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Birdsall Urges Action by “Global Citizens” in UN Address

September 17, 2012

Nancy BirdsallIntegration of the global economy has outpaced the ability of international institutions to address key market failures—inequality, volatility, and inadequate provision of global public goods—undermining the prospects for inclusive and sustainable growth, CGD president Nancy Birdsall said in an address to the UN General Assembly.

In the absence of an activist global political entity to address these issues, as national governments attempt to do within sovereign states, the growing number of people who are coming to regard themselves as global citizens should press their own governments to adopt policies that address these problems, domestically and internationally, she said.

“I am a US citizen by birth and a development economist by training. But with the globalization of everything—supply chains, Facebook, civil society, and more—I have felt more and more like a citizen of the world. I suspect that many of you feel much the same way,” Birdsall said.

The September 10 address was the focus of this year’s UN General Assembly session on the Millennium Development Goals, the UN-endorsed poverty-reduction targets that expire in 2015.

Birdsall made clear that market-driven growth has put the world on the winning side in the global war on poverty, creating opportunities for hundreds of millions of people to lift themselves out of poverty, and supporting rapid progress in many countries on the MDGs.

But, she added, “economic globalization has outpaced political globalization. We have a global economy without the equivalent at the global level of a state.”

For example, she said, unmanaged markets tend to exacerbate inequality, within and across nations, as those with the right assets—such as access to quality education—enjoy high and rising incomes while those who lack such assets fall further behind. Similarly, the gap between the richest and poorest nations has widened with globalization, she said.

Volatility, especially in global financial markets, can exacerbate inequality, she said. “In 2007 and 2008, we saw how the tightening of fuel and food markets led to price spikes that were particularly painful for importing countries that had relied on global trade of these products—and for poor households in those countries. Then at the end of 2008 came the collapse of financial markets around the world—with real effects on growth, jobs, and well-being everywhere, though thankfully not long-lasting in many developing countries.”

Even so, "the high public debt that follows government rescues of banks and other financial institutions crowds out private investment and job creation and reduces the fiscal space for spending on infrastructure, education, and health programs that benefit the poor and help build a middle class." Such crises also strip assets from the poor, sometimes with lifelong consequences, she said. For example, children pulled from school because of a family's financial hardship often do not return, even when markets have recovered.

The third problem with unmanaged markets, she said, is the inadequate provision of public goods, a problem that is most urgent and obvious at the global level in the lack of agreement to limit a global public bad, emissions of carbon and other heat-trapping gasses that are driving climate change.

“Just as local pollution control requires that a government entity imposes regulations or creates offsetting incentives through taxes or subsidies, global‐level control of greenhouse gas emissions is likely to require that an activist international community, including at the least the major polluter countries, impose controls or agree on incentives,” Birdsall said.

“Climate change is the biggest and most glaring example of a global problem that hits the poor people and countries hardest. By an unfortunate twist of fate, tropical countries that contributed least to the accumulation of gases are likely to suffer the worst declines in agricultural productivity, in precisely the sector where the poor within countries are heavily concentrated.”

“In the absence of corrective action at the global level, projected declines in agriculture in India are on the order of 30 percent in the next 70 years—and as much or worse in parts of Africa. Sea-level rise in Bangladesh, drought and floods, and the expanding reach of malaria and other diseases in many tropical areas will also hit those most vulnerable hardest.”

What to do? The first-best solution would in principle be an activist global polity, she said, one with the mandate from global citizens to set and enforce policies and practices that would reduce global inequality, deal with volatility, and ensure adequate provision of such global public goods as zero-carbon-emissions energy.

“But in fact the world is made up of sovereign nations—and it is within sovereign nations that democratic and representative systems of government are rooted. It is within nations that citizens of the world ... have the possibility and the responsibility to hold the governments of their own countries accountable for policies and practices that have impacts within and beyond their borders.”

She concluded her speech with a list of suggestions—many grounded in CGD research—for policies and practices that those who consider themselves global citizens should urge their governments to adopt.

Among these: for the United States to put a price on carbon emissions, and for the Europe and the United States to endorse governance reforms in the IMF and World Bank that would give the big emerging-market nations a larger stake—and thus to help these institutions become more effective in responding to global challenges (financial market volatility in the case of the IMF and inadequate provision of global public goods in the case of the World Bank).

She also offered suggestions for the rich and powerful individuals in the big emerging-market countries such as China, India, Brazil, and Indonesia, including protection of their own forests and investments in infrastructure, health, and education to enable people who remain poor in those countries to lift themselves out of poverty.

“All of us in this room are among the world’s rich, influential, and powerful. We are each responsible for holding our own countries accountable—for domestic policies that at the least do no harm elsewhere, and for our own countries’ support of multilateralism and international cooperation on global economic and financial challenges,” she said. “I do believe that more citizens of the world, particularly young citizens, are getting on board. Let us all join them.”

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Photo of Nancy Birdsall
Senior Fellow, President Emeritus