Political solutions do not need to be a zero-sum game. You can give something to your opponent that doesn’t collide with your own vital interests. A few thoughts on the magic of personal meetings and building trust – in The Empty Square
We, in the European Leadership Network, urge de-escalation of NATO-Russia military risks.
The security situation in Europe has deteriorated to its lowest point since the end of the Cold War.
NATO and Russian military forces operate in much closer proximity than just a few years ago, previous lines of NATO-Russia communications have broken down, and the nuclear and conventional arms control system that took decades to build is rapidly unravelling, with nothing to take its place.
Against this backdrop, the ELN has lent its support to an extended series of detailed senior expert discussions led by ELN members Sergey Rogov and Alexey Gromyko on how NATO and Russia might reduce the risk of inadvertent conflict. The experts group has comprised some 30 people including retired diplomats and military officers from the United States, Russia and Europe.
While members of the group differed over the root causes of the current crisis, they share a common concern that as tension builds between Russia and NATO, there is a growing danger of a real military confrontation.
🇬🇧 First part of a conversation with Thomas Mulhern of Global Denmark Podcast. Our designated topic was The Danish Model, but our conversation covered much more than that: equality, SDGs, The UN and Energinet, which owns, operates and develops the transmission systems for electricity and natural gas in Denmark. But there was more – which will follow in part II. You can listen to part 1 here
“Alle ansvarlige ledere må handle for at undgå gentagelse af rædslerne fra 1945.” Sådan står der bl.a. i et åbent brev, jeg har underskrevet sammen med 55 andre tidligere stats- udenrigs- og forsvarsministre med opfordring til at tiltræde traktaten om forbud mod atomvåben.
Læs om henvendelsen i New York Times her
Og selve brevet her.
Call for Global Ban on Nuclear Weapons
All responsible leaders must act now to ensure that the horrors of 1945 are never repeated!
Along with 55 other former prime, foreign and defense ministers I have signed this appeal to current world leaders to join the United Nations’ Treaty on the Prohibition of Nuclear Weapons.
We cannot re-boot our economies after the corona pandemic without rethinking our social contract and confronting climate change. Indeed, this path may lead us to new shared prosperity. On this and more, please listen to my conversation with Alan Stoga in the Tällberg Foundation’s podcast series
By Mogens Lykketoft, fm MP, Finance Minister, Foreign Minister and President of the UN General Assembly
Forget all about household logics. Countries needs to incur debt now, lots of debt …
Governments must incur debt to invest in climate, health, jobs and welfare. Anything else would be deeply irresponsible. We must secure the economy after the corona crisis, and we must not let the climate down.
The Corona pandemic is a shock treatment.
Fortunately, in Denmark our government is at the forefront taking action to save both lives and jobs. Other countries are joining. We will manage this crisis. It will be hugely painful and expensive. But doing nothing would be even more costly.
By no means is it too early to think about how we move forward when the pandemic and panic have subsided.
Already, voices claim that “one cannot spend the same money twice” – i.e. we must hold back our efforts to save the climate and our welfare, as the Treasury has already invested heavily to mitigate the corona crisis.
Before the current crisis, too, we heard similar arguments from conservative circles: Investing more in climate action must necessarily mean cutting down on welfare.
These are dangerous thoughts. If they prevail, the latest shock to the world economy could lock us in the deepest crisis of a hundred years. It risks undermining our democracy and preventing us from doing what we agreed just a short while ago was absolutely necessary for the climate.
We Must Save Health, Jobs and Climate
As far as I am concerned, not incurring larger government debt to save our health, jobs and climate, would be nothing short of irresponsible. It would be disastrous.
Viewing a country’s finances as one does a private household economy makes no sense. Nevertheless, for the last 10 years this kind of matter-of-fact ‘sensibility’ has been key to the EU’s member states’ mistaken austerity response in the face of the financial crisis.
The bill for the irresponsible financial speculation, which closed millions of jobs in the wake of the 2008 financial crisis, was paid by massive cuts in benefits for the poor and needy. And this while cutting taxes for the who are most well off.
Inequality increased, and employment less so. Thus, many people lost confidence in the co-called responsible politicians.
In his latest massive work ‘Capital and Ideology’, French economist Thomas Piketty provides a compelling analysis to prove that cost savings in welfare spending and an increasingly unfair distribution of wealth have paved the way for nationalists and populists, excelling in xenophobia as well.
This is a rebellion against the traditional political elites, which many people feel have let them down. In particular, it has been costly for Social Democratic parties to lend their name and support to a common policy in the EU, which has pressured wage-earners, eroded welfare schemes and tax systems, and thus contributed to significantly increased inequality.
