NationStates Jolt Archive

I've been working on this for a while, and have just put it through my region. Now I'm interested to see what people think on a larger scale.

UN Resolution: International Clearing Union
Category: Free Trade/(Fair Trade)?
Strength: Strong

We, the UN General Assembly

REAFFIRMING the United Nations’ duty to encourage development and economic growth in all countries.

RECOGNISING that currently, the entire burden of discharging international debt is solely placed on the debtor nation, and any debt relief programmes currently in existence do not have the necessary power.

RECOGNISING that this debt burden leads to a spiral of indebtedness, with severely damaging consequences on all scales, from human to international.

NOTING WITH REGRET that on average currency speculation results in capital entering rich nations, and leaving poor nations, and the problems resulting from this shift contribute to the debt spiral.

HEREBY

RESOLVE to establish a global bank known as the International Clearing Union. Its purpose - to bring balance to world trade.

The International Clearing Union will:
1) Issue its own currency, known as the Bancor, redeemable against national currencies at fixed rates of exchange
2) Use this to measure a countries trade deficit or surplus
3) Give every country an overdraft facility at the bank equal to half the average value of its trade over the past 5 years
4) Provide an incentive for all UN members to have neither a trade deficit or surplus at the end of a year:
a) Any nation using more than half its overdraft allowance (going too far into deficit) over the course of one year will be:
- Charged interest on the overdraft
- Obliged to reduce the value of it’s currency by up to 5%
- Obliged to prevent the export of capital.
b) Any nation with a trade surplus greater than half its overdraft allowance (going too far into surplus), over the course of one year, will be:
- Charged interest (negative interest) on this total
- Obliged to increase the value of currency by 5%
- Obliged to permit the export of capital

The above will result in: capital being unable to flee from nations in major deficit to nations of major surplus – because it’s movements are blocked in one direction, but not the other – and on aggregate, nations in surplus would spend their money back into deficit nations. The present weakness of the debtor nations would no longer drive them further into dependency.

This link might provide some context:
http://www.monbiot.com/archives/2004/06/01/the-age-of-consent/

Any thoughts, comments or delerious ramblings would be greatly appreciated.
Oh, and do the mods know whether the 'Fair Trade' resolution category will come into operation anytime soon?

I note the honourable members proposal with interest, however I feel this proposal need to be very carefully considered. I am always worried when percentages are quoted in proposals and little or no backup is given to argue their validity. Certainly the idea of counter-cyclical demand management policies have been around for some time, though I am unconvinced in how this proposal actually help to balance the rich poor divides in the world. If you are going to use the ideas behind these policies I would very much like to see some articles defining how these policies will be used.

My other concern is who will actually be managing the union. No mention is made of that anywhere, as it stands the only nations capable of providing both the expertise and finances will be the banking corporations of the richer and more powerful nations. Clearly this is not congruent with the spirit of this proposal and as such I feel it needs further thought.

The issue with regard to a fixed rate of exchange also need elaboration; does this mean a fixed rate of exchange against all currencies in the world, or specific rates set against individual currencies? You should also consider there are many economic agreements on Fair/Free Trade already in place between regions in the NS world and I feel careful consideration as to the impact of this proposal should be made. The most immediate of these that spring to mind, is the International Fair Trade Agreement.

I look forward to your comments in order to broaden my understanding of the figures chosen and the points I have raised.

Most Respectfully
Lydia Cornwall, UN Ambassador
Office of UN Relations, Dept for Foreign Affairs
HM Government of Telidia

unions destroy economies, we find this proposal in favor of restricting economies to unions and we will not stand for this! if a corporation falls out of line, just have them seized by the government!! dont impose unions on us!! evreyone in draganovia enjoys union free jobs and workplaces, we find that if unions come to our country, it will destroy our recovering economy, we will personally drive out any union workers that attempt to come to draganovia to set up unions.

unions destroy economies, we find this proposal in favor of restricting economies to unions and we will not stand for this! if a corporation falls out of line, just have them seized by the government!! dont impose unions on us!! evreyone in draganovia enjoys union free jobs and workplaces, we find that if unions come to our country, it will destroy our recovering economy, we will personally drive out any union workers that attempt to come to draganovia to set up unions.

