Sorry for the protracted pause in writing – I wish I had other writers to share responsibility for this blog with; sometimes this project gets a bit overwhelming and I take a step back to take stock!
Bill Nighy, ambassador for the Robin Hood Tax campaign in the UK writes about the continuing (and deepening) controversy about the banks and their failure to take responsibility for the economic meltdown and the resulting crisis, which the poorest in society are now being forced by the Tories to resolve:
Now, no less a figure than Mervyn King, governor of the Bank of England, has laid the blame for cuts in public services and welfare squarely at the door of the City. “The price of the financial crisis is being borne by people who did absolutely nothing to cause it.”
The evidence supporting him is overwhelming. The International Monetary Fund has warned that British government debt will be 40% higher as a result of the financial crisis. That’s equivalent to a total of £28,000 for every taxpayer in the country.
But King’s subsequent comment that he was “surprised that the degree of public anger has not been greater than it has” suggests that either he had a very high expectation, or that he has misread the public mood.
I’m an ambassador for the Robin Hood Tax campaign, which calls for a tiny tax of just 0.05% on every casino-style financial transaction in order to help poor people, reverse public service cuts at home and abroad, and tackle climate change. In this role I’ve seen how people’s sense of fairness has been stretched to the limits by the continued spectacle of huge pay increases and bonuses in big companies while ordinary people suffer. Every time people turn on the television news they are bombarded with stories of job losses, disabled children forced into care, public sector cuts or young people left without a future. Meanwhile one of the country’s leading bankers claims “the time for remorse and apologies needs to be over“. If there has been any remorse it has escaped my notice. Of course people are angry!
I think it’s a slight misrepresentation of what King said. There’s no question people are angry – the fights at town halls and on the student demonstrations has more than amply proven that. But we’re nowhere near the level of, say, Greek anger, where large swathes of the population demonstrate violently against the government. Is that to come? I’d say the British character mitigates that, as does the violent, pre-emptive behaviour the police have displayed so far (violent agents of the status quo? I should say so!). We also have a serious problem in the media where a disproportionately right wing press constantly misrepresents the economic crisis as only able to be solved by the ConDems’ shock therapy. Of course that’s complete bullshit – the country has been more than able to bail out Ireland at a time when we apparently don’t have enough money to keep libraries open. Would we be more inclined to follow the Greek lead if we were better informed? I wonder.
Portraying investment banks as a giant vampire squid wrapped around the face of humanity, a new animation from The Great Transition campaign of nef (the new economics foundation) is launched today, Monday 6 December, aimed at increasing public pressure on government to take on the banks and not sweep the issue under the carpet.
The animation ask politicians if they have a plan to tame the banks, and if not, why not?
The one minute animation is backed by a wide range of influential pressure groups including: Compass, ResPublica, 38 Degrees, World Development Movement, Tax Research and the Post Bank campaign. The animation is part of the fast-growing counterweight to the power of the banks and is launched the day before the Eric Cantona-inspired run on the banks (bankrun2010), that has seen grassroots public campaigns spring-up in 15 nations.
Andrew Simms, Policy Director at nef said: “Who is afraid of the big, bonus-driven banks? The Coalition government it would seem. Why else, just two years after the biggest bail-out in history, are the unreformed banks still in trouble? Big investment banks were compared to giant vampire squids, wrapped around the face of humanity, feeding on anything that smells like money. Now massive spending cuts follow in their wake. The government lack a plan to tame them, and seem to wish the problem would just go away. That’s why we’ve brought the vampire squid compellingly to life to jog their memory, and ensure that no one can forget the need for urgent reform. We have a plan to take back our banks for the benefit of the public and the wider economy, where is theirs?”
Tony Greenham, head of nef’s Finance and Business programme added: “The bankers claim they earn their bonuses through creating wealth, but the reality is that modern banking is more about extracting wealth from the real economy than doing anything socially useful. We can’t go on like this; it’s time to take back the banks for the public good and not allow our politicians to be bought off with a few grudging concessions from the banking elite.”
As public services pay the price for massive private-sector failure, there is little sign that government is prepared to stand up to the banks that played such a central role in the crisis:
- Nearly £7 billion will be paid out in City bonuses this year.[i]
- £7 billion is more than the first wave of public spending cuts, and the amount the UK has committed to propping up failing Irish banks as part of the Irish bail-out package.
- Attempts to change bad bonus behaviour with a levy failed according to former Chancellor Alastair Darling, and there are already signs that the banks are preparing to return to business-as-usual on bonuses eschewing measures designed to diffuse public anger.
- We’re told that there’s no alternative to huge public spending cuts in the wake of the crisis-driven recession. Yet, add together all the taxes in the UK that go unpaid, evaded or avoided and you come to a figure of £120 billion.[ii] A vigorous effort to collect even a share of that would completely change the debate. Yet the banks, and the accountants and lawyers that win lucrative business from them, are busy finding ever more ingenious ways to help their clients pay their fair share of tax.
No, not him.
The Robin Hood tax is something quite different. To use the campaign’s own words:
The Robin Hood Tax is a tiny tax on bankers that would raise billions to tackle poverty and climate change, at home and abroad.
By taking an average of 0.05% from speculative banking transactions, hundreds of billions of pounds would be raised every year.
That’s easily enough to stop cuts in crucial public services in the UK, and to help fight global poverty and climate change.
So by basically levying a charge on banking transactions which aren’t even needed and which don’t benefit a soul, we could in a stroke remove the need for slashing public services, decimating higher education, and cutting investment in our infrastructure just at the time we need it most. Can someone give me a very good reason why this hasn’t already happened?
Josef Stiglitz thinks it’s doable, but others disagree. David Kern, chief economist at the British Chambers of Commerce thinks:
“It may have potential. I’m not sure it’s the most appropriate thing. I think the main argument against it is that it’s most unlikely to be implemented globally. If a tax could be applied it would have beneficial effects … My reservation is that for the UK to engage in this unilaterally would be a very dangerous thing to do because it would destroy the country’s financial sector. People and businesses would migrate to other places. If the US and big European countries implemented it as well then it would not harm our financial sector as much.”
Any other economists, armchair or actual, who want to have a go at explaining why this shouldn’t happen? It seems unthinkable that the idea shouldn’t take off in some way, particularly considering the political capital to be made out there from the anger which persists against bankers. In the run-up to a general election where both the main parties are trying to outdo one another at brutalising the public sector (ironic when our financial woes were caused by the private sector), hopefully the campaign (which had a briefing today in the House of Commons) will gain traction.