The wealthiest companies and individuals have hoarded a hugely disproportionate share of the growth in prosperity. Worst in the US, but in Europe too.
Austerity Measures are Outdated
Right now, austerity measures are put on hold. All countries are accepting massive extraordinary government expenses to avoid huge losses of jobs and companies while combatting the Corona pandemic.
But EU countries still have tight budget laws that soon after this crisis will require spending cuts to cover public sector deficits, while still facing problems of unemployment.
According to prominent Danish economists, this makes no sense at all. On the contrary, it is more important for a country to be in control of its balance of payments than it is for a government to avoid increasing debt.
Denmark should join ongoing efforts to ditch the EU’s stringent budgetary requirements. In its entirety, Europe will be in dire need of an expansionary fiscal policy. Otherwise, not only will employment be undermined, we will also be unable to meet our long-term social and climate responsibility. Without help from the fiscal policies, central banks will not be able to put the economy back on track.
During my eight years as Finance Minister in Denmark in the 1990s, we did not need budgetary laws in order to conduct responsible economic policy. Improvement in employment and public finances was much better than was average in Europe – with 12 percent unemployment in the outset, and reducing it to 4 percent.
Back then, we Social Democrats and our coalition partners, had a common definition of accountability: Bringing down deficits was not put ahead of combatting unemployment and inequality. On the contrary. We gave priority to welfare growth and successfully targeted a policy that brought many more people to work and eventually eliminated the state deficit without socially painful cuts:
Deficits arise when many are unemployed and need community assistance rather than being tax payers. Deficits disappear when businesses and citizens get in the mood to invest and consume; then many more people get employment, and rather than having to rely on social benefits they contribute to increased tax payment.
States Need Deficits
More than ever, it is common sense that states have deficits. This gives them the freedom of action to invest in climate, health and social welfare: currently, loans can be obtained in the private sector at an interest rate of zero percent or less.
Even before the corona crisis, private savings were more than ample for states to borrow. Also, we have to expect that private savings will further increase now, as the crisis has sparked new fears for the future, more unemployment and even more fear of future unemployment. At the same time stock market and property market developments cause severe cuts in the value of people’s pension savings. People will hold back spending even more in order to rectify that. Furthermore, companies need time to regain sufficient investment momentum.
If both the private and the public sectors increase savings simultaneously, we will incur lasting losses in revenue and employment. This is why governments must spend more when private individuals and businesses spend less.
Fortunately, this logic matches perfectly the urgency of investing very massively in climate stabilisation. We only have a short time left to actually curb global warming. If we hesitate too long, the task – at best – becomes both more difficult and more expensive.
In the 1930s British economist Maynard Keynes articulated the necessity for the state to accelerate spending until purchase power and optimism are restored in the private sector. This was the prescription used by President Franklin D. Roosevelt to bring the US out of its deepest depression.
Keynes’ prescription is by no means outdated, even if the younger generation of economists have been trained to believe in the brilliance of private market forces, and to doubt the ability of states to bring momentum and order to the economy.
History has proven, time and again that states must pull the economy back out of whatever catastrophe unleashed by waves of speculation and/or natural disasters.
This will necessarily be the case this time around as well. But once the private sector is back in shape and able to deliver high employment and sustainable growth, the burden of reducing government debt will not be that heavy.
In Denmark, this is particularly easy because – compared to other EU countries – the Danish state has a disproportionately large pool of deferred tax revenue tied up in huge pension funds that are to be released in coming decades. Over the past thirty years, the building up of our labour market pensions makes it perfectly justifiable to run larger government deficits in the current decade.
Current Health Crisis Must not Lead to Less Climate Action
Over the past year, we have seen a highly positive leap in the general awareness of the urgency in contributing immediately and massively to curb climate change.
In Denmark, this urgency came top of the agenda during last year’s parliamentary election campaign and thus in the new government’s programme as well.
It is adamant that combatting the current health crisis does not result in less or belated climate action.
Here and now, it is about ensuring that the health systems have the capacity to curb the spread of infection, in order to save the lives of us elderly. As a 74-year old, I am most grateful for this.
But an even bigger and more important task is to avoid subjecting our children and grandchildren to much greater global disasters ensuing from climate change, than the one currently affecting us. Let’s not be paralysed by the sum of challenges. Knowledgeable people have told us what to do:
It is urgent as ever to heed the most climate-smart economists who urge a high CO2-tax.