With respect I don’t see the word ‘Union’ being used in the way you mean. This proposal has nothing to do with restricting or expanding the use of labour unions, but rather Keneysian economics.

Respectfully
Lydia Cornwall, UN Ambassador
Office of UN Relations, Dept for Foreign Affairs
HM Government of Telidia

I note the honourable members proposal with interest, however I feel this proposal need to be very carefully considered. I am always worried when percentages are quoted in proposals and little or no backup is given to argue their validity. Certainly the idea of counter-cyclical demand management policies have been around for some time, though I am unconvinced in how this proposal actually help to balance the rich poor divides in the world. If you are going to use the ideas behind these policies I would very much like to see some articles defining how these policies will be used.

My other concern is who will actually be managing the union. No mention is made of that anywhere, as it stands the only nations capable of providing both the expertise and finances will be the banking corporations of the richer and more powerful nations. Clearly this is not congruent with the spirit of this proposal and as such I feel it needs further thought.

The issue with regard to a fixed rate of exchange also need elaboration; does this mean a fixed rate of exchange against all currencies in the world, or specific rates set against individual currencies? You should also consider there are many economic agreements on Fair/Free Trade already in place between regions in the NS world and I feel careful consideration as to the impact of this proposal should be made. The most immediate of these that spring to mind, is the International Fair Trade Agreement.

I look forward to your comments in order to broaden my understanding of the figures chosen and the points I have raised.

Most Respectfully
Lydia Cornwall, UN Ambassador
Office of UN Relations, Dept for Foreign Affairs
HM Government of Telidia
Thank you for your intelligent and interesting post. In response to your fist point, I would recommend the link in my initial post as well as the one below, which is an article by Keynes, the father of the ICU. Appendix B is particularly relevant, as it concerns the actual incentives that I would use. Most of my information has come from the book 'Age of Consent' by George Monbiot, and I have used Monbiot's ideas in writing my version, as he is more up to date.

http://www.eco.utexas.edu/facstaff/Cleaver/368keynesoncu.htm

I chose 5% as it was mentioned in Keynes article, and seemed a reasonable figure (I am in no way an economist by trade, so my apologies if I make any howlers)

As to your concern about who would manage the Union, this is a very fair query, and one I was considering addressing in the proposal itself. Keynes himself felt that a governing council should be drawn from each of the major trading blocs, eg. the US, south america, Europe, the british commonwealth, the far east and so on. Today I would hope that they could be distributed somewhat more equally, and I am open to suggestions. Initially, I thought about one councillor to every few billion people, but as I am trying to regulate internationaltrade, they would have to be linked in some way to nations, while at the same time being free from national bias.

The fixed rate of exchange is intended as a marker, to give us an ability to measure trade deficits against something (like the US$ is used). So whatever would let that work is what it would be. To be quite frank, I'm not sure, as I'm not an economist.
As to your last point, the same argument could, I feel, be made about many resolutions, and I don't feel it is possible to take into account the effect this will have on every economic agreement. Is the International Fair Trade Agreement a resolution, because I cannot find it, and if possible could you provide me with some more information on it.
I look forward to your response.

Thank you for the kind reply, it is good to have a proposal, which actually has some solid theories behind it, though I feel it is going to be a real challenge bringing such a complex economic theory in to a proposal for the NSUN. That said it should be a fun challenge if you are prepared to stick it out, which I hope you do.

Thank you for your intelligent and interesting post. In response to your fist point, I would recommend the link in my initial post as well as the one below, which is an article by Keynes, the father of the ICU. Appendix B is particularly relevant, as it concerns the actual incentives that I would use. Most of my information has come from the book 'Age of Consent' by George Monbiot, and I have used Monbiot's ideas in writing my version, as he is more up to date.

http://www.eco.utexas.edu/facstaff/...8keynesoncu.htm

I chose 5% as it was mentioned in Keynes article, and seemed a reasonable figure (I am in no way an economist by trade, so my apologies if I make any howlers)

You are more than welcome. I will review the link you have provided in more detail and refer back to some of my economics books, which sadly are now gathering dust. Still now is as good a time as ever to give them a good dusting.

I actually read the article you provided previously, though I did feel that Monboit tries to cover a wide amount of topics many of who has very distinct theories of their own. That said it is a very good reference point. The tricky part is going be applying the theories to the economic situation in the NS world, which by its nature is vast beyond belief.

As to your concern about who would manage the Union, this is a very fair query, and one I was considering addressing in the proposal itself. Keynes himself felt that a governing council should be drawn from each of the major trading blocs, eg. the US, south america, Europe, the british commonwealth, the far east and so on. Today I would hope that they could be distributed somewhat more equally, and I am open to suggestions. Initially, I thought about one councillor to every few billion people, but as I am trying to regulate internationaltrade, they would have to be linked in some way to nations, while at the same time being free from national bias.

Indeed he did however, please note that references to RL are not permitted in NSUN proposals. Therefore to aid in gearing your thinking in the right direction we do not have particular trading blocks in the NS world. Though you could perhaps argue that the NS regions may be trading blocks in themselves since many nations trade with their neighbours. I will have to think about this though; it’s just a thought. Though I believe you can now see my earlier point. Applying Keneysian theory to the NS world will be challenge because the economic situation here is not the same as the RL world under which it was developed. Please don’t think I am saying it will be impossible I am just saying it will be challenge.

The fixed rate of exchange is intended as a marker, to give us an ability to measure trade deficits against something (like the US$ is used). So whatever would let that work is what it would be. To be quite frank, I'm not sure, as I'm not an economist.
As to your last point, the same argument could, I feel, be made about many resolutions, and I don't feel it is possible to take into account the effect this will have on every economic agreement. Is the International Fair Trade Agreement a resolution, because I cannot find it, and if possible could you provide me with some more information on it.
I look forward to your response.

I agree we need a benchmark, without it, it would be impossible to apply an economic standard. Though again remember we do not have the RL USD in the NS world. In RL the USD is used because it is the largest traded currency in the world, thus it is easy to lay down a standard. Here in NS we do not have such a currency and thus the alternative is calculating one. Do you feel this is possible and was that your intent with the Bancor?

The economic agreements I refer to are not resolutions no. These are in fact RP’d agreements though some have a large number of signatories following various principals, sometimes based on political ideology. I would ask that my colleagues belonging to these various types of organizations provide some comment here in order for this member to have a clearer understanding of the various economic policies in NS.

In closing, I will study the links provided as promised. However I would recommend the hounorable member give some thought as to how the economic theory can be more accurately tailored for the NS world.

Most Respectfully
Lydia Cornwall, UN Ambassador
Office of UN Relations, Dept for Foreign Affairs
HM Government of Telidia

First of all, sorry for the delay in replying. You know how it is, plagues of locusts, rivers of blood, the sky falling etc. A leaders work is never done...

Anyhoo. Yes I do know that RL references are not allowed in resolutions and I don't belive I actually used them in the resolution itself. I was using them merely as an examples, and the trading blocs bit probably should have been OOC. From now on I will use the nation of 'VeryRichLand' (I don't think that exists) as an example.
I've thought about the governing of the ICU. How about this?

FURTHER RESOLVE that the ICU be a strictly philanthropic organisation, charged with encouraging the development of the world in an equitable manner.

NOTING the above point, and acknowledging that nations generally act in the interests of their own populace, the UN resolves that no governmental staff shall serve in the ICU, and that it shall be staffed in the manner of other NGOs (for example the Red Cross), by volunteers. Obviously this is just work in progress, and as always I would appreciate.

When you say that 'applying Keneysian theory to the NS world will be challenge because the economic situation here is not the same as the RL world under which it was developed' do you mean the fact that liberalising your economy increases the economy rating? Because if you do, I don't see how this affects the resolution. I don't know that much about keynes' other theories, so sorry if I have missed it.
I agree we need a benchmark, without it, it would be impossible to apply an economic standard. Though again remember we do not have the RL USD in the NS world. In RL the USD is used because it is the largest traded currency in the world, thus it is easy to lay down a standard. Here in NS we do not have such a currency and thus the alternative is calculating one. Do you feel this is possible and was that your intent with the Bancor?
Yes that was my intention with the Bancor (not a very good name, what about the Sol, or something), and it shouldn't be impossible. I assume keynes would have thought of this as well, and he didn't have the benefit of modern computers.

Thank you for the information request, and I will certainly look at these agreements and review my proposal accordingly.

Lookin good. In its final form I think it would get my vote(s).

The Republic has been operating debtless, more or less since its founding. Even now, with a population exceeding 1 billion, we still maintain a trade surplus with our neighbors.

In general practice, all governments are capable of eleviating their national debt. Their debt is a necessary consequence of their market policies... And a change in policy, can remove and/or eleviate the present debt.

As such we would oppose the use of "international programs" since they seek to help eleviate the present debt, without repairing or reversing the policies which will continue or raise said debt.

In addition we find the currency devalue to be pointless, since states with skyrocketing debts have currency which is already devalued in the extreme. (We recently saw this in an excange between a socialist nation, in which it took only 2/25ths [0.08] of a Tekanian Standard Credit, to equal one Credit of currency from the other nation).

While we would encourage said nations to alter their fiscal, trade, and market policies; we feel creating programs for them to be nothing more than an international fiscal blackhole, which could never actually solve any problems, and cost the more fiscally responsible nations, to support nations whose own incompitent fiscal policies are leading to their economic destruction in the international market... Let's face it; survival of the fittest still stands...

I'm not sure this is such a great idea. It would punish the very nations that should not be punished!

It will punish poor nations that are struggling with a debt and trade problem with interest rates.

It will punish rich nations that are exporting wealth to starving nations across the planet that cannot feed their own people.

Two thoughts.

Article Four calls for very specific actions to be taken against nations out of compliance. Despite the fact that trade values for a given nation aren't part of the XML feed (http://ns.goobergunch.net/wiki/index.php/XML_feed), that doesn't mean that trade deficit and surplus aren't actual variables in the game (the NSEconomy calculator (http://nseconomy.thirdgeek.com/) certainly thinks they are). If so, then Four becomes a Game Mechanics violation
4) Provide an incentive for all UN members to have neither a trade deficit or surplus at the end of a year:
a) Any nation using more than half its overdraft allowance (going too far into deficit) over the course of one year will be:
- Charged interest on the overdraft
- Obliged to reduce the value of it’s currency by up to 5%
- Obliged to prevent the export of capital.
b) Any nation with a trade surplus greater than half its overdraft allowance (going too far into surplus), over the course of one year, will be:
- Charged interest (negative interest) on this total
- Obliged to increase the value of currency by 5%
- Obliged to permit the export of capital
Second, how is punishing a nation for its trade imbalance adding to Free Trade? This will act as a trade restriction, not trade improvement. As there is no Fair Trade category at this point, you'd have to make this one Social Justice. It isn't really, so that's gonna make for a bit of trouble.

Two thoughts.

Article Four calls for very specific actions to be taken against nations out of compliance. Despite the fact that trade values for a given nation aren't part of the XML feed (http://ns.goobergunch.net/wiki/index.php/XML_feed), that doesn't mean that trade deficit and surplus aren't actual variables in the game (the NSEconomy calculator (http://nseconomy.thirdgeek.com/) certainly thinks they are). If so, then Four becomes a Game Mechanics violation

I didn't intend this to be a game mehanics violation (obviously), but you may well have a point. I wasn't actually intending it to alter data on the NSEconomy calculator, and I don't know if it would do this though. If a mod could decide, that would be helpful.
Second, how is punishing a nation for its trade imbalance adding to Free Trade? This will act as a trade restriction, not trade improvement. As there is no Fair Trade category at this point, you'd have to make this one Social Justice. It isn't really, so that's gonna make for a bit of trouble.
I thought about this, but this is trying to regulate international trade, and so it doesn't directly 'reduce income inequality' or whatever the social justice descriptor says (I forget). Therefore, I felt free trade was the best, as in the long run I feel this resolution will level the playing field, therefore allowing truly free trade. This may be a matter of opinion.
I mentioned free trade because there was a thread in Technical asking for a free trade category, I don't know what happened to it.

