I haven’t posted something in a while that wasn’t a blurb about a publication, so to mark my 37th birthday I’m going to write a proper opinion post! The topic is the ‘Harnessing Digitalization in Financing of the Sustainable Development Goals‘ interim report to the Secretary General from the Task Force on Digital Financing of the Sustainable Development Goals. The opinion is that it’s stupendously underwhelming.
The words ‘political’, ‘legislation’, ‘lobbying’, ‘parliament’, and/or ‘legislative branch’ appear exactly zero times in this document. While it is only an interim report, the degree to which it avoids the politics of public financing generally, and digitalization/fintech more specifically, struck me. In effect, the thrust of the report is that digitalization of financial systems and services will lead to a more efficient and empowering use of financial assets (public and private) to achieve the SDGs. The closest the report gets to a discussion of political mechanisms is highlighting the role of regulatory bodies such as central banks and ICT ministries in making sure digitalization supports public goods and not merely private interests. I’ll pick on two aspects of the report specifically; the use of private resources to achieve public goods, and the assumption that ‘disruption’ of current financial structures will lead to citizen-empowered SDG investment.
The SDGs are not just a set of abstract technocratic ends; achieving them means using a lot (LOT) of public money to finance public goods on a global scale. The interim report does not stop at saying taxes should be used to achieve the SDGs, though, but also private citizens’ money stored in banks and investment funds. It’s self-evident that the use of taxes to fund public programs is political by nature; suggesting the creation of a regulatory and normative environment where the contents of private bank accounts are used to support investment in public goods is insanely political.
How does the task force think people would respond if they found out the money in their checking accounts was being used as collateral for private investment in the SDG goals? It doesn’t really say, so I’ll use myself as an example. I’m about as sympathetic as it gets with regard to the SDGs, and even my response would be “erm, I don’t want Commerzbank using my personal money to invest in what their board thinks is collectively useful.” I don’t want this even if there is cool ‘disruptive’ technology involved. Financing public goods is something I want handled by my legislative representative who (ostensibly) represents the citizenry, using the taxes I pay for the purpose of funding public (collective) goods. If my bank’s investment behavior aligns with this then super, but I don’t expect this from my bank.
But what if there was a cool ‘disruptive’ digital technology our there? Something that removed my bank as intermediary and allowed me to direct every Euro in my accounts to SDG-supporting projects as I see fit? Not to put too fine a point on it, but banks would never allow this. Transaction fees are a key way banks make their money. Banks are also extremely political; they value my legislative representative as much as I do, but have vastly more money to demonstrate this with. If they face ‘disruption’ by a tech actor who will remove them from the space between me and directing my money to an SDG project, banks will either a) buy that technology and kill it, b) buy that technology and charge customers to use it as the bank sees fit, or c) lobby to create legislation that prevents banks from being removed as intermediary. Digitalization of financial services and banking is indeed deeply political.
The report does talk a lot about regulators, though. Indeed, regulators will
make sure digital financial services will empower citizens to use their personal money to support the SDGs and make the world a better place enforce the regulatory systems that are based on the legislation that is created through political processes. Central banks generally do not see themselves in the business of setting the political tone, and tech regulators range from being hands-off at best to full-on corporate stooges at worst. These institutions are not going to lead the charge into the thorny politics of financing the SDGs in a way that leads to the greatest collective good unless Parliaments demand it.
If we’re going to seriously talk about digitalization and digitized finance as key components of achieving the SDGs, we have to get comfortable talking about politics. Kentaro Toyama said ‘technology is only a magnifier of human intent‘. If we can’t even talk about the fact that what we intend to do with technology is inherently political, and what that means for using tech to achieve the SDGs, then the digital era won’t deliver the benefits we’re hoping for.