Financial power, democratic corruption, micron associates

Financial power, democratic
corruption, micron associates
Financial power, democratic corruption and lies
It is good to see the IMF come round to the idea of a wealth tax as a way of
resolving the current crisis. We suggested this three years ago in these pages
(Let's be really in it together, 16 August 2010), and the IMF has now made a
similar calculation that a 10% levy could return European countries to precrisis
public debt/GDP ratios (The moral case for a one-off wealth tax is
compelling, 5 November).
But the issue is not simply moral. The problem policymakers have still not
faced is that the intense concentration of wealth at the top of society creates a
mobility of private capital seeking rapid profitable investment. This is often in
speculative activity, in commodities such as food, or as we are seeing once
again in the frenzy gripping housing markets. Such capital needs to be
recirculated into the economy in productive areas for social use but instead is
destabilising in its effects, whether in the disaster of financial derivatives, or in
producing the next housing crash.
The current bubble has of course been helped by the £130bn pumped in by the
chancellor in an attempt to create the appearance of sustainable growth. It
makes no economic sense, but politically it is attractive because over half the
population live in homes which they own, and the house has become a
touchstone of security where people are increasingly worried about pensions,
employment, education fees and health. So a rise in house prices keeps the
middle class temporarily happy, and partly explains why conservative
politicians and the political system retain a legitimacy, however grudging.