Fractional Reserve Banking – The Problems [ISEE recap 2]

all you have to know.
all you have to know.

When Dan O’Neill came to the required reforms of the banking system in his ISEE key note (which I resumed here), and used this image on his slide, I had never heard of the term ‘fractional reserve banking’. But if there is a cat meme on the topic, it is clearly a topic worth looking into, right?

Cue me going down the rabbit hole of trying to understand the way our current money system works, with the very valuable help of the guys at Positive Money. One caveat right away – the peeps explaining the system have focused on the UK, so there might be minor differences when looking at the EU or the USA, though Wikipedia tells me that fractional reserve banking is the current form of banking practiced in all countries worldwide.

If you have 2 hours at your hands, I would really recommend watching the video tutorial that Positive Money has made, it explains the whole issue much better than I will be able to picture here. But if you want a sneak peek in the problem and some of the solutions talked about at the conference… Read on!

Basically, think about how you imagine banks work. What happens when you walk up to a bank and deposit $100 of your hard-earned money?

a) They keep it in a big vault and wait for you to come and reclaim it.

This is actually how I used to imagine what happens behind closed bank doors. Image via Helmut Hirner, all rights reserved.
This is actually how I used to imagine what happens behind closed bank doors. Image via Helmut Hirner, all rights reserved.

b) They keep a certain percentage of it safe and lend the rest out to somebody who wants to loan money against an interest rate.

c) They take it, use it according to their best idea of what to do with it, and treat your deposit basically as an IOU (a requirement to repay you at some point) that they don’t necessarily have to be able to honor right now.

Decided? Read about the right answer after the jump!

Continue reading “Fractional Reserve Banking – The Problems [ISEE recap 2]”

Do Trees Have Rights Too? Introducing the Crime of Ecocide

Hello hello, I hope you had a wonderful Easter break! Iceland is a-mazing, in case you wondered, so I’d definitely recommend it to anyone. I’m planning a post on a peculiar Icelandic export soon, so there might be some pics in there as well, but today I want to talk about something different – namely, the concept of ecocide.

poster-imagine-no-qr-660-wide

Yesterday, I went to a presentation by Polly Higgins, a lawyer who submitted an amendment to the Rome Statute of the International Criminal Court – the document that defines what constitutes international crimes, such as genocide and crimes against humanity – asking that ecocide be considered an international criminal offence as well. What is ecocide, you ask? The definition is as follows:

Ecocide is the extensive damage to, destruction of or loss of ecosystem(s) of a given territory, whether by human agency or by other causes, to such an extent that peaceful enjoyment by the inhabitants of that territory has been or will be severely diminished.

Basically, Higgins argued as follows – in today’s world, especially in the corporate sector, the law obliges companies to prioritize their shareholder interests – i.e., profit maximization – which makes it hard for companies from a legal point of view to consider things like their impact on the environment in their decision-making process. Nowadays, if they do considerable harm (say, create an oil spill or pollute groundwater), the only avenue for communities to seek justice is to submit a civil case for every single offence – a process that can take years and is really expensive, as well as resulting in too little – too late compensation. If there were an international law deeming it a crime to destroy ecosystems in the name of economic progress, a whole number of things would change:

