tag:blogger.com,1999:blog-75307763632229653132024-03-13T04:46:15.591+01:00Simon Thorpe's Ideas on the EconomyThis is a blog that I started in October 2010, mainly for discussing my ideas on the economy, taxation and politics. Please add comments - I'll do my best to reply. If you are new, I would recommend watching one of <a href="http://www.youtube.com/user/SimonJonathanThorpe">my YouTube presentations (in French or English)</a>. You can download a fully indexed pdf version (935 pages!) <a href="https://mycore.core-cloud.net/index.php/s/JLERtqTK1w2b0kb"> here</a>.Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.comBlogger650125tag:blogger.com,1999:blog-7530776363222965313.post-11630996250074560442024-02-04T18:54:00.005+01:002024-02-04T18:54:36.891+01:00A Global Wealth tax could happen soon!<p> I've been rather quiet, but there are good reasons to start getting excited about the possibility of something really big happening in the next couple of years. </p><p>The big news is the fact that, on the 22nd of November, 2023, a landslide majority of countries at the UN voted to begin the process of establishing a framework convention on tax and completely change how global taxes are decided. I can strongly recommend the coverage of the events by the Tax Justice Networks Podcast entitled <a href="https://podcasts.taxjustice.net/episode/138-overturning-a-100-year-legacy-the-un-tax-vote/">"The day global power shifted"</a>. The proposition, made by an alliance of African countries, faced intense resistance from the OECD countries and lobbyists but nevertheless got approved. That means that the United Nations will be able to make proposals for global tax reform in a forum where measures that are supported by a majority of countries can be implemented. </p><p>So, what sorts of reforms to the tax system could be possible in such a system. Well, many people, including the Tax Justice Network and Oxfam, have been arguing that multinational companies should be obliged to report their profits on a country-by-country basis and pay taxes to national governments that depend on the money they earn in each country. This would help prevent the current system where companies can move their profits to low tax regimes and end up paying little if any, tax. This could also be helped by ensuring a minimum level of corporate taxation for all countries. </p><p>However, I would like to explore the possibility that a UN-based tax authority could have the potential to introduce global taxes that could be used to generate the funds needed to tackle the big global challenges - and specifically the <a href="https://sdgs.un.org/goals">17 sustainable development goals</a> that all UN member states signed up to in 2015. The latest <a href="https://unstats.un.org/sdgs/report/2023/">2023 Sustainable Development Goals Report</a> makes it clear that progress has been disappointing to put it mildly. The aim was to reach the goals by 2030. But while we are already halfway to 2030, roughly half of the 140 defined targets show moderate or serious deviations from the desired trajectory, and 30% have shown no progress or even regression compared with the situation in 2015.</p><p>One of the main reasons for the lack of progress has been the lack of funding. In a <a href="https://www.ineteconomics.org/perspectives/podcasts/indias-leadership-and-global-challenges-of-climate-and-finance">recent podcast from the Institute for New Economic Thinking</a>, Adair Turner, the chair of the <a href="https://www.energy-transitions.org/">Energy Transitions Commission,</a> noted that the shift to a net-zero carbon economy would need around<a href="https://www.energy-transitions.org/wp-content/uploads/2023/08/ETC-Financing-the-Transition-MainReport_update.pdf"> $3.5 trillion a year of capital investment</a>. African countries and countries like India have plenty of potential for generating electricity from solar panels, but lack the financial resources to install such systems. Where could they obtain the necessary funding? He talked principally about the need for investors in rich countries to play a greater role, or for organisations like the International Monetary Fund to make further loans. However, increasing debt for such countries does not seem like the best solution. </p><p>Instead, I have been suggesting that if the UN was able to impose a global wealth tax of around 0.3% per annum on all assets, it would generate the $3.5 trillion of capital investment without the need for additional debt. I was pushing this idea <a href="https://simonthorpesideas.blogspot.com/2023/11/the-cop-meeting-has-to-find-at-least-3.html">on my blog during the COP 28 meeting back in November</a>. Since then, I have found some additional sources of information that are relevant to the question of how much money could be generated by a global asset tax. </p><p>One particularly interesting source is a site that provides v<a href="https://companiesmarketcap.com/">ery complete listings for a set of 7985 publicly listed companies</a>. They provide a range of information, including </p><p></p><ul style="text-align: left;"><li><a href="https://companiesmarketcap.com/">Market Cap</a> - currently totalling $98.4 trillion for the 7895 companies</li><li><a href="https://companiesmarketcap.com/most-profitable-companies/">Earnings</a> - current total $7 trillion</li><li><a href="https://companiesmarketcap.com/largest-companies-by-revenue/">Revenue</a> - current total $55.4 trillion</li><li><a href="https://companiesmarketcap.com/largest-companies-by-number-of-employees/">Number of Employees</a> current total 122,068,352</li><li><a href="https://companiesmarketcap.com/top-companies-by-market-cap-gain/">Market Cap Gain</a>, </li><li><a href="https://companiesmarketcap.com/top-companies-by-operating-margin/">Operating Margin</a> - current average 24.23%</li></ul><p></p><p> and so forth. </p><p>But for my question, the really interesting ones are </p><p></p><ul style="text-align: left;"><li><a href="https://companiesmarketcap.com/top-companies-by-total-assets/">Total Assets</a> - currently totalling $244.9 trillion for the 7985 companies</li><li><a href=" current total $55.4 trillion">Total Liabilities</a> - current total $202.4 trillion</li><li><a href="https://companiesmarketcap.com/companies-with-the-highest-debt/">Total Debt </a>- current total $46.7 trillion</li></ul><p></p><p>and finally </p><p></p><ul style="text-align: left;"><li><a href="https://companiesmarketcap.com/top-companies-by-net-assets/">Total Net Assets</a> - currently $42.5 trillion</li></ul><p></p><p>These lists, which can all be downloaded as Excel files, make for fascinating reading. Since the data includes the country of origin of all 7985 companies, it was easy for me to get the total net assets by country. Here's the list</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBiwlE6RY-j_tg6TteZdVwTbvQ8rXFAxAc8vWlck67VdWIRY6aHq3_7MFLLURnb56a4E57XI7vQyqT9FXCuA7EcwvBQ0FZngz3C-kc7BSupBs-3dc6UUsHHDwfAxM9KJX82HKSqdWPAvYw63c3666kfrVn6rqvg7XtIUbklssR-kxuCaYhfAUBtUx9rSc-/s2288/Screenshot%202024-02-04%20at%2018.53.04.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2288" data-original-width="554" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBiwlE6RY-j_tg6TteZdVwTbvQ8rXFAxAc8vWlck67VdWIRY6aHq3_7MFLLURnb56a4E57XI7vQyqT9FXCuA7EcwvBQ0FZngz3C-kc7BSupBs-3dc6UUsHHDwfAxM9KJX82HKSqdWPAvYw63c3666kfrVn6rqvg7XtIUbklssR-kxuCaYhfAUBtUx9rSc-/s16000/Screenshot%202024-02-04%20at%2018.53.04.png" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><p>You can see that the total number of companies is less than the 7895 figure. The reason is simple. I only included companies with positive values for net assets. There are around 400 other listed companies with negative net wealth. Top on that list is Boeing, with a net asset figure of minus $16.7 billion. Such companies would clearly not be required to pay any globally implemented tax on net assets. </p><p>But if you look at the companies with positive net assets, you can see that companies registered in the USA have total net assets worth nearly $13 trillion, with companies like Warren Buffet's Berkshire Hathaway topping the list. The next biggest players are China, which has 4 big banks close to the top of the list, followed by Japan, France, Germany and the UK. </p><p>But you can see that the dataset also includes places like the Isle of Man, the Cayman Islands, Guernsey, Jersey, Panama, the Bahamas and the British Virgin Islands. So, contrary to my expectations, it appears that it is perfectly possible to determine the net assets of companies in all sorts of locations across the planet. </p><p>It follows that if the UN Convention on Global Taxation decided to implement a 0.3% annual tax on the declared net worth of just these companies, it would generate around $131 billion of useful revenue. </p><p>From my point of view, it seems that the question of who is the ultimate owner of a company registered in the numerous UK-linked tax havens is actually irrelevant. If a company registered in the Isle of Man paid its dues, then we don't really care how many shell companies were used to protect the owners. </p><p>If desired, it might also make sense to impose a UN-administered global tax on the $55 trillion in earnings provided by <a href="https://companiesmarketcap.com/most-profitable-companies/">the same source</a>. But, frankly, I think that a new tax on net wealth is simpler. I have no doubt that any attempt to tax earnings would lead to companies hiring sophisticated accountants to find ways of reducing the taxable earnings figures. Hiding figures for net assets would be considerably less easy. </p><p>Once the basic wealth tax mechanism is implemented, it would become relatively simple to extend the taxation mechanisms to other companies not included on this list, including privately owned companies. Forbes provides a list of the <a href="https://www.forbes.com/lists/largest-private-companies/?sh=8bc7156bac44">largest </a>US-based private companies. Unfortunately, that list only provides information about revenue and the number of employees. Those companies are also required to file their annual accounts, so it presumably would not be impossible to get the equivalent figures. </p><p>And, of course, my proposal is that exactly the same rate of tax should not just be applied to companies but to individuals - including myself! As I have already noted, the 2023 Credit Suisse Wealth Report calculated that the net wealth of the planet's 8 billion people totalled $454.4 trillion. </p><p>By taxing all net worth, it would be simple to provide the $3.5 trillion a year needed to shift to a zero-carbon economy and start tackling those 17 sustainable development goals. </p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-38218111307144060112023-12-04T18:31:00.003+01:002023-12-04T18:32:48.743+01:00UBI as a way to fight the effects of climate change<p> In my post last week, I argued that if the COP 28 participants could agree on a number for the amount of funding required to tackle change, and agree to implement two modest new taxes that would have to be paid by everyone, our hopes of making progress would be vastly improved. And we could avoid the endless arguing about who should be paying. </p><p>The answer should be obvious. We should all be paying - in direct proportion to our ability to pay. That's a simple rule that I think we should all aspire to. <br /></p><p>It is pointless trying to get elected governments to introduce big tax increases on their populations to pay for this. For obvious reasons, they will get voted out by the next Trump who will say "America First", "Cut Taxes" "Sod the planet".....</p><p>That's why my proposals for two new taxes - a 0.02% tax on all financial transactions, and/or a 0.3% annual tax on net wealth seem so sensible - at least to me! The critical thing is that they need to be paid by all parties - individuals, companies, trusts and governments, wherever they occur on the planet. No exceptions. </p><p> The funds would be sent directly to the <a href="https://www.unep.org/">United Nations Environment Program (UNEP) </a>or some other global authority that can be trusted to do the right thing. <br /></p><p>Last week, I took the number provided by Morgan Stanley in 2019. That report said that <a href="https://www.forbes.com/sites/sergeiklebnikov/2019/10/24/stopping-global-warming-will-cost-50-trillion-morgan-stanley-report/?sh=204a5f1751e2">we would need to invest $50 trillion between then and 2050</a>. I didn't question those numbers, but here is a brief summary of the breakdown. The money spent would be needed for five key areas five key areas of zero-carbon technology.
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<ul><li><strong>Renewables </strong>will require $14 trillion of
investment, and could deliver around 80% of global power by 2050—up from
37% today. As solar energy becomes more affordable, it will become the
fastest-growing renewable technology.</li><li><strong>Electric vehicles</strong> will become more important than
ever in the bid to reduce greenhouse gas emissions from automobiles; $11
trillion will be needed to build more factories and develop the
batteries and infrastructure needed for a widespread switch to electric
vehicles—the total number of which could grow to nearly 950 million by
2050.</li><li><strong>Carbon capture and storage</strong>, which Morgan Stanley
says is the only viable option for reducing emissions from coal-fired
plants, is another key area and would need almost $2.5 trillion of
investment.</li><li><strong>Hydrogen </strong>can help provide clean fuel for power,
cars and other industries—it will require almost $20 trillion of
cumulative investments to help make the gas, increase capacity to power
plants and manage its storage.</li><li><strong>Biofuels</strong>, like ethanol, will be key for future
global transportation and eventually spread to aircraft and other forms
of other travel—requiring $2.7 trillion by 2050.</li></ul><p>But it is important to realise that those numbers do not include the cost of dealing with the damage that is already caused by Climate Change. What is the cost of failed crop harvests? What is the cost of the infrastructure needed to protect coastal areas from flooding? How can we help those who are most badly impacted by the climate change that we have already produced? </p><p> Do you think that you could just increase the funding for UNEP and hope that they would be able to work out where the money should go? </p><p>It's at this point that I would like to suggest that trying to solve problems using top down programs is unlikely to be the best solution. </p><p>As I have suggested previously, and as has been suggested by other groups including <a href="http://EqualRight.org">EqualRight.org</a>, a particularly efficient way to help out those impacted by climate change is to provide them funds in the form of a Unconditional Basic Income. Rather than trying to pump money into third world countries top down, in the hope that their leaders will do the right thing, I think it would be much more efficient to pump the money into peoples pockets and let them decide what the priorities should be. </p><p>This was something I explained in a YouTube video I posted last year on "<a href="https://www.youtube.com/watch?v=CPre-wvF6XM">AI, Technological Unemployment and Universal Basic Income"</a>. Although that talk was aimed at showing how UBI could be useful for dealing with the unemployment generated by AI, many of the arguments I developed are directly relevant for using UBI to help tackle climate change. </p><p>For example, at <a href="https://youtu.be/CPre-wvF6XM?t=2655">one point </a>in the video I discussed one of the fundamental problems of trying to distribute aid (money, bags of rice, tents...) to the population. This figure below compares what we would like - we give $20 to someone at the top of the pyramid, and hope that the aid will be distributed equally - with what actually happens in the real world. Because of corruption, people will be tempted to keep some of the aid for themselves, with the result that the process can be very inefficient. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglBjbaM4lgmPZQ_fdA-uz6ZUe-urGAUSKY18Me2RI7hamvRawqquV4tlLD5ClUlpVWCxON1n7-ycbjbLV6Ut94uX_5aWhyUm5MviAsZ96e6745BaVQw65Y7hVR0x78xYHcw20eBcelyofbNiEImgFznhRtb8BEw5uLHIL2jZh_hp536qC1ZW8dGWLkEn4n/s2216/Screenshot%202023-12-04%20at%2018.04.39.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="756" data-original-width="2216" height="218" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglBjbaM4lgmPZQ_fdA-uz6ZUe-urGAUSKY18Me2RI7hamvRawqquV4tlLD5ClUlpVWCxON1n7-ycbjbLV6Ut94uX_5aWhyUm5MviAsZ96e6745BaVQw65Y7hVR0x78xYHcw20eBcelyofbNiEImgFznhRtb8BEw5uLHIL2jZh_hp536qC1ZW8dGWLkEn4n/w640-h218/Screenshot%202023-12-04%20at%2018.04.39.png" width="640" /></a></div><p>Compare that distribution system with a UBI based system. The UNEP could set up digital bank accounts for all citizens and simply credit those accounts every month (for example). In such a system, the people themselves get to decide where the funds go. If people need energy, they could choose to buy electricity. If they are thirsty, they could buy water. And if people are hungry, they could choose to purchase food. <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheDyKfyWp3XkGCrhU4IRMIV9Cux5LjK1OOknad66mzJP8I8NBIxyAktxnOTFgbf1ADs4FUCDTHPFl8wGRcIftwCuBmabh2gqv11jEbjr7VDfuRb1Eynxh5MtuWTQyhCacX3rj1HY3BotluJ4tFa63FxFoXHBRekdo4IX1yCK33KObYuGWroPwndhF8XZY7/s1094/Screenshot%202023-12-04%20at%2018.06.59.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="628" data-original-width="1094" height="368" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheDyKfyWp3XkGCrhU4IRMIV9Cux5LjK1OOknad66mzJP8I8NBIxyAktxnOTFgbf1ADs4FUCDTHPFl8wGRcIftwCuBmabh2gqv11jEbjr7VDfuRb1Eynxh5MtuWTQyhCacX3rj1HY3BotluJ4tFa63FxFoXHBRekdo4IX1yCK33KObYuGWroPwndhF8XZY7/w640-h368/Screenshot%202023-12-04%20at%2018.06.59.png" width="640" /></a></div><p>There would be no need for someone in an office in Geneva to decide what people should and should not be getting. The list of goods and services that could be funded in this way would be without limit. If they need medication, let them purchase medications. If they want renewable energy, let them club together to buy some solar panels. If they need to build walls to prevent rising sea levels from wiping out their homes, so be it. </p><p>It's interesting that this is really just allowing market forces to do their work. The problem is that the vast majority of people on our planet don't have any money to influence the markets. A global UBI would give those billions of people a voice. </p><p>I seriously believe that, with a global UBI in place, it may be much less complicated to tackle climate change that with the current attempts to find "top down" solutions. The Morgan Stanley report was arguing that we need to invest $14 trillion in renewable energy. If you say it like that, it sounds like a lot. And hoping that investors are going to invest $14 trillion (which effectively means borrowing the money) is probably naive. But suppose that you were paying all 8 billion people on the planet $30 a month of debt free money using funds generated by the 0.02% FTT and the 0.3% net wealth tax. It would cost about $3 trillion. </p><p>Anyone like to speculate what percentage of the $3 trillion would end up being used to tackle climate change? Clearly, the longer this goes on, the more urgent the need to tackle climate change will become, and the higher the percentage of the $3 trillion being used for that specific objective. Even if people use the money to buy food, water, and energy, it's still being used to offset the effects of climate disruption. </p><p>I firmly believe that the UBI mechanism is probably the best possible way to get people to change their life styles and give us a chance of combating climate change. <br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-38428028015508049462023-11-27T17:30:00.009+01:002023-11-28T08:40:32.692+01:00The COP meeting has to find at least $3 trillion a year of funding to fight climate change. Here's how.<p>Two years ago, I made three specific proposals for things that could be implemented at the COP 26 meeting in Glasgow</p><p></p><ul style="text-align: left;"><li class="post-title entry-title" itemprop="name" style="text-align: left;"><a href="https://simonthorpesideas.blogspot.com/2021/11/cop26-proposition-1-ban-all.html">COP26 - Proposition #1 - Ban all cryptocurrencies</a></li><li class="post-title entry-title" itemprop="name" style="text-align: left;"><a href="https://simonthorpesideas.blogspot.com/2021/11/cop26-proposition-2-decide-how-much.html">
COP26 - Proposition #2 - Decide how much funding is required and then
propose universal FTT and Asset taxes to provide the finance </a></li><li class="post-title entry-title" itemprop="name" style="text-align: left;"><a href="https://simonthorpesideas.blogspot.com/2021/11/cop26-proposition-3-global-personal.html">COP26 - Proposition #3 - A global Personal Carbon Allowance (PCA)</a></li></ul><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">I can't say that I am surprised that nothing happened. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;">But COP 28 starts in a few days, and I am terrified that the whole meeting will be taken up with people arguing about who should be paying for the actions that are so clearly needed. The situation was terrible in 2021. Surely, everyone will agree that things are much worse today. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">So I would like to come back to my Proposition #2, and provide some more details about my precise proposals. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><b>First, </b>we need to decide how much we will need to spend. In 2019, <a href="https://www.forbes.com/sites/sergeiklebnikov/2019/10/24/stopping-global-warming-will-cost-50-trillion-morgan-stanley-report/?sh=4fbb17a51e23">a report from Morgan Stanley</a> had said that tackling climate change would need $50 trillion of investment before 2050. On the basis of the UN Environment Programme's <a href="https://www.unep.org/resources/emissions-gap-report-2019">Emissions Gap Report in 2019</a> it was concluded that the cost of fixing climate change was between <a href="https://www.ecosystemmarketplace.com/articles/thanks-to-past-inertia-it-will-now-cost-between-1-6-and-3-8-trillion-per-year-to-fix-the-climate-mess/">$1.6 trillion and $3.8 trillion</a>. The recently released <a href="https://www.unep.org/resources/emissions-gap-report-2023">Emissions Gap Report for 2023 </a>says that $4 trillion a year is need to stay on track with the net-zero scenario. <br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">It's clear that the cost of inaction will be huge. In 2022, <a href="https://www.deloitte.com/global/en/about/press-room/deloitte-research-reveals-inaction-on-climate-change-could-cost-the-world-economy-us-dollar-178-trillion-by-2070.html">Deloitte’s Global Turning Point Report </a>claimed that unchecked climate
change could cost the global economy US$178 trillion over the next 50
