We are searching data for your request:
Upon completion, a link will appear to access the found materials.
By Eric Toussaint
The reduction of the public deficit should not be done by reducing public social expenditures, but by fighting against the great tax fraud and taxing more the capital, financial transactions, wealth and income of the richest. But further, this crisis must be considered as a possibility of breaking with the capitalist logic and carrying out a radical change in society.
The crisis shakes the European Union to the ground. For several countries, the noose of public debt is closing on them and they are suffocated by financial markets. With the active complicity of governments, the European Commission, the European Central Bank and the IMF, the financial institutions responsible for the crisis are getting rich and speculating on the debts of the states. The employers take advantage of the situation to launch a brutal offensive against a series of economic and social rights of the majority of the population.
The reduction of the public deficit should not be done by reducing public social expenditures, but by fighting against the great tax fraud and taxing more the capital, financial transactions, wealth and income of the richest. But further, this crisis must be considered as a possibility of breaking with the capitalist logic and carrying out a radical change in society. The new logic to be built must break with productivism, include the ecological question, eradicate the various forms of oppression [racial, patriarchal, etc.] and promote common goods.
For this, it is necessary to build an anti-crisis front, both at European level and locally, in order to pool energies to create a relationship of force favorable to the implementation of radical solutions focused on social and climate justice. Since August 2010, CADTM has made eight proposals regarding the current European crisis | 1 |. The central element is the need to proceed to the cancellation of the illegitimate part of the public debt. For this, the CADTM recommends conducting an audit of the public debt carried out under citizen control. In certain circumstances, this audit must be combined with the unilateral and sovereign suspension of the repayment of the public debt. The objective of the audit is to reach the cancellation / repudiation of the illegal part of the public debt and a strong reduction of the rest of the debt.
The drastic reduction of public debt is a necessary but insufficient condition to get the countries of the European Union out of the crisis. It must be completed with a series of wide-ranging measures in different areas.
1. Carry out an audit of the public debt in order to annul the illegitimate part
An important part of the public debt of the States of the European Union is illegitimate because it is the result of a deliberate policy of governments that decided to systematically privilege a social class, the capitalist class, and other favored sectors, to the detriment of the rest of the society. The reduction of taxes on the high incomes of individuals, on their assets and on the profits of private companies, have led the public powers to increase public debt in order to cover the hole produced by this reduction. Thus, these public powers have strongly increased the tax burden on the modest households that make up the majority of the population. To this must be added, from 2007-2008, the rescue of the private financial institutions, responsible for the crisis, which has cost public finances dearly and has caused public debt to explode. The decline in income caused by the crisis caused by private financial institutions has once again had to be covered with massive loans. This general framework clearly indicates the illegitimacy of a significant part of public debts. To this is added, in a number of countries subjected to blackmail by the financial markets, other obvious sources of illegitimacy. The new debts incurred since 2008 have been assumed in a context in which bankers [and other private financial institutions] use the money obtained from central banks at low interest rates to speculate and force the public powers to increase the remunerations that they have to reimburse. Furthermore, in countries like Greece, Hungary, Latvia, Romania or Ireland, the loans granted by the IMF have been combined with conditions that constitute a violation of the economic and social rights of the populations. With the aggravation that these conditions, once again, favor bankers and other financial institutions. Also for these reasons they are illegitimate. Finally, in some cases the popular will has been mocked: for example, while in February 2011 a vast majority of Irish people voted against parties that gave gifts to banks and accepted the conditions imposed by the European Commission and the IMF, the new government coalition continues roughly the same policy as its predecessors. More generally, some countries witness the marginalization of the legislative power in favor of a policy of fait accompli imposed by the executive power that passes the agreements with the European Commission and the IMF. The executive branch then presents this "take it or leave it" agreement to Parliament, which even goes so far as to organize a debate without a vote on matters of the first order. The tendency of the executive branch to transform the legislative body into a registry office is reinforced.
