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Shifting the global economy towards sustainability
How the Global Economy Works Today	Why the Global Economy Behaves As It Does	Turning the Global Economy Towards Sustainability

‘Small is Beautiful, Big is Subsidised’ – Helena Norberg-Hodge

Subsidies

Large-scale industrial systems benefit from truly enormous subsidies of various kinds. It has been estimated that every year, the world’s tax-payers provide an estimated $700 billion of subsidies for environmentally destructive activities, such as fossil fuel burning, overpumping aquifers, clearcutting forests and overfishing (Brown 2008).

These include direct payments to industries that governments seek to protect. The sector in which such subsidies are most common is agriculture, with governments in the industrialised world providing huge subsidies to their farmers.

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‘There is something unbelievable about the world spending hundreds of billions of dollars annually to subsidise its own destruction’ – Subsidising Unsustainable Development, The Earth Council

Example

Farm subsidies in the economically rich countries of the North have been estimated at $300b per annum, with the great majority going to the largest-scale farmers: some 78% of US agriculture subsidies (around $17 billion per annum), for example, go to the largest ten per cent of farmers. Subsidies to 250,000 US cotton farmers alone are greater than all US official aid to Africa, with a population 800 million.

The removal of agricultural subsidies is consistently at the top of the agenda of the countries of the global South in international trade negotiations under the aegis of the World Trade Organisation (WTO), since their farmers simply cannot compete with the heavily subsidised products generated by Europe and the US. For example, EU subsidies encourage an annual surplus of six million tonnes of sugar, much of which is dumped in the markets of poor countries at below production prices.

Large corporations also receive various other forms of indirect subsidies. These include:

government research grants to universities and think-tanks whose research agendas are increasingly driven by corporate interests
tax breaks and other incentives by national and local authorities to encourage large business to locate in their territory
expenditure on transport infrastructure that is paid for by tax-payers but used disproportionately by the distributors of industrial products
the absence of a tax on aviation fuel, the only energy source to be thus exempted.

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"The European Union’s Common Agricultural Policy is responsible for 85% of the world's agricultural export subsidies, which may well qualify as the largest distortion of any sort of trade" – Charlene Barshefsky, US trade representative.

Part of the problem here is the progressively greater inter-twining we have seen in recent years between government and business. In many countries, corporations fund the political process, in some cases providing finance to all political parties that are likely winners of elections. Individuals move easily between government and senior positions in business and many policy committees in parliaments all over the world are dominated by corporate interests. This makes it difficult either to remove subsidies that are damaging or to orient policies in a more ecologically- and community-supportive direction.

Dollar bales
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Animal subsidies - Click on image to enlarge

“The invisible hand” - Click on image to enlarge

WTO negotiations