Sunday 20 November 2011

Missed opportunity (2)

It has become conventional wisdom to praise Gordon Brown for keeping us out of the Euro, but my own view remains that we ought to have joined at the beginning. I should much prefer to be on the inside trying to make a great project work rather than on the outside gloating over its problems and, I suspect, secretly hoping for its failure.

I am not an expert in counter-factual history but I think it plausible to argue that, had Britain joined, our adherence to rules and regulations would have caused us to block the membership of those countries - Greece and some other "Mediterranean" economies - which blatantly came nowhere near meeting the Maastricht qualifying criteria. Hence, with Britain on the inside from the beginning, the Euro may not have been in its present difficulties.

Be that as it may, our current failure to support France and Germany in their quest for a financial transactions tax (FTT - aka a Tobin tax or a Robin Hood tax) is deeply disappointing. The initial proposal by Tobin was that a tax of a fraction of 1% would curb currency speculation and thus lead to more stability in international trade. The World Development lobby latched on to the idea and suggested that the substantial proceeds of the tax could be used to tackle world poverty. More recently it has been suggested that the takings should be used to bail out European countries with sovereign debt problems.

I have some sympathy with David Cameron's view that such a tax, now proposed for all financial transactions, is not viable unless it is adopted by the US and other major financial centres. However, I should like to see him and George Osborne lobbying hard for this, as Gordon Brown lobbied hard for a package to "save the world" in 2009, rather than standing to one side and saying it can't be done.

I have read recently that, just as the Labour party was, and perhaps still is, the political arm of the trade union movement, today's Tories are now the political arm of the City of London. That seems to ring true. But it is a nonsense to force great democracies to dance to the tune of the greedy and amoral speculators of "the market." This should be stopped. An FTT of not just of a fraction of 1%, but 2%, 5% or what ever it takes to put the markets in their place is, in my view the obvious solution. Where are the politicians with the energy and vision to be working for this?

It is true that an FTT would place a disproportionate cost on Britain vis a vis our European partners because of London's financial pre-eminence. Perhaps the analogy is too strong, but I cannot help reflecting that, in the past British politicians have been prepared to send our young men to shed their blood in order to "save" Europe. When it comes to sacrificing the income of their paymasters, their priorities are different.

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