Rethinking Global Finance (II)

Two  weeks ago I alerted readers to the fact that global financial institutions, like the World Bank and the International Monetary Fund (IMF), are presently in the process of rethinking the advice they give to governments around the world. They have become acutely aware that the present trajectory of financial practices is simply not sustainable.

Johnny West, founder of OpenOil, a Berlin-based consultancy in oil and other extractive industries, and columnist for Petroleum Economist, has written extensively about some of the new thinking that is happening in these global institutions.

At the heart of this re-orientation is the notion that much more of the profits of extractive industries like oil and mining should flow towards local governments. According to Paul Collier, governments should then use these funds to “Invest in investing: the creation not of industries but of the infrastructure to support them, that infrastructure being partly physical, such as roads and utilities, and partly social, such as developing trading and legal systems which encourage private investment.”

Unlike manufacturing that actually makes something people need, extractive industries are making massive profits by delivering products to people who own them in the first place. (Consider that in 2008 Exxon made a profit of $45 billion dollars – the largest profit ever recorded by a company.) Because of this unique dimension of extractive industries, it is argued that we can stay well within capitalist orthodoxy by also applying unique taxation practices for these industries without creating market distortions.

The traditional argument is that these massive profits are justified because of the huge risks these companies take in discovering their products. However, with present computerized data now available on the substructure of most of the earth’s surface, the risks are substantially reduced. Why, for example, should government not use this data to identify where oil and minerals are located and then auction off the rights of extraction to the highest bidder. Nova Scotia did just that recently. It invested $15 million in oil exploration and then sold extraction rights for $900 million. You could argue that the rightful owners got the lion’s share of the profits.

There is cause for concern, for example, when corporations are extracting large amounts of oil from some African countries which are largely fed by Save the Children or the World Food Program. What would happen if, in such cases, the IMF moved in to advise local governments to insist that most of those oil profits should go to feed their own people and strengthen local infrastructure?

Some of the impetus for this new way of thinking is coming from Latin America where an increasing number of countries are claiming ownership of their own oil and minerals. It is becoming clear, that if private companies want to stay in the game, they will have to be willing to make major concessions. The World Bank and the IMF should see the writing on the wall and begin advising governments differently in relation to their extractive industries.  

Jack Heppner

Local Fruit, Free for the Sharing

Unless you have a mature orchard in your backyard you probably don’t have access to a diversity of local fruit. The grocery store may sell a small selection of local fruit, however most fruit is trucked in from afar. Distant fruit is picked early and expected to ripen enroute. This results in fruit with focus on texture rather than taste. How do you get local fruit when you don’t have fruit trees? The answer is Fruit Share.

Fruit Share is an organization started by Getty Stewart in Winnipeg that connects volunteer fruit pickers with tree [or rhubarb] owners to harvest luscious, local fruit. This year South Eastman Transition Initiative is bringing Fruit Share to Steinbach.

When you walk the neighbourhoods of Steinbach you may notice many fruit trees and bushes. Apple trees, cherry trees, and rhubarb plants are just a few of the possibilities. During September you may notice some fruit beginning to get over-ripe, it may even be littering the sidewalk on which you walk. Local fruit going to waste!

With many people struggling to fill their bellies, food should not be squandered. There are different reasons that fruit owners may not be able to harvest their own fruit. Fruit owners may not be physically able to reach the fruit on the high branches or they may not have time due to a busy schedule. Un-harvested fruit drops to the ground and rots; this attracts insects, undesirable animals and makes a mess.

Now Steinbach fruit owners who do not have the ability or desire to pick their own fruit can register with Fruit Share. Fruit Share will organize Steinbach volunteers to harvest that fruit. On the day of the harvest 1/3 of the fruit will go to the fruit owner, 1/3 will go to the volunteer pickers and 1/3 is donated to a local organization such as the South East Helping Hands Food Bank. Instead of wonderful fruit going to waste, Fruit Share connects those in the community who have excess to those that have a need.

