We’ve lived so long under the spell of hierarchy—from god-kings to feudal lords to party bosses—that only recently have we awakened to see not only that “regular” citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society simply to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
—Frances Moore Lappé, excerpt from Time for Progressives to Grow Up

Saturday, July 21, 2012

Financing development or developing finance?

Click here to access article by Nicholas Hildyard from Bretton Woods Project. 

Although I found his presentation a bit oblique, it's clear to me that the author is essentially arguing that bankers and private financial institutions, having now saddled governments with their gambling debts, are now intent upon entering into highly profitable infrastructure investments which bankrupt states can no longer fund.
Governments argue that the sheer size of the 'infrastructure gap', coupled with the lack of government funds due to huge costs of propping up the banks in the wake of the financial crisis, means that they have no choice but to bring the private sector into infrastructure development.
The method of choice they are using are state/private partnership ventures:
...The policy choice is not between the private sector, on the one hand, and the state, on the other. There is a new state-private combo, in which a realigned state is the lynchpin in creating new highly profitable investment opportunities through selling off state-owned enterprises at knock-down prices.
Such state/private ventures are encouraged by international banking institutions (run by the One Percent) to rollback environmental and other regulatory restrictions and provide tax breaks in order to induce private parties to invest. For example, in India:
To attract infrastructure investors, the Indian government (like many other governments) is rolling back hard-won environmental and social regulations, particularly those protecting poorer people against forced evictions. It also set up a high-level committee (including investment bank Goldman Sachs' India director) to identify "regulatory or legal impediments constraining private investment in infrastructure" and to "issue specific recommendations for their removal". Other incentives now being offered by the Indian government include tax breaks and an $11 billion fund to provide debt finance through tax-free infrastructure bonds. Legislation is also being introduced in many countries to encourage public pension funds (which could be a major source of public finance for infrastructure) to invest in privately-funded infrastructure, for the profit of the private sector. Private investors in the North, particularly private equity firms, are leaping onto the bandwagon, increasingly looking to infrastructure investments in the South as a new source of profits.
The fleecing of the 99 Percent never seems to end! Ain't capitalism grand?