Paul Sweeney: The two earlier contributions on Progressive Economy on 27th and 30th August, were spot on in showing a growing trend, ignored by the Irish media. On Friday 12 Sept, the German Finance Minister called for a global tax on financial transactions in a effort to end “binge-drinking” on capital markets. Peer Steinbrueck, a critic of Ireland’s leading role in beggar-thy-neighbour corporate tax competition policy in the EU, said the revenue would pay for the cost to taxpayers of bailing out the banks, including fiscal stimuli.
He says “the cost of the crisis should not be borne alone by small taxpayers.” The Irish Government, our corporate elite and their professional storm troopers – financial sector economists, accountants and lawyers - should take note.
He would like a tax of 0.005% on all financial transaction of banks, insurance companies and investment funds. Steinbrueck’s call follows on from a similar call by the Chair of the UK’s Financial Services Authority, Lord Turner, to introduce such a tax.
The Chancellor, Steinbrueck’s boss, conservative Angela Merkel, said she would discuss the idea, but it had close to no chance of being agreed at the G20 summit in Pittsburgh on 24th and 25th September.
Why is the Irish media not covering this interesting debate? Could it possibly be that it is generally opposed by conservatives as an interference in the market? And is anybody in power here interested in this idea?
Interestingly, Poul Rasmussen - who was in Dublin over the weekend - is the architect of the EU’s plans for regulation of financial services in Europe. The former PM of Denmark, an economist of some note and leader of the PES, was fresh from addressing the leaders of the UK's financial services. The meeting in the Guildhall, in the heart of the City, was a fierce affair. The big boys in finance don’t want regulation and were harshly critical of Poul Rasmussen’s proposals. While agreeing to more consultation, he would not back down on the need for greater regulation of hedge funds and private equity and the financial sector in general.
More interference in the market!
And even more market interference may be threatened by Obama this week. In his speech on Wednesday last, he said “our predecessors understood that government could not and should not solve every problem,” but “they understood that the danger of too much government is matched by the perils of too little: that without the leavening hand of wise policy, markets can crash, monopolies can stifle competition, the vulnerable can be exploited.”
Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions. He was a President of the Statistical and Social Enquiry Society of Ireland, former member of the Economic Committee of the ETUC, a member of the National Competitiveness Council of Ireland, the National Statistics Board, the ESB, TUAC, (advisor to OECD) and several other bodies. He has written three books on the Irish economy and two on public enterprise, including The Celtic Tiger; Ireland’s Economic Miracle Explained and Selling Out: Privatisation in Ireland, chapters in other books and many articles on economics.