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Poorest need deregulation more than Davos

Those on the left of the political spectrum argue that many of the world’s problems are caused by big business exploiting the poor. Those who support a free economy, meanwhile, lay many of the world’s…

You won’t find the best policy ideas here. Michel Euler/AP

Those on the left of the political spectrum argue that many of the world’s problems are caused by big business exploiting the poor. Those who support a free economy, meanwhile, lay many of the world’s problems at the door of public debt, high taxes or government regulation simply not allowing a thriving entrepreneurial economy.

Both sides of this debate tend to be agreed, however, that little good and much harm comes from a cosy relationship between big business and big government which exploits the people to the benefit of corporate and state interests.

This is a rather inauspicious starting point for considering whether the Davos meeting of the world’s political and business elites will bring about useful change.

In political circles, there is much talk of poverty, inequality and the 1%. But the big news of the last generation is the number of people who have actually been lifted out of grinding poverty as a result of continued globalisation.

Unprecedented improvement

Recent improvements in living standards of the world’s poorest people are unprecedented. Many parts of Asia have grown at extraordinarily rapid rates, and Africa is not only growing more rapidly and more sustainably than at any time in the post-war period, but inequality seems to be falling too.

It is true that much more needs to be done. The right policies, for example, would ensure that India grows as rapidly over the next two decades as China has in the past two. This doesn’t require grand pledges of aid or other action agreed at the Davos talking shop. In India, 40% of food rots before it gets to market because of poor supply chains and petty bureaucracy, a situation that will only end when the economy liberalises. A change in domestic policy is required. The necessary reforms will be homegrown and not determined in European ski resorts.

There are also changes to the world’s trading system that would help poorer countries. Within Africa, there is very little trade between the different nations – intra-African trade represents just 10% of the continent’s total trade, and the bureaucratic obstacles can be formidable.

A recent Brookings Institute Report described one African border crossing where up to 15 different government agencies bogged things down in paperwork and procedures.

The removal of trade barriers – especially in relation to agricultural goods – imposed by rich countries against poor countries would also be of great help. But there are already forums in which these things should be dealt with, including the World Trade Organisation.

Insofar as inequality is a major problem that needs to be addressed, one wonders what a meeting of a group of the world’s most privileged people will achieve.

Enriching us all

To some extent an increase in inequality, especially within a country, is an inevitable result of the process of globalisation that has improved the living standards of so many very poor people. Global entrepreneurs and their brands such as Google and Microsoft enrich us all but they enrich some more than others.

While not wishing to reverse the changes brought about by globalisation, politicians can ask themselves what changes would both move policy in the right direction and help the least-well-off who may, in developed countries, have benefited relatively less from greater freedom to trade.

The answers may vary from country to country, but in the UK they are pretty clear. Here are three policies that would greatly decrease living costs for the poor: a huge liberalisation of planning laws; the abolition of the Common Agricultural Policy and other trade restrictions in the EU; and a reconsideration of green policies that increase energy bills.

But don’t expect these policies to come out of discussions among the international business and political elites in Davos. Helping the worst-off requires solutions, which do not seem to be on the agenda of the global elites.

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57 Comments sorted by

  1. Gavin Moodie
    Gavin Moodie is a Friend of The Conversation.

    Adjunct professor at RMIT University

    I disagree that 'To some extent an increase in inequality, especially within a country, is an inevitable result of the process of globalisation that has improved the living standards of so many very poor people.' Increasing or decreasing inequality is a choice made by people, mostly by the richest and most powerful people.

    Cutting green policies would indeed help the poorest people for now, but surely their successors will suffer the most from global warming. To address both global warming as well as inequality one could introduce a progressive tax on carbon. That is, reverse the practice of discounting prices for bulk purchases of energy which subsidise big energy consumption and charge more for increasing generation of greenhouse gasses.

