This week the heads of state of the economies that comprise the Group of 7 (the ‘G7’) gather in France to discuss the critical issues of our time – with the stated focus of fighting inequality.
The group first came together in the 1970s to find a collective solution to the oil crisis that was destabilizing economies worldwide. Since their first meeting, the leaders of the G7 have met annually to confront the economic challenges that bind us.
This G7 gathering could be historic, if they decide to take the bold and swift action required to tackle inequality and the climate emergency, and deliver the Sustainable Development Goals.
As we brace ourselves for another financial crisis, inequality between and amongst countries continues to grow exponentially, breeding social and political unrest worldwide.
Within many of the G7 countries, affluence is not breeding happy and healthy societies but lonely and anxious ones. The global balance of power is shifting from nation states to multinational corporations, threatening the very democratic principles that bind the G7 countries. Meanwhile, the rapid rate of biodiversity loss and climate change threaten our very existence.
These existential issues cannot be solved by any single country alone. They are a product of a global economic system that desperately needs to be reformed. The G7 countries represent over half of global economic wealth and still have the power to change this system. Tinkering with exchange rates and select tax policies will not cut it.
We need our leaders to be brave at this critical juncture in history when the world is splintering, and to realize there is far more that binds us than divides us.
My new paper, published today by The Wellbeing Economy Alliance, offers 7 Ideas for the G7 in the spirit of hope and a belief that a more just and sustainable economy is not only possible, but a few strategic decisions away:
1. Adopt alternative progress indicators to GDP
Global obsession with Gross Domestic Product as a progress indicator has resulted in widespread confusion between means and ends. The G7 should abandon the objective of GDP growth and agree to focus on achieving real economic objectives that matter most to citizens.
2. Reform international economic organizations to promote wellbeing economies
Perhaps no one has suffered more deeply from our dubious notion of progress than the global south. The G7 should work to reform the international economic organizations to encourage locally-oriented, context-appropriate economic development practices. We must abandon the idea that development or progress is a one-way street and create space for experimentation to identify systems of production and provision that can bring wellbeing to all.
3. Introduce a binding code of conduct for multinational corporations (MNCs)
For too long, the global economy has allowed multinational corporations to accumulate unprecedented wealth and power, leading to a “race to the bottom” amongst countries to adopt the lowest environmental, labour and tax standards to attract or appease these global giants. A binding code of conduct would create greater space for upholding democratic governance of economies, and ensure more ethical production practices worldwide.
4. Regulate global competition
Every sector in the global economy is dominated a handful of corporations. MNC controlled supply chains now account for over 80% of global trade each year. This level of economic conglomeration is economically unsustainable and ethically unacceptable. We need global competition regulation to minimize risk and ensure more equitable and balanced business development worldwide.
5. Create citizens wealth funds
The rise of new technologies has created new wealth, much of it reliant on public funding for education and research. The G7 should recognize that technological development must benefit society as a whole and not just the select few – which requires a new tax and redistribution system. Through a windfall tax on technological breakthroughs G7 countries could develop Citizen Wealth Funds at the country level to fund universal basic income, public services and infrastructure development.
6. Ban and redistribute all off-shore bank account funds
Due to lack of global economic coordination and oversight, it is now estimated that at least 10% of the world’s GDP is held in offshore bank accounts. We need an official ban of all off-shore banking, with the G7 using their collective intelligence to extract all money currently held within these institutions and put it directly into a “global citizens wealth fund” to combat climate change and achieve the Sustainable Development Goals.
7. Introduce a Financial Transaction Tax
Global financial markets now move at lightning speed, generating immense wealth and at the same time universal vulnerabilities. France and Germany have been pushing for a global financial transaction tax (also known as a Tobin Tax or ‘Robin Hood’ tax) at the G7 but have not succeeded in gaining substantial traction. This policy agenda would tax international financial transactions, particularly speculative currency exchange transactions, reducing financial volatility and raising billions to combat the global crises of our time.
These bold ideas are fully feasible given the wealth and power of the G7 countries. During World War II, the Army Corp of Engineer’s had a motto: “the difficult we do immediately, the impossible will take a little while.”
There are moments in history when paradigms shift. We are at this moment and if the G7 promotes these policies, we would be well on our way to achieving the “impossible”: a global economic system that ensures we all live long and healthy lives in harmony with our natural environment.