years, unless global leaders unite in a systemic net-zero transition.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">Last month, the World Economic Forum claimed that <a href="https://www.weforum.org/agenda/2023/10/climate-loss-and-damage-cost-16-million-per-hour/">climate change is costing the world $16 million an hour,</a> and that t<span>he global cost of climate change damage is estimated to be between $1.7 trillion and $3.1 trillion per year by 2050.</span></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">Logically, this means that $3.5 trillion a year of investment would pay for itself.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">And yet, nothing will happen if the COP delegates waste their time arguing about who should be paying. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">That brings me to <b>the second point</b>. Where can we find find $3 trillion a year? </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">Rather than trying to convince governments to find money from their current tight budgets, forcing them to raise taxes, which they are understandably reluctant to do if they don't want to lose voters support, I believe that we should be looking at two radical new sources of funding that are (a) totally fair, (b) simple to implement, and (c) totally independent of national budgets.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> The first would be a tiny Financial Transaction Tax on absolutely all transactions, wherever they occur in the world, and whatever the denomination of the currency. The second would be a very modest annual tax on the net wealth of all households, trusts, corporations and governments - again, irrespective of where that wealth is located. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;">The funds generated by these two new taxes would be provided directly to the United Nations Environment Program (UNEP) or some other global authority, and that authority would be mandated to use the funds in the best possible way to fight climate change. Simple.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><b><span style="font-size: medium;">Using a Financial Transaction Tax</span></b></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;">So what level of Financial Transaction Tax would be needed to provide the UNEP with €3 trillion a year. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">Well, for the last 13 years I've been using the data provided by the Bank for International Settlements to get one measure of the annual volume of transactions. <a href="https://simonthorpesideas.blogspot.com/2023/02/global-financial-transactions-159.html">For 2021, the total was $15.9 quadrillon</a>, up 6.51% on the previous year..As you can see in this graph, it has been going up steadily since 2015.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaUzfSf5uonrwcHCUkoiAQRNxERYRctUvuOC3XiX4BzDJdxOFMNoFOp8CAkig0l6HVAGYovj0dmsYrnWnGW9cf-5_-W_6_GEoJ1AwtosISqyHn0m2Gr0H7JT0I5j88uHpWminkhiMfaoLZo5o3uxt2dDE0oKxyUG55V9C0QHg5Eh7W9gbBpwldkeuLBnI5/s1840/Screenshot%202023-11-27%20at%2013.53.13.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1230" data-original-width="1840" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaUzfSf5uonrwcHCUkoiAQRNxERYRctUvuOC3XiX4BzDJdxOFMNoFOp8CAkig0l6HVAGYovj0dmsYrnWnGW9cf-5_-W_6_GEoJ1AwtosISqyHn0m2Gr0H7JT0I5j88uHpWminkhiMfaoLZo5o3uxt2dDE0oKxyUG55V9C0QHg5Eh7W9gbBpwldkeuLBnI5/w640-h428/Screenshot%202023-11-27%20at%2013.53.13.png" width="640" /></a></div><p>However, even these eye-watering figures must be hopelessly underestimated. Firstly, BIS only reports figures for a set of 26 countries. But more importantly, BIS doesn't bother to include many major players. The most obvious and glaring absentee is the <a href="https://www.theocc.com/company-information/what-is-occ">Options Clearing Corporation</a>, "the world's largest equity derivatives clearing organization". The following graph shows the total number of executed trades per year since 2013, taken directly from <a href="https://www.theocc.com/market-data/market-data-reports/volume-and-open-interest/historical-volume-statistics">their webpage</a>. The number was fairly stable around 4-5 billion a year until 2020. Since then it has sky-rocketed. My number for 2023 is an estimate based on trades up to October, but looks set to be well over 11 billion. <br /></p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgn66107l9WY5QsTpE7YYY9v-i2ULG2PMufKx0Gt9-ioLT0oABumbK52Dpbk9FqOo-qfJVerllII3RQuyrTeNMcdDTHkrzHvBUHM2ty6WntJDwEdZk2MTPnRL89rELuvfO2GqgbDWmi4Nsowvbjb-G8EcG9l86XFqOwajSIW4a_RzOu4GqbUTjjD5eSltWi/s2162/Screenshot%202023-11-27%20at%2014.06.01.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1318" data-original-width="2162" height="390" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgn66107l9WY5QsTpE7YYY9v-i2ULG2PMufKx0Gt9-ioLT0oABumbK52Dpbk9FqOo-qfJVerllII3RQuyrTeNMcdDTHkrzHvBUHM2ty6WntJDwEdZk2MTPnRL89rELuvfO2GqgbDWmi4Nsowvbjb-G8EcG9l86XFqOwajSIW4a_RzOu4GqbUTjjD5eSltWi/w640-h390/Screenshot%202023-11-27%20at%2014.06.01.png" width="640" /></a></div><p>What OCC don't say is the financial value of those transactions. It is not inconceivable that we are talking about trades worth a million dollars each. If so, there could be another $11 quadrillion to add to BIS total. </p><p>Even if we only use the figures that are provided by BIS, it should be clear that to generate $3 trillion in funds, it would be enough to impose an FTT of less that 0.02%. </p><p>Importantly, this tax would not just be imposed on the High Frequency Traders responsible for a large proportion of the activity, it would be imposed on absolutely everyone on the planet, including you and me. When my pension is paid into my account (I retired from my job with the CNRS on the 1st of July) - 0.02% of it would go to the UNEP. Every time I make a payment by direct transfer or by credit card, 0.02% would go to UNEP. </p><p>Would I object, given that I know that the money would be used to help ensure that my grandchildren will have a habitable planet? Of course not. Especially when I know that every time I use my credit card, I am forced to pay Credit card processing fees that can typically <a href="https://www.valuepenguin.com/what-credit-card-processing-fees-costs">range from 2.87% to 4.35% of each transaction</a> - paid by the merchant, and passed on to me. The financial transaction taxes imposed by the banking system are even more outrageous when I use my credit card outside the Eurozone. Those <a href="https://www.bankrate.com/finance/credit-cards/a-guide-to-foreign-transaction-fees/">international charges are typically an additional 1-3%</a>. Thus, the FTT required to tackle climate change is hundreds of times less than the transaction taxes imposed by the banks. </p><p>Of course, those same banks will say that while it's fine to clobber each of us with what is effectively financial transaction taxes of 4-6%, imposing even a 0.02% tax on the financial sector's trillions of dollars of trading every day would cause the sky to fall in, prevent efficient price discovery, etc etc etc. Don't believe them. It would certainly reduce the incentive to make trades when the margin is less than 0.02%, but trading would certainly continue. </p><p>One of the standard arguments against imposing an FTT in a particular area (such as the Eurozone) has been that the traders would simply move their activity elsewhere. But, clearly, if the UN imposed tax applied to absolutely all trades, wherever they occur, and whatever the denomination used for trading, such arguments completely fail. </p><div style="text-align: left;">I think that it would also be vital to include the 0.02% FTT on trading in cryptocurrencies. There are now currently <a href="https://coinmarketcap.com/?page=89">8847 different cryptocurrencies</a>, with a combined <a href="https://coinmarketcap.com/charts/#market-cap">market cap of $1.4 trillion</a>. These are involved tens of billions of dollars worth of trading every day, but there were days in 2021 when the <a href="https://coinmarketcap.com/charts/">daily volume exceeded $300 billion.</a> I see no reason why this activity should not also be subject to the climate change tax, especially since c<a href="https://rmi.org/cryptocurrencys-energy-consumption-problem/">ryptocurrencies have a huge energy cost</a> - because of all the hardware needed for mining. Bitcoin mining alone is estimated to consume <a href="https://www.forbes.com/advisor/investing/cryptocurrency/bitcoins-energy-usage-explained/" rel="noopener" target="_blank">127 terawatt-hours (TWh) a year</a> — more than many countries, including Norway. See also my <a href="https://simonthorpesideas.blogspot.com/2021/11/cop26-proposition-1-ban-all.html">proposition #1 from 2021</a>. </div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b><span style="font-size: medium;">Using a Net Wealth Tax</span></b></div><div style="text-align: left;"><b><span style="font-size: medium;"> </span></b></div><div style="text-align: left;">My second proposition would be to impose an annual tax on Net Wealth - whether held by households and individuals, trusts, corporations and companies, but also governments. I talked about this option recently with respect to the <a href="https://simonthorpesideas.blogspot.com/2023/10/a-simple-1-tax-on-net-wealth-could.html">option of eliminating other types of taxation</a> such as sales taxes, income taxes and taxes on company profits. But here, the aim would be different. It would be an additional new tax that would be specifically and exclusively used to finance the $3 trillion needed to tackle climate change. As stated, the tax would be paid by all holders of net wealth, whatever their status or location</div><div style="text-align: left;"> </div><div style="text-align: left;">For individuals and households, the vital information can be found in the latest version of the <a href="https://www.ubs.com/global/en/family-office-uhnw/reports/global-wealth-report-2023.html">Credit Suisse Global Wealth Report for 2023</a>, which can be downloaded <a href="https://www.ubs.com/global/en/family-office-uhnw/reports/global-wealth-report-2023/_jcr_content/pagehead/link2.1078302825.file/PS9jb250ZW50L2RhbS9hc3NldHMvd20vZ2xvYmFsL2ltZy9nbG9iYWwtZmFtaWx5LW9mZmljZS9kb2NzL2d3ci0yMDIzLWVuLTIucGRm/gwr-2023-en-2.pdf">here</a>. They report that total household net wealth at the end of 2022 was $454.4 trillion, corresponding to an average value of $84,718 per adult. </div><div style="text-align: left;"> </div><div style="text-align: left;">That wealth is very unevenly distributed, with a small number of individuals holding a massive proportion of the total, as shown in the following pyramid, with 45.8% of total wealth held by the 1.1% of the population who have net wealth of over $1 million. </div><div style="text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizfZxDiro3LK0IuYqbk3l7tOzsFySLf7W5UZbzfH9IimArXpdbLeEb2EB5Do8p38mOztwNCi6urPa-qdBgQGFd71gPaXt9_mtEe5561pvThoi3JWlNK9DVrzuaey7WpdluYgJqnwXlDtKV0n09NsRzEIpXiNNk3Xk_3bGXqBfNQyBv-xdwI8SPhudcvTZI/s1520/Screenshot%202023-11-27%20at%2015.32.23.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1036" data-original-width="1520" height="436" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizfZxDiro3LK0IuYqbk3l7tOzsFySLf7W5UZbzfH9IimArXpdbLeEb2EB5Do8p38mOztwNCi6urPa-qdBgQGFd71gPaXt9_mtEe5561pvThoi3JWlNK9DVrzuaey7WpdluYgJqnwXlDtKV0n09NsRzEIpXiNNk3Xk_3bGXqBfNQyBv-xdwI8SPhudcvTZI/w640-h436/Screenshot%202023-11-27%20at%2015.32.23.png" width="640" /></a></div><div style="text-align: left;"> </div><div style="text-align: left;">Of course, net wealth varies enormously between countries, as you can see in the figure below. The highest average net wealth levels are seen for adults in Switzerland at $685,230, followed by the USA ($551,350), but for many countries in Africa, average net wealth is tiny. It follows that, if a global tax on net wealth was introduced, the contributions of people in different countries would vary naturally, and would automatically produce a shift of resources from highly advanced economies to developing economies. And that with no need for endless arguments at COP meetings about who should be paying. <br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8TP-JkmOrTGtB6nKms4SvCYLdAtNDm5gs9bpMWuvRa-E_JjyHoMpGOnFbAOXOUZMLpoPpeF7rv2g-pZAPil_QZWTxFtXdCenhO7emwhmmc-ZMC3BrZY1K5MH-fMTNJMwGtY7aUDcyxHihXmI2YCbUTivA72j0vv6dOfN9ANuhFLe9DHr6RtT6JjLrXw4D/s1620/Screenshot%202023-11-27%20at%2015.25.19.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1002" data-original-width="1620" height="396" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8TP-JkmOrTGtB6nKms4SvCYLdAtNDm5gs9bpMWuvRa-E_JjyHoMpGOnFbAOXOUZMLpoPpeF7rv2g-pZAPil_QZWTxFtXdCenhO7emwhmmc-ZMC3BrZY1K5MH-fMTNJMwGtY7aUDcyxHihXmI2YCbUTivA72j0vv6dOfN9ANuhFLe9DHr6RtT6JjLrXw4D/w640-h396/Screenshot%202023-11-27%20at%2015.25.19.png" width="640" /></a></div><div style="text-align: left;"><div style="text-align: left;"> </div><div style="text-align: left;">In previous posts I used the figures for the Forbes Global 2000 list to show that <a href="https://simonthorpesideas.blogspot.com/2023/06/forbes-global-2000-231-trillion-in.html">those 2000 top countries have assets of $231 trillion</a>,
$171 trillion of which are held by Banks and other Financial
Institutions. I've not yet managed to find figures for the net wealth of the many other publicly traded companies, but in 2022 there were <a href="https://focus.world-exchanges.org/articles/number-listed-companies">58,200 of them</a>, and in principle it would be relatively simple to get the required information about their assets and liabilities needed to calculate net wealth. </div></div><div style="text-align: left;"> </div><div style="text-align: left;">There are also large numbers of other companies that also presumably have to file annual accounts. According to Statista there are <a href="https://www.brimco.io/business-statistics-to-know/">334 million companies in the world</a>. Reporting requirements may vary between countries, but it is presumably the case that with companies with audited accounts, net wealth would be straightforward to calculate. What could the total be? It's difficult to say, but if a global net wealth tax were to be introduced, the numbers would presumably become visible rapidly. </div><div style="text-align: left;"> </div><div style="text-align: left;">One other type of structure that should be subject to a global net wealth tax are trusts, often located in tax havens. <span class="ILfuVd" lang="en"><span class="hgKElc"> According to a 2020 study by the Paris-based Organization for Economic Cooperation and Development, a</span></span><span class="ILfuVd" lang="en"><span class="hgKElc">t least $11.3 trillion is held “offshore,”</span></span><span class="ILfuVd" lang="en"><span class="hgKElc">. But earlier work in 2012 had reported that the super rich have as much as $<a href="https://www.reuters.com/article/us-offshore-wealth-idUSBRE86L03U20120722/">32 trillion in offshore havens</a>. One of the advantages of implementing this sort of global tax on net wealth is that such trusts would be forced to pay or risk being put into liquidation. In the end, it does not matter who the final owners of the assets are, or how many different chains of owners are used to dissimulate the owners, if trusts in the Cayman Islands and elsewhere were forced to pay the same amount to the UNEP fund, it wouldn't matter. I don't care who actually pays, as long as someone does!</span></span></div><div style="text-align: left;"><span class="ILfuVd" lang="en"><span class="hgKElc"> </span></span></div><div style="text-align: left;">The final group that would be required to pay are governments. As is well known, many of our governments are massively in debt, and so their net wealth is often negative. Such countries would clearly not be in a position to pay the tax. The <a href="https://data.oecd.org/gga/general-government-financial-wealth.htm">OECD provides a chart </a>for a restricted set of countries showing that 10 countries actually have positive net wealth - Switzerland, Estonia, Denmark, New Zealand, Russia, Sweden, Korea, Luxembourg, Finland and Norway. But Norway stands out because its government has net wealth amounting to 270% of its GDP.<br /></div><div style="text-align: left;"><br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeNVm9BWUOhjtfpCnEtbQg5MGC2eARs2nzliHqGQL6HWvTw5Fo4faht-22WSfxIwrHoiTycWUlbEaH-tMH_Yg0kyx9_1QKrDWDeno92-sjNr2Ka5Fn42K7WWinuP33dFi7wFzWb0YlTgkmPeq_15SPII_nJAqlEZLpqj7kE42fX8oTjJ-SiEIR3AkTNKB8/s1734/Screenshot%202023-11-27%20at%2016.11.36.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1074" data-original-width="1734" height="396" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeNVm9BWUOhjtfpCnEtbQg5MGC2eARs2nzliHqGQL6HWvTw5Fo4faht-22WSfxIwrHoiTycWUlbEaH-tMH_Yg0kyx9_1QKrDWDeno92-sjNr2Ka5Fn42K7WWinuP33dFi7wFzWb0YlTgkmPeq_15SPII_nJAqlEZLpqj7kE42fX8oTjJ-SiEIR3AkTNKB8/w640-h396/Screenshot%202023-11-27%20at%2016.11.36.png" width="640" /></a><div class="post-title entry-title" itemprop="name" style="text-align: left;">The reason why Norway stands out is almost certainly because it is a major supplier of Fossil Fuels - which no doubt explains why Russia also belongs to the group. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;">Unfortunately, I have not been able to find many figures for the net wealth of other governments involved in Fossil Fuel production. But we know that <a href="https://www.visualcapitalist.com/visualizing-the-scale-of-global-fossil-fuel-production/">Saudia Arabia produces 12% of the world's oil, the United Arab Emirates 4% and Kuwait 3%</a>. And the <a href="https://www.argaam.com/en/article/articledetail/id/1613419">Saudi Sovereign Wealth Fund is expected to have over $1 trillion by 2025 and targets $2.7 trillion by 2030</a>.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> It seems likely that by grouping together Individual and Household net wealth ($454.4 trillion) with the wealth of both Public and Private companies, Trusts and Governments, the total amount of wealth that could be subject to an annual net wealth tax could approach $1 quadrillion. This is a figure that I have seen elsewhere, though rarely with a detailed breakdown. See for example, a youtube presentation entitled <a href="https://www.youtube.com/watch?v=IAqj30s4lH8">"What everyone gets wrong about debt"</a> by the Economics Explained.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;">If true, it follows that a 0.3% annual tax on global net wealth would provide the $3 trillion needed to tackle climate change.</div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;">Would I be prepared to hand over 0.3% of the value of my properties and financial assets every year to save the planet? You bet. </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;">The fact is that, as demonstrated by the Credit Suisse Wealth Report, household wealth (and almost certainly the wealth of companies) have been increasing by around 6-8 percent every year for the last 20 years - as seen in the following graph - with the notable exception of the financial crash in 2008. <br /></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhyaaF-KDS3Z83D-Byb_JbMgRPH7CP8fBquElYvG0DOUs9yI7cwWi_XJeyTEtLkfp4j8la0DSJtPMgKaOIdtClSJzJg4VqWbWuZfeAMT-zp54-EHixXrZqSkVicLOjZbLwm6mrEP0Cd-eK3GA5HQpEoWLhR509Zy0KRAXeVs0GNrnOZZrPXn8CKp5Z5lOjo/s1734/Screenshot%202023-11-27%20at%2016.37.12.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1074" data-original-width="1734" height="396" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhyaaF-KDS3Z83D-Byb_JbMgRPH7CP8fBquElYvG0DOUs9yI7cwWi_XJeyTEtLkfp4j8la0DSJtPMgKaOIdtClSJzJg4VqWbWuZfeAMT-zp54-EHixXrZqSkVicLOjZbLwm6mrEP0Cd-eK3GA5HQpEoWLhR509Zy0KRAXeVs0GNrnOZZrPXn8CKp5Z5lOjo/w640-h396/Screenshot%202023-11-27%20at%2016.37.12.png" width="640" /></a></div>I honestly think that those with wealth might be able to spare 0.3% of their wealth every year, when they get to keep the other 7%. <br /> </div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><div style="text-align: left;"><b><span style="font-size: medium;">FTT or Net Wealth? Or both? </span></b></div><div style="text-align: left;"><b><span style="font-size: medium;"> </span></b></div><div style="text-align: left;">I think that it should be clear that either an FTT of around 0.02% or an annual Net Wealth Tax of 0.3% could provide the $3 trillion we need. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">I propose that the United Nations should be empowered to impose one or both these taxes as soon as possible. It could easily decide to do both and have a 0.01% FTT coupled with a 0.15% Net Wealth Tax which would also work. But it could also decide to use one more than the other, if implementation is easier for one. On the face of it, the FTT option seems simpler, effectively requiring simply the addition of one line of code to the software handling all electronic financial transactions. For the Net Wealth Tax, it may be simpler to introduce it first for publicly traded companies, before adding individuals. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">But the fact is that both options are by relatively simple. Above all they are fair, because they can be applied to everything - with no exceptions. There will be no reductions or exemptions. And they would need to be applied everywhere. Anyone cheating by attempting to avoid the payments would have the problem of trying to explain why they should be an exception. And, they could easily be banned from the international financial system. <br /></div><div style="text-align: left;"> </div><div style="text-align: left;">Importantly, if it turns out the $3 trillion a year is not enough, and that we need to double the amount (something that seems to me to be highly plausible), the UN body mandated to impose the two tax systems should have the power to increase the rates to whatever is needed. There can be no wrangling about this. We have to give the final say to people who can be trusted. </div><div style="text-align: left;"> </div><div style="text-align: left;">And if, as a result I end up having to pay 0.04% on all my financial transactions, or 0.6% of the value of my property, then so be it. I would be truly insane to think that I could find a better use of my money. <br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Finally, I would like to point out that while I have largely ended up with these proposals by thinking through the ideas myself, I recently discovered that there are other people proposing essentially the same sorts of ideas. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">I have been discussing with Laura Bannister who is the Executive Director at <a href="http://EqualRight.org">https://www.equalright.org/</a>. They have three key objectives that are very close to my own. </div><ul style="text-align: left;"><li><a href="https://www.equalright.org/climate-justice.html">Climate Justice </a>- based in particular on a scheme developed with the <a href="https://www.capandsharealliance.org/">Cap and Share Climate Alliance </a> </li><li><a href="https://www.equalright.org/tax-justice.html">No borders Tax Justice </a>- that includes the two ideas developed here, namely an International Wealth Tax, and an International Financial Transaction T<span>ax</span></li><li class="post-title entry-title" itemprop="name" style="text-align: left;"><span><a href="https://www.equalright.org/global-basic-income.html">Global Basic Income </a></span></li></ul><span>I strongly recommend downloading some of their material, such as <a href="https://www.equalright.org/uploads/7/8/9/3/78930716/no_borders_wealth_and_finance_taxation_-_briefing.pdf">this presentation</a> of the No Borders Tax Justice idea. </span></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><span> </span></div><div class="post-title entry-title" itemprop="name" style="text-align: left;"><span>Could this years COP 28 meeting be the moment when people move on from saying that we are not doing enough, to actually doing things and deciding how the actions can be financed. </span> <br /></div><p><br /><br /></p><br />Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-30506841227058743222023-10-08T18:17:00.001+02:002023-10-08T18:24:35.423+02:00A simple 1% tax on net wealth could replace conventional taxes<p>The more I think about it, the more I am convinced that we could solve a lot of our problems by replacing manycurrent taxes by a simple annual tax on net wealth. </p><p>Calculating net wealth for individuals is really not complicated. Just add up the value of all your assets, and subtract the value of everything you owe (your liabilities). If you possess more assets than debts, then you have a positive net wealth. If you owe more than you possess, you are negative. </p><p>There are <a href="https://youngandtheinvested.com/best-wealth-net-worth-tracker-apps/">loads of apps</a> you can download to help you do it. Here are some of them:</p><ul><li><a href="https://www.popsilla.com/finance.empower">Empower</a></li><li><a href="https://www.tillerhq.com/">Tiller Money</a></li><li><a href="https://apps.apple.com/us/app/topia-financial-independence/id1527286971">Topia</a></li><li><a href="https://mint.intuit.com/">Mint</a></li><li><a href="https://www.ynab.com/">YNAB (You need a budget) </a></li><li><a href="https://www.monarchmoney.com/">Monarch Money</a></li></ul><p>We have figures for the total amount of net wealth for the most of the population on the planet, thanks to the Credit Suisse Global Wealth Report that analyses net wealth for 5.4 billion people. The latest 2023 edition is available <a href="https://www.ubs.com/global/en/family-office-uhnw/reports/global-wealth-report-2023/_jcr_content/pagehead/link2.1078302825.file/PS9jb250ZW50L2RhbS9hc3NldHMvd20vZ2xvYmFsL2ltZy9nbG9iYWwtZmFtaWx5LW9mZmljZS9kb2NzL2d3ci0yMDIzLWVuLTIucGRm/gwr-2023-en-2.pdf">here</a>. It shows that Global household wealth in 2022 was $454.5 trillion, which works out at $84,718 per adult. </p><p>Suppose that everyone paid 1% of their net wealth per year to an international agency. For example, the United Nations. Obviously, this would generate $4.5 trillion a year - enough to tackle many of the challenges we currently face. For example, it has been claimed that <a href="https://www.bnnbloomberg.ca/50-trillion-is-needed-to-stop-global-warming-morgan-stanley-1.1336842">we need to find $3 trillion a year to fight climate change every year from now to 2050</a>. With a 1% net wealth tax, this would be paid for immediately. </p><p>Alternatively, you could use the money to give every adult on the planet $847 a year - about $70 a month. That sort of global basic income would prevent millions of people starving to death, as well as <a href="https://www.nature.com/articles/s41893-023-01115-7">helping safeguard biodiversity</a>. It might also mean that the thousands of people trying to cross the Mediterranean to get to Europe might decide that actually it would be better to stay at home. </p><p>Now the critical question would be to work out who would end up paying the 1% net wealth tax. </p><p>Here again, the Credit Suisse Wealth Report is very useful. Clearly, mean wealth values will vary a lot between countries. This figure shows the mean wealth for 20 of the richest countries. </p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2_QhAfzt4nNhh4H9J_e2p-BrlhGmW6UaCB52466KH-s-6HZKOEZNMNxqtDa6l99Fxmy6glvlB7jO6pEOhlLkieDkeLmcdxR78MAHOsZAZDNwVmfyo7LQsCCP6nIrTXfLMEEPWGrtqbSV3ROBXlnGMkr2iMMDYkWofKLzQDaa-cZUmeb_7dRYES5LTcZy7/s1210/Screenshot%202023-10-08%20at%2016.41.41.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1210" data-original-width="670" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2_QhAfzt4nNhh4H9J_e2p-BrlhGmW6UaCB52466KH-s-6HZKOEZNMNxqtDa6l99Fxmy6glvlB7jO6pEOhlLkieDkeLmcdxR78MAHOsZAZDNwVmfyo7LQsCCP6nIrTXfLMEEPWGrtqbSV3ROBXlnGMkr2iMMDYkWofKLzQDaa-cZUmeb_7dRYES5LTcZy7/w354-h640/Screenshot%202023-10-08%20at%2016.41.41.png" width="354" /></a></div><p></p><p>This means that the average Swiss adult would pay $685 a year. In the USA, it would be $551. In France, it would average out at €312, and in the UK it would be €302.</p><p>But of course, the amount paid would vary a lot even within a country, depending on a number of factors. </p><p>In the USA, the bottom 50% of the population only accounts for 3% of the wealth. Whereas, the top 1% account for 18.5% of the total net wealth.</p><p>Indeed, the percentage of people with no net wealth at all (and who would never be called on to pay a net wealth tax) can be very significant. According to an OECD report, in 2019, <a href="https://www.aspeninstitute.org/blog-posts/thirteen-million-us-households-have-negative-net-worth-will-they-ever-move-from-debt-to-wealth/">10.4% of US households had negative net worth</a>. </p><p>And of course, the people with negative net worth are not randomly distributed amongst the population. People in their 20s and 30s are often very heavily indebted, with student loans and mortgages to pay off. In contrast, many people reaching retirement age may have paid off their mortgages and managed to save quite a bit of money. This is particularly obvious in <a href="https://ifs.org.uk/data-items/median-household-net-wealth-age-and-decade-birth">this graph for the UK from the Institute for Fiscal Studies</a>. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0x_bhXd7FmIcaL-u86duod4bRgRe1tkNYWJY1BlQZv2jsxobpKoGItDIXw4mrb8ALmf-C6i37dBefuybQBmLhX73KO9lNkNnjxOg1aNIYLfVsogCzYvFCBO1hRUkBlrZYpSE58SuldT3pf6o0GuCMQWctzzD8z52MjQWZOXITlVPcOSIJuYmUIMsXQnKm/s1674/Screenshot%202023-10-08%20at%2017.06.34.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="944" data-original-width="1674" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0x_bhXd7FmIcaL-u86duod4bRgRe1tkNYWJY1BlQZv2jsxobpKoGItDIXw4mrb8ALmf-C6i37dBefuybQBmLhX73KO9lNkNnjxOg1aNIYLfVsogCzYvFCBO1hRUkBlrZYpSE58SuldT3pf6o0GuCMQWctzzD8z52MjQWZOXITlVPcOSIJuYmUIMsXQnKm/w640-h360/Screenshot%202023-10-08%20at%2017.06.34.png" width="640" /></a></div><p>It is clear that, if a 1% annual tax on net wealth were introduced in the UK, the average amount of tax paid would increase almost linearly with age, from around £300 a year at age 30, to £3000 a year at 50, and £5500 a year at 65. Would this be unreasonable? I don't think so. Don't forget that someone who was 65 and living on just their pension in rented accommodation with no savings would pay nothing. It really would be a tax that only affects people who are in a position to pay. <br /></p><p>One other very attractive possibility that would follow from a switch to taxing net wealth is that you could scrap inheritance taxes. Since it doesn't matter whether the wealth is held by elderly grandparents, or whether it gets shifted to the next generation(s), there would still be the 1% to pay. </p><p>I've been reading up on some of the discussion about the pros and cons of taxing Net Wealth. The OECD conducted an <a href="https://read.oecd-ilibrary.org/taxation/the-role-and-design-of-net-wealth-taxes-in-the-oecd/overview-of-individual-net-wealth-taxes-in-oecd-countries_9789264290303-4-en#page9">analysis of such taxes in 2018</a>. They noted that while there were 12 OECD countries with net wealth taxes in 2012, the number had dropped to just four in 2017 (France, Norway, Spain and Switzerland), and Emmanuel Macron scrapped the one of remaining French wealth taxes in 2018. </p><p>Why is this? Well, one problem is that the existing wealth taxes only generate a relatively small amount of government revenue, as shown in the following figure, where you can see that only 0.48% of total taxation in France came from the wealth taxes. <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDdNe6GpxoxCDSn7aivln_2xAGZjmaq7FLsjNFmJOjbJgTr9sbLXcG3u6zTCq58nDAnz75JS7frbMoQNrJ_eQbcVBSkuHdj_UnqFR0E4Bo6aECId-iHKk6ZAh06YR38XT474UEmIujzWcRnHsC6erpzTME4BnPWeC8v9ZvlYQpbjDHMLc06kOABPNBiBPE/s1400/Screenshot%202023-10-08%20at%2017.22.56.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="828" data-original-width="1400" height="378" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDdNe6GpxoxCDSn7aivln_2xAGZjmaq7FLsjNFmJOjbJgTr9sbLXcG3u6zTCq58nDAnz75JS7frbMoQNrJ_eQbcVBSkuHdj_UnqFR0E4Bo6aECId-iHKk6ZAh06YR38XT474UEmIujzWcRnHsC6erpzTME4BnPWeC8v9ZvlYQpbjDHMLc06kOABPNBiBPE/w640-h378/Screenshot%202023-10-08%20at%2017.22.56.png" width="640" /></a></div><br /><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p> </p><p> </p><p>But the reason for this lies in the fact that these wealth taxes almost always have thresholds and only apply to people with very large net wealth. This also makes it very tempting for rich people to find ways of moving wealth to tax havens to avoid having to pay. But my proposition is that the 1% tax should be paid by anyone with net wealth. Indeed, if the net wealth tax was to be applied at a global level, there would no longer be any incentive to move wealth elsewhere. </p><p>In my opinion, a simple annual net wealth tax could easily replace many of the existing complicated taxes on income. </p><p>But, even more significantly, I see no reason why the 1% net wealth tax should only be paid by individuals. If we were to apply the tax not only to the $454.5 trillion of wealth held by individuals, but also to the huge amounts of assets held by corporations, then we really would be able to get rid of many of the current tax mechanisms. In <a href="https://simonthorpesideas.blogspot.com/2023/10/assets-of-forbes-global-2000-170.html">my recent posts</a>, I mentioned that the companies in the Forbes Global 2000 list have over €231 trillion in assets, $170 trillion of which are held by banks and other financial institutions. </p><p>So far, I have been unable to find any way to determine the net wealth of all the other companies that didn't make it onto the Forbes list. According to Statistica, there were around <a href="https://www.statista.com/statistics/1260686/global-companies/">333 million companies in the world</a> in 2021. I suppose I could try downloading all their company statements, but I can't be bothered! Nevertheless, my understanding is that wherever those companies are located, they are legally obliged to report their assets every year. So why not simply require them to pay 1% of the net asset value in tax every year? </p><p>That way, you could almost certainly scrap taxes on company profits, which are notoriously susceptible to "tax optimisation" by extremely sophisticated accountants. Hiding assets would probably be much harder, and frankly not worth the bother. </p><p>And in the same way that I think it makes sense to require young people with student loans and mortgages to pay much less tax than elderly people who have accumulated lots of wealth, I think that it would make sense to tax companies that have amassed lots of assets rather than start-ups. Even a start-up that is making a good level of profit should not be the target of heavy taxation. That start-up will probably want to use those profits to invest and hire new staff. Why prevent them doing that by taxing away all their resources? No, taxation should target those companies that have amassed large amounts of assets. <br /></p><p>Here's one final reason why taxing net wealth makes much more sense than taxing income. If you are rich and have lots of assets - properties, shares etc - the current system is designed so that you only pay tax if you sell off those assets. At that point, you get taxed on the capital gains if you made a profit. If you just sit still, you will see the value of your assets increasing by around 8% a year, as demonstrated by another fascinating graph from the Credit Suisse Wealth Report. </p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwhEhNqlpjvcRY3hsoWQCCDovPkBO-0CKdOb5yFSgeYOYgAdmDgx0vsmp0GxxEoxcvKth5NLmk_RUctnitSRHsw3KgTMGN9XSizQopNHSXvdYrdTujfTMIjQsNbpymvQAyo51JIsQItiseeibcsyczXXPDbeOROkEicqQA50rDw63OPsmT9yu20VKKaMQh/s1798/Screenshot%202023-10-08%20at%2017.52.40.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1116" data-original-width="1798" height="398" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwhEhNqlpjvcRY3hsoWQCCDovPkBO-0CKdOb5yFSgeYOYgAdmDgx0vsmp0GxxEoxcvKth5NLmk_RUctnitSRHsw3KgTMGN9XSizQopNHSXvdYrdTujfTMIjQsNbpymvQAyo51JIsQItiseeibcsyczXXPDbeOROkEicqQA50rDw63OPsmT9yu20VKKaMQh/w640-h398/Screenshot%202023-10-08%20at%2017.52.40.png" width="640" /></a></div>You can see that, except the financial crash in 2008, global net wealth has been increasing by around 8% every year since 2001. This immediately tells you that getting the asset holders to pay 1% in tax per year is hardly going to make them suffer. They will still get to keep the other 7%!<p></p><p>But the other critical point is that if you only tax assets that get sold, this is a strong incentive for asset holders to remain very passive and not to try and actively use their assets to promote useful activities. Why would you sell off your property and shares to invest in a new venture if you knew that you would have to pay 30% tax on the increased value of those assets? If you paid 1% of the value of your assets every year in tax, you would be much more likely to try and swap your assets for ones that produced an even better return. </p><p>Well, I think that's enough for today. But the bottom line is that I find it decidedly odd that so few people seem to have been thinking about the advantages of a universal flat rate net wealth tax. <br /></p><p><br /></p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-20474120027957069322023-10-07T16:16:00.001+02:002023-10-07T16:16:16.719+02:00Assets of the Forbes Global 2000 : $170 trillion held by the Financial Sector<p>Back in June, I posted an analysis of the Assets held by the companies belonging to the Forbes Global 2000 biggest companies in the world. I had noted that together they held over<a href="https://simonthorpesideas.blogspot.com/2023/06/forbes-global-2000-231-trillion-in.html"> $231 trillion of assets</a>. I also noted that virtually all the top 100 in the list were Banks (the first non-bank is the Saudi Arabian Oil Corporation that comes in at number 62).<br /></p><p>More recently, I downloaded a version of the Forbes dataset produced by Databahn that you can find <a href="https://www.databahn.com/products/2023-forbes-global-2000-companies-list-excel-spreadsheet-download-file">here</a>. One of the nice things about Databahn's version is that they assign each of the companies to 39 particular Industrial Sectors, and this allowed me to select those that belong to the Financial and Banking Sector. I ended up regrouping several of them which seemed to refer to the same sort of thing (Banks, Banking, Banking and Financial Services, Banking and Finance, Insurance....). </p><p>You can see the result of this analysis in the following table. </p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyG1z41vNJgZLtUIslPBERDxyoV-v6iCJ-VOR10Le6UPAifebjE9aQlQQINUqigG3HW-m6jzekqvWefIXniujdqL7FWRTty5xmBxN2ONsSK5i4ULnwtCnH_mUSQyPBwXvInbHTt2K8NJy2jTf5jTvi5iPUjgD8_lNKXj9vQMbs6cLkrJlT50oUmpTLjZuX/s1860/Screenshot%202023-10-07%20at%2016.00.16.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1860" data-original-width="1528" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyG1z41vNJgZLtUIslPBERDxyoV-v6iCJ-VOR10Le6UPAifebjE9aQlQQINUqigG3HW-m6jzekqvWefIXniujdqL7FWRTty5xmBxN2ONsSK5i4ULnwtCnH_mUSQyPBwXvInbHTt2K8NJy2jTf5jTvi5iPUjgD8_lNKXj9vQMbs6cLkrJlT50oUmpTLjZuX/w526-h640/Screenshot%202023-10-07%20at%2016.00.16.png" width="526" /></a></div><p></p><p>As you can see, the 538 different companies corresponding to the financial sector hold over $170 trillion in assets, corresponding to nearly three quarters of the total (73.53%). </p><p>You can look at the other sectors, but none of them exceed 3% of the total. They are essentially all very minor. Even huge companies like Amazon (#87 on the list) only hold 0.2% of the total. </p><p>You may know that I see a very simple way to finance all sorts of wonderful things. Just get all asset holders to pay 1% or less of our net assets into a big pot controlled by the United Nations. That pot could be used to fix climate change, end poverty and starvation, educate everyone, etc etc etc. </p><p>To be fair, I would also be happy to pay 1% of the value of my assets too. Personally, I would be happy to do that if the 568 financial corporations that are in the Forbes Global 2000 coughed up $1.7 trillion a year. And that's just the 568 that made it onto the Forbes list. According to the <a href="https://investguiding-com.ngontinh24.com/articles/how-many-banks-are-there-in-the-world#toc-0">InvestGuiding </a>website, there are 44,000 banks and credit unions around the world. Anyone like to guess the total value of all their assets? <br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-32241315716224410652023-08-05T16:42:00.006+02:002023-08-06T13:32:43.132+02:00The cost of interest payments - $13 trillion a year, increasing to over $18 trillion in 2025<p>I'm continuing with my crusade against the insanity of increasing interest rates "to control inflation". I was impressed by a report in the Economist from February saying that "<a href="https://www.economist.com/finance-and-economics/2023/02/19/the-worlds-13trn-interest-bill">The world's interest bill is $13 trillion - and rising"</a>. They estimated the interest bill for companies, households and governments across 58 countries that together account of 90% of global GDP. They found that in 2021, the interest bill was $10.4 trillion - or 12% of combined GDP. By 2022, because of increases in interest rates, the number had increased to $13 trillion - or 14.5% of GDP - hence the headline. <br /></p><p>Now, the Institute for International Finance, publishes its quarterly Global Debt monitor, which reported that at the end of Q1, debt had increased another €8.3 trillion to $305 trillion. This implies that the average interest rate on that debt is roughly 4.3%. That sounds plausible. It can be less, but can easily be much more - think of the interest rates charged by credit card companies. Current average rates in the US are <a href="https://www.forbes.com/advisor/credit-cards/average-credit-card-interest-rate/">24.5% according to Forbes</a>. <br /></p><p>But, as we know, Central Banks such as the Bank of England have been
jacking up base rates, and while some of the rate changes take effect
immediately, others take longer - particularly when fixed rate mortgages
with short term periods of 2 or 5 years come up for renewal. <br /></p><p></p><p></p><p>Back in February, this showed that interest costs are expected to reach around 17% of GDP anyway. But that an extra 1% increase in base rates in 2023 would lead to more than 20% of GDP being used to pay interest charges. Assuming that GDP is around $90 trillion, this implies that interest payments could easily reach $18 trillion a year. </p><p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8ageqANe00UoK9Zuc7MP3uoJku6AmMcATIIHaFg-Q0b43bh8Z_7fAGnhajPgqm79JBSOpytvo-Bnx6zQMCohkKZ28ZUl1b1ol-d7HTRDf_XNSabAEpOA8AXsz-fLKuIGrQfPMCdDqQ7oVgQXun0y0YRkOXwkwhQ6L1J_C65I5TVYjh5XZYaIVVgQ1RugL/s786/Screenshot%202023-08-05%20at%2015.50.52.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="786" data-original-width="674" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8ageqANe00UoK9Zuc7MP3uoJku6AmMcATIIHaFg-Q0b43bh8Z_7fAGnhajPgqm79JBSOpytvo-Bnx6zQMCohkKZ28ZUl1b1ol-d7HTRDf_XNSabAEpOA8AXsz-fLKuIGrQfPMCdDqQ7oVgQXun0y0YRkOXwkwhQ6L1J_C65I5TVYjh5XZYaIVVgQ1RugL/w343-h400/Screenshot%202023-08-05%20at%2015.50.52.png" width="343" /></a> <br /></p><p>And that's with a relatively modest 1% hike. The Bank of England has just made its 14th consecutive increase in rates to 5.25%, with 5.75% anticipated by the end of the year. </p><p>Now, the argument is that these rate increases help control inflation by reducing the desire to take out more loans (which, if you know how the system works, means the amount of money created out of thin air by commercial banks). </p><p>But, above all, it triggers a massive transfer of our money to the banks - either because we borrowed money ourselves, or because we have to pay higher prices to businesses whose interest charges are increased, or because our governments have to pay higher interest charges on government debt. Remember that in 2022, <a href="https://simonthorpesideas.blogspot.com/2023/04/eurozone-government-debt-reaches-1226.html">Eurozone interest payments on government debt increased by a staggering 25.3%</a> from the figures in 2021 to reach €227 trillion. Would anyone care to guess what Eurozone taxpayers will have to fork out for 2023? </p><p>And where does all this money go? <br /></p><p>Does it go to cover the cost of health care, education, tackling climate change (or any of a large number of other vital things)? </p><p>Nope. The vast majority of those interest payments go to commercial banks and other financial institutions, allowing them to pay massive payouts to shareholders and bankers. </p><p>There's a Youtube site called "Economics Explained" with 2.28 million subscribers that recently put out a video called <a href="https://www.youtube.com/watch?v=IAqj30s4lH8">"What everyone gets wrong about global debt"</a>. </p><p>The video contains some sensible stuff - it mentions the $305 trillion figure for global debt, and gives a $1 quadrillion figure for global assets, suggesting that the net worth of the planet is around $700 trillion. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhREBVstli798rU90ju_lZ-_K3FjGt-pUFhc_xu4P3DNxvl-WW3FM9j02W5s6gxKyO0v4MNAwpGpzbuicTtYS1DAwNmbWbsV7mQY3gGTxkaN3aF52x4BcRG4ReKqLPO3zBytd-fi0Mx8c6OlfGggNQu16oQxvAshKqHcwfhrLUY2SEPgcAZFV6Rhf1nIq24/s1664/Screenshot%202023-08-05%20at%2016.12.49.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1122" data-original-width="1664" height="270" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhREBVstli798rU90ju_lZ-_K3FjGt-pUFhc_xu4P3DNxvl-WW3FM9j02W5s6gxKyO0v4MNAwpGpzbuicTtYS1DAwNmbWbsV7mQY3gGTxkaN3aF52x4BcRG4ReKqLPO3zBytd-fi0Mx8c6OlfGggNQu16oQxvAshKqHcwfhrLUY2SEPgcAZFV6Rhf1nIq24/w400-h270/Screenshot%202023-08-05%20at%2016.12.49.png" width="400" /></a></div><p>But when they ask the question of who the $305 trillion is owed to, they say that "95% of all the wealth or the net worth of the world; including the $300 billion owed in debts, is owned by households and the other five percent is owned by governments and businesses that are primarily responsible for creating value".