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    1. Brad Farrant

      Adjunct Research Fellow in Early Childhood Development at University of Western Australia

      In reply to Gavin Moodie

      Excellent comment Gavin. I also disagree with that "inevitable" increase in inequality statement and couldn't agree more with comment on the medium to long term impact of climate change on the poor.

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    2. David Arthur

      resistance gnome

      In reply to Gavin Moodie

      Thanks for this, Prof Moodie.

      I'm in substantial agreement with what you write, other than "progressive" carbon taxation. I'm strongly in favour of flat carbon taxation through a consumption tax on fossil fuels (FFCT). There are ample opportunities, through other components of the tax/transfer system, for revenue raised through such FFCT, to avoid unduly penalising those with limited discretion to alter their energy use patterns.

      If you have a look at an article "EU 2030 climate action: a…

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    3. David Stein

      Businessman

      In reply to Gavin Moodie

      Nice comment, Gavin. Many studies have shown that rising inequality is indeed bad for economic growth. It also makes intuitive sense - a larger middle class means a larger mass market for business to sell to. Here are some excellent recent reports from the Center for American Progress for anyone who is interested in a more academic discussion of the link between inequality and growth:
      http://www.americanprogress.org/issues/economy/report/2013/12/04/80381/trickle-down-economics-and-broken-promises

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    1. Felix MacNeill

      Environmental Manager

      In reply to Ben Marshall

      No need to ask, Ben - a quick look at the IEA's site indicates that they actively push the work of Nigel Lawson and kindred denialists.

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    2. David Arthur

      resistance gnome

      In reply to Felix MacNeill

      IEA? That's be the Institute of Economic Affairs, http://www.iea.org.uk/

      Here's the first page of results if you search their site with search term 'climate':
      Colin Robinson - Climate Change Policy
      ... Author Colin Robinson challenges climate change orthodoxy. ... Colin Robinson discusses his latest book on climate change policy, Climate Change Policy: Challenging the Activists ...
      VIDEO - 27/11/2013 - 12:47
      IEA Climate Change Debate - Fred Singer
      ... Prof. Fred Singer discusses research…

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  2. Felix MacNeill

    Environmental Manager

    I'll probably be accused of shoting the messenger or some such sin, but readers would be well advised to be aware that the Institute of Economic Affairs is happy to co-publish work with the Heritage Foundation.

    Naturally, I would fight to defend their right to associate with whomever they choose, but I would die in a ditch for my right to take anything they say with an unhealthy amount of salt.

    But, given this association, it's unsurprising that this article is as helpful as someone saying that, because horses served us well in the past, we absolutely cannot and must not try to go beyond the horse or improve it in any way, even if we reached peak hay some time ago...

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    1. Felix MacNeill

      Environmental Manager

      In reply to Mike Hansen

      Well, everybody knows that businessmen and former chancellors are smarter than actual scientists, otherwise they wouldn't be richer, would they?

      Stands to reason, innit?

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    2. Neil Gibson

      Retired Electronics Design Engineer

      In reply to Mike Hansen

      As usual Mike Hansen tries to shoot the messenger not the message. I suppose he really really has nothing else to say!

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    3. Michael Shand
      Michael Shand is a Friend of The Conversation.

      Software Tester

      In reply to Neil Gibson

      You don't think it is interesting that the author is calling for deregulation, cutting green policies and un-restricted free trade Ahem....for poor people, cough cough, to help the disadvantage corpora...ahhh poor people

      Maybe he can actually pull this off in the same way the Koch brothers got the Tea Party to rally for abolishing the Capital Gains Tax

      "What do we want!"
      "Our profit from investment in the share market which is some people's whole job to be completely tax free"
      "When do we want it!"
      "Before any of these protesters figure out what capital gains tax is"

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    4. David Arthur

      resistance gnome

      In reply to Neil Gibson

      Memo: Davos WEF

      Less corporate tax evasion => less government indebtedness

      Less corporate tax evasion => lower corporate tax rates

      Less corporate tax evasion => improved public health

      Less corporate tax evasion => improved public education

      Less corporate tax evasion => improved infrastructure

      improved public health + improved public education => improved worker productivity

      improved infrastructure + improved worker productivity => improved corporate profitability

      So why avoid taxes when if paying taxes results in improved profitability anyway? Because they can.

