Professor John Langmore and his book
Last night I went to the Victoria University to hear
Professor John Langmore speak. The evening was organised by the
Students Christian Movement at the University of Melbourne. The evening was very interesting and Professor Langmore made some interesting comments. He is thoughtful and knowledgable. Below is one particular part of his talk. The arrangements and structure of the evening enabled conversation and an occasional butt in to clarify what he was telling us.
There is no expert from Australia - probabl,y said Professor Langmore, because there was no obviously suitable person available. The Commission of Experts is to report on reforms required by the international monetary and financial system.
Listed below is a summary of the Commission's recommendations. It was described in discussion last night as a sort of international credit union model rather than a banking model. A credit union for nations? Interesting idea. Anyway, the recommendations:
- Major increases in aid & lending for developing countries, without onerous conditionality, (as the IMF and World Bank have previous done) to fund both economic development and climate change adaptation and mitigation;
- They went further than the G20 (apparently the Stiglitz Commission sees its work as complimenting that of the G20) and recommend issueing $250 billion of Special Drawing Rights (SDR - will need to explain those to you in simple language so see below) each year until the crisis is over. Professor Langmore says he wrote to one of the members and to the rapporteur suggesting just this so he thinks he just might have had a bit of influence on this topic. This would also establish the basis for a new global reserve system;
- Establishment of a new credit facility to be financed by the surpluses from China, Japan and so on and with a governance structure which effectively represents the contributors and borrowers and is not dominated by the US and Western Europe;
- Establishment of an intergovernmental tax co-operation agency to provide a basis for dramatically improving the sharing of information between national tax agencies which is essential for sharply reducing international tax evasion;
- Establishment of a UN economic co-ordination council to meet annually at head-of-government level to address areas of concern in the functioning of the global economic system in a comprehensive way. This would address the gaping hole in global institutions in a representative and accountable way. Membership would be elected on a regional constituency basis and ensure that all continents and all major economies were represented. It would be a democratically elected alternative to the unelected, static G20;
- Strengthening of various aspects of financial regulation including by the establishment of a global financial regulatory authority and a global competition authority. Such institutions have become essential since so much economic activity is multinational and interdependent; and
- Exploration of innovative mechanisms for generating finance for development including through the possibility of a carbon tax or a financial services tax (also known as a Tobin or currency transaction tax) which would simultaneously contribute to stabilising international financial markets.
It is expected that some of these proposals may be resisted by many developed countries including Australia.
Professor Langmore says it would be valuable to take action to urge the Government to assess them seriously and to accept them. This would be one way, Professor Langmore says, to demonstrate re-engagement with the international system through expressing solidarity the half of the world's population living in or close to poverty.
Note: back to the SDRs or Special Drawing Rights. Professor Langmore was speaking to people further down the economic food chain than the IMF so here are my notes:
SDRs are a virtual currency issued to governments as government reserves. They can only be traded between governments. They attract low interest rates for borrower and lender. The values of the SDRs are based on four major reserve currencies namely the dollar, the euro, the yen and the yuan.
And for further information to background this discussion,
please see the links below:
