Asia Global Institute

The Neglected Necessity

Friday, April 7, 2017

The Neglected Necessity

James Bacchus, a member of the AsiaGlobal Fellows Faculty Committee, highlights the need for sustainable global growth, despite ongoing political turmoil.

In this time of great global anxiety, in what passes for public discourse and political deliberation, one overriding necessity is widely neglected worldwide: the urgent need to find new ways to grow and govern the world economy that will work both economically and environmentally for all of humanity.

Our "reality show" politics today deals too little with reality. Much time is spent shouting at each other. Scant time is spent listening to each other, engaging in actual conversation, and seeking the elusive common ground of constructive cooperation. Rarely, if ever, do most of us consider the confluence of this neglected necessity, which encompasses and connects much of what all the shouting is about.

Climate change is real. We are causing it. It is already here, and it is happening faster and faster. Carbon dioxide levels in the earth's atmosphere now total more than 400 parts per billion - twice what they were at the dawn of the Industrial Revolution. Melting sea ice at both poles is at record lows. NASA has reinforced the nearby beach to protect the rocket launch pads at the Kennedy Space Center from the rising sea.

As pervasive as it is, climate change is only one result of the profound alteration of the earth's ecosystems caused by the ever-intensifying human impact on our imperiled planet. Human actions are depleting more and more of the natural capital of the earth, and are pushing us closer and closer to the boundaries of what the planet can endure. Air, water, land, forests, other species - all that sustains us on earth is increasingly at risk.

At the same time, more than seven billion people on the earth are struggling to become free or to remain free in the midst of fearful economic uncertainties. The international economic integration that we call "globalization" has lifted nearly a billion people out of poverty in the past generation, especially in China, India, and the other emerging economies of Asia. But that many people and more still remain mired in poverty worldwide, somehow living on less than $1.25 per day. For all our recent gains, much of humanity remains immersed in immiseration.

What is more, in much of the developed world, the vast economic gains from globalization have not helped everyone; most of those gains have gone to the wealthiest among us. In the United States, where 10 per cent of the American people own more than 75 per cent of the overall national wealth, and where the wealth gap continues to grow wider, about two-thirds of the real income gains from globalization have gone to those in the top 1 per cent while the real incomes of many of those in the lower middle class have frozen or fallen.

Automation and other technological innovations are causing 80 per cent of job losses suffered by these Americans who are caught between yesterday and tomorrow. The jobs of 38 per cent of American workers are said to be at risk from automation. But these Americans are told to blame their plight on foreign trade and on foreign investments made by US companies because of globalization.

In considering and in confronting these unprecedented economic and environmental challenges, our habit in every part of the world has long been to see and treat the economy and the environment as separate and distinct. They are not. The economy and the environment are, in fact, one and the same.

Our future economically cannot be separated from our future environmentally. Nor can our future environmentally be separated from our future economically. If, for example, the Floridan aquifer beneath Orlando that is Central Florida's source of freshwater were to be polluted or depleted, Orlando would surely be left with no local economy. History teaches us that, if we push on heedlessly past the pressed boundaries of the earth's ecosystems, ours will not be the first civilization to fall for failure to live within our environmental means.

An awareness of the basic inter-connectedness between the economy and the environment must be written into all of the rules we choose together to live by at every level of human governance. In the rules we live by, economy and environment must be united into one.

We must live by rules because freedom is only possible within a framework of rules on which we have all agreed. These rules we call "laws." Laws are not truly laws unless they are followed. Usually they will not be followed if they cannot be enforced. Assurance of the equal enforcement of the law through the "rule of law" is a necessary prerequisite to real freedom everywhere.

Market freedom - the freedom to exchange, to trade, to invest - is an essential element of human freedom. Market-based, democratic capitalism is by far the surest source of a shared human prosperity. As with other aspects of human freedom, market freedom works best within an enabling framework of rules upheld by the rule of law.

Market freedom also works best where it benefits from an understanding that the indivisibility of the economy and the environment is a consequence of the inescapable fact that the economy is contained within the environment. Because it must work within the environment, a market economy, to be able to attain and to sustain success in the creation of human prosperity, must work in ways that sustain the environment.

The human development we seek through our ongoing exercise of market freedom must therefore be sustainable development. As the pioneering Brundtland Report of a United Nations commission back in 1987 first defined it, sustainable development "meets the needs of the present without compromising the ability of future generations to meet their own needs." Sustainable development is a form of human development that works economically, environmentally, and inclusively, for today, and equally for tomorrow.

Because the economy and the environment are actually one and the same, the two must thus be treated as one and the same in the enabling frameworks of rules that we write to help catalyze the liberating and wealth-creating magic of the marketplace. Likewise, the two must be treated as one and the same in the enabling frameworks of rules that we write to help counter climate change and to help prevent other ecological harm.

Moreover, because the natural environment knows no borders, and because the human economy today connects and re-connects across borders, many of these rules in these enabling frameworks must likewise cross borders. The rule of law will therefore not succeed if it is limited and confined entirely within and behind borders. In the eyes and in the efforts of every nation, the rule of law must also include the international rule of law, which can only be established and maintained through international cooperation.

