Today I took a side, a stand, if you will, about the proposed Bank Tax that Europe and the U.S. wish to impose on Banks so that bailouts like what happened in 2007, and 2008, do not happen again. I sided with the idea that Banks should have a tax imposed on them. My reasoning is simple, in that the public should not be the one on the hook for giving out corporate welfare to them, like we did. Sure. Banks supposedly paid us back in Bonds and other assortments of money, but the burden was placed squarely on the tax payer, and the public purse to bail them out. That should have never happened.
Perhaps in the Conservative mind set, this was appropriate action to take, and what had happened that lead up to the downturn was also acceptable. However, the lessons learned most certainly do not take Canada off the hook as we were well knee deep in this mess that transpired in the U.S. and around the world too. The idea that capitalism can look after itself now has a big black mark against it. Banks now have proven that they cannot look after themselves, and that they need regulation and strict punishment to protect the public, the tax payer, from the harm that they can ensue. It is shameful that our minority government has so staunchly sided with the notion that Banks should be forgiven and then be given a clean slate. To loosen the regulations and give the Banks the wide open range that they so eagerly want is social suicide.
Greed is the problem, and short term thinking is the mantra that I hear throughout the media. The writing, signs and signals are everywhere, and it says that Banks should not police themselves. When the goal of the all the players in the organization is to make as much profit as they can, the result is the zero sum game, the mentality to be the king of the hill at all costs and capture as much of the money as you can. When the corporation stays stagnant, then the shareholders are angry, the lenders and borrowers are burdened with no incentives, and anything but growth is considered a fail in the lexicon of the money speak. So growth is encouraged at any cost, even with the selling of troubled mortgages and loans from the low end of the middle class and packaging them up as the new gold rush of today. Banks have being extremely clever over the last few years, searching and inventing ways to inspire profit, that the guarantee that the ratio of real money versus credit is called into question. We seem to be the victims, the suckers, as we fall into their traps.
Of course the harm is that we will all pay. We pay in terms of the total value of our net worth as a society. We as a society have being given a new drug on our streets called credit, and we are addicted. The personal debt load in Canada, per capita, is about $28,390.00 in 2005 (Stats Canada, January 2007), and it is still growing starting over the last two decades. We are saving less and borrowing more on credit to keep up with our current lifestyles, and the Banks seem to be more than happy to oblige, even when the signs are there that debt will go critical for some very soon. So what happens when the taps are shut off? Do you have a cushion to fall onto? Could you survive up to six months without any income as jobs disappear?
What I would like to see, and mandated from the federal government, is to put street crime versus corporate crime in the same light. That a White Collar criminal be given the same punishment as a Bank Robber. Sure, many argue that the two are not the same, but lets look at the harm that each causes:
- Both the Bank Robber and White Collar criminal steal/take money. Although each uses different methods, the end result is about the same—the victims are the people who lost the money.
- The money is very rarely recovered. Yes, even when the White Collar criminal and Bank Robbers are caught, the money is hardly ever given back, or recovered.
- The White Collar criminal has more opportunities to take money than the bank Robber. It is true. The Bank Robber has to go through many levels and layers of security, and needs to use direct force to a small group of people in order to take the money, were as the White Collar criminal pretends to be your best friend, the one who is always looking out for your best interests, just before when he/she takes off with your money. I say the level of harm, albeit on two different levels, exacts about the same level of victimization over time and space here.
- Both are repeat offenders. Once bitten by the “easy money,” stealing money become a routine and necessity. And whose to say each group here is using the stolen money for drugs and other illegal activities?
I think taxing the Banks and using that money to bail them out with when they fail is a brilliant idea. Canada is no way a perfect player with its financial institutions when I stop and reflect back on the beginning of the down turn. Remember that we were enjoying some of the highest prices for our raw resources back then—now look at the those industries—funny how only the Banks came out on top, yielding profits less than a quarter term, in that fiscal year, after the downturn started.
Update, June 5, 2010: Apparently the links below were broken. I think they are fixed now; thanks C.K., for brining that to my attention.