A new deal after COVID-19

ABSTRACT

The COVID-19 pandemic has revealed grave structural faults in our global institutional architecture. We argue that political energies should now be focused on three main areas where transformative reorganizations are realistically achievable. In global health, we propose that monopoly patents be complemented by health impact rewards as an optional alternative incentive for developing and supplying innovative pharmaceuticals. To slow global warming, we propose a common glide path for reducing per-capita emissions, with the option to compensate for temporary excess emissions by financing the achievement of additional emission reductions in poorer countries. For the global financial sector, we propose eliminating fossil-fuel subsidies, reintroducing Glass–Stegall, protecting the fair value of international natural-resource sales, and instituting an alternative minimum tax on corporations, financial transactions taxes and progressive taxes on internationally operating digital businesses.

KEYWORDS:

• Climate change
• Health Impact Fund
• human rights
• illicit financial flows
• pharmaceutical industry
• Sustainable Development Goals

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 https://www.who.int/neglected_diseases/diseases/en/.

2 https://www.who.int/tb/en/, https://www.who.int/malaria/en/.

3 The Clinton Health Access Initiative found that, four years after its introduction, only about 7% of the 71 million persons living with hepatitis C have been treated. The other 66 million remain ill and continue to spread the disease (CHAI, 2020, p. 8).

4 Proven reserves of crude oil alone are worth around $100 trillion, more than the current annual gross world product.

5 In 1835, Great Britain borrowed the present equivalent of about $300 billion to compensate some 3000 slaveholders for their lost ‘property’ – the slaves of course got nothing. Repayment of this huge loan took until 2015. https://www.theguardian.com/news/2018/mar/29/slavery-abolition-compensation-when-will-britain-face-up-to-its-crimes-against-humanity and https://www.independent.co.uk/news/uk/home-news/britains-colonial-shame-slave-owners-given-huge-payouts-after-abolition-8508358.html.

6 https://www.worldometers.info/coal/coal-consumption-by-country.

7 https://phys.org/news/2020-12-china-foreign-coal-global-climate.html. China is not alone. Since the Paris Agreement, the 60 largest commercial and investment banks, led by JPMorgan Chase, Citi and Bank of America, have collectively provided $3.8 trillion in financing to fossil-fuel companies. https://www.cnbc.com/2021/03/24/how-much-the-largest-banks-have-invested-in-fossil-fuel-report.html.

8 https://www.statista.com/statistics/276629/global-co2-emissions/.

9 https://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions.

10 A similar idea underlay the Clean Development Mechanism under the Kyoto Protocol, though its implementation was deeply flawed. https://en.wikipedia.org/wiki/Clean_Development_Mechanism.

11 https://globaljustice.yale.edu/oslo-principles-global-climate-change-obligations.

12 https://www.urgenda.nl/en/themas/climate-case/global-climate-litigation/, https://en.wikipedia.org/wiki/State_of_the_Netherlands_v._Urgenda_Foundation.

13 http://taxjustice.wpengine.com/wp-content/uploads/2017/11/Tax-dodging-the-scale-of-the-problem-TJN-Briefing.pdf.

14 In 2015, the largest subsidizers were China, the US and Russia, with $1400, $649 and $551 billion, respectively. https://www.eesi.org/papers/view/fact-sheet-fossil-fuel-subsidies-a-closer-look-at-tax-breaks-and-societal-costs.

15 Of course, such a scheme could work elsewhere as well: in China, Europe, Latin America, the Arab world and Australia, where such ‘carbon pricing’, introduced by the Labour Party under Julia Gillard, was in effect 2012–2014 before being revoked after an election win by the Liberal Party under Tony Abbott. https://en.wikipedia.org/wiki/Carbon_pricing_in_Australia.

16 https://en.wikipedia.org/wiki/Presidency_of_Franklin_D._Roosevelt,_first_and_second_terms.

17 https://www.bloomberg.com/news/articles/2019-09-16/global-currency-trading-surges-to-6-6-trillion-a-day-market.

18 Assuming 250 trading days, $6,600,000,000 * 250 * 0.5% / 10. This revenue would be diminished somewhat by the cost of administration and enforcement.

19 Interestingly, New York State has had an FTT for stock transactions since 1906, but has chosen, since 1981, fully to rebate this tax. https://www.vox.com/2014/11/20/7254003/financial-transaction-tax. The rate ranges from $0.0125 to $0.05 per share, depending on the share price.

Additional information

Notes on contributors

Thomas Pogge

Thomas Pogge, having received his PhD in philosophy from Harvard, is Leitner Professor of Philosophy and International Affairs and founding Director of the Global Justice Program at Yale (https://globaljustice.yale.edu). He co-founded Academics Stand Against Poverty, an international network aiming to enhance the impact of scholars, teachers and students on global poverty, and Incentives for Global Health, a team effort toward creating new incentives to improve access to advanced pharmaceuticals worldwide.

Krishen Mehta

Krishen Mehta is a former partner of PwC and currently serves as a Director of Tax Justice Network. He is a Senior Global Justice Fellow at Yale University and a member of the steering group of the Independent Commission for Reform of International Corporate Taxation (ICRICT). Mehta is co-editor of Global tax fairness (Oxford UP, 2016) and Tax justice and global inequality (Bloomsbury Publishing, 2020). In prior years, he has taught or been a guest speaker at Tokyo University, American University and the Fletcher School of Law and Diplomacy at Tufts University.