</p>They go on to say that "Global debt isn't a problem" and that "on a global scale we just owe this debt
<div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0">
to ourselves"</div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"> </div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0">This is the most incredible slight of hand. The critical issue is who owns the $305 trillion of debt - not who owns the $1 quadrillion in assets. And even more importantly, who gets the $18 trillion a year (or more) in interest payments that we will collectively be paying in a couple of years. </div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"><br /></div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0">No, we don't pay the interest "to ourselves". We pay it to the financial sector, and in particular, the commercial banks who have the right to create the money supply and charge us all interest. No surprise that the rich asset holders get richer and richer, whereas nearly everyone else spends almost all their lives and time paying off interest. </div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"><br /></div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0">If you think that there maybe more useful things that could be done with
$18 trillion every year, then maybe you will join me in trying to get
this insane system changed?</div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"><b><br /></b></div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"><b>Note added on 6th August. </b></div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"> </div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0">I had a look at another recent Youtube video from the people at "Economics Explained" - this one's called <a href="https://www.youtube.com/watch?v=BtVNO0H7yLU">"Why inequality starts being a problem now</a>". And they say it again - even more clearly. According to them, 95% of the $300 trillion in global debt is owned by households - we owe all this money to ourselves. Here's a frame from the video</div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"> </div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj99MYrGFIeQi6SCzIRTG5-H38Pv3JoCphKzT4HeSQkRrBxo2YHj9xBUK7J5WshpUB-MyjP5va-vC19Z2PObt32TrCugKDdPVKHCFuOkWoh49Alpmiv-sKKWlA1bRe6VtFDx9GcxWY9lm9cQbPfKP8_AO4keDlXsHylbZBihTnP82HwL0hq9fXZUsmE_uwx/s2014/Screenshot%202023-08-06%20at%2013.21.27.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1118" data-original-width="2014" height="223" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj99MYrGFIeQi6SCzIRTG5-H38Pv3JoCphKzT4HeSQkRrBxo2YHj9xBUK7J5WshpUB-MyjP5va-vC19Z2PObt32TrCugKDdPVKHCFuOkWoh49Alpmiv-sKKWlA1bRe6VtFDx9GcxWY9lm9cQbPfKP8_AO4keDlXsHylbZBihTnP82HwL0hq9fXZUsmE_uwx/w400-h223/Screenshot%202023-08-06%20at%2013.21.27.png" width="400" /></a></div>And here's the transcript of the narration. </div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"><i>"<span style="font-family: "Times New Roman",serif; mso-ansi-language: #0C00; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">The remaining 95% of global debt is owned </span><span style="font-family: "Times New Roman",serif; mso-ansi-language: #0C00; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">directly or indirectly by households</span><span lang="EN-US" style="font-family: "Times New Roman",serif; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">. M</span><span style="font-family: "Times New Roman",serif; mso-ansi-language: #0C00; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">ost of this is
controlled by </span><span lang="EN-US" style="font-family: "Times New Roman",serif; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;"></span></i><i><span style="font-family: "Times New Roman",serif; mso-ansi-language: #0C00; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">corporations like Banks and companies </span><span style="font-family: "Times New Roman",serif; mso-ansi-language: #0C00; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">with large treasury Holdings but </span><span style="font-family: "Times New Roman",serif; mso-ansi-language: #0C00; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">households own those companie</span><span lang="EN-US" style="font-family: "Times New Roman",serif; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB; mso-font-kerning: 0pt; mso-ligatures: none;">s."</span>
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{page:WordSection1;}</i></style> </div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0"><i><b> <br /></b></i></div><div aria-label="15 minutes, 59 seconds to ourselves on any other scale that's" class="segment style-scope ytd-transcript-segment-renderer" role="button" tabindex="0">Come on, guys. I don't know exactly who you are. But can you be serious? It's not because banks have shareholders that they can be described as owned by households. <br /></div>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-51116054932354452042023-08-02T12:42:00.000+02:002023-08-02T12:42:08.094+02:00End variable rate loans now!!<p>In<a href="https://simonthorpesideas.blogspot.com/2023/08/the-insanity-of-trying-to-control.html"> yesterday's post</a>, I complained about the fact that the UK banks had directly benefited from the series of interest rate hikes by the Bank of England, increasing their first half profit levels by between 24 and 50%. Millions of homeowners in the UK are going to have to find hundreds of pounds more every month when their fixed rate loans come up for renewal. And the effects are going to get worse in the coming months. </p><p>The fact that this is a direct result of the way loans are made in the UK is made abundantly clear from <a href="https://www.thebanker.com/World/Western-Europe/France/French-banks-performance-impacted-by-characteristics-unique-to-the-domestic-retail-market">a recent article in The Banker</a>.</p><p>I quote:</p><p><i>"While rising interest rates have benefitted most banks’ bottom line
in the form of higher net interest income, contributing to higher levels
of net interest income for most European banks, French banks have not
benefitted as much due to characteristics unique to the French market.</i></p><p><i>Unlike
the UK where mortgages are either fixed, variable or track the Bank of
England base rate, in France most mortgages are fixed....</i></p><p><i>These characteristics of the French market explain French banks’ ‘subdued’ domestic retail banking revenues."</i></p><p>Well said!</p><p>I can imagine that the Bankers at the big French Banks will be envious of the massive bonuses that their colleagues in the UK will be raking in at the end of the year. And they might be tempted to argue that Macron should shift to the wonderful UK based system where banks can "earn" massive profits every time the Central Bank decides to ramp up interest rates - "in order to control inflation". </p><p>But firstly, the French should fight any such attempt to further rig the system in favour of bankers. </p><p>And second, I claim that the millions of people in the UK who have to put up with this insane system should be protesting very strongly. Any political party that proposed an end to variable rate loans at the general election next year would probably get a lot of support.</p><p>Is anyone with Labour, the Liberals, the Greens or elsewhere listening? <br /></p><p></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-41549491562838613972023-08-01T18:25:00.003+02:002023-08-01T18:35:40.142+02:00The insanity of trying to control inflation by hikes in interest rates<p>In the UK, the Bank of England has proceeded to make <a href="https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp">a series of 13 increases in the lending rate</a> since December 2021, supposedly in an attempt to control the rate of inflation. It's currently at 5%, but it is highly probably that this week will see another rise to 5.25%, and <a href="https://www.reuters.com/world/uk/bank-england-rates-set-peak-575-by-year-end-2023-07-25/">many think it will reach 5.75% by the end of the yea</a>r. <br /></p><p>I challenge any economist or banker to provide a coherent argument in favour of such a policy. </p><p>The standard argument is that if you raise interest rates, people and businesses will be less tempted to borrow money and this will tend to reduce the amount of money in circulation - and this has the effect of reducing inflationary pressure. After all, <a href="https://simonthorpesideas.blogspot.com/2014/03/victory-bank-of-england-admits-that.html">as the Bank of England admitted in 2014</a>, commercial banks create money - effectively out of thin air - when they make loans. If people hold back from borrowing more because the interest rates being charged are too high, this will indeed tend to reduce the amount of money creation by the commercial banking sector. </p><p>However, there is a glaring problem with this story, linked to the fact that virtually all mortgages in the UK involve variable rate loans. According to <a href="https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/fixed-rate-mortgages-aKTV65T2Lmq4">Which?, the vast majority of loans have fixed terms that only last for 2 or 5 years</a>. And that means that people can be hit by massive increases in interest charges when those fixed term periods come to an end. This can mean having to find £500 more every month for a mortgage on a home worth £500 000. </p><p>Where does that extra £500 a month go? Well, it obviously goes straight to the commercial bank that made the initial loan. And that's why the Bank of England's sequence of interest rate hikes has been a fantastic deal for the banks. Their profits have soared. </p><p>For example, this morning we learned that HSBC <a href="https://www.theguardian.com/business/2023/aug/01/hsbc-more-than-doubles-profits-as-interest-rates-soar">doubled its profits in the first half of 2023 to a very impressive £17 billion</a>. While the bank is clearly a multinational entity, HSBC UK accounted for about 22% of the group's total pre-tax profit in that period. </p><ul><li>NatWest reported <a href="https://www.forbes.com/sites/roystonwild/2023/07/28/natwests-h1-profits-soar-but-nim-forecasts-downgraded-for-2023/">a 24% increase in first half year profits to £7.7 billion</a>.</li><li>Lloyds pre-tax profits also went up <a href="https://www.thesun.co.uk/money/23201052/lloyds-banking-groups-profits-up/">23% to £3.8 billion</a>. </li><li>Barclays profits were up <a href="https://www.rte.ie/news/business/2023/0727/1396739-barclays-h1-results/">24% at £4.5 billion</a>.</li></ul><p>So, it seems plausible that every time the Bank of England raises interest rates, there will be champagne corks popping in the City. That is because the Banks can "earn" extra money when they are "forced" to increase the interest rates, despite having done absolutely nothing to merit the extra money. </p><p>Of course, when the banks make bumper profits, it means that they will be able to pay bigger dividends to their shareholders. According to t<a href="https://www.theguardian.com/business/2023/aug/01/hsbc-more-than-doubles-profits-as-interest-rates-soar">he Guardian report</a>, HSBC's bumper profits means that it is planning to hand out $2 billion in divided payments worth 10p a share, as well as an additional $2 billion share buyback. The bankers themselves will also be expecting bumper bonuses. Indeed, HSBC has put aside an extra $200 million for performance related pay for staff compared with last year, when they paid out £3.4 billion in bonuses to top performers. </p><p>In other words, the brilliant Bank of England policy doesn't remove money from circulation. It simply moves billions of pounds from working people in the UK, and puts it directly in the pockets of bankers and their shareholders. Pure genius. </p><p>The fact is that this situation could be easily fixed by ending the insane system of variable rate mortgages. In France, you can get fixed rate mortgages for the entire term of a mortgage. It can be 20 or even 25 years. And the rates can be very reasonable - even now. For example, <a href="https://francehomefinance.com/resources/more/best_french_mortgage_rates/">one website talks about rates for resident buyers of between 2.8% and 3.1% over 25 years</a>. But even non-resident buyers can get 25 year fixed rate loans. This means that when you take out a loan, you know exactly how much you will be paying every month until the loan is paid off. There is no way that the bank can be allowed to increase the interest rate. </p><p>Of course, if at some stage, the interest rates drop, you can always take out another loan and pay the first one off. Seem's sensible to me. <br /></p><p>For me, it should simply be made illegal to make loans that don't have fixed rates for the entire period. If that was the case, then it would be true that when the Central bank raises the base rate, it would have the desired effect of decreasing the incentive to take out additional loans, without meaning a massive transfer of people's hard-earned cash to bankers. <br /></p><p>As it stands, the current system is absurd. When the Bank of England raises the rate, it increases the cost of finance for existing loans not just for individual citizens, but also for businesses. Suppose you have a business with a lot of debt. If the brilliant economists at the Bank of England ramp up the interest rate, that means you will have to pay more to service the loans, and you will be faced with the choice of either increasing your prices to customers, or go out of business.</p><p>If it is the first option, then it should be obvious to anyone who thinks about it for five minutes that this will have exactly the opposite effect to what was intended. It will directly lead to inflation.</p><p>Of course, there will be those in the banking sector who think that this way of trying to control inflation is brilliant. It is - for them. </p><p>As I say, the solution is actually simple. Variable rate loans should be abolished. <br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-47678117552190125352023-06-11T11:24:00.006+02:002023-06-11T11:29:56.093+02:00The Forbes World's Billionaires List 2023 - 2638 billionaires with assets of $12.2 trillion<p>To get some idea of how much revenue would be generated by an annual asset tax of 1%, I thought it would be interesting to have a close look at Forbes World's Billionaires List for 2023 which is available <a href="https://www.forbes.com/billionaires/">here</a>. As the Forbes website points out, they counted "2,640 ten-figure fortunes, down from 2,668 last year. Altogether, the
planet’s billionaires are now worth $12.2 trillion, a drop of $500
billion from $12.7 trillion in March 2022". I'm not sure that we have to feel very sorry for them for the fact that they have lost a bit over the last year. <br /></p><p>I downloaded the data set from the website and generated a Google Sheet that you can find <a href="https://docs.google.com/spreadsheets/d/13bS7A7RAh42be5gQcRO4BsCOIID6cGjkluE5Jj6uuk4/edit?usp=sharing">here</a>. (It was actually quite hard work, but well worth it I think). <br /></p><p>One thing I did was to generate a table of the asset value (Net worth) of the billionaires by country. Here's what that generates</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_2FkqIMhi1A7T1GOv1IHQKtvvzQi8AFN3prI_m8eqU5xWDYrjQOgBFVM4YmFhl3ENXoq5LePO-t_Mi5z8oJk-ZK8MsDLqp_dkLtBkS57Iif3cdhuk9OFZr4Fr-BJ2ZZ9CV-6i49swlyVeMBLSZVEbjwXsuVbF-aqhKRjLppLl60HicrAB5b49ho9BPg/s2430/Screenshot%202023-06-11%20at%2010.27.52.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2430" data-original-width="1458" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_2FkqIMhi1A7T1GOv1IHQKtvvzQi8AFN3prI_m8eqU5xWDYrjQOgBFVM4YmFhl3ENXoq5LePO-t_Mi5z8oJk-ZK8MsDLqp_dkLtBkS57Iif3cdhuk9OFZr4Fr-BJ2ZZ9CV-6i49swlyVeMBLSZVEbjwXsuVbF-aqhKRjLppLl60HicrAB5b49ho9BPg/w384-h640/Screenshot%202023-06-11%20at%2010.27.52.png" width="384" /></a></div><p>The list is headed by the USA, China and India. But, given that I live in France, it was particularly interested to see that France comes fourth in the ranking, with 43 billionaires who have total net wealth of $590 billion. </p><p>Obviously, that is helped by the fact the world's richest billionaire is Bernard Arnault and family, who are based in France. They have a net worth of $211 billion. But, if you are interested, here is the complete list of all 43.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg07-QSBvIgf8japhQsTJgx1uay7c1i3L1oPjRPVuOIF8XcpuvWXSn7puF3_GIAMFSM4jsMPpjS0Cya5L_H-1wFOsLFxLAdJb0WQbZFnskyu2FOsXj6U0_bvJeu8DH0A1XCq-KFhA9XL1zA02s7R5EyU8gIPaZ0xNNOtnuznuucRBEwNdHqrG4hLIYjqg/s2748/Screenshot%202023-06-11%20at%2010.39.14.