Unfortunately, I will have to respond to the points raised by other delegates at a later date, as I am running out of time for the next 2-3 days. Sorry

Okay, sorry about the delay. Here is the current draft, I've incorporated the bit about the Governing of the Union.
UN Resolution: International Clearing Union
Category: Free Trade
Strength: Strong

We, the UN General Assembly

REAFFIRMING the United Nations’ duty to encourage development and economic growth in all countries.

RECOGNISING that currently, the entire burden of discharging international debt is solely placed on the debtor nation, and any debt relief programmes currently in existence do not have the necessary power.

RECOGNISING that this debt burden leads to a spiral of indebtedness, with severely damaging consequences on all scales, from human to international.

NOTING WITH REGRET that on average currency speculation results in capital entering rich nations, and leaving poor nations, and the problems resulting from this shift contribute to the debt spiral.

HEREBY

RESOLVE to establish a global bank known as the International Clearing Union. Its purpose - to bring balance to world trade.

The International Clearing Union will:
1) Issue its own currency, known as the Bancor, redeemable against national currencies at fixed rates of exchange
2) Use this to measure a countries trade deficit or surplus
3) Give every country an overdraft facility at the bank equal to half the average value of its trade over the past 5 years
4) Provide an incentive for all UN members to have neither a trade deficit or surplus at the end of a year:
a) Any nation using more than half its overdraft allowance (going too far into deficit) over the course of one year will be:
- Charged interest on the overdraft
- Obliged to reduce the value of it’s currency by up to 5%
- Obliged to prevent the export of capital.
b) Any nation with a trade surplus greater than half its overdraft allowance, over the course of one year, will be:
- Charged interest (negative interest) on this total
- Obliged to increase the value of currency by 5%
- Obliged to permit the export of capital

FURTHER RESOLVE that the ICU be a strictly philanthropic organisation, charged with encouraging the development of the world in an equitable manner.

NOTING the above point, and acknowledging that nations generally act in the interests of their own populace, the UN resolves that no governmental staff shall serve in the ICU, and that it shall be staffed in the manner of other NGOs (e.g. the Red Cross) - by volunteers.

The above will result in: capital being unable to flee from nations in major deficit to nations of major surplus – because it’s movements are blocked in one direction, but not the other – and on aggregate, nations in surplus would spend their money back into deficit nations. The present weakness of the debtor nations would no longer drive them further into dependency.

Right, time to return fire...
It will punish poor nations that are struggling with a debt and trade problem with interest rates.In theory, reducing the value of a currency helps economies by making exports more attractive, and therefore increasing the money made by selling stuff. Furthermore, restricting the export of capital means that what money there is tends to stay in the country, to help that countries economy.
It will punish rich nations that are exporting wealth to starving nations across the planet that cannot feed their own people.
On the contrary, section 4b results in nations with a trade surplus spending this surplus back into nations with a deficit (unless they want to lose it via the demurrage system). This is the key part of the system.

In general practice, all governments are capable of eleviating their national debt. Their debt is a necessary consequence of their market policies... And a change in policy, can remove and/or eleviate the present debt. Are they? Nations with heavy national debt spend most of their national income on paying their debts, and in some cases can only pay the interest. I believe the record currently stands at 80% of a nations income being spent on paying it's debt. Clearly, a nation with only 20% oif it's possible income to spend on everything, including encouraging exports. Meaning that the trade deficit is likely to increase as the debts do.

In addition we find the currency devalue to be pointless, since states with skyrocketing debts have currency which is already devalued in the extreme. Not necessarily, but yes, in some cases the currency devalue probably would be pointless. (OOC: take early 1920's Germany for example). Maybe if that clause was amended to read ' in most cases...' or something.

Let's face it; survival of the fittest still stands...But should it? If we have the chance to do good, and equalise the playing field (and with this I feel that we do) then surely we should?

Are they? Nations with heavy national debt spend most of their national income on paying their debts, and in some cases can only pay the interest. I believe the record currently stands at 80% of a nations income being spent on paying it's debt. Clearly, a nation with only 20% oif it's possible income to spend on everything, including encouraging exports. Meaning that the trade deficit is likely to increase as the debts do.