Internationally, the 194 countries that are Members of the United Nations culminated several decades of work in New York in September of 2015 by agreeing on the United Nations Sustainable Development Goals. Drawing from the engagement of millions of people worldwide, all of these 194 countries, including the United States, have agreed on 17 global goals and on 169 targets for achieving them. Their professed aim is to achieve them all by 2030.

These are not modest goals. One of the 17 goals is to "end hunger." Another is to "end poverty in all its forms everywhere." Yet another is to "promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all." The common pledge in these ambitious goals is that "no one will be left behind."

The Sustainable Development Goals are not rules. They are not laws. They are not binding. They are, however, a collective expression of what the assembled countries of the world have agreed, one and all, to try to accomplish together through further international rulemaking and international cooperation.

If these ambitions are not just airy and "aspirational" words, if we are indeed serious about accomplishing these goals, then we must understand: there can be no hope of attaining any of these global goals unless we begin today to bring economy and environment together as one in all of our international rulemaking.

So far, we have not really tried. So far, we have kept economy and environment apart in separate silos of global endeavor and of global governance. Uniting economy and environment to help achieve sustainability through global governance is not on any global negotiating agenda.

The economy is often marginalized in international environmental agreements. Three months after concluding the Sustainable Development Goals, the United Nations concluded the Paris Agreement on climate change. The Paris Agreement is an historic achievement, but it will not work environmentally unless it also works economically.

International trade can help spur the transition to a green economy by hastening the spread of new "climate-friendly" technologies worldwide. The trillions of dollars needed to finance "mitigation and adaptation" actions to address climate change - especially in the developing countries - must come mostly from the private sector. Yet, though the new global climate agreement speaks vaguely of "non-market approaches" to climate actions, nowhere does the agreement speak specifically of the "market."

Likewise, the environment is often marginalized in international economic agreements. Foreign trade and foreign direct investment are both necessary to sustainable development. Both can be - and usually are - conducted consistently with the objectives of sustainable development. Yet in the texts of our international trade agreements and our international investment agreements, the concept of "sustainability," if it is mentioned at all, is usually seen as not much more than an incidental, obligatory recitation, a mere afterthought.

Where there are environmental protections in our trade and investment agreements, they are usually "exceptions." They are rarely affirmative obligations. There is little sign at all of any urgency in the international silos of trade and investment for making certain that trade and investment are sustainable.

With our international environmental and economic agreements alike, there is urgent need for a reimagining of the rules. Climate and other international environmental rules must also be viewed economically. International trade, investment, and other economic rules must also be viewed environmentally. All of these rules must be transformed to reflect the broader view of economy and environment as one and the same.

Equally, there is urgent need for a reimagining of the frameworks that enable these international economic and environmental rules. Rather than separate silos, we must reimagine them as Venn diagrams that acknowledge and address the overlapping of our economic and environmental concerns affirmatively and consistently with the Sustainable Development Goals.

Additionally, we must identify and implement ways of linking these overlapping frameworks that will uphold and enforce international rules consistently with sustainability. As it is, in anticipating the need to draw the right lines of judgment in coming disputes involving the demands of both economy and environment, we do not know the answers to the most basic questions. Who will judge? Where will they judge? How will they judge? And how will their judgment be enforced?

Reimagining international economic and environmental rules, reimagining the frameworks that enable them, and linking those frameworks together to serve sustainability, is the only way we will be able to advance together toward the fulfillment of the United Nations Sustainable Development Goals.

But how can we hope to accomplish any of these agreed global goals in the gloomy political context of today? How can we possibly hope for more international cooperation economically and environmentally at a time when so much of the world seems bent on joining in a raucous and rushed retreat from all further international cooperation - and when we Americans, who have led the cooperative global advance so proudly for so long, are now numbered among the first to flee?

The right consensus statements at global gatherings are desirable and can be helpful, but the global solutions we seek for sustainability will not be found in any of the solemn proclamations from any of the forthcoming global summits. They will only be found back home. They will only be found back home everywhere on the earth.

Solutions are not imposed from the top down. Solutions must arise from the bottom up. The solutions we seek for sustainability will only be found down in the vibrant and innovative enterprise of free marketplaces, and down in the practical problem-solving of the global explosion of creative and collaborative public, private, and public/private coalitions, alliances, and voluntary networks at the catalytic "grass roots" of the world.

It is at the global "grass roots" where the answers will be found, and where they will then be scaled up from the bottom up to serve all of humanity within enabling and linked frameworks of local, regional, and global rules that help us secure an abiding global prosperity by according appropriate primacy to global sustainability. Wellsprings of cooperative human imagination and experimentation will create success, will breed more success, and will then rise up and surround the recalcitrant and the unrealistic at the top with proven successes in sustainability that will encourage and will ultimately empower an affirmative global political transformation.

But global solutions for sustainability will be found much sooner, and they will be scaled up much sooner worldwide, if all of those around the world who say they wish to lead us are truly willing to lead us. The first and most important test of whether they are truly willing to lead us is whether they are willing to take the perceived political risk of telling us the truth.

