July 21, 2024


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Inside the global fight to save capitalism

Pressure is on for markets to work better. While critics of today’s capitalism are unlikely to be satisfied with the rate and scale of change, politicians and executives on every continent have seen the writing on the wall. Even the Vatican is moving far beyond its comfort zone in the push for change.

Previously unthinkable approaches to fiscal policy are now de rigeur. Industrial policy is back as a way to respond to China’s rise. And the need to limit climate change has become a horizontal force affecting nearly all governments and policy fields.

Former U.S. Treasury Secretary Larry Summers, a barometer of moderate Democrat thinking, this week announced his support for a “back to the future” approach to national budgeting, where governments spend their way out of the Covid-19 economic hole. He said the big-spending “macroeconomic policy revolution” underway is reasonable because “interest rates are four percent lower” than in 2000.

The OECD’s chief economist Laurence Boone agrees: “Debt service is significantly lower today than it was back in 2014, even though we have much more debt (because of low interest rates), so we have the fiscal space,” she told POLITICO. And with 2021 global economic growth set to “barely offset the 2020 contraction” free-flowing government spending remains necessary.

Poland’s Finance Minister Tadeusz Kościński told POLITICO the leftward economic shift of his right-wing government is a matter of “leveling the playing field.” He doesn’t want to increase taxes on the rich, but will force them to pay the taxes they’re currently skipping, while small businesses are getting tax breaks because bigger businesses are using lower “per unit costs” to establish market dominance, Kościński said.

The move away from GDP as a measure of national outcomes continues. Leading the charge are economists like Marianna Mazzucato. “GDP completely confuses price with value,” the author of “Value of Everything” told a Washington Post audience, leading us to under-resource things we care about from childcare to fresh air. (Catch-up with Mazzucato’s views on industrial policy and innovation on the Global Translations podcast).


The Roman Catholic Church and dozens of the world’s largest investors and companies — managing a combined $10.5 trillion in assets and 200 million workers — launched a Council for Inclusive Capitalism, “under the moral guidance of His Holiness Pope Francis.” Council founder Lynn Forester de Rothschild told Global Translations the body is focused on measurable actions connected to the U.N. Sustainable Development Goals.

Rothschild decried today’s forms of capitalism where some workers need welfare assistance. “Are you kidding me? You’re a Fortune 500 company and your employees are on the public dole?” she said.

“God didn’t create the corporation. The corporation is an invention by society to give limited liability to shareholders. But why should society give that if the shareholders mistreat workers, or poison customers or degrade the planet?” Rothschild asked. “We’re going to fail,” she said, noting. “we’re not going to just turn on a switch and make greed go away. But one thing that’s nice about being connected to the Vatican is a Christian principle of redemption and forgiveness. We’re going to call each other out. But we’re not going to do it in a condemning way,” Rothschild said.


British officials have played bad cop in the run-up to Saturday’s global climate summit, which they’re co-hosting with the U.N. and France. The Brits have stumped up a promise to cut their emissions by 68 percent before 2030 (boosted from a previous 40 percent commitment), and they blocked a bunch of leaders from giving speeches because they didn’t bring big new commitments to the table.

Who’s been dropped? Big names including Australia, Brazil, Indonesia, and Mexico. South Africa’s exclusion is an extraordinary diplomatic slap against Johannesburg, given that S.A. is holding the U.N. Security Council presidency, and positions itself as Africa’s leading global voice.

Who made the cut? 76 countries plus the EU, plus both red and blue state governors from the U.S., Canada (after discussions), and notable corporations such as Apple and Zurich Insurance.

G-20 split down the middle — but that’s progress: 11 of the G-20 nations are now on the path to net-zero emissions, a big leap forward compared to just five a year ago. And yet that leaves big holes in the summit line-up. Whether you cut it by GDP or population, nine of the 20 G-20 national governments will not be there, including fossil-fuel dependent Russia, Turkey and Saudi Arabia who chose not to be involved, in addition to those rejected by organizers.

Accounting tricks don’t replace system change: Australia and Brazil have both been snubbed after creative accounting efforts. Brazil is promising to go carbon neutral by 2060, but there’s a ransom attached: it wants rich countries to pay $10 billion a year to speed the journey. Australia expressly ruled out raising its Paris pledge, and the government wants to apply emissions credits from a generous 1997 deal to join the Kyoto Protocol to help meet the Paris target. That’s a plan with no legal basis.

