31 Mar 2012

The New Deal Movement : Roosevelt 2012

I just read a short book by Pierre Larrouturou called "C'est plus grave que ce qu'on vous dit... Mais on peut s'en sortir" (It's worse than what they tell you, but there is a way out).

Very nice - and a real bargain at only 3 euros! He argues that there has been a failure to recognize the real nature of the economic crisis. Essentially, the real issue is the ridiculous levels of debt that have been accumulated over the last few decades since the deregulation of the financial markets by Reagan and Thatcher in the 1980s. This is nicely illustrated in a figure that he produces for the level of debt in the USA as a percentage of GDP. The figure for 2011 is 358%. In 2011 alone, the level of US national debt increased by $1300 billion - while GDP only increased by $260 billion. In other words, debt is going up 5 times faster than the economy. And it's not by providing yet more bail outs for the financial sector that this problem is going to go away.

Larrouturou argues that we need a radical series of policies - as wide-ranging and radical as Roosevelt's New Deal that was brought in 1933.  For example, in 1933 Roosevelt forced through more radical reforms in three months that Hoover had done in four years.  Some of the laws were proposed, discussed and voted in a single day. Laws that did things like preventing high street banks from speculating with depositors money (the Glass-Steagall act) were passed rapidly, and led to decades of financial stability before the neoliberals scrapped the restricitions in the 1990s.

Larrouturou argues that it is precisely this sort of bold initiative that is needed now. And he has started a new movement called "Nouvelle Donne" (for New Deal), that has a website called Roosevelt 2012.

I've joined the 15000 or so citizens who have already joined. 

There are 15 specific propositions.

Number 1 is the idea the Pierre Larroutorou and Michel Rocard  proposed in their tribune in Le Monde at the beginning of january- and which I had also realized was possible. Without changing any treaties, Central Banks such as the ECB can lend governments the money the need to avoid paying ridiculous levels of interest to the banking sector.

Number 8 proposes to create a real tax on financial transactions.

The other 13 are good too, although I think that many of them would not be necessary if we abolished the current tax system at the same time as introducing an FTT. For example,  Number 3 proposes that the French should get rid of the tax breaks that have been voted in since 2000 and which mean that the State loses €100 billion of tax revenue every year. My view is that rather than getting rid of those tax breaks (which would certainly meet very strong resistance), it would be far simpler to simply get rid of the taxes completely. But I guess you've probably heard that one already!

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