Not only does Fruit Share rescue fruit and deliver it to those who want it, Fruit Share also builds community. New friendships and connections can be made over the sweet success of a full apple basket or a freshly baked crisp made from the harvest of a neighbour’s plentiful tree or bush.

Next time you bite into a tasteless apple trucked in from a distant land take the time to sign up with Fruit Share. Make your fruit trees available to those with the ability to harvest them or sign up to volunteer and go home from a harvest with an armload of delicious fruit costing you only an afternoon of picking with friends.

Fruit Share is now picking rhubarb. Do you have excess or are you looking to make some rhubarb crisps? Visit and register at www.fruitshare.ca or call Fruit Share Steinbach at 326-3919. 

Rebecca Hiebert

Rethinking Global Finance (I)

Most of the time we find ourselves preoccupied with personal and local issues with reference to developing sustainable lifestyles. In one sense that is appropriate because it is the sum of many individual choices that changes lifestyles generally in a region like Southeastern Manitoba. On occasion it is helpful, however, to raise our eyes to the global dynamics that either hinder or enhance sustainable lifestyles around the world.

Ever since World War II, two agencies that have impacted millions around the world are the World Bank and the International Monetary Fund (IMF). They were created to assist developing countries to become economically viable. The World Bank would loan developing countries money for major projects designed to stimulate their economies. If a country had difficulty paying its debt, the IMF could be called upon for advice, additional monies or loan guarantees.

That was the theory. In reality it quickly became apparent that these agencies were the handmaidens of established governments and large corporations. In short, the following story was repeated around the globe: The World Bank persuaded developing countries to borrow money for projects to boost their economies. The money went directly to international corporations to build the projects but the debt was unloaded onto the developing country. When these loans could not be paid, the IMF came in to call for “structural adjustments” in exchange for debt reduction or further loan guarantees. These adjustments consisted of the three kingpins of neo-liberalism: privatization of public utilities, deregulation of industries and cuts to social spending. This, in turn, created an environment for international corporations to move in for the kill. (If you don’t believe this scenario, read “Confessions of an Economic Hitman,” by John Perkins, and “Shock Doctrine,” by Naomi Klein.)

This environment created a dynamic in which wealth inevitably flowed upward. The number of billionaires around the world began to mushroom while abject poverty continued largely unabated. And now even developed countries are beginning to look to the IMF to rescue their faltering economies. With most of the world’s wealth now in a few private hands, it is becoming clear that economies around the world are in deep trouble.

It is in this context that the World Bank and the IMF are attempting to re-invent themselves because the present trajectory is simply not sustainable. For the first time in history the president of the World Bank, Jim Yong Kim, is not an economist but an anthropologist and medical doctor who appears to be prepared to challenge status quo thinking at the World Bank. And the IMF is presently studying a paper proposing that extractive industries like oil and mining be taxed at a higher rate than other industries.

The IMF and the World Bank have a virtual monopoly on giving advice to governments about public finance and a whole lot else. So there is reason for optimism that the new winds blowing through these organizations will help to bring a greater degree of sustainability for economies around the world. More about this in two weeks.

Jack Heppner

Pesticide Ban in Manitoba

The Manitoba government recently gave notice that it is leaning toward banning the use of pesticides for cosmetic purposes. We remain one of four provinces without such a regulation. So it appears likely that it is only a matter of time before Manitoba follows suit. 

Of course, there will be opposition from chemical companies. Like tobacco companies before them, the chemical industry continues to argue that there are no conclusive, scientific studies that prove that such chemicals are harmful to human health. And they may have a point. But just like any person of average intelligence knew a few decades ago that inhaling smoke was not healthy, so it is becoming increasingly clear that exposure to industrial chemicals can be harmful, especially to young children. There is no shortage of anecdotal evidence to support such an assertion.

