Challenging Poweromics ... and looking for Recovery

Insightful words were this week articulated by the head of Britain's trade union movement, Brendan Barber, as he pointed out the fundamental flaws in Politicians' actions over the last ten years ... as well as the fallacy in promoting the 'green shoots of recovery' ...

"Politicians bought the line that 'Finance' should be 'King' and deregulation the answer to every problem ... activities so well described by Adair Turner as 'socially useless' were seen as 'economically essential' ...

... set finance free we were told, have a bonfire of regulations, let the super rich get even richer ... it will somehow trickle down to the rest of us ... 'manufacturing is old fashioned', 'let the city rule', 'greed is good' ... these were the 'watch words' ... and those whose still preach that greed want us to forget the crash and tell us the economy is now in recovery ...

... but the economy has fallen off a cliff and the green shoots mean little ... when 1000's of people a day are joining the dole queue ... and rising share prices count for little when a million and more young people can't find work ...

and bumper bonuses ... an obscene joke, when it was our money that rescued to banks, and its our public services that are now being told they will have to face the consequences ...

... it's only when unemployment starts coming down, only when we create decent jobs that pay decent wages, and only when vital public services are safe from cuts, that we will be able to talk about a real recovery ..."

Wise words, well spoken, from a leader who can clearly see the wood from the trees ... but what's arguably most shocking & surprising of all is that he's describing the behaviour & actions of a supposed Labour Government (led by 'leaders' supposedly also brought up in the church!) who were once thought of as the voice of communities and hard-working people ... how things have changed ... and how things will have to change for us to get back on course ...

... but unfortunately none of the current politicians & bankers will do this for us ... it will require brand new leadership, new people who truly represent the voice of the people, to take responsibility and turn around our failing economy, and society ... we face a huge battle, a battle of values, one that needs to challenge Poweromics and the basic premise that 'greed is good' ... we need to quickly introduce Leanomics (and leanomics indicators such as the 'BUTS' test - where U refers to unemployment/untapped talent as mentioned above), else we will resign our economy/society to history ...

'For evil to flourish, all it needs is for good men to do nothing' [Edmund Burke]

"The City" - 'socially useless' and needs be 'taxed more'

In a recent post I pointed out the need to tax wealth manipulation far more (e.g. many investment banking transactions), and ideally in a similar way to 'gambling' ... and it's interesting to now hear Lord Turner, chairman of the Financial Services Authority (i.e. the FSA - the UK's financial watchdog), say he also backs a new tax on banks (e.g. speculative transactions) ... as a means to prevent excess bonus payments in the industry. It was also even more profound to hear Lord Turner say that much of the activities in the City of London are "socially useless"!

However Lord Turner's comments do not set out a new policy, because as a government spokesman has been quick to point out, "tax policy" is a matter for the Chancellor! Lord Turner's comments do however put far more pressure on the Chancellor, Gordon Brown, and the Government, to show their true colours now ... and to show us whether all their 'talk' to date of fixing the problems are 'real', or all 'rhetoric' and 'spin' ...

To date it has been mostly rhetoric and spin, as they have handed bankers an open cheque (i.e. taxpayers' money on a plate), and given they created much of the UK banking crisis themselves (e.g. by allowing the re-integration of investment banking with commercial banking here in the UK) ... I think it's unlikely they'll admit their mistakes or fundamentally change tax policy here anytime soon, despite the fact that it's desperately needed ... they'll probably simply rely on fear and confusion created by others (e.g. groups like the CBI, the Voice of Banks, for instance) who will predictably speak out about the 'damaging effects' of such a move.

What Lord Turner has successfully done is to raise the 'stakes' and to highlight where 'responsibility' actually lies ...

Referred to on Stephanomics recent blog (on QE and banking). Take a look at Paul Mason's blog too - he's Newsnight's economics editor, and unlike Stephanie, he took time to blog about this specific subject himself.