Somehow, amidst the din of the holidays, a true gem of an idea is taking flight. And, if it works, we may be looking at a way to (finally) fix what’s wrong with the money system in the US. And, again if it works, it should please all those anti-regulatory conservatives out there who somehow seem to think the Great Recession was caused by working folks who borrowed more than they should have to buy houses. Like all those Wall Street suits had nothing to do with it. But that’s another story.
Taking a cue from the healthy foods crowd who brought us the idea of buying locally, that sneaky duo of Rob Johnson and Ariana Huffington have been pushing this new idea…. “Move your Money.” What a concept! Green your money!…well, I suppose it’s already green, but it’s not Green. It’s not local. So, how to get this across?
It turns out that one of the mainstays of our holiday season is a wonderful film called, cleverly, It’s a Wonderful Life.
Initially considered a flop in 1946 when it came out, it has emerged as perhaps the best loved American holiday film ever. And the enduring story has such strong parallels to today’s financial crisis, it’s scary. If you haven’t seen it, do yourself a favor and do so. If you have, I don’t need to remind you about how a community-based bank can prevail over all those avaricious Wall Street sharks. And the real point is, let’s remember, and then act like, George Bailey in the film, or rather his customers. Let’s put our money in locally based banks that know us. Let’s take all those savings out of banks that are “too big to fail” because, in fact, they HAVE failed. Were it not for us taxpayers, they wouldn’t be in business today, much less enjoying record-setting bonuses that seem to suggest an inverse relationship between financial performance and executive compensation.
So check out http://moveyourmoney.info and consider the option. The four minute clip, largely from the movie, captures it all so well.
The Wall Street Journal reports that the effort to extend the current Estate Tax regime through next year has failed. As part of the Bush tax cuts, the exemption, above which taxes are due, has been slowly rising. The Conservative plan, put in place in 2001, phases out the tax entirely next year, and then, in the following year, reverts to the 2001 rates and much lower exemption. They couldn’t make it permanent then, as they wanted to do, because it simply cut too much revenue out of the equation, even for the then-dominant Republican leadership on both ends of Pennsylvania Avenue.
Beneath the din of the healthcare debate, and Joe Lieberman’s stunning profile in cowardice and betrayal of his constituency, the inexorable process of displacing taxes from the super-wealthy to the middle class continues its stealthy pace. It is stunning to me that in these particularly dire economic times, the progressive majority in both the House and Senate has squandered the opportunity to extend current year provisions into next year. Neither the House nor the Senate could muster the will to adopt the extension. Lieberman-type leadership at its best?
And the conservatives – wow, they are a whole other kettle of fish. Cynical beyond measure, they figure a bankrupt government is better than no government at all. (Remember that stellar statement by neo-conservative, Grover Norquist: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” So helpful in tough times.)
But this Estate Tax matter is really serious for the non-profit sector – not that you’d really understand that from the way many in philanthropy have used their considerable resources. The Council on Foundations, for instance, does support making permanent the current estate tax regime, though the matter shows up way down their list of public policy priorities, and one has rarely if ever heard the Council’s leadership making the case for the Estate Tax. Even with the more broadly-based, and often far more insightful, Independent Sector, this issue has not really achieved traction with the membership despite the best efforts of its leadership to remind us all of its importance.
Best estimates suggest that the sector will lose $25 billion each year, if the estate tax is abolished. The incentives for the creation of new foundations or the making of very large testamentary gifts to churches and non-profit organizations shift from financial to purely altruistic. In other words, without the tax deductions, people give less. And it means that if a billionaire expires during the next calendar year, she will pass down that entire fortune to her children or other beneficiaries intact. No taxes. No obligation to share with the society that enabled the accumulation of that fortune in the first place. As Bill Gates, Sr. has often commented, these huge fortunes are not easily assembled in other parts of the globe. The infrastructure, educational systems, regulated financial markets (okay, so we still have some work to do!), transportation systems, and everything else that contributes to the creation of successful businesses needs to be supported somehow, and the Estate Tax is a valuable tool for this.
