How we can make globalisation fairer

We need international action to halt the slide on corporation tax.

The world's wealthy and powerful have convened in the small Swiss town of Davos this week with income disparity high on the agenda. But although it tops the list of CEO risks, no one here appears clear about how to deal with the problem.

The global financial crash should have been the left's moment but now in the fifth year of the crisis, which unpicked many of the principal assumptions of neoliberalism and the Washington Consensus, social democrats and progressives are no closer to having an analysis about how to make the global economy work more equitably and sustainably.

The occupy movement have done much to raise awareness of the issue - spooking company bosses along the way - but they have been largely silent on alternatives, passing the buck to politicians. In the UK our elected representatives have fallen over one another to call for a more popular, responsible or mutualist form of capitalism but suggest micro measures at the domestic level. They miss the point that global fairness in a global economy starts at the global level.

A new report by IPPR, launched today in Davos, takes an analytical and historical look at globalisation to break it down into component parts and understand what has delivered progressive outcomes and what has failed. On the BBC's Today programme this morning, Lord Mandelson - who led our Globalisation project and wrote a foreword to the report - spoke of how markets, while indispensable, can become volatile and need to be regulated, and that globalisation creates income inequalities. Unlike the laissez faire approach to globalisation of the 1990s which appeared to see globalisation as an end in itself, we see that globalisation has the potential to lift people out of poverty and expand the global middle class, as it has most dramatically in China, but that it comes with risks too.

Chief among the risks are the prospect of a downward spiral on corporation tax and the excessive volatility inherent in some forms of capital mobility. The first has moved the tax burden away from global corporations towards individual income, consumption and domestic firms; the latter is part of a wider problem in the financial services sector where pay and performance have become unhinged with all the incentives geared at the short term gains rather than long term value.

Our report recommends concerted international action to halt the slide on corporation tax by making profits across Europe contingent on where sales, staff and production is actually based rather than where the head office is registered. We also push for a more widespread understanding that capital controls, which the IMF now advocate but other organizations like the WTO still oppose, are a legitimate policy in certain circumstances.

In surplus countries like China, health, unemployment and retirement insurance systems are key to reducing savings rates and increasing domestic demand. Conditional cash transfers, like, for example, former President Lula's 'bolsa familia' policy of giving poor families incentives to vaccinate their kids and send them to school, are also a good way of lifting living standards.

In current account deficit countries like the UK and US, the challenge is to increase levels of trade. The projected increases in the global middle class create huge export opportunities for Britain in educational services, higher education, medical devices,green technology, the creative industries and tourism as well as our more traditional comparative advantages such as financial services, aerospace and pharmaceuticals.

In addition we must ensure that consumption is based not on debt but on rising wages. Efforts to broaden the living wage is key to this but so too should countries like Britain reorient their welfare policies towards the crisis points that globalisation can cause like unemployment. Wage loss insurance, which would mean higher benefits when people lose their job but a requirement to pay it back when they return to employment, is another idea worth exploring. Ensuring that Britain

Meeting the concerns of citizens everywhere who feel anger at the growing disparities in society at a time of austerity is by no means easy. But it is essential if governments and CEOs are to avoid an even bigger populist backlash.

Will Straw is Associate Director at IPPR

Will Straw was Director of Britain Stronger In Europe, the cross-party campaign to keep Britain in the European Union. 

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.