In this disturbing context, knowing that sooner or later a series of States will face the concrete risk of being unable to pay due to lack of liquidity and that the repayment of an illegitimate debt is unacceptable in principle, it is advisable to clearly pronounce on the cancellation of debts illegitimate. Cancellation, the cost of which must fall on the culprits of the crisis, namely private financial institutions.
For countries such as Greece, Ireland, Portugal or Eastern European countries [and those outside the European Union, such as Iceland], that is, countries that are subjected to blackmail by speculators, the IMF and other organizations Like the European Commission, it is appropriate to resort to a unilateral moratorium on the repayment of public debt. This proposal is popular in the countries most affected by the crisis. At the end of November 2010 in Dublin, in an opinion poll carried out by telephone of around 500 people, 57% of the Irish questioned were in favor of the suspension of the payment of the debt ["default" in English] more than for emergency aid from the IMF and Brussels. «Default! say the people "[the people for the suspension of payment] was the headline of the Sunday Independent, the island's main newspaper. According to the CADTM, this type of unilateral moratorium must be combined with the performance of an audit of public loans [with citizen participation]. The audit should allow the government and public opinion to provide the necessary evidence and arguments for the cancellation / repudiation of the part of the debt identified as illegitimate. International law and the domestic law of countries offer a legal basis for this type of unilateral sovereign action of annulment / repudiation.
For countries that resort to suspension of payment, with the experience on the debt issue of the southern countries, the CADTM warns against an insufficient measure, a simple suspension of debt repayment, which can be revealed counterproductive. The moratorium must be made without the addition of default interest on the amounts not reimbursed.
In other countries such as France, Great Britain or Germany, it is not imperative to decree a unilateral moratorium during the audit. But it must also be carried out there in order to determine the extent of the annulment / repudiation to be carried out. In the event of a deterioration in the international situation, suspension of payment may become necessary even for countries that believe they are safe from blackmail by private lenders.
Citizen participation is the imperative condition to guarantee the objectivity and transparency of the audit. This audit committee must be made up especially of the different affected State bodies, as well as expert auditors of public finances, economists, jurists, constitutionalists, representatives of social movements ... and it will make it possible to determine the different responsibilities in the debt and debt process. demand that those responsible, both national and international, be held accountable to justice. In the event of hostility from a government regarding the audit, it will be necessary to set up a citizen audit committee without government participation
In any case, it is legitimate for private institutions and high-income individuals who own the titles of these debts to bear the cost of canceling illegitimate sovereign debts, since they are largely responsible for the crisis of which, in addition, they are benefited greatly. The fact that they must bear the cost of cancellation is nothing more than a just return to greater social justice. It is important to create a registry of title holders in order to compensate citizens with low and medium incomes that are among them.
If the audit shows the existence of crimes related to illegal indebtedness, the perpetrators must be firmly condemned to pay for the repairs and not allowed to be released from prison terms based on the seriousness of their acts. Justice must be demanded against the authorities who started the illegal loans.
With regard to debts that are not affected by illegitimacy, an effort should be imposed on creditors in terms of reducing the stock and interest rates, as well as an extension of the repayment period. It would also be desirable to positively discriminate in favor of small holders of public debt securities that should be repaid normally. On the other hand, the amount of the part of the State budget destined to the repayment of the debt must be limited depending on the situation of the economy, the repayment capacity of the public powers and the irreducible nature of social expenditures. Take inspiration from what was done with Germany after the Second World War. The 1953 London Agreement on the German debt, which consisted in particular of reducing the debt stock by 62%, stipulated that the ratio of debt service to export earnings should not exceed 5% . | 2 | A ratio of this type could be defined: the sum assigned to repayment of the debt cannot exceed 5% of the State's income. A legal framework must also be adopted to prevent a repeat of the crisis that began in 2007-2008: prohibition of socializing private debts, obligation to organize a permanent audit of the public debt policy with citizen participation, imprescriptibility of crimes related to illegal indebtedness, nullity of illegal debts ...
