Tuesday, October 7, 2014
Promise and difficulties of global federalism
The proposal made by Branko Milanovic in his 2006 paper on "Global Income Inequality: What it is and Why it Matters" illustrates the meaning of federalism, its promise and also its difficulties. He argues that global income inequality between citizens of the whole world is very large. It doesn't matter a lot whether it has increased or decreased slightly in the recent past, because in any case it remains huge, logically larger than the income inequality of any of the most unequal countries such as Brazil or Southafrica. We may just not worry about it, but universalistic ethical considerations or, absent these, practical considerations about global revolts and migrations (which are more likely today because of media globalization), should make all of us worried about the phenomenon. He proposes, to fight against it, the creation of a global agency, independent from national governments, that taxes the rich people in rich countries and transfers the resources to the poor people in poor countries. The specification is necessary because often international aid flows from relatively poor or middle income people in rich countries (but not from their rich, who avoid or evade taxes) to the elites in poor countries, which may end up being regressive. But of course, it would not be democratic to tax without this agency being elected by the people: "no taxation without representation." Hence, this form of global federalism should be accompanied by the direct election and democratic accountability of the members of the agency, as opposed to the current global institutions, which are confederal in nature because they are representations of the national governments. Federations, as opposed to confederations, involve a direct relationship between the citizens and the governments at each level, with each type of taxation allocated to that level of government that is more efficient at administrating it. At the European level, we are fighting to go from the currently mostly confederal structures to increasingly federal ones. At the global level, we haven't started yet, but we should.