Thursday, November 03, 2011

Reality Check

Reality Check
John Sayer

John Sayer believes it doesn't really matter if the demands of the 'occupy' protesters are not neatly defined. Their revolt against greed and an increasing, unacceptable level of inequality in the world is perfectly clear

Nov 03, 2011

Around the world, groups of protesters have gathered in response to an initial demonstration near Wall Street. Some are in our own city, camping out in Central District, writing posters and playing music.

It is easy to suggest they have unclear or diverse demands, and to criticise protesters in some cities who may damage property as part of their anger. But regardless of whether they have an exact prescription of the way forward or perfect conduct, we must give them credit for succeeding where many others, including politicians, non-governmental organisations and the media have singularly failed - they have renewed public attention on some unfinished business.

They have succeeded in refocusing attention on the fact that the great majority of the world's people are suffering as a result of the economic crash: millions of people face unemployment, cutbacks in essential social services, homelessness, reduced standards of living, hunger and poverty.

A small group of people who played a central role in creating the problem in several of the world's leading financial organisations have received staggering amounts of taxpayers' money to help their institutions recover, as well as massive salaries and bonuses. Yet they have failed to provide the services that the bailout was supposed to include: loans to small businesses and others to rekindle the economy.

Governments, whose job it is to create stability and security for their citizens, seem unable or unwilling to take the structural measures to reduce the chances of similar financial disasters occurring in future, so busy are they with treating the immediate symptoms and dealing with the social consequences of spending cuts and austerity packages.

Oxfam Hong Kong is concerned with these social and financial issues because all shocks and uncertainty - whether financial or naturally occurring - and all uncertainties - financial or climate change - hit poor people first and usually the hardest. Poor people pay the price of their own vulnerability. The powerless pay for the mistakes of the powerful.

The widening gap between rich and poor began to accelerate at the end of the 1970s, after three decades of market-driven growth in many Western countries. Since then, the top 1 per cent of the population has amassed a larger share of the wealth than the majority, and the gap has widened to an alarming degree. This was unrelated to the rate of growth, which slowed as distribution became more unequal.

We know that we need reform of the economic system at the highest level to reduce shocks, uncertainties and inequalities. Governments talk unconvincingly about reintroducing regulations to stop the creation of financial behemoths that are "too big to fail" and therefore governed neither by elected governments nor by market forces. But there has been little action.

One step in the right direction could be the introduction of a financial transaction tax, the so-called Robin Hood tax. This could reduce risky financial speculation while creating funds to be used to ensure that poor people have more equal access to productive opportunities.

Those with vested interests will claim that such a tax will hurt growth, and thereby stall economic recovery. Yet, the proposal is for a 0.05 per cent tax - a tiny sum in relation to the figures that define the financial sector. People with privileges to protect often rail against any controls over the free rein of business, but history has always shown that business is more resilient than its self-interested defenders are willing to admit.

Advocates of the status quo have tried to instil fear that social reforms will cause the collapse or flight of business. Citing such fears in the past, they opposed the abolition of slavery, an end to child labour, the eight-hour day, statutory holidays, equal pay for women, the Mandatory Provident Fund, progressive income tax, the minimum wage, environmental standards and more.

But of course, business has survived, and people have benefited, sustainably, from the fairness of these initiatives.

Those who argue that structural reforms will hurt growth should remember what 2008 taught us about certain types of growth. We don't want the reckless, unbalanced and unsustainable pursuit of growth for growth's sake, making the wealthiest 1 per cent of the world's people even more absurdly rich while others travel along the path to poverty.

The vast majority of people, the 99 per cent, want growth of a kind that creates a fair and sustainable society.

Protesters remind us that there is work to be done fixing a very imperfect economic system. Let us not ignore their timely call.

John Sayer is director general of Oxfam Hong Kong

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