Environmentally, the truth is, we have long since passed the point where we must confront the reality of man-made climate change and all the many other human impacts on the earth's threatened ecosystems, including their far-reaching potential consequences for our economic aspirations.

Economically, the truth is, we simply cannot prosper by retreating from international cooperation, and by rejecting and undermining the rules on which we have long agreed to help govern globalization. And we cannot grow by turning inward into nativism, protectionism, and a myopic economic nationalism. No country has ever grown - and continued to grow over time - without opening economically to the wider world.

Openness to both international trade and international investment is necessary for national growth. Trade and investment must flow freely for any economy to grow by becoming more productive. A closed economy is denied the competition, innovation, and efficiency that are essential to increasing productivity and to raising the standard of living. An economy bereft of the gains from trade and investment will, over time, shrink and decline.

But international trade and investment are not nearly enough to assure national competitiveness. Openness to trade and to investment must be accompanied by domestic actions that enable all of us to make the most of both. Here is where, in America, we have fallen short, so far, in this century.

We have fallen short in America by not helping all Americans make the transition from the old economy to the new sustainable economy of the future. The right signals are missing in the marketplace. The right skills are missing in the workplace. Many Americans feel left over and left out and left behind, and they are fearful of the relentless churn of global change.

Sadly, we have fallen short, too, by selling these fearful Americans the consoling illusion that there is no need for them to accept change and to adjust to change in the new economy, because the old economy will return, along with all their old jobs, if we only build enough high walls to hide us from the new challenges of the new and wider world.

The truth is, our national competitiveness depends on combining openness to the wider world with a willingness to make the many changes we must make because of the new economic realities of the wider world. Promising to shield people from change does not serve them; it condemns them to a darker future. We best serve people by finding the ways they can flourish from change in a brighter future.

What are those ways? What, today, are the domestic ingredients of national competitiveness that must accompany openness to trade and investment? Surely these ingredients must include financial stability and fiscal solvency, the right regulatory mix between governments and markets, and durable and flexible institutions that encourage the free and open exchanges of markets through the enabling framework of the rule of law.

Surely national competitiveness must also include a long list of ingredients that can help maximize the flourishing of individual human freedom: creative lifelong education for both work and citizenship, beginning with essential and cost- saving investments in early childhood; practical, skills-based training and re- training and other tested and proven forms of transitional assistance; roads, transit systems, water systems, bridges, seaports, airports, spaceports, communications grids, green power grids, and other needed infrastructure; a fair, limited, and broadly shared tax base; a tax structure that does not result in an obscene extent of inequality; ease of labor mobility; accessible and affordable universal health care; abundant basic scientific research and development; effective protection and preservation of the environment; a reliable safety net of social security; a supportive economic atmosphere for individual and cooperative initiative, incentive, and enterprise; and all else necessary to enable each of us to make the most of the opening of new economic opportunity in an open economy.

Lastly, the truth is, we will not prosper over time if the changes we make to enhance competitiveness everywhere throughout the global economy - whether local, regional, national, or international - are not sustainable. The new ways in which all of us can flourish, the new ways in which "no one will be left behind," are the ways that embrace and embed the realities that the economy and the environment are truly one, and that we will be competitive tomorrow only if we ensure sustainability today.

To meet this first test of leadership, the test of truth, we ought to recall the conclusion of one of the first and foremost observers of national development, the Frenchman Alexis de Tocqueville. In his famous account of Democracy in America in the 1830s, Tocqueville attributed the early success of the bold American experiment with a democratic republic to the "universal acceptance" by Americans of what he called "the principle of interest rightly understood."

Tocqueville's "principle of interest rightly understood" is a principle of self- interest that is not limited to the narrow demands of the near term. It is a way of seeing our self-interest that instead ranges far afield and far ahead. It is a way of seeing our self-interest in our broader as well as our narrower needs, and in our needs tomorrow as well as our needs today.

Today, in confronting the daunting Venn diagrams of global economic and environmental changes and challenges in the twenty-first century, Tocqueville's "principle of interest rightly understood" must again attain our universal acceptance; for it is a way of rightly seeing our self-interest as consonant with the contemporary concept of sustainable development.

In America, and in every other country in the world, we need leadership consistent with this enduring principle up at the top. Even more, we need leadership consistent with this principle down here at the bottom, beginning with each one of us.

With an outpouring of such leadership down here at the bottom, we can build up from the bottom up. Together, we can summon the will we need, we can forge the cooperation we must have, and we can discover the sustainable solutions we must find. Together, we can unite the economy and the environment through the international rule of law in ways that will enable us to shape and share a sustainable global prosperity for all. Then this will no longer be a neglected necessity.

This is the text of remarks delivered by James Bacchus at the Inaugural Presentation Global Leader Speaker Series University of Central Florida Orlando, FloridaMarch 29, 2017.The views expressed in the reports featured are the author's own and do not necessarily reflect Asia Global Institute's editorial policy.


James Baccus

Member, Asia Global Fellows Facuilty Committee

James Baccus


Room 326-348, Main Building
The University of Hong Kong
Pokfulam, Hong Kong

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