2. Stop austerity plans, they are unfair and deepen the crisis
In accordance with the IMF's demands, the governments of European countries have chosen to impose strict austerity policies on their peoples, with clear cuts in public spending: retirements in the public service, freezing and even lowering the salaries of civil servants , reduced access to some vital public services and social protection, delayed retirement age. Conversely, public companies demand - and obtain - an increase in their rates, while the cost of access to healthcare and education is also revised upwards. The recourse to a particularly unfair rise in indirect taxes is growing, especially VAT. Public companies in the competent sector are massively privatized. The austerity policies that are being put into practice are being pushed to a level never seen since World War II. In this way, the effects of the crisis are doubled by the alleged remedies that are aimed above all at protecting the interests of capital owners. In short, the bankers drink, the people pay!
But the peoples increasingly tolerate the injustice of these reforms characterized by a broad social regression. In relative terms, it is the workers, the unemployed and the most modest families who have the most to contribute so that the states continue to fatten the creditors. And among the most affected populations, women occupy the first place, since the current organization of the economy and patriarchal society causes the disastrous effects of precariousness, part-time and poorly paid work to fall on them. Directly affected by the degradation of public social services, they pay a very high price. The struggle to impose another logic is inseparable from the struggle for total respect for women's rights.
3. Establish a true European tax justice and a fair redistribution of wealth. Prohibit transactions with judicial and tax havens. Fight against massive tax fraud by large companies and the wealthiest
Since 1980, direct taxes on the highest incomes and large companies have not stopped. Thus, in the European Union, from 2000 to 2008, the upper rates of income tax and corporate tax fell 7 and 8.5 points respectively. Those hundreds of billions of euros of tax gifts were essentially oriented towards speculation and the accumulation of wealth by the richest.
A profound reform of taxation must be designed with the objective of social justice [at the same time reducing the income and assets of the richest in order to increase those of the majority of the population] harmonizing it at the European level in order to prevent tax dumping. | 3 | The aim is to increase public revenue, especially through the progressive income tax for the richest individuals [the marginal rate on the highest income bracket should be raised to 90% | 4 |], the wealth tax at starting from a certain amount and corporate tax. This increase in income must go hand in hand with a rapid reduction in the price of access to basic goods and services [basic food, water, electricity, heating, public transport, school supplies ...] especially due to a strong and concrete reduction in VAT of such vital goods and services. It is also about adopting a fiscal policy that favors the protection of the environment by taxing polluting industries as a deterrent.
The European Union must adopt a tax on financial transactions, especially on exchange markets, in order to increase the revenue of public powers.
The different G20s, despite their declarations of intent, have actually refused to attack judicial and tax havens. A simple measure to fight against tax havens [that every year make the countries of the North lose, and also those of the South, vital resources for the development of populations], is for a Parliament to prohibit all natural persons and to all companies present in its territory carry out any transaction that passes through tax havens, under penalty of a fine of an equivalent amount. We must also eradicate these black holes in finance, criminal trafficking, corruption and white-collar crime.
Tax fraud deprives the community of considerable means and acts against employment. The consequent public media must be put at the service of the finance ministry to fight effectively against this fraud. The results must be made public and the culprits severely punished.
4. Put the financial markets in order, especially by creating a register of title owners, by prohibiting short sales and speculation in a number of sectors. Create a European public rating agency
Speculation on a world scale represents several times the total wealth produced on the planet. The sophisticated setups of financial mechanics make it totally uncontrollable. The gears that it raises alter the structure of the real economy. Opacity on financial transactions is the norm. To tax creditors at source, you need to identify them. The dictatorship of the financial markets must end and speculation must be prohibited in a whole series of sectors. It is convenient to prohibit speculation with public debt securities, with currencies and with food. | 5 | Short sales should also be prohibited | 6 | and Credit Default Swaps must be strictly regulated. We must close the markets for direct contracting of derivative products, which are true black holes that escape all regulations and surveillance.
