What is The Left's response to the financial crisis?

[Second Summer]

As annoying as Tony Blair is, he does seem to have some good points in his letter to New Statesman:

The paradox of the financial crisis is that, despite being widely held to have been caused by under-regulated markets, it has not brought a decisive shift to the left. But what might happen is that the left believes such a shift has occurred and behaves accordingly.

[....]

The Labour Party is back as the party opposing “Tory cuts”, highlighting the cruel consequences of the Conservative policies on welfare and representing the disadvantaged and vulnerable (the Lib Dems are in a bit of a fix, frankly).

For the Conservatives, this scenario is less menacing than it seems. They are now going to inspire loathing on the left. But they’re used to that. They’re back on the old territory of harsh reality, tough decisions, piercing the supposed veil of idealistic fantasy that prevents the left from governing sensibly.

I'm not sure about his assertion that the centre hasn't moved to the left though. Maybe not yet, but the crisis is still ongoing. And I'm not sure how long the voters will have patience with the Conservatives to get the country back on its feet.

Anyway, looking to France where Hollande was elected on a program of opposition to the way the right was handling the financial crisis, things seem to just continue on as before. Predictably, Hollande's popularity has slid to a record low. So this issue is relevant beyond the UK.

If neither of the traditional right or left parties have palatable solutions, maybe the time has finally come for the smaller fringe-parties which tend to have more dramatic solutions. Let's just hope it's "our" fringe-parties that cease the day, and not those iron heel guys as seems to be happening some places in eastern Europe.

 

[Second Summer]

Some more thoughts on this: The Establishment Left who are working within the framework of capitalism and the free market economy can't respond to the crisis any better than the (establishment) right who are also bound by the same framework.

Back in the day, the solution would have been to regulate more. But in the globalised economy corporations can and must flee from regulations in order to increase profits, otherwise they will be out-competed by other corporations that are operating under more favourable conditions. So The Establishment Left can't use their traditional medicine of imposing meaningful regulations.

So if they want solutions, maybe they need to look beyond the capitalist free markets framework.

 

[Blobbenstein]

I think if rich people and corporations paid their fair share of tax, then the world's economies would run smoother, and there would be less poverty, but I think you are right Indian Summer, that this is difficult to achieve as things are. It's a shame the rich and those corporations couldn't agree that even they would be better off if they paid more tax, and work together to make that smoother running world economy.

 

[Blobbenstein]

what I mean is that even though they would pay more tax, the economies are more productive, with less inflation, and what they could actually buy with their remaining wealth would be more or less the same as they can buy now, maybe a lot more with lower inflation.

 

[ledboots]

In the US, the corporate tax rate is 39%. Tied with Japan for the highest in the industrialized world.

 

[Blobbenstein]

yes, but do they really pay that much, or do they cleverly avoid it with legal loop holes?

 

[ledboots]

yes, but do they really pay that much, or do they cleverly avoid it with legal loop holes?

Oh, they avoid them, all right. Usually by moving part of theit operations overseas, raking in the dough there, and then losing money on their US investments, which they can write off. General Electric, for example, got a refund rather than pay a cent in taxes. http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes.html

 

[Second Summer]

Oh, they avoid them, all right. Usually by moving part of theit operations overseas, raking in the dough there, and then losing money on their US investments, which they can write off.

I believe that is a strategy big corporations use in the UK as well.

 

[Blobbenstein]

It was a mistake in a spreadsheet that could have been easily overlooked: a few rows left out of an equation to average the values in a column.
The spreadsheet was used to draw the conclusion of an influential 2010 economics paper: that public debt of more than 90% of GDP slows down growth. This conclusion was later cited by the International Monetary Fund and the UK Treasury to justify programmes of austerity that have arguably led to riots, poverty and lost jobs.
Now the mistake in the spreadsheet has been uncovered – and the researchers who wrote the paper, Carmen Reinhart and Kenneth Rogoff, have admitted it was wrong.
The correction is substantial: the paper said that countries with 90% debt ratios see their economies shrink by 0.1%. Instead, it should have found that they grow by 2.2% – less than those with lower debt ratios, but not a spiralling collapse. Yet cutting public spending to avoid that contraction has become a linchpin of both George Osborne's and the IMF's policies.

http://www.guardian.co.uk/politics/2013/apr/18/uncovered-error-george-osborne-austerity

 

[Second Summer]

http://www.guardian.co.uk/politics/2013/apr/18/uncovered-error-george-osborne-austerity

I loved the part about The European Spreadsheet Risk Group Yes, spreadsheets are going to be our downfall. I too was surprised to read they were basing serious research on an Excel spreadsheet.

 

[Second Summer]

Oh, they avoid them, all right. Usually by moving part of theit operations overseas, raking in the dough there, and then losing money on their US investments, which they can write off.

Another example of this:

Schmidt said at the time that he was "very proud" of Google's corporate structure, which shunts profits from countries like Britain to low-tax havens like Ireland and the Netherlands.

"It's called capitalism," he stated baldly. "We are proudly capitalistic. I'm not confused about this."

Eric Schmidt defends Google's teeny UK tax payouts - again (The Register, 22nd April 2013)
He also says that British firms do the same, which I have no reason to doubt.

 

[Blobbenstein]

"It's called capitalism," he stated baldly. "We are proudly capitalistic. I'm not confused about this."

Heroin dealing is just capitalism too.

 

[Second Summer]

Heroin dealing is just capitalism too.

Maybe, but successful capitalism does seem to depend on the rule of law. And heroin dealing tend to be illegal ...

 

[Blobbenstein]

capitalism is about market forces, and I think some people are quite successful at drug dealing; those higher up in illegal organisations.

 

[das_nut]

Back in the day, the solution would have been to regulate more. But in the globalised economy corporations can and must flee from regulations in order to increase profits, otherwise they will be out-competed by other corporations that are operating under more favourable conditions. So The Establishment Left can't use their traditional medicine of imposing meaningful regulations.

Sure they can, on a large enough scale (say US or EU-sized).

Anyone wants to sell goods and services in a nation, well, regulate them, regardless of where they are. If they are outside of the country, it'll just cost them more to be inspected.