Naturally, first we must get business going again. But if we are to have the least chance of achieving our highly ambitious goal of CO2 reduction in 10 years, we need a firm plan for a steadily rising CO2-tax towards 2030.
The instant companies and citizens realise that the CO2-tax will be gradually much increased in 10 years’ time, they will promptly increase investment in sustainable solutions to meet the challenge.
Ambitious Goals lead to Sustainable Solutions
We must achieve our ambitious goals. In Denmark it is a political promise. Barely six million Danes, our footprint on the climate equals that of one hundred million Africans.
Another important reason to strive for our goal is that it will encourage and help our businesses to take the lead in many more areas of sustainable solutions, which the world will demand and need.
In Denmark, our generally high standards has proven a solid experience in creating jobs and earnings in sustainably sound solutions. These high domestic demands from various industries became the starting point for Denmark’s considerable export successes in e.g. the pharmaceutical industry and wind energy.
We must not fear that companies die, or that people will not understand the necessity for action, nor that the social profile will become too skewed. On the contrary, with a steady hand we must introduce the large-scale social engineering to prevent such consequences.
We must prevent the most CO2-emitting companies from simply relocating out of our country and continuing their pollution elsewhere. They and their employees must have the support and encouragement to transform jobs from black to green. This requires special transitional arrangements, which all EU-countries will need; thus these arrangements must not be confused with illegal state subsidies or the like.
In order for these measures not to feed increased inequality, we must spend a considerable part of the CO2-tax revenue to ease taxation for people with lower incomes. We simply won’t be able to maintain a majority of citizens in favour of an ambitious climate action plan through the upcoming parliamentary elections before 2030, unless this transition goes hand in hand with a trend towards greater equality and social justice.
As, ideally, there should soon be less CO2 to tax, we must overcome the fear that tax revenue will dwindle too fast. Of course, we must welcome such a scenario.
All experience teaches us that increased prevalence of climate-friendly solutions, e.g. solar energy, quickly makes them affordable. This opens for the introduction of new forms of taxation without imposing heavy burdens on citizens. We must design a new transportation tax where charges vary according to the type of fuel, location and time of day. We need more electric cars quickly. Therefor it is still too early to put a charge on buying and driving them. But in a few years, once they have taken over the entire new car market, they will – because of technological advances and economies-of-scale – become much cheaper to acquire, and thus be able to carry a charge.
No Limits to Growth in Quality
Countries around the North Sea need also overcome their fear of losing state revenue in order to stop issuing new licenses to drill for oil and gas at sea. Drilling until 2060 simply cannot be reconciled with credible climate ambitions when we know that the precondition for a sustainable world is that we stop using fossil fuels by 2050! Incidentally, we have every reason to believe that long before then, oil and gas will become increasingly poor business.
Many fear that a consistent climate solution means giving up the good life and putting a halt to growth. There are limits to growth in quantity, but no limits exist to growth in quality. This we Danish Social Democrats already pointed out in our programme in 1977. In todays’ context this means:
We cannot possibly continue with growth as we have known it; but growth will easily continue if we meet three basic requirements well before 2050: 1/ Replace all fossil fuels with renewable energy sources; 2/ Create systems and methods to recycle virtually all waste; and 3/ Plant a lot more trees than we cut down.
With regard to sustainability, we can easily sustain growth in health, education and care for children and the elderly; but this will eventually mean that we must be prepared to increase taxation somewhat. Come to think of it, I expect most people would prefer to invest more in health to be better equipped for another corona crisis and the inevitable evolution of bacteria developing resistance to e.g. antibiotics. To this end new answers need to be researched and developed.
As we go along, all over Europe we will see new opportunities to improve tax revenue from giant multinationals and multibillionaires who have been allowed to pocket most of the increase in national income and wealth in recent decades.
In order to reduce debt and address inequality we need to do both. So, the most urgent common tasks in the EU are to put an end to the super rich’s escape to tax havens, to set a common minimum in corporate tax, and to tax the turnover of the big financial houses and tech-companies.
I hope Denmark will be at the forefront in this endeavour in the EU; and most likely the total sum of challenges will encourage other countries to join forces with us. In Denmark, and I would assume in other counties, we can raise significant revenue by fixing our broken tax system so that we will again be able to effectively combat fraud, evasion and arrears.
MOGENS LYKKETOFT from Denmark, economist, MP for 38 years, fm Minister for Finance and Foreign Affairs, leader of the Social Democratic Party, Speaker of Parliament. President of the United Nations General Assembly 2015-2016, when the Global Goals for Sustainable Development were approved and we had the Paris Climate Agreement.
Photo: © Hasse Ferrold