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Coffee, confection and the trillion dollar climate connection!

By Peter Vintila - posted Monday, 25 February 2008


Let the rich - wherever they are - pay death duties

The world contains just under 10 million so-called HNIs or “high net worth individuals”:lucky people worth $1+ million in capital assets excluding housing and consumption items. Their combined capital asset will reach $51 trillion by 2011 according to the most recent World Wealth Report (PDF 2.09MB) - just in time to fund bold, new, post-Copenhagen or post-Kyoto climate change programs.

Assuming each individual fortune is taxed every 25 years, a 50 per cent estate tax on this small treasure would raise around $1 trillion pa. How convenient is that? You would almost think this a match made in heaven! There’s no obstacle here that political creativity and courage can’t overcome. That doesn’t mean the rich won’t fight it. They will … and that’s why political courage is needed.

One third of HNI assets belong to millionaires in the developing world - yes there’s concentrated elite money there too. From the point of view of isolating capacity to pay, this makes estate taxes a much more precise instrument. Making proper allowances for the poor in the developing world is one thing, letting the rich there off the hook is altogether another. A global millionaire’s estate tax works perfectly here too.

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Third World debt forgiveness

Currently, the developing world transfers some $380 billion annually to the developed world to service international debt. This money services a $2.5 trillion debt. Returning this money or forgiving these punishing debts would liberate sufficient funds to pay for some 80 per cent of the developing world’s clean energy make-over. Forget the rice and tortillas.

Even without further borrowing, interest payment will exceed $16 trillion by 2050. This money, it has been extensively noted, could do many other good things too - ask Bob Geldorf. But if it were dedicated to climate change mitigation, modern debt financing instruments would enable it to finance the first 25 years of the developing world’s clean energy refit. Is it smarter to bleed them to exhaustion and then demand their dinner as well? Is it civilised?

Trade reform

The developed world spends about $350 billion annually in subsidising inefficient agricultural production. That can buy a lot of efficient and clean energy infrastructure as well as boost trade, development and self-help capacities in the developing world. To say nothing of ideological consistency and the integrity of the free trade argument.

Diverting defence budgets - weapons to windmills?

While this is an argument I am developing more fully elsewhere (see Climate Change War or Climate Change Peace?) it warrants brief summary form here. The world currently spends 2 per cent of annual GDP or $1.3 trillion on its militaries - more than enough to finance global climate change mitigation. Of course some defence spending is necessary but a decade or so ago, the world managed with half as much. Did anyone feel more unsafe then?

World military spending has climbed so rapidly because it has been growing at the huge rate of 7 per cent per annum. Some of this involves preparation not just for more oil wars but for coming water and food wars as well. And this takes us to the threshold of another very big question, perhaps the biggest of all if we can bring ourselves to ask it: are we going to devote more resources to fighting over diminishing planetary life support capacity than we are willing to spend on its protection and extension?

As I write, and while the world’s civilian publics remain silent on this matter, the worlds militaries - both advanced an backward - are answering. In Africa and the Middle East they are already spilling blood. Elsewhere they are preparing in the name of coming climate change threats to national security.

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This is absurd for a number of reasons. Fighting over life support capacity is more expensive than maintaining it. Beyond that, modern warfare, while it may deliver possession to the victor, often hastens destruction of the prize. We should not be surprised to learn that, war is bad for climate change. The world’s defence machine, even when idling, is five times more carbon intensive than is the world civilian economy.

That said, green consciousness is now everywhere and I have seen serious Pentagon reports involving the search for less carbon intensive ways to kill. Hybrid tanks and solar power for military bases. That kind of thing. Good ideas are always infectious. But, hey, we can do better than that!

Finally, and this may be more critical still, war destroys social as well as natural capital. And, right now, we need the former as much the latter. Diminishing social capital means diminishing capacity to co-operate, means less effective international climate change agreements. And so will we be trapped in complex downward spiralling synergies of our own careless making? What, for the sake of coffee and coke?

Conclusion

But if we can give a little, then, taken together, forsaken cups of coffee and the odd can of coke, death duties, debt forgiveness, trade reform and partial disarmament, together point to available surplus funds of about $4 trillion - much of which is growing either under its own steam or driven by general economic growth. It also opens up vast new negotiating terrain and many opportunities for the exercise of constructive leverage. Even this very preliminary and incredibly hasty survey reveals that we can save the planet without poaching from the poor and we can do it even if the UN have seriously underestimated costs. Let me end on this up-beat note.

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About the Author

Peter Vintila is currently completing a book called Climate change war or climate change peace to be published early in 2010. An exploratory essay under the same title is available on his website.

Other articles by this Author

All articles by Peter Vintila

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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