We are currently living in a world that is both connected and divided, with a small percentage of people benefiting while the vast majority suffer from poverty and inequality. At the same time, various global challenges like climate change, pandemics, financial instability, violent conflicts, and biodiversity loss threaten humanity. These issues require collective action on an unprecedented scale, similar to what was seen after World War II when the modern multilateral system was established.
In order to address these challenges, there is a need to create a new multilateral framework that can provide “international public goods.” These goods are characterized by their non-excludability, non-rivalry, and positive externalities, meaning that they benefit everyone and their provision leads to shared advantages. While the concept of public goods was initially applied at the national level, it has now expanded to the international arena through initiatives like international development cooperation.
To effectively deliver international public goods, there must be widespread public awareness and political agreement on joint initiatives. This consensus should result in binding international agreements implemented by intermediary institutions that can organize, finance, and manage these efforts. Additionally, robust financing mechanisms are needed to support the organizations working on these initiatives.
One viable financing option is an International Financial Transactions Tax (IFTT). This tax, estimated to be as low as 0.1 percent, could generate significant revenue to fund international public goods. Many economists, policymakers, and political leaders have supported this idea due to its potential to raise funds without significantly impacting economic activity. In fact, financial transaction taxes have been implemented in numerous countries with success, making them a proven tool for generating revenue.
While an IFTT may not become a global initiative immediately, it could be implemented through multilateral coalitions of like-minded countries. These coalitions could demonstrate the effectiveness of an IFTT in practice and pave the way for broader proposals in the future. Institutions like the United Nations and regional organizations could facilitate these initiatives and help determine the allocation and disbursement of funds raised through an IFTT.
In conclusion, providing and financing international public goods is crucial in addressing the global challenges we face today. Establishing an IFTT to fund these initiatives is a promising approach that could lead to positive outcomes. However, it will require strong political will and cooperation to implement these changes effectively. The time to act is now, and every effort must be made to ensure a sustainable future for all.
