Financial Transactions Tax
“It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.” – Mark Twain
Former U.K. Prime Minister Tony Blair discussed the momentous June 23 Brexit Referendum on a still “Too Big to Fail” bank conference call last week. Revealing how he really felt near the end of the interview, he proclaimed, “Knowing what you’re talking about became a disqualifier during the Referendum.”
Blair typifies the neo-liberal elite who as Twain observed “know for sure” what they are talking about, despite overwhelming evidence to the contrary. One would think the Brexit debacle (not to mention the Trump debacle, the rise of Sanders, and the race tensions spinning out of control in the U.S., all rooted in a deeply flawed and divisive economic system that works too well for a few, and not well at all for too many) might cause these leaders to seriously ask themselves whether what they “know for sure just ain’t so.” And we wonder why today’s “elites” attract such disdain.
No doubt, the Leave vote was supported by many who had little understanding or interest in the European Union (E.U.); this has been well-documented. No doubt we also find its roots in the rise of xenophobic, anti-European opportunists who spearheaded the Leave campaign, only to shamefully disappear from the public stage when they surprised themselves and got their way.
The potential damage caused by Leave vote is a consequence of the far greater and more destructive ignorance on the part of the elites, including Blair himself. This elite ignorance arises from a blind faith in a dangerously-flawed neo-liberal economic ideology and the E.U.’s misguided, core architecture: monetary union without fiscal union. A basic understanding of biology tells you that organisms move toward food and safety when their life is under threat. Take away the adjustment mechanism of national currencies; squeeze people until they cannot live under a misguided austerity ideology; combine this with a commitment to free labor mobility – and you have designed a guaranteed refugee crisis with all the social turmoil that comes with it. So yes, Mr. Blair, as you said, “these people” as you called them – presumably you were referring to the ignorant little people who voted to Leave – “really do want these problems solved.”
In that same interview, Blair also put his finger on a root cause when he said, “The basic concept of Europe is about how to exercise power in a multi-polar world. Small countries need to band together to exercise collective power.” This fear-based philosophy is understandable in our highly competitive and too often violent world. But, building this fear-driven competitive narrative into the architecture of our political economy guarantees we will never transcend it. The logical extension of fear-based division and extreme competitiveness is violence in all its forms, from the violence that we have seen play out, too often, over much of modern Wall Street, to the violence we see in our divided communities, to the violence of war.
This competitive narrative is at the heart of neoliberalism with its belief in: uncontrolled globalism; the financialization of unrestrained “free markets;” and “free trade” defined around mega-corporate interests which locks the world into a race-to-the-bottom around health, labor, and environmental safeguards.
So how will Great Britain fare outside of the E.U., assuming the Brexit vote will not get a do-over? The pundits and economists are all alarmed about the loss of growth. They “know for sure” that less growth means a poorer Britain, but they appear to be ignorant of the uneconomic growth now emanating out of the City of London. Could it be that Brexit’s ignorant, xenophobia-fueled vote will have the ironic effect of breaking apart the entrenched, systemic ignorance of neoliberal elites, and lead to a healthier and wiser Great Britain?
Let’s imagine what a better Britain might look like. First, the financial sector might be cut down to size as it splinters into more manageable units across Europe. The consequence of London as a world financial center (do we really need one?) is a national economy way out of balance, dependent on a too powerful, extractive export industry that corrupts politicians with influence (even if subconsciously); drives extreme inequality; and separates London’s elite from the rest of the U.K. as Brexit demonstrated. A smaller financial sector in London, more aligned with the genuine needs of the real economy (rather than playing to its own speculative wants) is a good thing – unless you happen to own expensive real estate in London. We see similar consequences in corrupt, extractive export dependent economies in Africa. There it is diamonds and oil rather than finance, and the corruption may be more brazen, but the consequences for society follow a similar pattern.
Second, the U.K. had the foresight not to sign up for the fatally-flawed common currency. The British Pound has depreciated nicely making the country immediately more attractive as a trading partner or investment region to the rest of the world. If it could now shake the destructive austerity ideology imported from the E.U. (i.e., Germany), it would have the opportunitycialis symptoms http://genericcialis-cheaprxstore.com/ genericviagra-bestrxonline.com pre pharmacy schools online sildenafil citrate
to take advantage of historically cheap borrowing-costs to invest in its health, education, and critical infrastructure beginning with a smart, clean, energy systems, the foundation for a thriving economy in the 21st century. To do this, some tax shifting (and collecting) will be necessary over the long run. For starters, by imposing a financial transaction tax, the new Britain could send a positive signal across the Channel by finally joining the rest of Europe in nudging finance away from excessive speculation. This new revenue stream will actually enhance the resilience of capital markets and, with it, the health and stability of the real economy (notwithstanding the ignorant neoliberal cries to the contrary).
Think of it as the “Brexit wake-up call.” It was certainly not an intelligent way to remake the European Project on the fly, leaving great risks in its wake. But there remains the potential for a flourishing Great Britain of the future, a gleaming light in the diverse, culturally-rich mosaic that will always define Europe. All this, if it can only transcend its elites’ flawed economic-thinking.
The futile debate between market fundamentalists and those who claim you can’t stop “progress” on the one hand, and proponents of tighter government regulation and oversight on the other continues on with no resolution in sight. From too-big-to-fail banks, a second front is now opening, this one focused on the structure and regulation of equity trading in the United States. >> Read more
Last Friday, I participated in a Special Briefing on Capitol Hill in support of the Financial Transactions Tax (FTT). I came as a seasoned practitioner speaking on behalf of the real economy, not for the interests of the Wall Street trading community. What I tried to convey was that what the US and World needs is enhanced capital market function, and that an FTT can help bring it >> Read more
On April 15, I made a statement at the Press Club in Washington, DC., >> Read more