      I wonder if more regulation of international capital movements would constrain corporate tax avoidance?

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    5. Jane Middlemist
      Jane Middlemist is a Friend of The Conversation.

      citizen

      In reply to Felix MacNeill

      Grammar Felix. Stands to reason dunnit ? (Past tense) not innit? (present tense) No wurries. Pyne will sort these important details out in the new curriculum. Don't report me.

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    6. Firozali A Mulla

      logged in via LinkedIn

      In reply to David Arthur

      Less of all how does the government run???

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    7. R. Ambrose Raven

      none

      In reply to Neil Gibson

      As usual Neil Gibson tries to shoot the messenger (Mike Hansen) not the message (Philip's cronyism will climate change denialists). I suppose he really really has nothing else to say!

      So, Neil Gibson, what DO you have to write that is worth reading?

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    8. Felix MacNeill

      Environmental Manager

      In reply to Neil Gibson

      Funny thing, Neil, because he was focusing precisely on the message.

      I know it sounds nice and rational to use a phrase like 'shoot the messenger' or 'ad hominem' but it only works if it's used accurately.

      Referencing publications is aprecise and just way of looking at the message.

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    9. Jane Middlemist
      Jane Middlemist is a Friend of The Conversation.

      citizen

      In reply to Felix MacNeill

      Nothing to do with tenses was it? I'm hopeless with grammar. Just er… trying to be funny, sorry. 'Relaxed and comfortable' - yes, dear old Mr Howard - now that was a PM who was looking after us and not wanting us ever to be tense. Compared to Mr A, he's starting to look, if not exactly "good", at least not quite so scary.

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    10. Felix MacNeill

      Environmental Manager

      In reply to Jane Middlemist

      I used to comfort myself, in the long, dark days of the Howard government, that at least this would probably be as bad as it got...

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    1. Neil Gibson

      Retired Electronics Design Engineer

      In reply to Phillip Dawson

      Another ad-hominem attack rather than comments on the article. Completely off topic.

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    2. David Arthur

      resistance gnome

      In reply to Neil Gibson

      Memo: Davos WEF

      Less corporate tax evasion => less government indebtedness

      Less corporate tax evasion => lower corporate tax rates

      Less corporate tax evasion => improved public health

      Less corporate tax evasion => improved public education

      Less corporate tax evasion => improved infrastructure

      improved public health + improved public education => improved worker productivity

      improved infrastructure + improved worker productivity => improved corporate profitability

      So why avoid taxes when if paying taxes results in improved profitability anyway?

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    3. Phillip Dawson

      Lecturer in Learning and Teaching at Monash University

      In reply to Neil Gibson

      No, this wasn't an ad-hominem attack. Ad hominem arguments take the (fallacious) form that an argument should be rejected because of some fact about the person making the argument. I was not engaging Booth's argument at all. I was making a comment about the disclosure statement on the article not giving enough information. There is room in the disclosure statement box for more than just author affiliation, and it's one of the things that sets The Conversation apart from other media. In my opinion, the community's thoughts about author disclosure are on topic; you disagree and that's fine.

      For more discussion of faulty ad hominem arguments than I'd care to go into here, see http://plover.net/~bonds/adhominem.html

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    4. Neil Gibson

      Retired Electronics Design Engineer

      In reply to Phillip Dawson

      No comments on the article but about the writer ." I can't comment on the accuracy" but I will publish it anyway. If it looks like a duck ,walks like a duck and quacks like a duck then it probably is ad hominem. Your diatribe has nothing to do with the article published and all about the author.

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    5. R. Ambrose Raven

      none

      In reply to Neil Gibson

      Which is exactly a method of attack commonly used by climate change denialists. Leftists prefer discussion; rightists prefer assassination.

