Another good letter from the Guardian today:
I fully sympathise with those who rail against bankers' bonuses, but there is a danger of falling into short-termism along with those who speculate on the money markets. The result may be a measure of constraint but the same unjust economic order. Interim measures may be better than nothing; but who will build a coalition of individuals and organisations from all sectors of society to mount a well-informed and vigorous campaign for measures leading to an economy which is almost wholly devoted to producing goods and services that meet our shared human needs rather than securing excessive financial gains for all too few?
Professor Michael Taylor
Former director, Christian Aid
Protest is an appropriate first stage of reform, but Michael Taylor is right, it cannot deliver change by itself.
The creation of a new, viable, narrative is what we need.
This blog is a small contribution.
RThere is an alternative economic policy available: it starts here.
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Richard – maybe what we need is a huge simplification of the banking industry. Of course, businesses and individuals need access to credit but essentially all we need is a bank that looks after people’s savings and lends depositors’ money to people/businesses who are creditworthy.
I can’t see anything very difficult about that or deserving of million pound bonuses. Perhaps the Bank of England should acquire a high-street chain and run it in the public interest. Come to think of it, we already own a couple.
Richard,
To all those who believe the finance sector generates huge tax revenues, perhaps they should look at the facts:-
http://forensicstatistician.wordpress.com/2011/01/13/is-the-finance-sector-good-value-for-money/
The conclusions are surprising.
Richard – a few thoughts. Just as there may be an “undeserving rich” such as, maybe, some overpaid bankers, is there also an “undeserving poor” who rely on and have a sense of entitlement to a life on benefits? Is the solution to both problems to promote a culture which places less value on material possessions and places more value on indefinable values of community, “decency”, self-reliance and improvement. Am I describing a Scandinavian model, or a Singaporean one?
Do you really want a national investment bank pregnant with political overtones? Why do you think banks aren’t lending? Is it because regulatory capital rules are such that they are required to rebuild their balance sheets? Would it really be preferable for a national bank to lend in circumstances deemed uncreditworthy by “real” banks? If a project is unfinanceable commercially it would seem better to fund it through taxes than quantitative easing. I would introduce a comprehensive 7 or 10 year national economic plan (not sure who would draw it up) which could not be fundamentally altered by governments without cross-party agreement or a specific electoral mandate. No government would then be allowed to steal money from future generations to fund re-election associated pledges. If the Bank of England can be independent, why not go a bit further?
Is it unrealistic to think that you can come even close to raise the reducing the tax gap by keeping taxes high and encouraging compliance? I know a lot of Scandinavians (held up as a model of happy taxpayers) who are doing everything possible to avoid their high taxes. The answer may by low taxes, like Ireland. It worked for them but they simply over-leveraged, a completely different problem.
We should be changing how we live and how we want to live.
The Chilean Economist Manfred Max-Neef has been doing just that.
PS
Rudolf Elmer and wikileaks are in the news today. http://m.guardian.co.uk/media/2011/jan/16/swiss-whistleblower-rudolf-elmer-banks?cat=media&type=article
@chris foren
The first paragraph “answers” the second.
It’s hard to hide things in simplicity.
Why should people be hugely rewarded for doing simple tasks ?
It may be 2011, but turkeys still do not vote for Christmas.
http://news.aol.co.uk/uk-news/story/crackdown-on-top-rate-tax-loophole/1516724
@Neil
I’d like to think that data is right but know that the definition of what is in finance vary enormously and think this may be a case of apples and oranges
@Will Jenney
I am not sure quite what model you are describing because your analysis is confused
Only Irish companies had low tax – and that was on profits artificially relocated to the Republic
And you don’t want a politically controlled investment bank but want a seven year plan beyond democratic control. There’s just a hint of anti-democratic Soviet thinking in there
So I’m sorry – I’m not sure what you’re saying, but it makes little sense to me right now
@Richard Murphy
Richard,
The classifications for GDP & Tax revenue referenced on the forensicstatistician site both use the same definitions from the ONS so one can’t try to say the comparisons are unfair. They are like for like.
Indeed, the article makes two clear points:
1) Tax take relative to GDP contribution for finance and business services is woefully below that of manufacturing (indeed without the remnants of a modest manufacturing sector our Gvt tax take would be dire)
2) Both tax take & GDP contribution by the finance sector is extremely poor when assessed in relation to the amount of capital employed. They are literally betting the nation three times over. It is our country’s assets, residents’ assests and future tax income that they are gambling with. And that doesn’t bode well for all of us.
Could the Oil Industry/ Pharma etc. bring the nation to the brink of bankruptcy like the Finance sector has? I’d say no.
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