The rating agency sector also needs to be reformed and strictly framed. Far from being an objective scientific evaluation tool, these agencies are structurally stakeholders in neoliberal globalization and have on several occasions unleashed repetitions of social catastrophes. In effect, the reduction of the note of a country implies an increase in the interest rates on the loans that have been granted. Consequently, the economic situation of the country in question deteriorates even more. The sheep behavior of speculators multiplies the difficulties encountered that will weigh even more heavily on the populations. The marked submission of the rating agencies to the US financial media makes them major players at the international level, and their responsibility for triggering and evolving the crisis has not been sufficiently clarified by the media. The economic stability of European countries has been left in the hands of these rating agencies, without protection, without serious means of control by public powers. The creation of a public rating agency is essential to escape this impasse.
5. Transfer banks to the public sector under citizen control
After decades of financial diversions and privatizations, it is time to move the credit sector into the public domain. States must regain their ability to control and guide economic and financial activity. They must also have instruments to make investments and finance public spending, minimizing indebtedness with private and / or foreign financial institutions. Banks must be expropriated, without compensation, and transferred to the public sector under citizen control.
In some cases, the expropriation of private banks can represent a cost to the state due to the debts they may have accumulated. The cost in question must be recovered from the general equity of the large shareholders. In effect, the private companies that are shareholders of the banks and that led them to the abyss while making juicy profits, own a part of their assets in other sectors of the economy. Therefore, a puncture must be made in the general equity of the shareholders. It is about avoiding as much as possible the socialization of losses. The Irish example is emblematic. The way in which the Irish Allied Bank was nationalized is unacceptable. You have to learn from that.
6. Socialize the numerous companies and services privatized since 1980
A feature of the last thirty years has been the privatization of many public companies and services. From banks to the industrial sector through postal services, telecommunications, energy and transportation, governments have turned over much of the economy to the private sector, while losing all capacity to regulate it. These public goods, derived from collective work, must return to the public sector. It is about creating new public companies and adapting public services according to the needs of the population to respond, in particular, to the problem of climate change, for example with the creation of a public service for thermal insulation of homes.
7. Drastically reduce working hours to create jobs and increase wages and pensions
Distributing wealth in another way is the best response to the crisis. The part of the wealth created destined for workers has been reduced considerably for several decades as creditors and companies have increased their profits for speculation. Increasing wages not only allows people to live in dignity, but also strengthens the means used to finance social protection and pensions.
By reducing working time without lowering wages and creating jobs, the quality of life of workers is improved and employment is provided to those who seek it. The radical reduction of working time also offers the opportunity to practice a different rhythm of life, a different way of living in society, moving away from consumerism. The time gained for leisure will allow a greater active participation of people in political life, in strengthening solidarity, in volunteer activities and in cultural creativity.
8. Democratically re-found another European Union based on solidarity
Several provisions of the treaties governing the European Union, the eurozone and the ECB should be repealed. For example, it is necessary to eliminate articles 63 and 125 of the Lisbon Treaty, which prohibit any control of capital movements and any aid to a State in difficulties. The Stability and Growth Pact must also be abandoned. And furthermore, it is necessary to replace the current treaties with new ones within the framework of a genuine democratic constituent process to reach a pact of solidarity of the peoples in favor of employment and ecology.
The monetary policy as well as the regulations and practices of the European Central Bank should be completely reviewed. The inability of the political power to force the ECB to issue money is a very serious obstacle. With the creation of the ECB as an entity above governments and peoples, the EU made a disastrous decision, that of subjecting human beings to finances and not the other way around.