Still, your proposal does not solve the issue... Debt is created by policy, this program gives them funds, without forcing a change in policy. It's the equivalent of walking into the street, and handing a crack whore a check for $1,000,000.00 and expecting them to be the CEO of a major corporation in a few years. All this would create is an ecconomic black-hole where funds are seived into nations that will never come out of debt because of their own failure of ideals.


But should it(survival of the fittest still stand)? If we have the chance to do good, and equalise the playing field (and with this I feel that we do) then surely we should?

Should it? Yes, most certainly... If a nation is going to fall into debt because of its own decisions, it should work its way out of debt by its own decisions... This proposal only addresses the symptom of their problem, and not the problem itself... If this were to be successful, this proposal would have to go much further.... most likely up to the point of massive forced changes onto their economic policies, and a total violation of their economic rights, in order to solve their problem.... And even that is not enough, as it will only extend their stability that much longer... Sorry... A nation in massive debt is unfit... It only has two real alternatives, adapt or be assimilated by a larger more successful nation (and thus die as a state)... Adapt or die... the rule of "Survival of the fittest". MAy sound harsh; but that is how the universe works.

So a nation flounders - boo freakin' hoo!

I'm not paying for some little twit of a nation. Just because they are stupuid enough to run up a deficit that cripples their nation, doesn't mean I have to be screwed over economically.

Next.

So a nation flounders - boo freakin' hoo!

I'm not paying for some little twit of a nation. Just because they are stupuid enough to run up a deficit that cripples their nation, doesn't mean I have to be screwed over economically.

Next.
Who says that it was their fault they got into debt? Besides, if you have a massive trade surplus, why are you complaining, all you have to do to avoid Section 4b is spend it.

Who says that it was their fault they got into debt? Besides, if you have a massive trade surplus, why are you complaining, all you have to do to avoid Section 4b is spend it.

But what if you are saving it for something? Say - for example - you are hosting the NS games in ten years time - you might want to build up a large surplas to spend on that, but because of this you would lose it all each year.

Why is it socialists always want to reward the incompitent, and penalize the successful?

REAFFIRMING the United Nations’ duty to encourage development and economic growth in all countries.
Reaffirming what?

Giordano,
UN representative,
The Black New World

Why is it socialists always want to reward the incompitent, and penalize the successful?

Because they're incompetant and not successful, duh. :rolleyes:

Ok - I have been thinking about this some more, and I really would like an answer to this question.

What if my nation is building up a surplus for a reason? In ten years time we know that we are going to have to renovate a huge area of Catriana, and that it will take a lot of money to do it. So we build up a surplus for the next ten years, so that when the renovation starts the whole nation does not go in to huge debt over it.

Would we be required to give up this surplus, or be punished for building it up by having it taxed in a huge way? Cause that seems a touch unfair :}

Ok - I have been thinking about this some more, and I really would like an answer to this question.

What if my nation is building up a surplus for a reason? In ten years time we know that we are going to have to renovate a huge area of Catriana, and that it will take a lot of money to do it. So we build up a surplus for the next ten years, so that when the renovation starts the whole nation does not go in to huge debt over it.

Would we be required to give up this surplus, or be punished for building it up by having it taxed in a huge way? Cause that seems a touch unfair :}
Ok, that's a fair point...

*thinks*

:mp5: Damn you! Thats a hole in my argument.
Nope, this is the sort of query I was looking for. If you know now that you will need to renovate Catriana, could you not spread the preparations over 10 years? If that is not possible, then what about savings acocunts in the ICU, allowed only for specific purposes. Or maybe a way of getting exemption? Hmm. I will think on't

Ok, that's a fair point...

*thinks*

:mp5: Damn you! Thats a hole in my argument.
Nope, this is the sort of query I was looking for. If you know now that you will need to renovate Catriana, could you not spread the preparations over 10 years? If that is not possible, then what about savings acocunts in the ICU, allowed only for specific purposes. Or maybe a way of getting exemption? Hmm. I will think on't

I am glad I can be of help :}