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2652" data-original-width="2748" height="618" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg07-QSBvIgf8japhQsTJgx1uay7c1i3L1oPjRPVuOIF8XcpuvWXSn7puF3_GIAMFSM4jsMPpjS0Cya5L_H-1wFOsLFxLAdJb0WQbZFnskyu2FOsXj6U0_bvJeu8DH0A1XCq-KFhA9XL1zA02s7R5EyU8gIPaZ0xNNOtnuznuucRBEwNdHqrG4hLIYjqg/w640-h618/Screenshot%202023-06-11%20at%2010.39.14.png" width="640" /></a></div><p></p><p>My congratulations to all of them. The names at the top of the list show that France is really very important in the world of luxury goods. Nothing wrong with that. <br /></p><p>It follows that if Emmanuel Macron were to impose a 1% global tax on Net Worth for all French residents, it would immediately generate a very useful $5.9 billion in revenue - around €5.4 billion - just from the first 43 people on the list. <br /></p><p>But, just to be clear, I'm not proposing a 1% tax that would only apply to billionaires (or even those with net worths of €10 million or more). I would apply the 1% to the net worth of everyone - including me! It's called being fair. </p><p>And I honestly don't see why France's 43 billionaires could complain about having to cough up 1% of their fortunes every year if absolutely everyone was treated in the same way. </p><p>A recent study by the French government institute (INSEE) found that <a href="https://www.insee.fr/fr/outil-interactif/5367857/details/30_RPC/34_PAT/34D_figure4">50% of French households have a net worth of over €177,200</a>, meaning that if my proposed asset tax was introduced, they would be paying at least €1772 a year in wealth tax, rising to around $2 billion a year for Bernard Arnault and his family. That's perfectly fair, and easy to implement. This seems to me to be a much simpler system than the taxes that many people seem to want, in which there is a hard threshold for paying an asset tax. </p><p>Indeed, if you look at the decile distribution of wealth in France, you find that t<a href="https://www.insee.fr/fr/statistiques/2412847#tableau-figure1">he bottom 10% of households have net debts of €4700</a>. Hey, that suggests an extremely simple scheme where you pay 1% of your net wealth in tax per year, but that if you have net debts, you get 1% back as a handout. A simple implement of a basic income scheme. <br /></p><p>I also looked at how the wealth was distributed according to the type of industry. Here's the result </p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-TBvy9DtZdIp3eMq6iURVSgRrOteIGwDw3aVGHgVFYbrG643XSQNWTUenullNdXa4XdIlyCYt0y0bP4EqazTRtgDHn0o-nLd7ssNQNDd_ZCOjrgiJsKtz0Jz59QwOfsCrQyb2_Fvj3bk3EpNzW81M5N_GNyPPmQoK2r5u729dteI14GUeRmrZ6opiBw/s1222/Screenshot%202023-06-11%20at%2011.03.14.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1222" data-original-width="854" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-TBvy9DtZdIp3eMq6iURVSgRrOteIGwDw3aVGHgVFYbrG643XSQNWTUenullNdXa4XdIlyCYt0y0bP4EqazTRtgDHn0o-nLd7ssNQNDd_ZCOjrgiJsKtz0Jz59QwOfsCrQyb2_Fvj3bk3EpNzW81M5N_GNyPPmQoK2r5u729dteI14GUeRmrZ6opiBw/w448-h640/Screenshot%202023-06-11%20at%2011.03.14.png" width="448" /></a></div><br /><p></p><p>You can see that Tech billionaires are particularly significant, But Fashion & Retail, Finance & Investments, and Manufacturing are also important, with over $1 trillion in assets for each area. </p><p>But, as you can see by comparing these figures with <a href="https://simonthorpesideas.blogspot.com/2023/06/forbes-global-2000-231-trillion-in.html">my post yesterday</a>, all these individual fortunes are totally dwarfed by the assets held by the 2000 biggest corporations in the world. The Forbes Global 2000 companies have combined assets of $231 trillion. That is around 20 times more than all the wealth held by all the world's 2638 billionaires. There's really not much point in picking on billionaires alone. <br /></p><p>And, surprise surprise, the vast majority of those assets are held by banks and financial institutions. They should be the number one target of my proposed global 1% asset tax. Sure, there are 371 billionaires who have made fortunes in Finance and Investments - and they have a combined net worth of over $1.6 trillion. But this is peanuts compared with the assets held by banks.</p><p>How come nobody ever suggests taxing them? </p><p>Could it be that the banking system manages to avoid anyone ever raising that possibility? Maybe they have a way to influence what the media talks about, what economists talk about, and what our politicians propose? </p><p>Until there is a political party who is prepared to put a 1% global tax on assets on their program, we will effectively have no chance to change the way the system is rigged in favour of banks. <br /></p><p> </p><p> </p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-20776937074299423712023-06-09T12:19:00.000+02:002023-06-09T12:19:28.823+02:00Forbes Global 2000 - $231 trillion in assets. Time for a 1% global asset tax<p> Forbes just released their listing for the world's 2000 largest corporations. Quoting from their headline : it ranks the largest companies in the world using four
metrics: sales, profits, assets and market value. As a group, the
companies on the 2023 list account for $50.8 trillion in sales, $4.4
trillion in profits, $231 trillion in assets and $74 trillion in market
value. You can find the full table <a href="https://www.forbes.com/lists/global2000/?sh=4d2e9ece5ac0">here</a>. <br /></p><p> For me, it's the assets' column that interests me most. As Forbes said in their headline report, those total assets amounted to €231 trillion. But I have downloaded the complete data set and generated a ranked list of all 2000 companies in terms of their assets. I've made a Google Sheet that you can find <a href="https://docs.google.com/spreadsheets/d/1khyjcgEMvsBQrRU-v4G03NKxqkiXT1mXD_7PIY_7NuE/edit?usp=sharing">here</a>. And the conclusions are simple. </p><p>If you look at the top 100 on the list, you get a list that is almost entirely composed of Banks and Financial Institutions. Here's the list</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGLXa_3sifz1cmEjAszf1IHXeYoTMGqB2VGE9swEnZAAiDccjcvE2cuLpfEQajOgnEX9WF0eZW3uwycVOuGXywC8RfwLmPg27msloUdsxSzeL0J2HrtsIXvszmy7mSvLAADGt1iflAxJrM6BsBLGWmCogBapJR1FdkoVdc6jq2tKSGGjYJrRDmgQk0YQ/s2490/Screenshot%202023-06-09%20at%2011.21.12.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2402" data-original-width="2490" height="618" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGLXa_3sifz1cmEjAszf1IHXeYoTMGqB2VGE9swEnZAAiDccjcvE2cuLpfEQajOgnEX9WF0eZW3uwycVOuGXywC8RfwLmPg27msloUdsxSzeL0J2HrtsIXvszmy7mSvLAADGt1iflAxJrM6BsBLGWmCogBapJR1FdkoVdc6jq2tKSGGjYJrRDmgQk0YQ/w640-h618/Screenshot%202023-06-09%20at%2011.21.12.png" width="640" /></a></div><br /><p>The first non bank is ranked #62 - it's the Saudi Oil Corporation.</p><p>The first that actually manufactures something useful is the Volkswagen Group at # 63, with Toyota at #78. </p><p>Amazon, which is a huge company that certainly provides services for many people, comes in at #87. </p><p>There's another Oil company at #94 (Shell), the French energy company EDF at #97 and Telecom giant AT&T at #99.</p><p>And that's it. The other 94 are all Banks. </p><p>And if you add up the total asset values for the top 100 companies, you get a total of over $126 trillion. Of that, less than 2.5% is held by the 6 companies that actually provide anything real. </p><p>I did <a href="https://simonthorpesideas.blogspot.com/2020/05/the-forbes-2000-companies-over-201.html">a similar sort of analysis in 2020</a> (based on the numbers for 2020), and the total values for assets across the 2000 companies came to $201.4 trillion. So there has been an overall increase of nearly 15%. But I also looked at the increases for individual companies, and in many cases, the increases in assets have been spectacular. </p><p><a href="https://www.forbes.com/companies/freddie-mac/?list=global2000&sh=6c08eb725d06">Freddie Mac</a>, Goldman Sachs, the Agricultural Bank of China, CITIC and ICBC all increased the value of their assets by over 40%, with the Industrial & Commercial Bank of China increasing the value of its assets to an eye-watering $6.117 trillion. Indeed, the top four players are all Chinese Banks with combined assets of $20.9 trillion. </p><p>Anyone who has been paying attention to what I have been arguing recently will know that I have been proposing a flat rate 1% global asset tax on all assets, whoever owns them, wherever they are held. Just taxing the top 2000 companies would generate $2.3 trillion a year - virtually enough to pay the $3 trillion a year that we have to find to have a chance of tackling the climate emergency. </p><p>For more on this, check out my <a href="https://www.youtube.com/watch?v=CPre-wvF6XM">youtube video</a> on "AI, Technological Unemployment and UBI", where I propose four different ideas for financing global projects, including a global asset tax. <br /></p><p>Note that my proposal would be that everyone would pay - including me. I own property, and so I would pay 1% - like everyone else on the planet. </p><p>The key is that, contrary to the message that we are being fed by the media, the world's wealth is not held by a handful of tech billionaires like Elon Musk, Mark Zuckerberg and Jeff Bezos. It's not even held by big corporations like Apple (#127), Tesla (#440);, and NVidia (#854). Even Google's parent company Alphabet is only #111. The vast majority of wealth is held by banks, who currently pay no tax on those assets at all.<br /></p><p>Taxing assets would have remarkably little effect on innovation - unlike taxing profits, which will really hit new startups. Taxing assets is, for me, a no-brainer.</p><p>I simply don't understand why no-one else is seriously talking about this. <br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-84559554405733144952023-04-25T10:19:00.001+02:002023-04-25T10:19:15.820+02:00Eurozone Government debt reaches €12.26 trillion in 2022 ($12.26 trillion) - Interest payments increase by 25.24% to €227 billion<p>Eurostat has just released the latest figures for public sector debt and interest payments. You can find all the details <a href="https://ec.europa.eu/eurostat/databrowser/product/page/gov_10dd_edpt1">here</a>. But, as usual, I have downloaded the most interesting information and put it in a Google Sheet that you can find <a href="https://docs.google.com/spreadsheets/d/1oPX_UzOsh539X1VbPFiilAEW2z8G6I78OGxizAG6XJk/edit?usp=sharing">here</a>. And the key results are shown in the following table.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0KS9m-lunbBWEdeiNwX-bADjWy7DMb_3xY2ZEv-ph8XXelq8k6klfM7PEZYRG0rTUsDYSRnJEo1zAj79c6b83-2TM_gEd8AdGf9S8ZeDv7qz6AqSlh3NnQqPBVRybAPM4NK2dC4DkWCYcbAJUEOL1FFg6HYJdaXWVpHdOh5BkkfqL6M89Y8KSFpzekg/s1568/Screenshot%202023-04-25%20at%2009.30.17.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1568" data-original-width="1376" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0KS9m-lunbBWEdeiNwX-bADjWy7DMb_3xY2ZEv-ph8XXelq8k6klfM7PEZYRG0rTUsDYSRnJEo1zAj79c6b83-2TM_gEd8AdGf9S8ZeDv7qz6AqSlh3NnQqPBVRybAPM4NK2dC4DkWCYcbAJUEOL1FFg6HYJdaXWVpHdOh5BkkfqL6M89Y8KSFpzekg/w562-h640/Screenshot%202023-04-25%20at%2009.30.17.png" width="562" /></a></div><p>The bottom line is that EuroArea debt has now reached €12.26 trillion. If you include all 27 European Union countries, the total is €13.27 trillion. In both cases, the increases are roughly in line with inflation at around 3.8%. But, intriguingly, the percentage change varies a lot between countries. Debt levels for Czechia and Estonia both increased by over 20% and Romanian debt levels increased by 15.4%. We could perhaps congratulate Ireland and Cyprus and Sweden, who all actually managed to get their levels down. However, in the case of Sweden, it turns out that this is essentially due to changes in the Euro exchange rate - the debt levels measured in national currency units actually increased. </p><p>But the even more worrying information concerns the cost of paying interest on government debt. Eurozone interest payments have increased by over 25% to a whopping €226 billion. And the increase reaches 28% if we include all 27 countries in the European Union. For my own country, France, interest costs increased by 43.8% to reach nearly €50 billion. For Italy, the total was over €83 billion. </p><p>As I have argued for over 10 years, these payments make no sense. Our governments borrow money from the financial markets. For example, yesterday, the Agence France Tresor <a href="https://www.aft.gouv.fr/en/publications/communiques-presse/20230424-issuance-btfs">announced that they would be issuing an additional €6.488 billion in government bonds</a>. Those bonds are purchased by the following primary dealers (<a href="https://www.aft.gouv.fr/en/primary-dealers-presentation">the SVTs</a>), who are the only entities able to purchase them. <br /></p><ul><li>BANK OF AMERICA SECURITIES (BofA Securities Europe SA),</li><li>BARCLAYS (Barclays Europe Plc),</li><li>BNP PARIBAS (BNP Paribas SA),</li><li>CITI (Citigroup Global Markets Europe AG),</li><li>COMMERZBANK (Commerzbank AG),</li><li>CRÉDIT AGRICOLE - CIB (Crédit agricole - CIB SA),</li><li>DEUTSCHE BANK (Deutsche Bank AG),</li><li>GOLDMAN SACHS (Goldman Sachs Bank Europe SE),</li><li>HSBC (HSBC Continental Europe SA),</li><li>JP MORGAN (J.P. Morgan SE),</li><li>MORGAN STANLEY (Morgan Stanley Europe SE),</li><li>NATIXIS (Natixis SA),</li><li>NATWEST MARKETS (Natwest Markets NV),</li><li>NOMURA (Nomura Financial Products Europe GmbH),</li><li>SOCIÉTÉ GÉNÉRALE (Société générale SA). <br /></li></ul><p></p><p>And where do those banks get the money to buy the bonds? Well, they would like us to believe that they simply act as intermediaries for investors - people like you and me who have money to invest and think that government bonds are a safe bet. </p><p>But, in reality, those banks can simply create the "money" used to buy government bonds out of thin air. It's how money is created. And, since they can then sit back and "earn" the interest payments on the government debt and those interest rates are increasing rapidly, things are looking very good for the banks in the coming years. </p><p>Sure, the relatively low interest rates in recent years meant that the amount that Eurozone taxpayers were paying to the financial markets every year had dropped from nearly €300 billion a year in 2012 to a mere €172 billion in 2021. But the 25% increase last year makes it look like the banks will be able to cash in on their generosity with money creation over the last few years. Anyone like to predict what the figures will be for 2023? <br /></p><p>If you look at the total amount of interest paid by taxpayers in the Eurozone since the Eurostat figures started in 1995, the amount is a staggering €7.197 trillion. That's around €20 000 for every man, woman and child in the Eurozone (there are 343 million of us). Personally, I think that money could have put to better use. <br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-76283744771344378492023-02-28T23:13:00.001+01:002023-03-01T12:09:59.416+01:00Global Financial Transactions : $15.9 quadrillion in 2021<p>The Bank for International Settlements published its data on Payments and Financial Markets infrastructures for 2021 on the 31st January 2023. You can find all the details using the BIS Statistics Explorer that you can find <a href="https://stats.bis.org/statx/toc/CPMI.html">here</a>. But, as usual, I have downloaded all the relevant data sheets and compiled them in a Google Sheet file that you can find <a href="https://docs.google.com/spreadsheets/d/1HsQVS25icTA0FrE9YTgj6xfROz-nKgKlGExPd03HVKM/edit?usp=sharing">here</a>. </p><p>The bottom line is that Financial Transactions have continued to grow. For 2021, they reached $15.91 quadrillion, up 6.5% on the previous year, despite the fact that BIS was unable to obtain data from Russia following the Ukraine invasion. So we can probably add in a further $60 trillion (which was roughly the value for Russia in 2020).</p><p>Here are the results by country in table form for the 23 countries included in the BIS dataset. Of course, there are lots of other countries that do not appear in the table, but many of the big players will be there. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHLwxhA8ID1T1VucB9vvPJetF1YT8MyGIl6evrqaE1hGocfbuMNotDFtr-8O8VAezMxoNObi0IVq_72AtwODswealfN0u6lX__HR-gHDiU0Mq5AU9DqZlby8hFyREOGDttDjcwJQ1jqGtQnMaL6t7c0xnqTXmJtDj7lVLRPRzvDgFyn8alWJbJ2trJpg/s1558/BIS%20transactions%202021.tiff" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1558" data-original-width="678" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHLwxhA8ID1T1VucB9vvPJetF1YT8MyGIl6evrqaE1hGocfbuMNotDFtr-8O8VAezMxoNObi0IVq_72AtwODswealfN0u6lX__HR-gHDiU0Mq5AU9DqZlby8hFyREOGDttDjcwJQ1jqGtQnMaL6t7c0xnqTXmJtDj7lVLRPRzvDgFyn8alWJbJ2trJpg/w278-h640/BIS%20transactions%202021.tiff" width="278" /></a></div><br /><p>One striking feature is the massive increase in transactions for China - up 11.3% since 2020 and allowing it to overtake the UK. </p><p>As always, there is also a huge amount of activity associated with <a href="https://www.cls-group.com/">CLS group</a> that mentions that it settles around $6 trillion in transactions every day on its website. And, indeed, as you can see from the next table that shows all the players that exceeded $100 trillion during the year, it has now taken the number one spot. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4Lv_MIdHbfPiD8Ixryd2nA10rFXWovQ6eX5lLNcPdofwiW2A_8wbq1FWW9SPLNBe5ZfC2K7UM5Z70QN0us77ePk3PrNEaejPGfmW3ZKLTrwgMvHXMODSwith3Kehw611SUOKoovKhzlgs6tMlbcQQ5g_uu6mn3MSgi_scz4yjTHnVMi2ddszXrCxQ1w/s1702/BIS%20transactions%202021%20-big%20players.tiff" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1702" data-original-width="1152" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4Lv_MIdHbfPiD8Ixryd2nA10rFXWovQ6eX5lLNcPdofwiW2A_8wbq1FWW9SPLNBe5ZfC2K7UM5Z70QN0us77ePk3PrNEaejPGfmW3ZKLTrwgMvHXMODSwith3Kehw611SUOKoovKhzlgs6tMlbcQQ5g_uu6mn3MSgi_scz4yjTHnVMi2ddszXrCxQ1w/w434-h640/BIS%20transactions%202021%20-big%20players.tiff" width="434" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><p>As always, I will again have to regret that BIS still only provides information about "selected" payment systems. I still have no idea why they think that the transactions handled by major players including the <a href="https://www.theocc.com/">Options Clearing Corporation</a> do not need to be included. OCC describes itself as "the world's largest equity derivatives clearing organization". It cleared a staggering 10,377,923,457 transactions in 2022, double the quantity in 2019 - their figures are all <a href="https://www.theocc.com/market-data/market-data-reports/volume-and-open-interest/historical-volume-statistics">here</a>. Despite my efforts, I have been unable to determine the value of the those 10 billion deals. But, in many cases, we are talking about deals that can be worth millions of dollars each. It might be that the value of the transactions handled by OCC alone could dwarf everything that BIS reports. </p><p>The critical point is that if there was a political will, it would be trivial to solve many of the problems facing humanity with a tiny 0.1% tax on these transactions. Even if we just take the numbers provided by BIS, the revenue generated would be more than enough to provide a basic income of $100 a month for every one of the 8 billion people living on our planet - total cost less than $10 trillion a year. A large sum, but less than one thousandth of the value of transactions. </p><p>And before anyone says that it would be unfair to target the traders who are responsible for a lot of that activity, just remember that I am proposing that everyone would pay exactly the same percentage. When my salary comes in to my bank account, 0.1% would be taken in tax. Every time I use my credit card or pay my electricity, telephone, or food bills, I would pay 0.1% as well. Would I object? No. I would be happy to know that my money was being used to improve the well being of all my fellow citizens. </p><p>Of course, some will argue that any tax on financial transactions will cause the volumes to drop. Would that be a bad thing? What useful function is provided by the $6 trillion a day in transactions handled by CLS group, or the 10 billion transactions settled by OCC? I believe that if only a tiny fraction of that money was injected into the real economy, then almost everyone would benefit. </p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-3133885190656740702022-10-21T18:32:00.000+02:002022-10-21T18:32:11.656+02:00My Youtube videos - on the economy, neuroscience and AI<p>I have a YouTube video channel where you can find quite a few videos that I have uploaded over the years. Here's a<a href="https://studio.youtube.com/channel/UCBzcvWOt_GeQM8hldUZxuIQ/videos/upload?"> link</a> to the channel. <br /></p><p>The first ones date from March 2012 when I proposed my <a href="https://studio.youtube.com/video/GtToYnTJ_zM/edit">0-0-0-0.x Tax reform plan</a> (essentially scrapping all taxes except for a Financial Transaction Tax that would be a fraction of 1%). There were versions in English and <a href="https://youtu.be/3L_4hg36AUw">French</a>.</p><p>In April 2012, I did another one on "Solving the Debt Crisis" (in <a href="https://youtu.be/22uW8SnfccI">English</a> and <a href="https://youtu.be/_ETdHuevejI">French</a>) that totalled over 2200 views. </p><p><span><span></span></span>May 2012 saw my proposals for "Debt Annihilation" (again in <a href="https://youtu.be/SKLbjpLk6KI">English</a> and <a href="https://youtu.be/1TNP6PfHx6I">French</a>)</p><p>In June 2012, I was back with "Some Radical Proposals for Monetary Reform" (in <a href="https://youtu.be/DthcVZsFKmo">English</a> and <a href="https://youtu.be/Ur42PhWm1V0">French</a>), <span> </span>and in August, I posted "<a href="https://youtu.be/P1gcd8CYEEU">How the Eurozone countries could fix the global economic crisis</a>".</p><p>In September 2012 I had a video called "<a href="https://youtu.be/JJvkvjr6z0U">The N-Euro Solution</a>" which proposed the idea of creating a parallel debt free monetary system. </p><p>One of my most popular videos has nothing to do with economic reform. It was a video on "<a href="https://youtu.be/wtNUIUr4fYw">Paranormal Phenomena</a>" posted in January 2013. I think a lot of people were surprised to see a "serious" scientist taking the evidence for fascinating phenomena like telepathy and precognition seriously. </p><p>My biggest hit ever, was not me - it was French economist B<a href="https://youtu.be/B6H2v4DaEyo">ernard Maris revealing the truth about how commercial banks create money out of thin air when they make loans</a> - posted in April 2014 and seen over 75000 times. </p><p> I also posted <a href="https://youtu.be/iFU2F8Efu4M">Ryland Thomas from the Bank of England saying effectively the same thing</a> (posted April 2014 and seen over 3800 times) </p><p>My TEDx talk (in French) entitled "<a href="https://youtu.be/6lNToViEAvg">Vers un monde pratiquement sans taxes</a>" (towards a world virutally with no tax) was posted to my Youtube Channel in September 2014 where it has been seen nearly 600 times. But I recently discovered that the original TEDx version has now been seen a very impressive 14,950 times! Not bad!</p><p>A talk that I presented at the Toulouse School of Economics in February 2015 and called "<a href="https://youtu.be/NQIducYlrjA">Fixing the Economic System</a>" has been seen 970 times, and there is a similar talk in French called "Des solutions pour sortir de la crise'" posted in September 2015. </p><p>I gave a talk entitled "AI, Neural Technology and Society" at an Emerging Technology meeting in November 2017 that you can find <a href="https://youtu.be/dQrU90p6AOM">here</a>. You can find another version <a href="https://youtu.be/HtoTtbRj8CA">here</a> .<br /></p><p>And then, finally, there is the talk on "<a href="https://youtu.be/CPre-wvF6XM">AI, Technological Unemployment and Universal Basic Income</a>" that I posted last week. <br /></p><p>The talks on my personal YouTube Channel are mainly devoted to my ideas on the economy. But when I was looking at YouTube, I realised that there are actually quite a few more of my talks that can be found. </p><p>Here's a fairly complete list. </p><p>One of the first is a 10-minute presentation in French at a festival called "<a href="https://youtu.be/Go9S0siEhoQ">La Novella</a>" in 2011 that was uploaded to YouTube in July 2012 and where I talk about the speed of processing in the human visual system. <br /></p><p>I have another TEDx talk (in French) from April 2018 called "<a href="https://www.youtube.com/watch?v=L5_lvYgCRNY&t=177s">Survivre à la révolution de l'Intelligence Artificielle</a>"</p><p>Another French talk with an English title "<a href="https://youtu.be/RbBrj6nmO68">Finding Repeating Structures: The Secret of Intelligence?</a>" was presented at "Les Rendez-Vous Aero de l'innovation" in December 2017. <br /></p><span class="style-scope yt-formatted-string" dir="auto"><span></span></span><p><span class="style-scope yt-formatted-string" dir="auto"><span>I gave a series of 3 one-hour lectures at a Winterschool in Obergurl, Austria, in December 2016 on "<a href="https://youtu.be/iBSaCb28zBA">How can the brain store memories that last a lifetime</a>. They were posted to YouTube in February 2018. The talks are in three parts -<a href="https://youtu.be/iBSaCb28zBA">Part 1</a>, <a href="https://youtu.be/GARZhc36NLU">Part 2</a>, and <a href="https://youtu.be/1pyd1c1csAY">Part 3</a>.</span></span></p><p><span class="style-scope yt-formatted-string" dir="auto"><span>I gave another talk in Grenoble in June 2019 entitled "<a href="https://youtu.be/602d76Yri84">Finding Repeating Patterns: A key to intelligence in man and machine?</a>"</span></span></p><p><span class="style-scope yt-formatted-string" dir="auto"><span></span></span><span class="style-scope yt-formatted-string" dir="auto"><span>I gave a talk on "<a href="https://www.youtube.com/watch?v=bSjTtCTfVUU">Why use Spikes?</a>" at a meeting in Rennes in June 2021 that was posted to YouTube in January 2022. </span></span></p><p>I gave a talk at the <span class="style-scope yt-formatted-string" dir="auto">Computing Systems Week in Lyon in October 2021 entitled "<a href="https://youtu.be/8K5oc4y0Vas">Hardware-friendly AI algorithms: Why Spikes are important</a>"
that I discovered had been posted to YouTube in July 2022. I actually
had to re-record the talk when I got back to the lab because there had
been problems with the original recording. </span></p><p><span class="style-scope yt-formatted-string" dir="auto">You can find a talk that I gave for the researchers at IMEC in Holland in April 2022, entitled "<a href="https://youtu.be/sQRM_NcZv30">The importance of spikes for power-efficient AI systems</a>". I was forced to give it via<span> zoom because I was prevented from travelling because of Covid. </span></span></p><p><span class="style-scope yt-formatted-string" dir="auto"><span>I must say that it's nice to know that my talks will hopefully still be visible even when I am no longer around. But it's also nice to realise that when I watch my old videos on the economy from 10 years ago, I still agree with virtually everything I said. <br /></span></span></p><p><span class="style-scope yt-formatted-string" dir="auto"><span> </span></span></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-91780603730682625132022-10-21T17:08:00.000+02:002022-10-21T17:08:04.117+02:00Terabrain systems are coming - and could mean that many paid jobs will disappear. <p>I was mentioned in <a href="https://www.forbes.com/sites/calumchace/2022/10/19/superintelligence-may-be-closer-than-most-people-think-says-neuroscientist">a message on the Forbes news site</a> yesterday entitled <span style="font-size: small;"><span style="font-family: inherit;">"</span></span><span style="font-size: small;"><span style="font-family: inherit;">Superintelligence May Be Closer Than Most People Think, Says Neuroscientist". It was posted by Calum Chace as a way to draw attention to some ideas I have been proposing recently. <br /></span></span></p><p>Following on from my recent Youtube video on "AI, Technological Unemployment and Universal Basic Income", I was invited by Calum Chace and David Wood to do a podcast in their series called "<a href="https://www.lifespan.io/organizations/london-futurists/">London Futurists"</a>.</p><p>The podcast can be found on <a href="https://podcasts.apple.com/gb/podcast/the-terabrain-is-near-with-simon-thorpe/id1642832645?i=1000583111843">Apple Podcasts</a>, <a href="https://open.spotify.com/episode/5ziKfAOS6WaDxgQ9IhDJ4m?si=6093bc4eaeb64af1">Spotify</a>. and on the <a href="https://londonfuturists.buzzsprout.com/">London Futurist's site</a>.<br /></p><p data-test-bidi="" dir="ltr">In it, I talk about the question of why human brains consume much less
power than artificial neural networks. And I explain my view that the key to artificial general
intelligence is a "terabrain" that copies from human brains the
sparse-firing networks with spiking neurons.</p><p data-test-bidi="" dir="ltr"> The timeline of the podcast, which lasts 30 minutes, gives an overview of some of the points I make</p><ul style="text-align: left;"><li>00.11 Recapping "the AI paradox"</li><li>00.28 The nervousness of CTOs regarding AI</li><li>00.43 Introducing Simon</li><li>01.43 45 years since Oxford, working out how the brain does amazing things</li><li>02.45 Brain visual perception as feed-forward vs. feedback</li><li>03.40 The ideas behind the system that performed so well in the 2012 ImageNet challenge</li><li>04.20 The role of prompts to alter perception</li><li>05.30 Drawbacks of human perceptual expectations</li><li>06.05 The video of a gorilla on the basketball court</li><li>06.50 Conjuring tricks and distractions</li><li>07.10 Energy consumption: human neurons vs. artificial neurons</li><li>07.26 The standard model would need 500 petaflops</li><li>08.40 Exaflop computing has just arrived</li><li>08.50 30 MW vs. 20 W (less than a lightbulb)</li><li>09.34 Companies working on low-power computing systems</li><li>09.48 Power requirements for edge computing</li><li>10.10 The need for 86,000 neuromorphic chips?</li><li>10.25 Dense activation of neurons vs. sparse activation</li><li>10.58 Real brains are event driven</li><li>11.16 Real neurons send spikes not floating point numbers</li><li>11.55 SpikeNET by Arnaud Delorme</li><li>12.50 Why are sparse networks studied so little?</li><li>14.40 A recent debate with Yann LeCun of Facebook and Bill Dally of Nvidia</li><li>15.40 One spike can contain many bits of information</li><li>16.24 Revisiting an experiment with eels from 1927 (Lord Edgar Adrian)</li><li>17.06 Biology just needs one spike</li><li>17.50 Chips moved from floating point to fixed point</li><li>19.25 Other mentions of sparse systems - MoE (Mixture of Experts)</li><li>19.50 Sparse systems are easier to interpret</li><li>20.30 Advocacy for "grandmother cells"</li><li>21.23 Chicks that imprinted on yellow boots</li><li>22.35 A semantic web in the 1960s</li><li>22.50 The Mozart cell</li><li>23.02 An expert system implemented in a neural network with spiking neurons</li><li>23.14 Power consumption reduced by a factor of one million</li><li>23.40 Experimental progress</li><li>23.53 Dedicated silicon: Spikenet Technology, acquired by BrainChip</li><li>24.18 The Terabrain Project, using standard off-the-shelf hardware</li><li>24.40 Impressive recent simulations on GPUs and on a MacBook Pro</li><li>26.26 A homegrown learning rule</li><li>26.44 Experiments with "frozen noise"</li><li>27.28 Anticipating emulating an entire human brain on a Mac Studio M1 Ultra</li><li>28.25 The likely impact of these ideas</li><li>29.00 This software will be given away</li><li>29.17 Anticipating "local learning" without the results being sent to Big Tech</li><li>30.40 GPT-3 could run on your phone next year</li><li>31.12 Our interview next year might be, not with Simon, but with his Terabrain</li><li>31.22 Our phones know us better than our spouses do</li></ul><p>The main point overlaps with the first part of my YouTube presentation, in that I argue that although the current generation of deep learning based AI systems are too power hungry to compete directly with a human brain, which uses a mere 20 W, there is a strong chance that within a few years, it will be possible to simulate neural networks with more neurons than the human neocortex using off-the-shelf hardware. The trick is to networks of spiking neurons with extremely sparse firing patterns.</p><p>Although I don't talk about it in the Podcast, I think that such systems could mean that many paid jobs will disappear. Fortunately, there's a solution. It's called Universal Basic Income!</p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-1204905125303699972022-10-17T18:44:00.001+02:002022-10-17T18:44:10.812+02:00AI, Technological Unemployment and Universal Basic Income<p>I have been involved in a training course on the Economic Singularity that finished last week. There were 10 one-hour presentations by a set of 6 speakers, including myself. <a href="https://economicsingularity.eduweave.com/">https://economicsingularity.eduweave.com/</a></p><p>My presentation was on AI, Technological Unemployment and Universal Basic Income. It was a good excuse to talk about two of my passions. The first concerns my research over the past 45 years (yes, I started my doctorate in Oxford in October 1977) that has tried to understand the mysteries of how our brains process sensory information and store memories, and attempted to use ideas from studying the brain to develop artificial systems. </p><p>The second passion is my interest in the economy that started at the same time as this blog in October 2010. </p><p>Following the presentation, and after taking into account some of the feedback I got from the "students", I updated and expanded the original 1-hour presentation, and the result is a 75-minute-long talk that I have uploaded to YouTube. You can find the presentation <a href="https://youtu.be/CPre-wvF6XM">here</a>. </p><p class="reader-text-block__paragraph">
The talk has three parts.
</p>
<p class="reader-text-block__paragraph">
In Part 1, I discuss why humans will not be able to compete with AI,
why many paid jobs are going to disappear, and why this could be a
disaster unless we act quickly. I argue this position on the basis of my
own work into biological vision, which demonstrates that our biological
hardware is simply too slow and limited to compete with advancing
computer technology. I mention my current projects that aim to implement
neural networks with billions and even trillions of spiking neurons
using off-the-shelf hardware such as NVIDIA GPUs and computers with
Apple's M1 and M2 chips. Such devices could replace paid humans in a
wide range of situations.
</p>
<p class="reader-text-block__paragraph">
In Part 2, I propose that introducing a Universal Basic Income is
probably the best way to cope with the technological unemployment
resulting from advances in AI, robotics and automation. I discuss 4
different ways of financing a UBI : (1) Central Bank Money Creation, (2)
A radical reform of the tax and benefit system with an Unconditional
Basic Income coupled with a flat rate income tax, (3) a 0.1% financial
transactions tax, and (4) an annual 1% tax on all assets. The first two
could be used at the national or regional level, whereas the last two
could be used to provide a $100 a month Basic Income for everyone on
the planet.
</p>
<p class="reader-text-block__paragraph">
In Part 3, I describe another very radical proposal, the
introduction of IOU-based transaction system (IOUNet) that could allow
the economy to function without the need for conventional money. In the
end, I am personally convinced that there is a way forward that would
allow all humans to live rewarding lives, and live in peace with
technology. However, I believe that this will only be possible if we
make the right decisions now. I very much hope that the ideas presented
here could help stimulate a wide-ranging discussion on this vital and
pressing issue.
</p>
<p class="reader-text-block__paragraph">
There's a lot of stuff there, and watching the whole thing
requires some effort. But I very much look forward to getting feedback
from you - whether positive or negative. I will no doubt be doing an
update of the presentation, as well as a version in French, so do let me
know what you think.