Why this event matters: It will tell us how far leaders are willing to go during their own political careers. Climate geopolitics shifted in recent months: governments representing two-thirds of global GDP (including China and the incoming Biden administration) now accept the long-term move to net zero emissions. Yet none of today’s leaders — in democracies, at least — will be in office when that goal is set to be achieved. Success this weekend is therefore about mapping out mid-term commitments.

As a sign of how quickly climate change mitigation — i.e. preventing the damage — is slipping out of reach, 11 countries will instead speak about raising adaptation efforts (coping with the damage), and a “Race For Resilience” program will be announced.

The EU gets its act together: After yet another marathon overnight summit, EU leaders have agreed to boost their 2030 emission targets: from a 40 to 55 percent cut. They were playing catch-up to the recently departed U.K., which intends its new climate target to serve as proof of its newly nimble post-EU politics. As always for the EU, success was complicated. The bloc needed to agree on a new budget (including a green-oriented $900 billion Covid-19 recovery fund). The hold-up came from Hungary and Poland which demanded more cash for their green transition in exchange for the new budget conditions that EU money only goes to countries abiding rule of law commitments. In other words, the EU’s climate unity is a hostage of Brexit and budget politics.

What will China say? The most anticipated speech at the summit will be from Chinese President Xi Jinping. He has said China will announce a new Paris Agreement commitment before the year ends, and Foreign Ministry spokesperson Hua Chunying said China has already met its 2020 climate target.

Carbon inequality: The world’s rich need to cut their carbon footprint by a factor of 30 to slow climate change, the U.N. has warned. Oxfam has also pointed out that the emissions from Europe’s richest communities have risen in recent years (hello, air travel).

What impact would national green recovery spending have? A green energy shift “can cut around 25 percent off the greenhouse emissions predicted in 2030,” according to a U.N. report published Wednesday. But so far only five G20 members have allocated stimulus spending to such low-carbon measures.

Where are cities having an impact? Hundreds of cities and local governments are actively working towards Paris climate goals. President Trump’s refusal to take climate action accelerated the trend among climate-conscious U.S. cities, but it’s going to continue long after him. “We refused to be silent,” said Penny Abeywardena, New York City’s Commissioner for International Affairs. That started with Mayor Bill de Blasio signing an executive order within 24 hours of Trump leaving the Paris agreement, announcing the city was still on board. It led to a city green deal in 2019, and onto divestment from oil and gas stocks. “New York City and London broke ground on divestment. That’s an example of how cities can produce breakthroughs,” said former Toronto mayor David Miller, who is now an ambassador of the C40 cities network. De Blasio told Global Translations he is “not waiting to take bold climate action to prevent future tragedies,” including “stopping new fossil fuel infrastructure.”

Regional reality check: A new Europe Sustainable Development Report shows that even the best performing countries are set to miss their 2030 goals by the deadline. Not even Nordic nations were on track prior to Covid-19, and countries are now further behind.

Republicans still leading the climate resistance: Dozens of House Republicans sent a letter to Federal Reserve Chair Jerome Powell Wednesday warning him against proceeding with stress tests on lenders to measure their vulnerability to climate change, the first major political rebuke of the Fed’s new efforts.. Central banking authorities in the EU, Japan and UK are introducing climate stress tests.

The rise of coordinated Green-trolling: Corporations looking to brag about their climate commitments — or looking to do PR and marketing for fossil fuel companies — are facing a growing group of activists, like Amy Westervelt, shaming them online.


🎧 Closing out our three-episode podcast mini-series on critical minerals, Luiza Savage and I travel down the road to clean energy, only to find it continually intersects with dirty mining processes. Today China dominates the rare earths and mineral extraction industries that many clean energy systems rely on, forcing democracies to ask: can we make a greener version of China’s playbook? We talk to European Commission vice president Maroš Šefčovič, who heads up the European Battery Alliance, and Sen. Lisa Murkowski (R – Ak.) among others. Listen here.

The EU also announced a new European Raw Materials Alliance this week, complementing its initial €3.2 billion for battery production projects. The bloc’s goal is locally-built battery cells that are the cleanest on the market. New rules will cover everything from how the raw materials are sourced to mandatory recycling targets and market entry conditions for foreign competitors, to ensure all those new batteries made in Europe can’t be undercut on price or by harming the environment.

