A Case of a `Double Whammy’

Back in 1997, world leaders drew up a protocol in Kyoto, Japan to implement the United Nations Framework Convention for Climate Change. After several years of debate, it officially became an international treaty on 16th February 2005. The protocol represents one of the most serious collective attempts by the world’s political leaders to tackle the various grave environmental problems facing humanity.

As of February 2009, 183 states have signed and ratified the Kyoto Protocol. Sadly, the US which is the producer of the world’s largest amount of greenhouse gas per capita till now refuses to ratify the treaty. One of the main reasons for this refusal is her concern that abiding with the agreed limits will harm its economy.

The US government obviously realised that it was impossible to achieve environmental targets, as stipulated by the Protocol, and economic growth targets at the same time. This fear is not unfounded as total US greenhouse gas emissions in 2004 actually went up by 15.8% compared to 1990 levels. But to castigate the US over this single statistic may be unfair as global greenhouse emissions had also increased by 38% in the period 1992 to 2007.

In any case, the issue of climate change has not been consigned to the back-burner. The world’s political leaders agreed in 2007 to come up with a successor to the Kyoto Protocol. At the 33rd G8 summit, G8 nations agreed to reduce carbon dioxide emissions by half come 2050. In December 2009, global leaders are going to meet again in Copenhagen to discuss a framework to solve the problem of climate change.

Is there a basis then to anticipate significant improvements in the control of greenhouse gas emissions in future years? Sadly, the prognosis is not that good and the reason is very simple. The more important and immediate task in the minds of almost all political leaders around the world nowadays is on achieving economic growth rather than on reducing emissions of greenhouse gases. Political leaders are experienced enough to know that generally the electorate is nowadays concerned more about the economy than the depletion of the ozone layer. Due to their impact on jobs and income, political leaders’ management of economic issues rather than environmental issues will significantly determine their political fate. If we study the history of many countries including Malaysia, it is quite remarkable that compared to previous leaders, current political leaders’ are very much more concerned with the economy. For example, in the case of Malaysia, Datuk Seri Najib six months into his prime ministership has made more statements on the economy than Tunku Abdul Rahman during his thirteen years in the same office. Moreover, the statements nowadays are almost always, in one form or another, the reassurance to Malaysian voters that the country’s economy will continue to grow.

This need to reassure is because, unlike before, there is a very high level of `financial leverage’ or indebtedness among many private and public sector organizations, indebtedness which carries interest charge, often of the compounding type. To illustrate, the total US debt which includes households, business and financial sector debts is now estimated to be around USD57 trillion compared to only about USD5 trillion in 1957. Highly leveraged firms carry higher risk of becoming bankrupt if sales slow down. So the pressure to generate sales revenue and profit is very high or intense in order to ensure the ability to meet debt commitments. Any lateness in repayment will simply be penalised by additional interest charges. And once major players in any industry engage in financial leveraging, it is difficult for their competitors not to follow suit. Soon almost all firms in all industries cannot avoid becoming leveraged or highly indebted. For them revenue growth is essential. The alternative is bankruptcy or insolvency. Hence, the growth imperative for all economies regardless of the implications for the environment. In the case of the US, when the economy grounded to an almost complete halt in 2008, the US federal government, despite its own enormous public debt of more than US$11 trillion, quickly stepped in to ensure credit will continue to flow to business organizations and for the economy to continue to grow. The cost to the environment due to these measures is hardly discussed.

Humanity is currently facing two extremely serious problems. The first is the global climate problem which is getting worse. The second is the very serious problem of underpaid employees everywhere having to work harder to generate more revenue for their firms. In a way present day employees are now being enslaved. In the past, slaves are physically chained. Modern day slaves are chained by their nation’s indebtedness, their firms’ indebtedness as well as their own personal indebtedness from housing, car or credit card loans and the like. So for most people nowadays, there is no choice but to work if they are to avoid losing their personal possessions and avoid bankruptcy. Pay and working conditions considerations are now not as important as getting secure employment itself.

There are social costs to be borne in all these. For many families, both parents will work day and night. Many have hardly any time for their children’s upbringing. For those who can afford it, maids will do the task for them. It is not a wonder that we are witnessing increases in cases of juvenile delinquencies and family breakdowns. Tackling these problems should be the priority for our political leaders if the fate of our future generations is of the utmost concern. Global warming undoubtedly is a serious problem for it is said to be responsible for many ecological disasters including storms and floods. But it is arguable that the more serious problem is the debt-generated phenomena of modern-day human slavery and oppression and all its attendant negative social consequences. Humanity is now drowning in floods of water and floods of debt. It is a classic but tragic case of a `Double Whammy’. Sadly, these are also all man-made problems caused by making debt an industry integral to the modern economy.