</p><p></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-90811261729227361202022-10-17T18:10:00.002+02:002022-10-17T18:10:40.046+02:00My entire blog in pdf form - updated. <p> </p><div class="reader-article-content reader-article-content--content-blocks" dir="ltr">I've been very quiet in the last year - with only one post so far for 2022. Not very impressive. Sorry about that. <br /></div><div class="reader-article-content reader-article-content--content-blocks" dir="ltr"> </div><div class="reader-article-content reader-article-content--content-blocks" dir="ltr">But I've been busy recently</div><div class="reader-article-content reader-article-content--content-blocks" dir="ltr"> </div><div class="reader-article-content reader-article-content--content-blocks" dir="ltr">Firstly, I've updated the pdf file of my entire blog which now extends to an impressive 935 pages. You can download it <a href="https://mycore.core-cloud.net/index.php/s/s5ska57vnJwqks4">here</a> if you are feeling courageous. Actually, if you are interested in the content of my blog, I would recommend that you use the pdf version, which is much easier to navigate. </div><div class="reader-article-content reader-article-content--content-blocks" dir="ltr"> </div><div class="reader-article-content reader-article-content--content-blocks" dir="ltr">There's a list of contents at the beginning, where you can find all the posts in chronological order. One rather depressing fact is that quite a few of the hyperlinks no longer work. The original sites have disappeared. But there's not much I can do about that. <br /></div><div class="reader-article-content reader-article-content--content-blocks" dir="ltr"><br /></div><br />Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-72994354576534821922022-04-27T14:57:00.002+02:002022-04-27T14:57:39.973+02:00Eurozone Government Debt in 2021 goes over €11.7 trillion - up 5.6%<div style="text-align: left;"><span style="font-family: inherit;">On the 22nd April, the Eurostat updated their data concerning Government Debt in the European Union and the Eurozone. You can find the full data wet <a href="https://ec.europa.eu/eurostat/databrowser/view/SDG_17_40__custom_2592129/default/table?lang=en">here</a>. But, as usual, I have compiled the data in a Google Sheet that you can find <a href="https://docs.google.com/spreadsheets/d/14G39215eJgbr8SdJ8ouePbKIdgsMKgfJv633LjW_kBo/edit?usp=sharing">her</a>e.</span></div><div style="text-align: left;"><span style="font-family: inherit;"><span style="font-size: small;"> </span></span></div><div style="text-align: left;"><span style="font-family: inherit;"><span style="font-size: small;">If you include all 27 EU countries, the total comes to €<span data-sheets-userformat="{"2":12799,"3":{"1":2,"2":"#,##0.##########","3":1},"4":{"1":2,"2":16185078},"5":{"1":[{"1":2,"2":0,"5":{"1":0}},{"1":0,"2":0,"3":3},{"1":1,"2":0,"4":1}]},"6":{"1":[{"1":2,"2":0,"5":{"1":0}},{"1":0,"2":0,"3":3},{"1":1,"2":0,"4":1}]},"7":{"1":[{"1":2,"2":0,"5":{"1":0}},{"1":0,"2":0,"3":3},{"1":1,"2":0,"4":1}]},"8":{"1":[{"1":2,"2":0,"5":{"1":0}},{"1":0,"2":0,"3":3},{"1":1,"2":0,"4":1}]},"9":2,"10":1,"11":2,"15":"Arial","16":9}" data-sheets-value="{"1":3,"3":12740563.4}" style="font-style: normal; font-weight: normal; text-align: right;">12,740,563,400,000 - also up 5.6% on 2020.</span></span></span><style type="text/css"><span style="font-family: inherit;">td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}</span></style></div><p><span style="font-family: inherit;">The increase in debt levels varied a lot between countries, with three countries actually managing to decrease their debt levels a bit - Denmark (-6.4%), Cyprus (-2.4%) and Sweden (-2.3%). But other countries increased debt levels much more than the average. Czechia's debt went up 26%, and for several others the increase was double digit including Bulgaria (12.4%, Latvia (15.6%), Luxembourg (12.4%), Malta (18.7%), Romania (13.6%) and Slovakia (11.4%).</span></p><p><span style="font-family: inherit;">The other fascinating information provided by Eurostat concerns the amount paid in Interest on Government debt. It totaled over €198 billion for the European Union, with a few countries being particularly generous. French taxpayers handed over €34.5 billion, and those in Germany also contributed nearly €21 billion. But the most generous were Italian taxpayers, who paid out over €62.8 billion.</span></p><p><span style="font-family: inherit;">It's particularly impressive when you calculate the total amount of interest payments made since the Eurostat dataset started in 1995. For the 19 Eurozone countries, that total has now reached over €6.64 trillion, which constitutes over 87% of the increase in public sector debt over the same period. </span></p><p><span style="font-family: inherit;">Have our governments been spending too much? Yes, sure. They have been spending far too much of our taxes paying the entities who lend our governments the money they keep borrowing. Spoiler alert. The banks that lend money to our governments don't actually have the money they lend us. They just create it out of thin air, and then sit back and let the interest payments come in. </span></p><p><span style="font-family: inherit;">I suppose that you might argue that since interests rates are low at the moment, we are getting a good deal. It's true that Eurozone interest payments have dropped a bit over recent years, as you can see from this graph. <br /></span></p><p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixc2k6iMpPKFsaZ90llMp5yQ4CAKkh6XpgNz_Fg6iijOXnZb0QYoEw7TfTU72OL7N9W0p_QV42r3A29S9GTvp-H1Rdcr6ybhfLet0J0V1tnb92AjGZa43MSZqYUCvpyhL4cRDe1IALeanDvZaCddKAMHXHabanAsqESBZ_I8-Z9l1u6mGhmTy5t26q4g/s1556/Screenshot%202022-04-27%20at%2014.54.20.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="958" data-original-width="1556" height="394" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixc2k6iMpPKFsaZ90llMp5yQ4CAKkh6XpgNz_Fg6iijOXnZb0QYoEw7TfTU72OL7N9W0p_QV42r3A29S9GTvp-H1Rdcr6ybhfLet0J0V1tnb92AjGZa43MSZqYUCvpyhL4cRDe1IALeanDvZaCddKAMHXHabanAsqESBZ_I8-Z9l1u6mGhmTy5t26q4g/w640-h394/Screenshot%202022-04-27%20at%2014.54.20.png" width="640" /></a></div>But €179 billion is not to be sniffed at. I suspect that there may be better things to do with that money. <p></p><p>I really think that fixing this system should be a very high priority. <br /></p><p> </p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-58131672666899602572021-12-14T11:54:00.001+01:002021-12-14T11:54:07.946+01:00Global Financial Transactions in 2020 - nearly $15 quadrillion<p>The Bank for International Settlements published its most recent data set for Payments and Financial Infrastructures on the 7th December 2021. It includes data for 2020 for 27 countries and zones. You can check out the figures yourself <a href="https://stats.bis.org/statx/toc/CPMI.html">here</a>. But, as usual, I have compiled the data myself to get the overall figures for financial transactions, and you can see my calculations in a public google sheet <a href="https://docs.google.com/spreadsheets/d/1HsQVS25icTA0FrE9YTgj6xfROz-nKgKlGExPd03HVKM/edit?usp=sharing">here</a>. </p><p>The bottom line can be seen in the following graph that shows annual transaction values for the period 2012 to 2020. In 2020, the total comes to $14,937,746,000,000,000 - which is nearly $15 quadrillion - up over 6% on the previous year. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEi2d5aqp-tpza74HDcn8CaRniVuLMVaWKBD0vQb7_5qwHapWh6NNqtA5J3LtmWutp6RmK3qa9_iXMS1Sv_EI2OtspV82xj-RgVXvO5cKrkm_hTZys1e8AYYphWTCSV3XTubELOYPUsux5k5tO2reypjdNpl9QR-IKtKo2omFC_b59Ta0C4-WohPJGzxeA=s2722" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1636" data-original-width="2722" height="384" src="https://blogger.googleusercontent.com/img/a/AVvXsEi2d5aqp-tpza74HDcn8CaRniVuLMVaWKBD0vQb7_5qwHapWh6NNqtA5J3LtmWutp6RmK3qa9_iXMS1Sv_EI2OtspV82xj-RgVXvO5cKrkm_hTZys1e8AYYphWTCSV3XTubELOYPUsux5k5tO2reypjdNpl9QR-IKtKo2omFC_b59Ta0C4-WohPJGzxeA=w640-h384" width="640" /></a></div><p>I have also broken down the total by country, as shown in the following table. </p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEhfTqTCRBbNZmh7gDX-nMh_-b1-K989vtju8mf8odxEaa5UM5QvLFStTU4zfHc936vRINF1W2DAhSz098uZdCvtUU4QsNEqx3UFZ9ICelBbspNBrdQCML0VNS5IiRSzNwK_E1POKGRMIwooFzQKahrIAu0pjgD_ohn-vy0niA-efMlFc7RTLyv0MlqODg=s2002" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2002" data-original-width="802" height="640" src="https://blogger.googleusercontent.com/img/a/AVvXsEhfTqTCRBbNZmh7gDX-nMh_-b1-K989vtju8mf8odxEaa5UM5QvLFStTU4zfHc936vRINF1W2DAhSz098uZdCvtUU4QsNEqx3UFZ9ICelBbspNBrdQCML0VNS5IiRSzNwK_E1POKGRMIwooFzQKahrIAu0pjgD_ohn-vy0niA-efMlFc7RTLyv0MlqODg=w256-h640" width="256" /></a></div><br /><p></p><p>You can see that over a quarter of the total occured in the US, with the UK coming in second with around 13%, and China third with over 12%. The CLS group, which seems to avoid being localised anywhere in particular, accounted for over 10%.</p><p>In fact, the bulk of the total involves a relatively small number of players. The following table provides the details for 32 actors that each handled over $100 trillion in 2020.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEglSmokwksWYet6JDaOHsHhonpmwmtGERPICDdHUxINsUyh-d0dppIUgvByCaTlGCkbJ6nEsR0N0Btm3iP7kUPaDvc2aDpsg99TDbBdo4Zo-Ub1SQNosIASbWGK3UVV8bmib7f5Uq6DIBrwxZkqkigDunG8re3gidFuhWlecIR-62GzC-W6kMylvSMjjQ=s2182" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2182" data-original-width="1370" height="640" src="https://blogger.googleusercontent.com/img/a/AVvXsEglSmokwksWYet6JDaOHsHhonpmwmtGERPICDdHUxINsUyh-d0dppIUgvByCaTlGCkbJ6nEsR0N0Btm3iP7kUPaDvc2aDpsg99TDbBdo4Zo-Ub1SQNosIASbWGK3UVV8bmib7f5Uq6DIBrwxZkqkigDunG8re3gidFuhWlecIR-62GzC-W6kMylvSMjjQ=w402-h640" width="402" /></a></div><p></p><p>For me, this concentration means that, if ever there was a political will to use a financial transaction tax to raise the funds needed to do important things like saving the planet, it would be relatively simple to tap a substantial slice of the activity. Those 32 players account for 86% of the total.<br /></p><p>Of course, as I have been pointing out every year when I have been compiling the BIS figures, the numbers provided here only cover a selective subset of the total. As the BIS site notes, <a href="https://stats.bis.org/statx/srs/table/PS3">Table </a><span class="tbl-title"><a href="https://stats.bis.org/statx/srs/table/PS3">PS3</a> provides information about "Payments processed by <b>selected </b>payment system</span>", <a href="https://stats.bis.org/statx/srs/table/CCP3">Table </a><span class="tbl-title"><a href="https://stats.bis.org/statx/srs/table/CCP3">CCP3</a> provides information about "Transactions cleared by <b>selected</b> central counterparties and clearing houses" and </span><span class="tbl-title"><a href="https://stats.bis.org/statx/srs/table/CSD3">Table CSD3</a> provides information about "Transactions processed by <b>selected</b> central securities depositories". There is no explanation about how these selections have been made. And there are some major omissions. One of the most glaring omissions is the Options Clearing Corporation - which describes itself as the <a href="https://www.theocc.com/Company-Information/What-Is-OCC">"world's largest </a></span><a href="https://www.theocc.com/Company-Information/What-Is-OCC">equity derivatives clearing organization"</a>. <span style="font-size: small;"><span style="font-family: inherit;">In 2020, it handled a staggering </span></span><style type="text/css"><font size="3"><span style="font-family: inherit;">td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}</span></font></style><span style="font-size: small;"><span style="font-family: inherit;"><span data-sheets-userformat="{"2":513,"3":{"1":2,"2":"#,##0","3":1},"12":0}" data-sheets-value="{"1":3,"3":7525503088}" style="font-style: normal; text-align: right;"><a href="https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Historical-Volume-Statistics">7,525,503,088 trades in equity, non-equity, and stock loans</a> - up over 50% on 2019. And already in 2021 they have handled over 9 billion trades - so it is going to be an even bigger year. Unfortunately, I have been unable to find any numbers concerning the value of these transactions. </span></span></span></p><p><span style="font-size: small;"><span style="font-family: inherit;"><span data-sheets-userformat="{"2":513,"3":{"1":2,"2":"#,##0","3":1},"12":0}" data-sheets-value="{"1":3,"3":7525503088}" style="font-style: normal; text-align: right;">When will BIS include OCC's data in their figures? How many other major players don't get included for obscure, probably historical reasons? Is $15 quadrillion just the tip of an iceberg? <br /></span></span></span></p><p><span style="font-size: small;"><span style="font-family: inherit;"><span data-sheets-userformat="{"2":513,"3":{"1":2,"2":"#,##0","3":1},"12":0}" data-sheets-value="{"1":3,"3":7525503088}" style="font-style: normal; text-align: right;">Whatever the real figures, there can be little doubt that with $15 quadrillion a year in transactions, there is plenty of scope for raising money via a financial transaction tax if there is the political will. The other very interesting use for a tiny transaction tax would be to allow Central Banks such as the ECB, the Bank of England and the Fed to remove excess money from the system. This would be the perfect solution to allow central banks to inject newly created money directly into the economy without the fear of inflation. As I have argued, a minuscule FTT could be used to automatically remove excess liquidity in the system.</span></span></span></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-46835508648293631482021-11-05T16:01:00.006+01:002021-11-05T16:10:28.435+01:00COP26 - Proposition #3 - A global Personal Carbon Allowance (PCA)<p>The idea of a Personal Carbon Allowance or PCA is not new. In the 2000s, t<a href="https://www.theguardian.com/politics/2006/dec/11/uk.greenpolitics">he British government was already exploring the idea</a>, with the idea of issuing a sort of carbon "credit card" - to be swiped every time they bought petrol, paid an energy bill, or booked an airline ticket. A related suggestion, applied to industries, is the <a href="https://www.edf.org/climate/how-cap-and-trade-works">"Cap and Trade" scheme</a> in which companies have the right to generate a fixed amount of CO2 or other pollutants - the cap. The trade part is a market where those companies can buy and sell allowances. Such schemes are already operating in many countries. For example, the EU has been running its Emissions Trading System <a href="https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/development-eu-ets-2005-2020_en">since 2005</a>. But other schemes have been developed in China, Australia, Canada and some states in the US such as California. The World Bank has <a href="https://carbonpricingdashboard.worldbank.org/map_data">a site</a> that lists dozens of schemes as well as other schemes using Carbon Taxes. </p><p>So, could a similar approach be used at the level of individual citizens? Back in the 2000s, the UK government concluded that there would be too much resistance and <a href="https://www.theguardian.com/sustainable-business/personal-carbon-allowances-budgets">dropped the idea</a>. However, with the COP26, an increasing number of people are thinking about the idea again. In part this has been triggered by the publication of a research paper in Nature Sustainability in August 2021 entitled "<a href="https://www.nature.com/articles/s41893-021-00756-w">Personal Carbon Allowances Revisted</a>". And it got a further boost when Polly Toynbee published an opinion piece this week in the Guardian called "<a href="https://www.theguardian.com/commentisfree/2021/nov/02/radical-policies-net-zero-personal-carbon-allowances">We need radical policies to reach net zero. Here's a fairer way to do them</a>". In the Guardian this morning, there was an article on the fact that "<a href="https://www.theguardian.com/environment/2021/nov/05/carbon-top-1-percent-could-jeopardise-1point5c-global-heating-limit">Luxury Carbon Consumption of the top 1% threatens 1.5°C global heating limit</a>". To keep on track for the Paris Climate agreement, "every person has to reduce their CO2 emissions to about 2.3 tonnes a year by 2030 - roughly half the average of today". But, according to<a href="https://policy-practice.oxfam.org/resources/carbon-inequality-in-2030-per-capita-consumption-emissions-and-the-15c-goal-621305/"> an Oxfam Study</a> released today, the world's richest 1% are on track to releasing 70 tonnes each. They will account for 16% of total emissions by 2030, up from 13% in 1990. </p><p>For me, the solution could indeed be the introduction of a Personal Carbon Allowance, coupled with a trading system that meant that people who exceed their quota would need to buy allowances from those who are living within the budget. </p><p>While some people are talking about introducing such a scheme at the national level, it seems to me that it would be much more interesting to introduce the scheme at a truly global level - and the sooner the better. There might be some people in countries like the UK and France that were able to live lifestyles that enabled them to keep below the 2.3 tonne limit - and those people would effectively receive payments from those in the population who were less frugal and disciplined. </p><p>But the vast majority of the people living within the limit are in third world countries. The scheme would therefore be a way of providing direct support for those countries. Such a scheme would, in my opinion, be better than the current scheme where western governments provide limited amounts of direct aid because such aid is always at risk from political decisions, as was <a href="https://www.theguardian.com/uk-news/2021/oct/27/uk-foreign-aid-cuts-to-stay-for-another-three-years">recently the case in the UK</a>. The funds would go directly to those who are living within the limits of the planet - wherever they live. Indeed, the Oxfam report shows that the poorest 50% of the earth's citizens could increase their Carbon footprint by over 200% and still remain within the 2.3 tonne limit. </p><p>How would such a system affect people like me? Well, I was pleased to see that when I typed in the data for my energy usage on the "<span style="color: #0000ee;"><u><a href="https://www.myclimate.org/">myclimate.org</a></u></span>" website, I discovered that the Carbon footprint of our energy consumption is effectively zero - even when we include all the energy used for heating, lighting, cooking, transport etc etc. We got rid of our oil-fired central heating system last year and replaced it with a very efficient heat pump. We have also installed 26 solar panels, which currently allows us to export about 30% of our consumption to the grid - which means that we will be able to pay the installation costs in less than 10 years. And for the last 3 years, we have been getting 100% of our electricity from renewable sources - not including nuclear. We have replaced our diesel cars by two electric vehicles which means that essentially all our travel costs (at least for limited distances) can be done with a zero carbon cost. Of course, there is a carbon cost associated with buying solar panels, and electric vehicles, but at least these are one-off costs. And we haven't completely eliminated air travel - we still like to go on vacation! But the <a href="https://www.myclimate.org/">myclimate </a>website even allowed me to offset the carbon footprint associated with such trips. That effectively implements something close to the Personal Carbon Allowance mechanism, but on a voluntary basis. It's not perfect, but it does allow me to feel a little more comfortable about my occasional excesses. </p><p>There's still a lot more I could be doing, and I will be trying to do better - I promise! Eating less beef is a good one. Buying locally produced items is another. And buying second hand goods (clothes, furniture etc) is yet another. Having a Personal Carbon Allowance would be a perfect way to make such decisions much easier to make. Buy a brand new iPhone and you will get a massive hit. But purchase a second hand recycled one, and you would keep your full allowance. Easy.</p><p>So, I seriously think that this is something that should be high on the agenda at COP26. </p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-68536824323405364672021-11-02T12:43:00.001+01:002021-11-02T12:43:13.134+01:00COP26 - Proposition #2 - Decide how much funding is required and then propose universal FTT and Asset taxes to provide the finance<p>Saving the planet is going to require a lot of investment. <a href="https://www.globalgiving.org/learn/cost-to-end-climate-change/">Estimates vary a lot</a>, but <a href="https://www.forbes.com/sites/sergeiklebnikov/2019/10/24/stopping-global-warming-will-cost-50-trillion-morgan-stanley-report/?sh=58a97dc451e2">a report by Morgan Stanley in 2019</a> said that it would need around $50 trillion between now and 2050. And the UN's Gap Report in 2019 put the cost at between <a href="https://www.ecosystemmarketplace.com/articles/thanks-to-past-inertia-it-will-now-cost-between-1-6-and-3-8-trillion-per-year-to-fix-the-climate-mess/">$1.6 and $3.8 trillion a year</a> - which, over 30 years, would be an even larger amount. </p><p>It seems to me that a very high priority for the COP26 should be to come up with a figure that everyone can sign up to. But let's assume a minimum of €2 trillion a year to play safe. <br /></p><p>Once that has been done, there will be the inevitable question of who has to pay for it all. Poor countries will say that the rich countries should foot the bill. The rich countries will try and get other rich countries to pay more. And the result is that much valuable time will be wasted with haggling. This could easily cripple the ability of the meeting to reach agreement.<br /></p><p>How could this be avoided? For me, a simple solution would be to introduce new global taxes that are truly universal, and which are clearly ear-marked for solving the problem in hand. They would be implemented by a global authority, independently of national governments, and with the teeth needed to guarantee that everyone plays by the rules. </p><p> For some time, I have been proposing two such taxes that could be both used to generate the $2 trillion a year that we need. </p><p>The first would be a tiny Financial Transaction Tax that would be paid on all electronic transactions, wherever they occur on the planet. I've been following the Bank for International Settlements data for some time. In 2019, transactions totaled over $14 quadrillion ($14,077,730,000,000,000 to be more precise). How large a transaction tax would you need to generate $2 trillion a year? Answer - about 0.014%. </p><p>Of course, everyone would have to pay. When you receive your salary on your bank account every month, you would have to pay. But for someone on a median income of around €2000 a month, you would have to pay around 30 centimes. You would also have to pay again when you spent the money, or moved it to a savings account, or used it to pay off debt. So that would be another 30 cents. Would people object to paying less than a euro a month to save the planet for future generations? I doubt it. </p><p>So, why aren't we doing it? Well, there are some very powerful people who consider that their ability to do trillions of dollars in transactions every day is somehow vital for the stability of the financial system. <a href="https://simonthorpesideas.blogspot.com/2016/10/bis-triennial-report-on-foreign-echange.html">In 2016, traders were doing an average of $5.1 trillion a day on the foreign exchange markets</a>, Why? Because they can make a profit doing it. It's possible that if a UN based global authority slapped a 0.014% charge on such transactions, they might do it a bit less - they would not be able to take home such a large bonus at the end of the year. But they would be able to look at themselves in the mirror and say that their speculative activity was doing a bit to help save the planet. </p><p>My second suggestion would be to finance the $2 trillion a year using a universal asset tax on all assets - wherever they are held, and irrespective of who owned those assets. It would not matter whether the assets belonged to a government, a company, a bank, a trust, or an individual. Every asset would be taxed, including land, buildings, yachts, jewelry, as well as any kind of financial assets including money and shares. There would be no incentive to shift from one sort of asset to another, because the tax would need to be paid anyway. Nor would it matter where those assets were held. Using a tax-haven would make no difference because the tax would be due every year anyway. Anyone involved in trying to hide assets to avoid paying the tax would be sent to prison. </p><p>How much would the annual asset tax have to be to generate the $2 trillion needed to save the planet? In 2020, I was suggesting that you might fix the tax rate at 1% per annum. But that number was partly justified by the idea that it would mean that someone living for 100 years, would still have a substantial amount left - removing 1% per year, for 100 years, leaves you with 36.6% of what you started with. But that's assuming that the value of the asset didn't increase. Given that global property values have been increasing by about 8% per year recently, I don't think we have to worry too much about those with assets, even with a 1% tax. </p><p>But in fact, 1% is probably way more than would be needed to generate $2 trillion. The property specialist Savill's recently published a report on total value of real estate in the world which "<span style="font-weight: 400;">reached $326.5 trillion in 2020, a 5% increase on 2019 levels and a record high. G</span><span style="font-weight: 400;"><span style="font-weight: 400;">rowth was driven by residential which is
