Sea change moments and tax justice
Politicians across the advanced world – from whom any new grand co-ordinating narrative must surely come – have shown themselves to be either incapable of, or largely uninterested in, developing new ideas and discourse about the lessons of the crash in ways which draw on and connect to the lessons learned by technocrats.Indeed. This has also been our experience (with a few, very few, honourable exceptions), but we have also seen a rising tide of public awareness of, and public engagement on, tax justice issues that pre-crash were, at best, regarded as marginal issues or, at worst, dismissed as running counter to the prevailing neo-liberal ideology.
Increased public awareness, and anger at austerity programmes, has done much to propel the tax justice agenda from the margins to the centre of discussion at this year's G8 and G20 summits, and while the blog is correct in stating that in the case of the tax justice agenda it has largely been experts pushing for change, there is no doubt that the global civil society movement now engaged on tax justice issues has played its part in taking our demands to the streets.
The big question now is how can we overcome the failure of supposedly progressive political parties in major finance dominated countries, like the U.K. and U.S.A., to engage on the tax justice agenda. As Baker asks:
Why is democratic politics, and the political leadership of major political parties, seemingly failing in this endeavour, and how can this be overcome?We would argue that, particularly in the case of the U.K., democratic politics have been side-lined by the malign effects of the Finance Curse: in the same way that the oil and gas economies of the Middle East and both west and north Africa have been afflicted by the Resource Curse, countries that host an over-sized finance sector find themselves dependent on that sector as Dutch Disease effects harm other exporting sectors and attract the brightest and best away from productive activities into the higher paid jobs in the wealth-extracting finance sector. Worse, political funding, revolving doors, and an unhealthy proximity between Big Finance and senior politicians, leads to comprehensive state capture, in much the same way that Big Oil has captured political processes elsewhere.
Our answer, therefore, to Baker's question about how to overcome the failure of democratic processes to address the issues raised by the financial crisis, lies with opening up a broader debate around the implications of the Finance Curse. Politicians now need to recognise that a development strategy based on an ever-expanding financial sector will almost inevitably undermine prospects for maintaining a balanced and diversified productive economy. If they seek the latter, they should take effective measures to roll back the short-term rent-seeking activities of the finance sector and incentivise banks to engage in the far harder task of nurturing productive activities.
Read more about the Finance Curse here. And read Andrew Baker's blog here.