  • First, countries would have to incorporate that international mandate into their own legal system and in their decision-making process. That is, it would also be illegal for governments to hand out contracts for industrial activities with a hugely negative environmental impact, and heads of state could be held responsible in front of the International Criminal Court if they went ahead anyway. Similarly, laws would have to be adjusted, making it impossible for governments to pass legislation that protects and exempts industry from environmental regulations (as has happened with the fracking industry in the US, for example).
  • Therefore, there would be a massive incentive to subsidize and prioritize sustainable and green businesses and industries in order to keep competitiveness up in this new legal environment. Closing the door to dangerous industrial activity would also give more space to the niche companies that are currently trying to be sustainable, but are failing in a cut-throat marketplace, and encourage innovation.
  • Companies in turn would have to consider long and hard whether to go ahead with projects that could have a massive negative impact anyhow, knowing that their CEO could be held personally responsible in court if they did. Since the law would be based on strict liability, companies would be responsible for damages even if they claim they had no prior knowledge of what would happen (eliminating the ‘I knew nothing’ argumentation against recklessness claims). Furthermore, in a criminal law setting, it would be the responsibility of states to take action against companies, rather than it resting on the shoulders of individuals, so the balance of power would be rectified. Finally, the principle of superior responsibility would hold those at the very top of the ladder – CEOs, heads of banks, heads of governments – to justice rather than somebody that was just following orders, and thus the most powerful themselves would be personally interested in cleaning up their companies’ and institutions’ act.

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SR on the Right to Food Delivers His Final Report to the Human Rights Council

Today, the UN Special Rapporteur on the Right to Food Olivier de Schutter delivered his last report to the Human Rights Council in Geneva. He held the post from 2008 until 2014, and has during that time published a number of important reports and observations on the necessity of switching over to a sustainable global food system based on environmentally benign production methods such as agroecology.

Olivier de Schutter, Special Rapporteur on the Right to Food addresses the Council of Human Rights. Image by UN Geneva, via Flickr CC.
Olivier de Schutter, Special Rapporteur on the Right to Food, addresses the Council of Human Rights. Image by UN Geneva, via Flickr CC.

His report today focused on the need to strengthen both democracy and diversity in order to fix our food systems. During his presentation, he stressed that politics should be used to reach beyond the current system which singularly enables the maximization of agribusiness profits. Indeed, “objectives such as supplying diverse, culturally-acceptable foods to communities, supporting smallholders, sustaining soil and water resources, and raising food security within particularly vulnerable areas, must not be crowded out by the one-dimensional quest to produce more food.” He added:

“At the local, national and international levels, the policy environment must urgently accommodate alternative, democratically-mandated visions.”

De Schutter stressed that truly democratic food systems start at the local level, and that therefore local communities as well as cities should have the right – and indeed the responsibility – to determine the best way to ensure the right to – sufficient and culturally appropriate – food to all their constituents. National strategies are however necessary to support and enable these local decisions.

“Governments have a major role to play in bringing policies into coherence with the right to food, and ensuring that actions are effectively sequenced, but there is no single recipe.”

According to the Special Rapporteur, “in some cases, the priority will be to promote short circuits and direct producer-consumer links in order to strengthen local smallholder farming and reduce dependence on imports. In other cases, the prevailing need may be to strengthen cooperatives in order to sell to large buyers under dependable contracts. National right to food strategies should be co-designed by relevant stakeholders, in particular the groups most affected by hunger and malnutrition, and they should be supported by independent monitoring.

Finally, he also called on international organizations to create a global framework that allows national food security strategies to be implemented successfully and that provides particularly developing countries assistance in that realm. Furthermore, he drew attention to the dual responsibilities of developing and developed countries to each do their part in alleviating food insecurity:

“Other global governance bodies must align themselves with the strategic framework provided by the CFS. The WTO, for example, must not hinder developing countries undertaking ambitious food security policies and investing in small-holder agriculture. […] Wealthy countries must move away from export-driven agricultural policies and leave space instead for small-scale farmers in developing countries to supply local market. They must also restrain their expanding claims on global farmland by reining in the demand for animal feed and agrofuels, and by reducing food waste.”

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Happy International Women’s Day! Let’s Celebrate with a Women In Agriculture Link Roundup!

The celebrations surrounding today’s International Women’s Day have given rise to a number of great resources recognizing the importance of women in agriculture. Instead of writing my own contribution, I thought I’d give you a handy link roundup for your surfing and perusal pleasure – have fun! From Food Tank: 23 Women Changing Food. Is … Continue reading Happy International Women’s Day! Let’s Celebrate with a Women In Agriculture Link Roundup!