Many will charge that such a ban is a threat to individual freedom; another example of the government telling me what I cannot do! I concede that sometimes government regulations are unfair and favor only certain sectors of society while, at the same time, harming others. However, from my point of view, this coming regulation will benefit us all in the end with respect to what really matters.

Most of us have been used to the “Betty Crocker” approach to maintain our lawns and gardens in the past half century or so. (Do you have a problem? Reach for the latest chemical and spread it around!) So the move toward a chemical-free approach is almost unthinkable. But one should remember that there were lots of lawns and gardens around before the age of unlimited access to chemicals.

Moving toward chemical-free lawns and gardens is not a regressive step, as some charge. Even while chemical usage was mushrooming, various groups and individuals suspicious of this new trend were developing techniques for chemical-free gardening. They discovered things that even our grandparents didn’t know. So the coming ban on pesticides does not spell a cataclysmic end to lawns and gardens.

What is required, however, is a reorientation of our approach to lawns and gardens. No longer able to “spray and forget,” we will have to enter into a long-term relationship with our soil and our plants to ensure a better future.

I offer a few pointers to help us move in that direction. Reduce the size of your lawn. Spread compost and aerate your lawn regularly. Don’t insist on a “monoculture” lawn. Remember that a healthy lawn is the best defense against unwanted weeds. I know, because it works for me. 

Similarly, in your garden, make generous use of compost, green manure and straw to create a vibrant soil and control weeds. Try companion planting and crop rotation. Reduce the size of your garden by making use of raised beds and vertical gardening techniques. And finally, don’t be afraid of getting some exercise in your garden.

In light of the coming ban on pesticides, it is fair to say that the best is yet to come!

 By Jack Heppner

Oil Development = Wellbeing?

Canada has become an energy giant – at least this is what Wikipedia says. According to the US Energy Information Administration, Canadian oil reserves are the second largest in the world. Only Saudi Arabia has greater assessed reserves. Mind you, much of Canadian oil is hard to get. It is either tied up as bitumen in the Athabasca Oil Sands, it is in the frigid north, or it is off shore where drilling is difficult.

As world oil supplies become more and more scarce, there is, and will continue to be increasing interest in these Canadian deposits. The question is: how should Canada as a nation respond to this growing interest? Conventional wisdom seems to say that we view this as a bonanza: we need to cash in on it as quickly as possible. But why? Last week I suggested that the market for our oil will not disappear, and the price of oil will only go up.

We know that oil companies need to show their investors a quick return on investment, but this is not true of governments. Our government needs to take a longer term, broader perspective on the development of such a resource. It is probably not reasonable to expect an oil company to consider what is best for our children and grandchildren in its long term strategy. However, I think it is the responsibility of a government to take such a long term perspective.

This is simply good conservative thinking. I am very disappointed that our current government, which claims to be conservative, applies what I call “company thought” to an issue that requires “nation thought.”

Furthermore, because the oil reserves we will be wishing to develop in the future will be hard to get at, their development will be more labour intensive than the oil developments of the past. We see this already. Labour demand in Alberta is high, and anecdotes of problems associated with this high labour demand are abundant – a shortage of housing, weak communities, and jobs simply not being filled. At the same time, some of the cities in eastern Canada are in recession.

Will there be any real winners if jobs continue to be lost in Eastern Canada and people wanting work need to continue to move to those areas where the oil is? Will there be any real winners if some of the areas we have considered part of Canada’s natural heritage become tailings ponds and other scars of open pit mining for oil.

Once wealth, whether it is national or individual has risen beyond a certain point, happiness is not a function of GDP or income. Happiness then is a function of family and community stability. Happiness is consistent with a country has stable communities and a diversified economy exporting a variety of products.

Given that we are dealing with a much sought after, but also very limited resource, the role of a conservative government needs to be to temper and guide the development of that resource. Instead, we see our government cheerleading the unfettered development and export of our non-renewable [once it is gone it is gone!] oil resource.

By Eric Rempel