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    6. Felix MacNeill

      Environmental Manager

      In reply to Neil Gibson

      See, you just don't get this ad hominem thing, do you, Neil?

      To challenge the veracity and reliability of a source is perfectly reasonable.

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  3. Michael Shand
    Michael Shand is a Friend of The Conversation.

    Software Tester

    "Both sides of this debate tend to be agreed, however, that little good and much harm comes from a cosy relationship between big business and big government which exploits the people to the benefit of corporate and state interests"

    WRONG, time and time again conservatives across the world demonstrate a love of corprotocracy

    Also,

    "and a reconsideration of green policies that increase energy bills." - are you serious? you can;t be serious? because fossil fuels just keep getting cheaper and cheaper right?

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    1. Michael Shand
      Michael Shand is a Friend of The Conversation.

      Software Tester

      In reply to Michael Shand

      I know people may bite back on the first part of that comment so let me be clear

      Corporations are people my friend - has been the slogan on the conservative right for at least a decade in teh US

      and that's just one example

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  4. Michael Shand
    Michael Shand is a Friend of The Conversation.

    Software Tester

    The poor in west virginia that had to import bottled water sure enjoyed the benefits of de-regulation

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  5. Stephen Ralph

    carer

    Personally I think Australia should close it's borders and stop dealing with anyone overseas. (Keeping immigration though).

    We can grow "our" own food, build our own houses, we used to make cars and could do again, tend the sick and be nice to each other.

    Let's not sell Australia to anyone but ourselves. The world is a sick sick place and getting sicker - time we took back the farm and started knitting sweaters from the wool that once made us great.

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  6. Will de Freitas

    Business and Economy Editor at The Conversation

    Hi all,

    Can we keep this discussion civil and on topic please? I've had to delete a few comments.

    Thanks

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    1. Michael Shand
      Michael Shand is a Friend of The Conversation.

      Software Tester

      In reply to Will de Freitas

      You guys need to review your priorities - all the comments you removed were mine and they were completely on topic and we seem to have a personal disagreement about what constitutes civility

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    2. Michael Shand
      Michael Shand is a Friend of The Conversation.

      Software Tester

      In reply to Will de Freitas

      Meanwhile you seem to have no problem with the absolute (Insert chosen civil word here) that Jim Inglis has been posting on

      Scrapping EU renewable targets after 2020 makes no sense

      nor the fact that Dale Bloom is posting comments to the effect that Evolution is a completely made up science

      are these civil?

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    3. Gavin Moodie
      Gavin Moodie is a Friend of The Conversation.

      Adjunct professor at RMIT University

      In reply to Michael Shand

      Michael

      I would distinguish between:

      1 not on topic;
      2 uncivil;
      3 incorrect; and
      4 stupid.

      It seems that the Conversation's moderators have problems with 1 and 2 but not 3 and 4, and this seems to be consistent with its community standards.

      I wouldn't have deleted all of the comments the moderator deleted, but you did draw attention to your tone with 'Fraudulant liar', 'uninformed bafoon' and 'half a brain', all of which are defamatory.

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    4. Michael Shand
      Michael Shand is a Friend of The Conversation.

      Software Tester

      In reply to Gavin Moodie

      Thanks for the response,

      I only used those words - as did you, technically I never directed them towards anyone and neither did you

      I would also question the consistency of how this is applied - it does seem you can call an author an idiot and all his work pathetic - but only if your say denying climate change but maybe it's the sheer number of response that create that

      I would also highlight a distinction between implicit uncivility and explicit uncivility, seems you can be a total (insert civil word here) if you do it implicitly

      Anyway all and all I think you are probably right and it is probably not that hard to avoid, it does erk me though that Jim can post 10 comments in a row slagging off the scientific method, BOM, CSIRO, climate science and individual scientists of all stripes and colours and the moderators don't raise an eyebrow but use a forbidden word and god damn!!!

