Economy for 99%

On March 17 in Manchester World Development Movement in collaboration with the Jubilee Debt Campaign organized a conference “An economy for 99%” to discuss the current economic system and how it can be adjusted to make it work FOR rather than AGAINST the 99%. I very much sympathize with such initiatives as i strongly believe that 1) system does not serve the interests of majority and 2) there ARE alternatives.

In order to move forward with alternatives and potential solutions, it needs to be clear what the root problems are and call them in the right words.

First of all, in public space we talk about crisis – financial crisis, economic crisis; but in fact it is private (!) banking crisis caused by particular business model. Because of the size of the banking business and therefore the size of the problem to be dealt with (accumulated debt, risky investments, ‘over-innovative’ financial products etc), a socialization or redistribution of costs has taken place and therefore we suddenly all are in this together (as Cameron often likes to emphasize). Those were not the ordinary people who created this crisis; in many countries experiencing recession and different economic problems, even their governments cant be actually blamed as their pre-crisis public debt levels were reasonable. The ultimate cause of this crisis hides in the banking sector which accumulated immense debt, but then thanks to close links between political and financial elites, decisions were made that governments have to bail banks out. You know, ‘too big to fail’ song…

Secondly, the way, how problems in banking sector have been tackled and why, in the first place, banks could get into such situation, indicates presence of another crisis. Crisis of legitimacy. Huge amounts of money have been invested in saving banks disregarding public opposition. Even worse, some governments have been forced to borrow from IMF to bail out private banks thus significantly increasing the public debt and consequently cutting public spending on education, health and social services. Moreover, there is immense lack of strong, convincing arguments from the governments’ side what’s good for the general society to bail out banks. To sum up, taxpayers are bailing out banks without giving their consent and without being clear how it will benefit them. To make things even worse, governments are allocating even more taxpayers’ money to build up funds when the next banks/ big financial companies will get in trouble.

Thirdly, there is this widespread approach that economy should be developed around ‘what’s good for banks and big businesses’, disregarding the weak linkage between these businesses and the real economy (taxes, jobs, infrastructure, living standards). Even though this may not be exactly what most politicians believe in (this is my hope), the reality is that the political system and elections make politicians as slaves of the funding they receive from the big businesses and thus are forced (or maybe they quite like it..) to lobby for the interests of businesses. This money becomes more important than voters to win elections. I call this as a serious crisis of democracy. Political agenda is not based on people’s needs or representation of majority of people’s interests. Rather, it is based on the global rat race, competitiveness mantra and very selfish power ambitions.

There are few immediate actions which can be taken to defend people’s interests:

1. Illegitimate debt

In developing world a term ‘illegitimate debt’ is not unknown. It characterizes loan which:

  • causes harm to people, environments and communities;
  • violates human rights;
  • violates basic notions and rules of fairness, and basic assumptions of public contracts;
  • violates democratic principles; and
  • exploits the vulnerability, impoverishment and misfortune of others.

Now, when talking about illegitimate debt we are used to think about nasty dictators using the loan to buy weapons, build their own private wealth, hide money offshore. However, in case of most recent bail outs and loans from IMF (think, Ireland, Latvia, Portugal, Greece), why on Earth people have to pay billions for somebody’s failed private business (interesting, as i learned about Ireland, in result of debt audit it was actually still impossible to find out whose debt exactly Irish people are paying)? And, if government can bail out a bank when it got into trouble, will it bail out a bakery which struggles to compete with the big chain supermarkets? Seriously, will it?

Having said this, people can and should seek for the decision from Constitutional Courts in respective countries regarding the accumulated debt and whose obligation it is to pay it.

2. Government representing who?

There should be actions taken to challenge lobbying business and party financing system which do all but keep politicians accountable to people. It is estimated that the next USA elections will cost around 7-8bn USD. Now, think, from where all this money will come and with what kind of strings attached..

3. dealing vs preventing future crisis

Public debate around current crisis and short/mid-term future is mostly focused around – ‘how to make sure we have enough funds to bail out next banks’ rather than ‘how to make the banks never ever again get into this again’. When one breaks his/her leg, i bet, he/she does not think that now he/ she has to buy in advance crutches, bandages etc, so just in case leg is broken again, she can quickly respond. He would rather think – i need to avoid doing particular things so i DONT break that leg again. Banks NEED more tougher regulation, transparency, splitting the normal banking functions from ‘gambling departments’ and improved ability to deal with their own financial risks where public bailout is excluded from contingency plans. Banks should be more thinking about risk prevention, not just management.

4. NO to tax havens

Tax havens is malignant tumour damaging all the economic system on a very global level. Parasites though love this tumour and do everything they can to prevent anyone from cutting it off. Tax havens by servicing the multinational companies, the rich and the dictators in tax avoidance, evasion, corruption and simply committing crime do create a system where only those who cant afford to have a private accountant pay all the taxes they are meant to pay. Tax havens promote inequality, unfairness and injustice. until tax havens will be legal, any changes on national level may not make significant changes.

5. Talent, Earnings and Meaningful work

UK government has been defending the City through preferential business conditions to ensure the big City firms dont move their businesses abroad and dont raise the unemployment due to staff cuts (the City has been threatening about doing this). However, if these city people earning 6digit salaries annually are so smart and talented (when they are asked how they can justify such salaries, they would always talk about their incredible talent), wont they be able to find another job or create one for themselves? Regarding big businesses, they are already paying hardly any tax in UK, so what’s the difference if they leave? Also, in one private conversation with somebody working in investment company (diamonds, gold and all those other sorts of stones), i was assured – anyone can do it; one just have to really really love money. So, if talent means loving money, gambling and being greedy, i think, this is a very worrying trend. it gives wrong messages to new generations entering job market in terms of what matters and how can one make living. I recently ended up in one event where the former city consultants and bankers were inspiring other current city workers about escaping that s..t and not regretting whatsoever their decision to leave finance sector. When trying out charity, social enterprise work etc they suddenly have discovered that the work can also be meaningful.

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