Bank Taxes. Werner: 'A diversion and a waste of time.'

Governments are talking about arrangements to levy a bank tax as an insurance fund or a  feed  for  bailout funds when future banking crises happen. It is stated that: 'It will be similar to pollution taxes on industry to discourage damage to the environment.' Germany has already set up its bank levy, but Prof. Richard Werner of Southampton University in a BBC World Service Radio interview with Jon Bithrey 1st April 2010  says that such taxes really only 'give the impression that something is being done' - they are to show that governments 'are being tough on banks'. These levies will not address the problem and  they are a diversion. In proportion to the massive sums necessary for bailouts from taxpayers they are very small, says Werner. He says the way to address the problem of boom and bust cycles, is to ensure that bank credit is restricted for speculative purposes.

Anything  can be purposefully used for good or ill.  Hammer? - build or kill; Chemicals? -  cure or kill; Nuclear reaction?- energy or bomb.  So the uses of, and by-products from, some activities are so socially or environmentally harmful that the freedom of individuals to do just what they like has to be curbed - e.g. prison, health and safety controls, fines, levies, etc.  So we tolerate the dumping of rubbish on a landfill site as long as a levy of £48 per tonne is paid to compensate for the pollution problems caused.  

Credit creation too is an amazing device - but with good or ill outcomes.  Some ill ones: Housing & industrial boom and bust, wild speculation, investor wipe-outs, regular lurches into poverty, etc, etc. But does anyone seriously suppose that a levy 'like a pollution tax' will deal adequately with the new disruption caused, as unfettered commercial banks get their way again in future?

No government would allow private individuals or groups to create and disseminate nuclear energy, dangerous drugs or weapons without maximum transparency and control. Credit creation can be highly beneficial when directed democratically to the common good, but it is toxic in the wrong hands - as we are now seeing.  

The subtitle of the book: The Free Lunch, is: Fairness with Freedom, and these qualities are usually at the heart of the debate at every stage of democratic development - even now in this banking crisis: Fairness for whom? Freedom for whom?  

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