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    5. Ben Marshall

      Writer

      In reply to Will de Freitas

      Hi Will,

      Sorry you had to delete one of mine (which related to the credibility of the author when I learned about an organisation he works for).

      In commenting on TC, and getting a couple of comments deleted now, I've had to learn a slightly new set of skills. It's easier than I thought to get it wrong.

      Forcing oneself to ignore trolls who bring disruption, negativity and a hidden agenda to a given subject, one is also forced to check one's own writing - both content and intent. That's a good thing.

      I've tried to conduct myself as if we were all at a polite gathering - never saying anything that I wouldn't directly to someone's face. But, as I've just found out, commenting negatively on someone's credibility is viewed here as a personal attack and not acceptable.

      It's a fine line, and I hope you'll forgive us our sins and trespasses. And, while I'm here, thanks very much for the work you do. It's appreciated.

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  7. David Arthur

    resistance gnome

    Memo: Davos WEF

    Less corporate tax evasion => less government indebtedness

    Less corporate tax evasion => lower corporate tax rates

    Less corporate tax evasion => improved public health

    Less corporate tax evasion => improved public education

    Less corporate tax evasion => improved infrastructure

    improved public health + improved public education => improved worker productivity

    improved infrastructure + improved worker productivity => improved corporate profitability

    So why avoid taxes when if paying taxes results in improved profitability anyway?

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    1. Kyran Graham

      PhD Candidate: Neuropsychiatry/Neuropsychology at University of Western Australia

      In reply to David Arthur

      It improves profitability in the long-run but undermines the short-term bottom line. And the director NEEDS to send his kids to Aspen for skiing lessons THIS year, don't you know???

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  8. John Newton

    Author Journalist

    Interesting to note that as the poorer countries rise up, the average American becomes poorer and has less chance of full time employment.

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    1. Firozali A Mulla

      logged in via LinkedIn

      In reply to John Newton

      While private investors showed a voracious appetite for gold in the wake of a sharp drop in prices, professional investors were absent from active buying, a trend expected to persist through this year. But a short-covering rally in the first quarter of this year isn't being ruled out and this could contribute to the recent stabilisation at a little more than $1,185/oz.

      Tapering of the bond-buying programme in the US by the Federal Reserve didn't have a major impact on the gold market, as prices…

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    2. John Newton

      Author Journalist

      In reply to Firozali A Mulla

      Firozali, not surer you were answering my question which concerned increasing levels of poverty in the 'richest' country in the world

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  9. Firozali A Mulla

    logged in via LinkedIn

    The democracy of today???? Therein lies the fundamental difference between then and now - that the images of children learning how to properly and safely operate guns is "shocking." We think this without pausing to consider why it's supposedly shocking. It's because we've spent the last 50 years in deep and progressive moral decay where the core values of the children and their parents in these pictures is very, very different from the core values of children and their parents today. Overtly…

    Read more
    1. Firozali A Mulla

      logged in via LinkedIn

      In reply to Firozali A Mulla

      In an audio recording released Thursday, the leader of Al Qaeda, Ayman al-Zawahri, called on Islamist brigades in northern Syria to stop fighting one another, to focus on toppling President Bashar al-Assad and to form an Islamic court to arbitrate disputes. Fifteen days of infighting between rebel brigades and fighters from the Islamic State of Iraq and Syria, which is inspired by Al Qaeda, had killed nearly 1,400 people as of Wednesday, according to a count kept by the opposition Syrian Observatory for Human Rights. Mr. Zawahri has little sway over most of the groups fighting in Syria.

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  10. David Arthur

    resistance gnome

    From elsewhere, I understand that living standards for a surprisingly large proportion of the world's population have increased over the last couple of decades; that is, in this era of freer global trade.

    I further understand that this has been accompanied by a decline in reproduction rates; the global average fertility rate is now ~2.5 live births per woman.

    That said, I am yet to be convinced that all this Good News is a consequence of such deregulation as has occurred. As some wise people…

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