It's Like Almost Free Money; Says Prime Minister Modi

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This article is about two things. It is about how green capitalism is ruining the world. And about how if there is to be a future for the human race then we need money to be created in such a way and according to such rules that ecology is conserved and enhanced.

Green capitalism is making much headway these days. The G20 has the focus of so-called green finance, and recently IPS news reported that "China seeks to export its green finance model to the world."

The conclusions from that G20 sub group meeting held in Argentina were very strange. "The massive demand for green financing simply cannot be met by the public sector or the fiscal system," Ma Jun, who has since been appointed UN Environment’s Special Advisor on Sustainable Finance, said. "In a country like China, 90 percent is being covered by the private sector. Globally, my feeling is that in the OECD countries the fiscal capacity is probably higher. Maybe more than 10 percent could be provided by governments," he said. "But in other economies with weaker fiscal capacity, the rate should be even lower than in China."

The reason this comment is strange is that private sector money is debt money. And nowadays most public sectors also raise their money as debt that has to be repaid with interest. And the great majority of the people of the world are too poor to be able to afford debt and the great majority of countries are crippled by public debt. In most countries taxes are only a small part of the source of money for governments.

In India, nearly a third of the national budget goes towards servicing debt because the national budget is to a large extent financed by debt. Most Indians earn less than 1 lakh Rupees a year. Half of us work with our hands as agricultural and other labourers. Most farmers in India are in a terrible debt crisis and most Indians are farmers or farm labourers dependent on farmers. In short, there is no way debt based money can create jobs for us. Nor do we have jobs that are fancy enough that we pay taxes. The FICCI Chairman today said that India will have 20 crore unemployed people by 2025.

Thus, with all these examples of how no one can afford debt it is strange that the G20 approach to money is still that the private sector shall create money as debt for getting the world out of the biodiversity and climate and soil loss and water pollution crisis.

Surely by know everyone should know that if we want to rebuild the ecology we cannot afford to borrow. In fact, all of human accumulated monetary wealth only came at the cost of running down the efficacy of ecological systems, destroying them, in a word.

In any case it is not at all clear what is included in this "massive demand for green financing." The governments of the world have the foolish idea that debt based money is fine because from such borrowings the governments generate taxes that they can use for public projects. They think there is such a thing as a green debt that will also generate green taxes.

But the trouble is that no one is regulating the private sector and telling them what to lend for, and what not to lend for. For example, there is not a single river or stream anymore in the whole of India where a person can go swimming without getting ill. And yet one of the flagship projects of the present Union government is a bullet train that is built to streak through soils and lay much fertile land to waste and spill its fuel in the earth and pollute the ground water.

Running a bullet train is obviously not a form of work that is building up the carbon sequestration of earth, and it is costing 2 crore Rupees for each of the 50’000 jobs being created. It is a great pity that the Ahmedabad-Mumbai high speed rail link is considered a project in need of financing. In fact, the ecological impact of transport never takes into account the loss of biodiversity from roads and rail. But leaving that aside, the statement of the Prime Minister about the economics of the project is equally strange. In recent newspaper reports on the new Mumbai-Ahmedabad bullet train link which was inaugurated the other day by Prime Minister Modi and Japanese Prime Minister Abe, the Prime Minster of India was quoted as saying that in one way the whole project is getting built for free, because India is importing 81% of the money to buy the equipment for the project from the Japanese Government and the cost of money is a mere 0.1% and repayable over a very long term of fifty years.

