
See also: G8 fails climate and development | Bank tax holiday worse than we thought | Paul Martin goes Robin Hood at G20 | Harper’s maternal money-throw