by far the largest real estate sector, accounting for 79% of all global
real estate value. It saw its value increase by 8% over the year, to
some $258.5 trillion</span>".</span></p><p><span style="font-weight: 400;">They have a fascinating graph showing that real estate is more valuable than global equities ($109.2 trillion) and Debt securities ($123.5 trillion) combined, and almost 4 times global GDP. </span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-m_jotgzB6JQ/YYEYSHKlOjI/AAAAAAAADeY/DHAqsQol4sQfwnEkhxBiaSJGToPeLVN7QCNcBGAsYHQ/s1486/Screenshot%2B2021-11-02%2Bat%2B11.47.09.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1018" data-original-width="1486" height="438" src="https://1.bp.blogspot.com/-m_jotgzB6JQ/YYEYSHKlOjI/AAAAAAAADeY/DHAqsQol4sQfwnEkhxBiaSJGToPeLVN7QCNcBGAsYHQ/w640-h438/Screenshot%2B2021-11-02%2Bat%2B11.47.09.png" width="640" /></a></div><br />Adding up just real estate, debt securities, equity and gold produces a total of $571.3 trillion. You would not need to tax that at 1% to save the world - 0.35% would be enough. If you own a house or apartment worth €250,000, would you think that it would be excessive to pay €875 a year to save the planet? Of course, if you have a loan, you would only need to pay the tax on the part that you already own - the rest would have to be paid by the bank that lent you the money. <p></p><p><span style="font-weight: 400;">But the figures provided by Savill's only covers a part of all the assets that could be taxed. If you own a yacht, or an aircraft, or a Picasso, or jewelry - you could simply be required to pay some proportion of its value per year. </span></p><p><span style="font-weight: 400;">Here, I am forced to guess, because I haven't been able to find the value of all insured goods. But, I suspect that total asset value could be closer to $1 quadrillion, which would shift the rate required to raise the necessary $2 trillion to 0.2%. </span></p><p><span style="font-weight: 400;">Finally, remember that my suggestion is that the authority could combine the two taxes. Splitting the tax take between the two would allow the FTT to be reduced to 0.007% and the asset tax to 0.1%. </span></p><p><span style="font-weight: 400;">Is that too much to pay to save the planet? I don't think so....</span></p><p><span style="font-weight: 400;">One big advantage of my proposal is that by fixing the amount needed at some value - here I have chosen $2 trillion a year - and announcing that the tax rates for the FTT and asset tax will be fixed to provide just the amount needed and not more, everyone who is required to pay will know precisely where their money is going. And, in addition, there will be massive pressure on the cheats to play by the rules. Since everyone except the cheats is contributing (according to their means), it is in the interests of everyone to find anyone who is trying to get round the rules and report them. The people who currently use tax-dodges and tax-havens to hide their money will hopefully soon abide by the same rules as the rest of the population. </span></p><p><span style="font-weight: 400;">Will it work? Well, the first step is to convince people at the COP26 meeting that this is the right way to go. <span></span><br /></span></p><p><span style="font-weight: 400;"><br /></span></p><p><span style="font-weight: 400;"><br /></span></p><p> <br /></p><p><br /></p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-59273436788884632332021-11-01T10:20:00.007+01:002023-11-28T08:40:09.775+01:00COP26 - Proposition #1 - Ban all cryptocurrencies<p>I've been very quiet for several months. But with <a href="https://ukcop26.org/">the COP26</a> starting this morning, and the prospects for real progress looking very bleak, I am spurred into action. I am very pessimistic about the chances of getting political leaders to make the right decisions on a country by country basis. Politicians are often only worried about getting re-elected in the short term - and making decisions that require their voters to accept constraints tends to be unpopular. I believe that we need to make decisions at the global scale. For this, the best thing would be for world leaders to accept the need to create a global authority with responsibility for saving our planet from disaster - and with the teeth needed to make the necessary changes. This will not be easy - especially in a world where Trumpist slogans like "America first" are rife. But, it is our only hope. </p><p>What sort of actions could this newly created authority take? Well here's one. Ban all crytocurrencies - with BitCoin at the top of the list. </p><p>The <a href="https://coinmarketcap.com/all/views/all/">CoinMarketCap</a> website gives an up-to-date list of all traded cryptocurrencies - there are currently 13,390. When <a href="https://simonthorpesideas.blogspot.com/2015/05/a-solution-for-greece-government-backed.html">I looked at the question in 2015</a> - there were only 740 of them. How things have changed! </p><p>Today, the site shows that the <a href="https://coinmarketcap.com/charts/">Market Capitalization of those cryptocurrencies</a> has now reached a staggering $2.6 trillion ($2,652,238,051,844 to be precise) - up from a mere $5 billion in November 2015, and up 1000% since the start of 2020. Trading in 24h totaled $155 billion last Friday. </p><p>Bitcoin alone has a market capitalization of over $1.17 trillion, with the second runner - Etherium - coming in at over $510 billion. <br /></p><p>But my problem with Cryptocurrencies is not their monetary value. It's the fact that their usage is destroying the planet by using unbelievable amounts of energy and resources. </p><p>According to the <a href="https://cbeci.org/index">Cambridge Bitcoin Electricity Consumption Index</a> Bitcoin mining is currently using an estimated 13 Gigawatts of power, which on an annual basis means an estimated 113.93 TeraWatt hours (TWh) of energy. </p><p>Another <a href="https://digiconomist.net/bitcoin-energy-consumption/">site</a> gives the annual figure at 184.59 TWh, comparable to the power consumption of a country like Thailand. It's the equivalent of 87.68 Million tons of CO2, the equivalent of the carbon footprint of Chile. </p><p>But even more mind-blowing are the figures for the energetic costs of a single Bitcoin Transaction - 872 Kg of CO2 and over 1800 kWh of energy. Think about this before you ever decide to buy something with Bitcoin. <br /></p><p>In addition to wasting vast amounts of energy, Bitcoin mining also requires the use of huge numbers of very expensive GPU server farms - as anyone trying to get hold of GPU knows. There was already a shortage of chips because of COVID - but <a href="https://unfspinnaker.com/93872/features/the-great-gpu-shortage-the-battle-between-gamers-crypto-miners-and-scalpers/">this has only been made worse by the fact that vast amounts of computing hardware is being bought up for cryptocurrency mining</a>. The reason is simple - you can make money that way. Sod the planet - if I can make money wasting massive amounts of resources, then so be it. </p><p>Some may argue that people use cryptocurrencies like Bitcoin to avoid having to use the commercial banking system, with its 2-4% merchant fees and international transaction taxes on card-based payments. I have some sympathy for this. But the simple fact is that the people use Bitcoin (and the thousands of other cryptocurrencies) for one of two reasons - to make money by speculation, or t<a href="https://insightcrime.org/news/digital-gold-rush-how-bitcoin-helps-organized-crime/">o hide transactions that could well be related to illegal activities like drug trafficking</a>. </p><p>So, if the world leaders meeting in Glasgow wanted to do just one thing that would really have an impact, I would say that a global ban on all cryptocurrencies should be close to the top of the list. Of course, there will be a lot of resistance - particular from the people that currently have a lot of bitcoins. But we will all need to make sacrifices if we are to have a hope of having a planet compatible with human life in the coming decades. Reducing the wealth of some of the people that have made fortunes from speculation is fine with me. </p><p>As I said, I have some sympathy with those who seek an alternative to the current system, where the vast majority of the money we use is produced as interest-bearing debt by commercial banks. But that alternative doesn't have to be cryptocurrencies like Bitcoin. See my next post for some suggestions for a real alternative. <br /></p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-39724281951349057592021-05-02T10:16:00.001+02:002021-05-02T10:16:23.360+02:00EU Government debt goes over €12 trillion with €192 billion in interest payments for 2020<p>I've been very quiet recently - sorry about that. But I'm still keeping an eye on events. One important annual event that I have been monitoring every year for the last decade is the moment when the European Commission publishes the official figures for government debt and interest payments in April.</p><p>You can find the basic data using <a href="https://ec.europa.eu/eurostat/databrowser/view/sdg_17_40/default/table?lang=en" target="_blank">Eurostat's Data Browser</a> but I have collected the critical information in a Google Sheet that you can find <a href="https://docs.google.com/spreadsheets/d/14G39215eJgbr8SdJ8ouePbKIdgsMKgfJv633LjW_kBo/edit?usp=sharing">here</a>. Sadly, for the first year, the Eurostat figures no longer include the UK - no longer a member of the European Union. Sniff.....<br /></p><p>The bottom line is that Government debt for the 27 countries that make up the European Union at the end of 2020 went over €12 trillion - €12,078,212,200,000 to be precise. That's an increase of 11.44% in just 12 months. </p><p>For the 19 countries in the Eurozone, the total is now well over €11 trillion - €11,107,740,800,000 - up 10.77% in a year. </p><p>The increases for individual countries varies. Greece's government debt only increased by 3%, and for Italy, the increase was 6.8%. For France, it was 11.4%, but even Germany increased the level of debt by an impressive 13%. The winner in that particular competition was Estonia, which more than doubled the level of debt (108% increase). </p><p></p><p>Obviously, we can blame COVID for much of this. Governments have been borrowing like crazy to cope with the impact of the pandemic. </p><p>And of course, the impact of that borrowing will be reflected in the levels of interest payments - the other fascinating story that you can learn from the Eurostat figures. We learn that taxpayers in the 27 European Union countries handed out a total of €191,646,600,000 in interest payments in 2020. If we only count the 19 Eurozone countries, the total comes to €172,706,500,000.</p><p></p><p>Now, you might say that this is no big deal. Indeed, the low interest rates that are in part the result of the ECB's policy of buying up government debt on the secondary markets mean that the amount of interest paid actually dropped by around 11% relatively to 2019. I suppose that is good news. <br /></p><p></p><p>But I think that we should not forget that under the current system, the increase in debt will need to be paid off at some point. And, in the future, there is nothing that can stop the markets from increasing the cost of government borrowing as soon as they can - it's very easy money. Just lend to a government, and sit back and let the taxpayers pay you. No risk - because governments can always tax their citizens to pay the money they owe. <br /></p><p></p><p>You should also not forget that these massive interest payments have been going on every year for decades - and they are quite unnecessary. </p><p></p><p>For example, if you look at the figures for the Eurozone for the entire period from 1995, you will see that that total amount paid out by Eurozone citizens has now reached €6,763,744,100,000. Divide that by the population of the Eurozone, and you can see that every man, woman and child in the region has paid an average of nearly €20,000 in interest payments over the period. For Italians, the number is even higher - €32,657 to be precise. </p><p>People who have read my blog before may well be aware that I think that these payments are insane. It is a racket. tThe money that our governments borrow from "the markets" is, in large part, created out of thin air by commercial banks who have the virtual monopoly of money creation in the current system. While it is already insane that we allow those commercial banks to create money to loan to citizens and businesses, the insanity is even more obvious in the case where they can create money to lend to our governments. </p><p>Perhaps one positive impact of the current pandemic, and the fact that our governments have been forced to borrow trillions of euros to cope, is that it might finally put the spotlight on the way in which commercial banks create money in the current system. The insanity of allowing our governments to keep on borrowing from banks that don't have the money that they lend should hopefully start to become obvious to all. </p><p></p><p>The solution? Simple. We should end the current system where our governments are legally obliged to borrow from commercial banks who can create the money they lend. Instead, governments should be allowed to borrow directly from Central Banks. And those Central Banks should have the option of writing off debt<br /><br /></p><p><br /></p><p><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-19190526859460984282020-11-15T16:05:00.005+01:002020-11-15T18:39:56.033+01:00BIS Transaction Data - Country by Country analysis<p>If you look at <a href="https://stats.bis.org/statx/toc/CPMI.html">the Bank for Internationa</a><span><a href="https://stats.bis.org/statx/toc/CPMI.html">l Settlements statistical dataset</a>, you will see that you have a choice between a country by country analysis where the data is provided in National Country Units, or in comparative tables where all the numbers are converted to US dollars. You can see this distinction in this screen shot, which also shows when the data for 2019 became available. It was the 30th October. <br /></span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-YCObjAlOl_0/X7EHBCnq7iI/AAAAAAAADUs/YxVxswbwL-09REvyZ4VlQpHM7z4YDnUrQCNcBGAsYHQ/s1452/BIS%2Bwebsite.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="996" data-original-width="1452" height="440" src="https://1.bp.blogspot.com/-YCObjAlOl_0/X7EHBCnq7iI/AAAAAAAADUs/YxVxswbwL-09REvyZ4VlQpHM7z4YDnUrQCNcBGAsYHQ/w640-h440/BIS%2Bwebsite.png" width="640" /></a></div><span></span><p></p><p><span>The data that I have been analyzing in the past few days has used the comparative tables. But it is also interesting to look at the country tables for the 27 different areas included in the B.I.S.'s dataset. I've done this using a Google Sheet that you can find (and leave comments!) <a href="https://docs.google.com/spreadsheets/d/1sLKSq5ZYEfV1UFRNeieh_fm37QT1kYLVaJKbHqDz254/edit?usp=sharing">here</a>. Essentially, I needed to use information from 4 different tables for each country. Here is the full set of tables.</span></p><p><span></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-IgDChqMb4a4/X7EIQrglQZI/AAAAAAAADU4/O3Nnw4wZI9055KRexT50Fgo0CUKxPyI4gCNcBGAsYHQ/s1612/BIS%2BTables.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="784" data-original-width="1612" height="312" src="https://1.bp.blogspot.com/-IgDChqMb4a4/X7EIQrglQZI/AAAAAAAADU4/O3Nnw4wZI9055KRexT50Fgo0CUKxPyI4gCNcBGAsYHQ/w640-h312/BIS%2BTables.png" width="640" /></a></div><p></p><p><span>The ones that are useful for looking at transactions are the following</span></p><ul style="text-align: left;"><li><span>T6 <a>Value of cashless payments and </a></span><span class="tbl-title">withdrawal/deposit transactions</span></li><li><span class="tbl-title"><span class="tbl-title">T9: Value of transactions processed by selected payment systems</span></span></li><li><span class="tbl-title"><span class="tbl-title"><span class="tbl-title">T14: Value of contracts and trades cleared</span> </span></span></li><li><span class="tbl-title"><span class="tbl-title"><span class="tbl-title">T19: Value of delivery instructions processed</span> </span></span></li></ul><p><span class="tbl-title"><span class="tbl-title">I've compiled the key information in the following table which provides the numbers for each country for the 5 years from 2015-19 in National Currency Units such as Euros, Yen and Sterling. </span></span></p><p><span class="tbl-title"><span class="tbl-title"></span></span></p><div class="separator" style="clear: both; text-align: center;"><span class="tbl-title"><span class="tbl-title"><a href="https://1.bp.blogspot.com/-lk7uv0VIe1E/X7FnnMPPIjI/AAAAAAAADW0/ZrokK5HiA84HUwlVJ3ARwsOFKuTYamF5gCNcBGAsYHQ/s1608/BIS%2BTransaction%2BValues%2B2015-19%2B%2B%2528NCU%2529.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1566" data-original-width="1608" height="624" src="https://1.bp.blogspot.com/-lk7uv0VIe1E/X7FnnMPPIjI/AAAAAAAADW0/ZrokK5HiA84HUwlVJ3ARwsOFKuTYamF5gCNcBGAsYHQ/w640-h624/BIS%2BTransaction%2BValues%2B2015-19%2B%2B%2528NCU%2529.png" width="640" /></a></span></span></div><span class="tbl-title"><span class="tbl-title"></span></span><span class="tbl-title"><span class="tbl-title"><span class="tbl-title"><span class="tbl-title">One of the advantages of presenting the figures in National Currency Units is that it makes the numbers more directly relevant for people in a particular country. One of the more impressive sets of numbers are the values for transactions in the UK that have increased from £914 trillion in 2015 to over £1,651 trillion in 2019. </span></span></span></span><p></p><p></p><p><span class="tbl-title"><span class="tbl-title"><span class="tbl-title"><span class="tbl-title"> </span></span>I've checked that the numbers in the table are fairly close to the USD numbers that I reported recently (using the average exchange rate for converting the local currency into dollars for the year in question). But importantly, the total falls short of the USD value for the simple reason that none of the national figures includes the figures for CLS group. </span></span></p><p><span class="tbl-title"><span class="tbl-title">It's particularly unfortunately that the need to include major international players like CLS Group is not taken more seriously. I have frequently pointed out the anomaly of not including the Options Clearing Corporation. <br /></span></span></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-23095412599626419452020-11-14T17:59:00.001+01:002020-11-15T18:34:50.520+01:00Global Financial Transactions from 2012 to 2019 - nearly $97 quadrillion in 8 years. <p>I've been examining in more detail the data set provided by the Bank for International Settlements that provides information on the level of transactions for the period 2012-2019. Today, I'm giving you the breakdown by country for the whole period.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-j-CZ3Lfbe7Y/X7FmMaL79II/AAAAAAAADWo/54u_Pb68jPcr9XeyHWi7p1S7EgoWd6UZACNcBGAsYHQ/s1806/Transactions2012-2019-by%2BCountry-revised.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1548" data-original-width="1806" height="548" src="https://1.bp.blogspot.com/-j-CZ3Lfbe7Y/X7FmMaL79II/AAAAAAAADWo/54u_Pb68jPcr9XeyHWi7p1S7EgoWd6UZACNcBGAsYHQ/w640-h548/Transactions2012-2019-by%2BCountry-revised.png" width="640" /></a></div>I've generated an additional column with the total transactions for each country for the 8 years, and ordered them according to that total. Not surprisingly, the USA comes top of the list a total of $25.3 quadrillion. Next comes the UK, but its interesting to see that the numbers for the UK have increased a lot from a modest $467 trillion in 2012, to over $2.1 trillion in 2019. China has also climbed fast from $547 trillion in 2012 to over $1.52 quadrillion last year. Other countries have been more stable, but France has actually dropped back a bit from over $512 trillion to 2012 to a mere $354 trillion last year. <br /><p></p><p></p><p>The bottom line is that over the 8 year period, there were $96,790,943,000,000,000 of financial transactions ($97 quadrillion). </p><p>I suspect that some of the numbers may be double counted. For example, BIS gives the data for CLS Group on a separate line marked "Memo". It may be that some of the trading is actually also included in the US or the UK figures. They also mark the numbers for the "Euro area" with "Memo", suggesting that those numbers may be double counted with other Eurozone countries. But I'm doing my best, and the BIS doesn't seem to be clear about how the tables are compiled. <br /></p><p>If you want to try and analyse the BIS statistical data set yourself, you can find it <a href="https://stats.bis.org/statx/toc/CPMI.html">here</a>. But, I warn you, it's quite hard work! To find out how I compiled the dataset, I you can find my Google Sheet analysis <a href="https://docs.google.com/spreadsheets/d/1HsQVS25icTA0FrE9YTgj6xfROz-nKgKlGExPd03HVKM/edit?usp=sharing">here</a>. I've even made it so that you post comments on the sheet if you see anything that is unclear. <br /></p><p>It's really rather a shame that nobody was listening when, 10 years ago, I proposed that <a href="https://hal.archives-ouvertes.fr/hal-00530144/en/">we could replace essentially all existing taxes by a very modest financial transaction tax</a>. At a rate of 0.1% it could have generated getting on for $100 trillion in revenue. We could have fixed climate change, eliminated poverty and done all sorts of very desirable things. </p><p><span></span><span></span>Better late than never I suppose....<br /></p><p><span></span><span></span><br /></p>Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0tag:blogger.com,1999:blog-7530776363222965313.post-41141774368167268912020-11-11T16:48:00.001+01:002020-11-15T18:22:41.381+01:00Financial Transactions in 2019 - Country by Country<p>Given that the Bank for International Settlements provides a country by country breakdown of where the financial transactions, this allows me to produce the following table with the value of transactions in each country.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-wo5jOUMhwn8/X7FjscULo9I/AAAAAAAADWc/JJjds4peNgsqHiHtofAGXx47JvFSTHa3QCNcBGAsYHQ/s1516/Transactions2019-by%2BCountry-revised.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1516" data-original-width="622" height="640" src="https://1.bp.blogspot.com/-wo5jOUMhwn8/X7FjscULo9I/AAAAAAAADWc/JJjds4peNgsqHiHtofAGXx47JvFSTHa3QCNcBGAsYHQ/w262-h640/Transactions2019-by%2BCountry-revised.png" width="262" /></a></div>As you can see, the US is responsible for just over one quarter of all the transactions. Next comes the UK, then CLS group (which appears to be a truly global player), and then China and Japan. <p></p><p>But it is interesting to see that even some relatively small countries
like Belgium can be major players, with some $633 trillion in
transactions. <br /></p><p>The following table provides a detailed breakdown for the US, the UK, and four Eurozone countries (Belgium, France, Germany and Italy). Note that all the values are given in USD for ease of comparison. <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-elhLaxaZGek/X7FipYLSVkI/AAAAAAAADWQ/Sh_jC4xlG2k4_QutKsc_khQKaCgAoIS3gCNcBGAsYHQ/s2048/Transactions2019-by%2BSelectedCountry-revised.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1371" data-original-width="2048" height="428" src="https://1.bp.blogspot.com/-elhLaxaZGek/X7FipYLSVkI/AAAAAAAADWQ/Sh_jC4xlG2k4_QutKsc_khQKaCgAoIS3gCNcBGAsYHQ/w640-h428/Transactions2019-by%2BSelectedCountry-revised.png" width="640" /></a></div><br />Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.com0