I am not involved in the project. I am not a fan of global communications or global transportation or global finance. In my view, the unholy trinity of growth slash development has landed the natural ecology of the earth on which we humans depend in a complete mess. But leaving that aside for the moment, - which leaving aside of course is what may well wipe out the human race… but be that as it may -, and focusing on the Prime Minister of India’s statement, is it not extraordinary that Narendra Modi seems to believe that money that has to be repaid can nonetheless be considered more or less free? In his statement does the "in one way" refer to the low interest rate? Would he consider the money he is importing completely free if it was zero interest? What is the commitment in Rupees per year that the Prime Minister has made? The 0.1% interest on the 88,000 crore Rupees being imported from Japan is 88 crore Rupees per year interest for 50 years which adds up to 4400 crore Rupees interest over the full loan tenure. In addition, the repayments are 1760 crore Rupees per year. In addition, the Indian component borrowed at probably around 10% interest adds up to capital and loan repayment of 2400 crore per annum on the Indian component of the capital cost of 20,000 crore. So, the total cost of money is 4248 crores per year, which just happens to be 206 crores more than the entire Union Environment Forests and Climate Change budget which is 4042 crore Rupees for 2017-2018. It is also more than eight times more than what was spent by the Union for flood relief this year in Bihar, whilst the Chief Minister of Bihar is seeking a one off 7636 crore Rupees for restoration and reconstruction. It is true that the Union government in the months from April to August this year raised 2.24 lakh crore Rupees in taxes from income tax and corporate tax. So perhaps depending on one’s priorities the bullet train could be considered affordable. But it is certainly not free.

But the sad thing is that the work that Indians are doing, and of course all people in the world are doing, that throws off taxes for governments, is entirely polluting. This is because jobs that are not polluting cannot pay back money let alone afford to pay interest. Jobs that are not polluting use money for exchange, as a currency that circulates, that allows people to trade with each other. But jobs that are not polluting only monetise a very small portion of their labour and of ecology. Only polluting jobs on the other hand generate taxes for governments. It is thus not right from two separate but related points of view that the Prime Minister of India has committed us to spending more on interest per year on a bullet train than the entire Environment Forest and Climate Change budget of the country. It is not right because we should be spending money on directly ecologically beneficial things, not roundabout slightly less worse things in the sense that the argument is that a bullet train is less bad than an airplane. It is also not right because in a fundamental sense everyone must understand that all economic growth including so-called green growth is polluting and thus the growth promoted by these people who are promoting debt even if it is dressed up as green debt should be outlawed if humans are to survive.

The only sensible way forward for India and indeed all countries is for countries to return to socialism and the system of ad hoc monetisation of fiscal deficits or some other straight forward way of creating positive money, with the difference that spending on activity that does not create more plant and animal life than was there to begin with should be outlawed.

One thing is for sure. India’s public finances are in a mess, and no one is doing anything about it. The public and especially men who take most of the decisions in this world and own most of the wealth, have also completely lost their way about what is important and what isn’t. The debt driven model of human culture can never give the three quarter billion Indians and around 5 billion other people across the world who depend on forestry and agriculture and grassland for their livelihoods the wherewithal to give back more to their ecology than we take out. Yet this is what we need: a culture that gives back more to ecology than we take out and a money system that fosters this culture.

Sadly, even many environmentalists are succumbing to the allure of the new buzz of sustainable finance, which is what the Japanese loan for the bullet train to Ahmedabad represents. There is an enormous effort on the part of owners of capital in the world to make out that there is such a thing as sustainable development and sustainable growth and sustainable finance and sustainable renewable energy and sustainable industrial infrastructure and for all I know even a sustainable military, and that all this sustainability will save us all. Since 2009 the United Nations has had Queen Maxima of the Netherlands as the Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA). Nowadays we seem to have to rope in Kings and Queens to again to do the hard sell for capitalists as they work overtime to make us believe that debt and return on investment is still a feasible proposition in the age of runaway manmade climate change just because it is labelled green. Well it isn’t.

The example of the cost of money imported from Japan for the high-speed rail link provided above shows that there is in fact a high cost associated with green finance, both a high cost ecologically and a high cost economically. But for the moment capitalists and their governments are living in cloud cuckoo land, in a utopian dreamland fantasy world where everything was beautiful and nothing hurt, and … "Ek prakaar se muft mein yeh pura project banta ja raha hai."

This simply cannot go on.

We need politicians who know that obviously money that has to be paid back is not free, not even "free in a way". The only kind of money that is genuinely free is money that is created by us, for us, that does not have to be paid back to anyone. Think about it. Such a kind of money does exist. It could exist if we wanted it. And we need to want it, if the human race is to survive.

(Editor's Note - Edited at the request of the writer.)

Anandi Sharan was born in Switzerland, lives in Bangalore, and worked in Araria District in 2016. She mainly writes about India and how we need a better money policy to help agricultural labourers and women especially to adapt to man-made climate change. 


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