While many social movements denounced the rigid and profoundly inadequate statutes, the ECB has been forced to change its mind at the height of the crisis by urgently changing its assigned role. Unfortunately, the ECB agreed to do so for the wrong reasons: not because the interests of the people were taken into account, but to preserve those of the creditors. It is the obvious proof that you have to shuffle and deal the cards again. The ECB must have the power to directly finance states that want to achieve social and environmental objectives that perfectly integrate the basic needs of the population.
At present, very different economic activities, such as investment in the construction of a hospital or a purely speculative project, are financed in a similar way. Political power must, at least consider itself, to impose very different costs on each other: low interest rates must be reserved for socially just and environmentally sustainable investments, while very high rates, even prohibitive when the situation demands it, must apply to speculative-type operations, and it is also desirable that they are purely and simply prohibited in certain sectors [see above].
A Europe based on solidarity and cooperation must turn its back on the competition and rivalry that level the bottom line. Neoliberal logic has led to crisis and revealed its failure. This logic has pushed social indicators down: less social protection, less employment, less public services. Those who have benefited from this crisis have done so by trampling on the rights of the majority. The guilty have won, the victims pay! This logic, which underlies all the founding texts of the European Union, starting with the Stability and Growth Pact, must be directly attacked: it cannot be sustained. The priority objective must be another Europe based on cooperation between States and solidarity between peoples. To do this, budgetary and fiscal policies must not be uniform, since European economies differ greatly, but they must be coordinated so that a leveling off "to the top" finally emerges. Global policies must be imposed at European level that include massive public investments for the creation of public employment in key areas [from community services to renewable energies, from the fight against climate change to the basic social sectors].
This other democratized Europe must, according to CADTM, work to impose non-negotiable principles: the strengthening of fiscal and social justice, decisions aimed at raising the level and quality of life of its inhabitants, disarmament and the radical reduction of military spending [including the withdrawal of European troops from Afghanistan and the exit from NATO], opt for sustainable energy without resorting to nuclear, rejection of genetically modified organisms [GMOs]. It must also resolutely end its policy of besieged fortress against immigrants and become a fair and truly supportive partner with the peoples of the South of the planet.
Eric Toussaint, Doctor in Political Science from the University of Liège –Belgium- and from the University Paris VIII - France-, Maître de conférences at the University of Liège (Belgium), President of the Committee for the Cancellation of Third World Debt - Belgium www .cadtm.org, member of the International Council of the World Social Forum and of the Presidential Commission for Comprehensive Debt Audit (CAIC) of Ecuador, member of the Scientific Council of ATTAC France. Author of La Crisis global, Editorial of the Mothers of the Plaza de Mayo, Buenos Aires, 2010; A look in the rear view mirror. Neoliberalism from its origins to the present, Editorial Icaria, Barclona, 2010; Banco del sur and New international crisis, Editorial Viejo Topo (Barcelona), 2007; Editorial Abya-Yala (Quito), 2007; Editorial Observatorio DESC, La Paz, 2007). Co-author with Damien Millet of 60 Questions / 60 Answers on Debt, the IMF and the World Bank, Icaria-Intermon, Barcelona, 2010.
April 2011 - Translated for Rebellion by Jorge Aldao Y Caty R. - http://www.cadtm.org
| 1 | See http://www.cadtm.org/Juntos-para-impose-otra-logica In this article we recover these eight proposals, update them and develop them.
| 2 | See, by Éric Toussaint, World Bank. The permanent coup, chapter 4.
| 3 | We think of Ireland, which applies a tax of only 12.5% on corporate profits.
| 4 | It should be noted that this 90% rate was imposed on the rich after Franklin Roosevelt's presidency in the United States in the 1930s.
| 5 | See, by Éric Toussaint, La Crisis global, Editorial of the Mothers of the Plaza de Mayo, Buenos Aires, 2010, chapter 4.
| 6 | Short sales allow you to speculate on the downgrade of a title, finally selling said title when it is not even owned. The German authorities have prohibited short sales while the French authorities and those of other countries are opposed to this measure.