‘Global competitiveness’ is a race to the bottom
The pursuit of international competitiveness, which we are told will assure our prosperity, is a vicious circle that is slowly killing us all. There is another way
An Irish protest against the Apple tax situation. Keeping a nation competitive and attractive to footloose global capital and corporations inescapably means prioritising multinationals like Apple over ordinary citizens. Photograph: Dara Mac Dónaill
Is there a connection between the rise of right-wing nationalism across the Western world and our addiction to international competitiveness, including Ireland’s (and other nations’) espousal of highly competitive corporate tax rates? In our new book, The Simpol Solution, we suggest that there is. And it’s a far more devastating connection than most people realise, because it affects everyone on the planet.
Keeping a nation competitive and attractive to footloose global capital and corporations inescapably means prioritising multinationals like Apple over ordinary citizens. It means favouring globally mobile elites over nationally-rooted poor and middle classes. Not only do governments have to keep corporate tax rates low; looser immigration controls and more “flexible” labour markets become the order of the day, all in a bid to provide an environment that’s maximally conducive to business needs.
If the UK reduces its corporte tax rate, where will that leave Ireland?
But the result is a widening gap between rich and poor that leaves the poor and the middle classes feeling increasingly marginalised and their sense of national identity under threat: exactly the factors that are fuelling the rise of far-right nationalism and causing voters to rebel in the form of Trump and Brexit. At the same time it hides the obvious conclusion that these people are the losers under globalisation. With elections coming up shortly in France and Germany, who knows what political calamity will befall us next?
Whether it’s the level of a nation’s corporation tax or the quality of its education system, no government has any choice but to maintain the “international competitiveness” of its economy. So fundamental has this pursuit become that it is now the guiding principle for virtually all government policy. Staying “internationally competitive”, we are told, will keep jobs and investment coming in, will provide the revenue for better public services, will keep the economy humming along and keep us all prosperous. But what we are not told is that these advantages turn out to be fool’s gold. They remain advantages only until other governments respond in similar fashion. When they do, the only winners are the multinationals and the rich who have benefited from the tax cuts while all governments are deprived of still more revenue, so leading to still more cuts in public services and an even wider gap between the haves and have nots. With governments all playing the same game, everybody loses because it becomes an endless race to the bottom: a vicious circle in which all nations are caught.
Ireland finds itself in a particularly conflicted position in this scenario. Basing its international competitiveness on a very low corporate tax rate may initially attract Apple and other multinationals. But other nations, notably the UK, inevitably react in tit-for-tat fashion. As Brexit negotiations approach, the UK’s threat of luring corporations away from EU states through still-lower rates of corporate tax is seen as one way to ensure a favourable trade deal with the EU. But if the UK reduces its rate, where will that leave Ireland (and everyone else)?
It’s little wonder voters see little difference between political parties and now resort to more extreme alternatives
It’s important to realise that in our globalised economy the pursuit of international competitiveness isn’t a party-political choice but a global imperative which has a devastating effect on democracy. Capital today is globally free-moving, so nations must compete with each other to attract inward investment and jobs to keep their economies going. The result is that it no longer matters much which party we elect because, whatever the party in power, the competitiveness line has to be followed. It’s little wonder voters see little difference between them and now resort to more extreme alternatives. The pursuit of international competitiveness – the very pursuit we are told will assure our prosperity – turns out to be a vicious circle that is slowly killing us all.
The Simpol Solution calls this vicious circle “Destructive Global Competition”. But is there a way out? Crucially, the book puts forward an ingenious way for citizens in democratic countries to use their votes to drive governments to break the vicious circle, so opening the way to implementing real solutions to many of the world’s most pressing problems.
But achieving a transformation of this magnitude first means changing the way we understand the world. And this transition is neither easy nor impossible; it is certainly visionary but it is not utopian. It is grounded in very pragmatic but new electoral possibilities so it is certainly not wishful thinking. And this is why much of our book is devoted to explaining and exploring the psychological and evolutionary pathways to change. In our analysis The Simpol Solution takes readers through the obstacles to new thinking, revealing a psychological and evolutionary pathway to change. By aligning with this process we can move our perceptions from their present “nation-centric” level, which blinds them to solutions like Simpol, to a “world-centric” level at which they become second nature.
Already in action and enjoying the support of members of parliaments and thought leaders around the world, the book shows how the “Simultaneous Policy” (Simpol) campaign overcomes the vicious circle, and how a combination of a multi-issue policy framework and the new way of voting that its supporters are already starting to use can combat Destructive Global Competition, driving politicians to implement co-operative global solutions. At the general election last year, 53 candidates from most of the major Irish political parties signed pledges to implement Simpol alongside other governments. Of those, 14 are now sitting TDs. At the last election in the UK, more than 600 candidates signed on. Of those, 32 are now sitting MPs in Westminster. Similar progress is also being made in other countries.
The SIMPOL Solution by John Bunzl and Nick Duffell is published by Peter Owen, at£14.99