Feckless. That was my reaction to this morning’s news about Britain’s veto of the treaty to save the Euro – only with more expletives and even then ‘feckless’ had a long pause between syllables. Britain has moved from the empty chair to a pariah in Europe, from comically inept to dangerous. Honestly, maybe Europe would be better off booting Britain out.
The veto stems from one key point, allegedly; a Financial Transaction Tax. This would disproportionately affect the City of London which contributes to 50% of Europe’s financial sector and according to neo-liberal theory would drive businesses out of London to seek places with lower tax rates because that means more profit (I personally suggest Somalia – no taxes there; it’s like a neo-liberals utopia). Consequentially, that means jobs will be lost and what little tax they do pay (just over £50 billion) will be lost.
The neo-liberal argument lost credibility since the beginning of the crisis; the theory has failed yet it is not falling. It is too entrenched with extra-democratic forces; the IMF, World Bank, WTO and markets and democratic governments are too tied to them. Capitalism does not need to fall, but be reformed.
Britain not only should adopt an FTT but needs it because...
...The FTT is just 0.01%, for any other industry this would be nothing, such a negligible amount. No one in their right mind would leave because of a 0.01% increase in tax. 0.01% is an accounting error. With this tax, corporations and bosses will not suddenly become impoverished. They will not flee to Japan, the USA or elsewhere because of a 0.01% tax increase. This ridiculously small amount would still raise billions and not for Europe, but for Britain; for our hospitals, our front line police and our schools which the government so desperately want to defend.
...“We are all in this together”. While UK families are being squeezed, seeing indirect and direct taxes go up and public services cut, yet the financial sector cannot cough up 0.01%. This is a clear indication of the government’s concern for the City before concern for the people; it shows exactly where their allegiance lies. I’m not one for Tory-bashing or negative politics, but it is difficult to justify a tax increase and service cut for people and refuse to raise tax by 0.01% for businesses.
...An FTT is in Britain’s interest, contrary to what the PM says. The S&D produced a document that shows that even at a low rate FTT would raise massive public revenues and serve as a weapon against short-termism and speculation. The S&D wanted an FTT of 0.05%; 0.01% will still suffice and not damage business. Now if we look at the strikes, it appears that public interest lies with maintaining the NHS, front line police, Sure Start and better schools. It is the epitome of a “Robin Hood Tax”, inherently it serves the people and is in our interest.
...The government’s arguments are inconsistent. An FTT is “not in Britain’s interest”, yet it is in our interest to cut the deficit at all (other) costs. Even a tiny rate of tax would raise billions more. It simply makes no sense. The Conservatives say that Britain should have a sovereign economic policy, which is a fair enough argument, yet surrenders economic policy to the markets. And economic policy underlies all other policy; even if the UK was out of the EU we would not be sovereign as “Goldman Sachs runs Britain” as one businessman put it. In fact, let’s go further. The Conservatives want powers back from Brussels and British policy to be made in Britain, yet refuses to give devolved power to Scotland and are ardent unionists. Their ideology demands less tax for all, yet tax went up during Thatcher’s years. The arguments for an EU in/out referenda can be applied for every other policy; WTO in/out, an FTT referendum, House of Lords reform and so forth. What the government says is different from what they do and the arguments are contradictory.
...It is possible to have an FTT raising billions and “incentivise” the financial sector to stay by “disincentivising” the leaving. This can be done by legislation; if they leave they must pay an extortionate fine, so high that it outweighs the benefits of leaving. If the EU set up tax and tariff, thus making it cheaper for business to do business in Europe which is still the largest consumer market in the world, the financial sector would not leave because we are a lucrative market and it would be cheaper to stay based here. We should use our leverage.
...Government should be in control, not the markets. Economic policy underlies all other policy; it cannot stay in the hands of the profit-seeking markets. Twice before in history the markets have had dominance – in 1850s and the 1920s. Both times it failed. The former regime collapsed because central government had to intervene to stop exploitation and give some relief to the poor; the markets went too out of hand and against the public good. The latter ended in depression. We need to shed US based neo-liberal ideology for a European based social democratic policy. The UK is European, not American and our culture and ideology should reflect that. The American model is incompatible with our values and their prison, health and education services are unfair and fail.
...The markets should bear its share of the cost of the crisis. It was more responsible for it that the people so, logically, it should bear more of the burden. The markets cannot have unlimited freedom because that leads to irresponsibility. Our society is ‘free’; I can do what I want. But there are laws in place that disincentivise me doing certain actions like stealing or murder where the state intervenes or lying where social convention has shaped me. I am still free but with limitations. The markets have no limitations or responsibilities.
Unless the PM genuinely believes his ideological line which would make him dangerous and blind, the only logic behind a refusal to sign the treaty is political. If his arguments are correct, then it is simply indicative of the over-reliance of Britain to the financial sector, a sector that cannot be controlled or managed but has to be incentivised by ever bigger carrots (we threw the stick out long ago). Britain faces a choice; Europe or USA, Social Democracy or Neo-liberalism, fairness or “freedom” in its basic form.
The FTT of just 0.01% would have raised billions in public revenue, helped pay off debt, been fair and been ‘European’. Instead we are faced with the prospect of deeper cuts to public services and more tax for the people. Way to go, Dave.