Spanner in the works: Chile and the EU are fighting over access to Chile’s lithium reserves, the world’s largest. “Our approach is to create an industry around it, not just [be] a raw material exporter,” Chile’s Vice-Minister for International Economic Relations Rodrigo Yáñez told POLITICO. The EU wants to get its hands on as much tariff-free lithium as possible as part of an upgraded trade deal.


Are rich countries hoarding vaccines? Amnesty International has slammed rich countries for buying up more vaccines than they need, and Martin Kimani, Kenya’s Ambassador to the U.N., told Global Translations he’s worried about an “emerging dynamic of richest countries first in line.” Kimani’s more on target than Amnesty is. Vaccines are a hit and miss game: many rich countries have ordered dose batches larger than their population because nine in 10 vaccines never make it to market, and no one knows how long successful vaccines will remain effective. But in doing so, rich countries have funded the basic research needed to get any vaccine to market, and primed that market, through the ACT Accelerator and COVAX facility, so that drugmakers have the fat needed to get vaccines free or at lower prices to developing countries. Where there may be an equity problem is with with drug companies — including Pfizer, BioNTech and Moderna — not yet participating in COVAX, and governments setting up the ACT Accelerator without giving it enough money to do its job.

Are rich countries giving enough to the ACT accelerator? No. Germany’s U.N. ambassador Christoph Heusgen finds the lack of investment astonishing given the “very serious threat to our multilateral system” that Covid-19 poses (Germany is the second-biggest funder). Bruce Aylward, a senior adviser to the WHO director-general, told Global Translations that current underfunding levels of around $20 billion represent simply a dumb collective choice by governments: “$20 billion is a lot of money but a fantastic deal. The cost will be recouped within 36 hours of international trade and travel being unlocked,” he said.

Who’s winning the mask diplomacy war? The EU, for now. Europe’s version of mask diplomacy got off to a slower start than China or Russia, each of which trumpeted their donations during the first wave of infections in Europe and North America. But after helping launch the ACT accelerator, the total EU commitment to the global Covid-19 response is now $50 billion, with $19 billion of that already spent, European Commission director Felix Fernandez Shaw told Global Translations. Amb. Kimani praised the EU’s “very significant support” while Amb. Issa Konfourou of Mali told me he’s fully on “Team Europe” thanks to the bloc’s efforts. EU spending is certainly well ahead of the U.S.: so far just $1.6 billion of State Department and U.S. Agency for International Development assistance is “directly aimed at fighting the pandemic.”


Monday’s Electoral College vote will formalize President-elect Joe Biden’s presidential win, and Biden has continued to dribble out names for his key appointments. We’re still waiting on a domestic climate czar to mirror John Kerry’s global role, but it looks like the boss of that person will be Susan Rice, who’s been tapped to lead a new Domestic Policy Council who is slated to coordinate the many cross-cutting and structural change policies Biden thinks American needs.

What Joe Biden reads and watches

The risks of the Anthony Blinken and John Kerry relationship, which will see Kerry report to Blinken but also join the National Security Council. Here’s how a similar relationship played out in the 1950s.

Biden to name Hill staffer Katherine Tai for top trade job. Tai is considered an ally of progressives.

A Trump comeback is not going to happen in 2024, insists POLITICO founding editor John Harris. He writes that there are no ingredients in America’s political system to support a long-term personality cult.

Global Tech Spotlight

Read our full Global Tech Spotlight. Nancy Scola looks at the fraught American relationship with Cuba that Joe Biden will inherit, one with technology at the center of it.

And whatever Biden does next vis-à-vis Cuba — he said in September he’d try to “reverse the failed Trump policies that inflicted harm on Cubans and their families” — has big implications not only for, of course, that island nation’s 11 million people but also the U.S. tech industry.

Over the past week I’ve been looking at the common ground, and the fundamental differences, between transatlantic partners when it comes to tech and innovation. First, I spoke to European Commissioner Mariya Gabriel and Luxembourg Prime Minister Xavier Bettel on priming innovation during a pandemic: Watch the video.

Next up: the head of Stanford’s Global Digital Policy Incubator Eileen Donahoe and Alina Polyakova, president and CEO of the Center for European Policy Analysis, who published a new report urging Western democracies not to hand the advantage to China by getting caught up in their relatively minor tech policy differences. Video. Report.

A case in point: Huawei has tested facial recognition software that could send automated “Uighur alarms” to government authorities when its camera systems identify people its AI identifies members of the oppressed minority group.