Even more compelling to me, though, are the tragic social and economic consequences evolving from the advent of a new, permanent Upper Class. Declining family size almost ensures that fortunes of $100 million or more can become self-perpetuating fiefdoms in economic terms. In a manner similar to the nobility of the Middle Ages, who reigned over their lands with impunity through primogeniture (i.e. the oldest son gets the whole thing), the new economic elite will become sequestered and insulated from the broader society. Taxes on the income or realized gains from a large fortune will hardly dent its ability to be self-perpetuating. I just fail to see how this benefits society, this diverse and dynamic set of economic and social forces that has created so much in the world. In Kevin Phillips’ Wealth and Democracy, the author draws out the inextricable tie between social equity and the vibrancy of our democratic practice. The fact is inescapable – government must dampen the accumulation of “super-wealth”, and use the proceeds to create opportunity for “the many,” for, after all, the latter is what has always produced the best that America has achieved.
Among European progressives, there is a strong rallying cry for financial reform through the closing of tax havens. A French leader was just at the PES Congress podium decrying the loophole – perhaps in the EU? – that permits tax havens to escape more stringent regulation because there 12 of them and they have treaties with one another. If one has 12 such treaties, then you are somehow off the hook. I clearly need to learn more about this! It’s fascinating that progressives in the US aren’t more focused on this issue. This recent case with HSBC where the IRS finally has acquired access to a list of thousands of American holders of offshore accounts only addresses part of the problem and hardly serves to take the issue off the table.
It is an interesting thing, as I’m becoming more familiar with the issues before the PES Congress (http://www.pes.org/), to begin to understand the confusion European progressives seem to be experiencing in their failure to gain more traction with the voters even in this period of economic dislocation. It’s vaguely reminiscent of the confusion plaguing the Republicans these days – they are so certain they were right, they just can’t understand why folks don’t respond. Perhaps it’s just the natural swinging pendulum.
Just now, a French leader is decrying the failure of Europeans to address the financial crisis because of their ongoing failure to leave national agendas at the door and address the system as a whole.
She’s then followed by the Finance Minister (I think) of Austria who argues that the financial crisis is not over because the stock market is rising – instead, the true measure is when the unemployment rate declines. He went on to push for an aggressive requirement that the financial industry be required to finance an insurance pool that will preclude the need for taxpayer funded bailouts in the future.
Next up is the head of the Czech Socialist Party who argues for a unified surveillance program or capability as well as the Tobin Tax (http://en.wikipedia.org/wiki/Tobin_tax) that has gotten a good deal of attention at this Congress.
Last, Javier Moreno Sánchez – Global Progressive Forum’s new leader – announced a new campaign for financial reform – get rid of toxic products, pass a Tobin-like Tax, and implement a regulatory regime; the campaign is called the Europe Campaign for Financial Reform. Unlike the US, where energy seems to be flagging to get these ideas in front of a Congress preoccupied with healthcare and other matters, Europe seems more prepared to address this thorny issue. Not the first time, I should think.
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As the PES Congress winds down, delegates slowly head for the trains or the airport. In a slowly emptying hall, a couple of fascinating speeches concluded the gathering.The first, by a French leader whose name I didn’t catch, noted the absence of elected officials from the crowds. In part, he said, this reflected the electoral challenges experienced by social democrats and socialists in the recent EU elections. But in part, he argued, this resulted from the struggle of progressives to establish a clear identity. As with the first day, this sounded much like an echo from the post-2004 US experience.
Poul Nyrup Rasmussen then returned to conclude the proceedings. His remarkably personable way of communicating helped him accent the plan that gave rise to his runaway election to another term as President of the PES: grow the activist base of the Party from 20,000 to 50,000 by the next Congress, strengthen the structure of the organization, and run campaigns that clarify what progressives stand for: job growth, a green economy, and financial reforms. I conclude that we will see much more of this man over the coming years.
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After lunch, I was sought out for a meeting with Javier Moreno Sánchez, the new Secretary General of the policy organization associated with the PES, the Global Progressive Forum, and several of his staff. Having delivered a speech in the morning, and otherwise been running ragged for the duration of the Congress, he looked tired but happy. His talk, referenced above, reflected his dominant policy interest – the passing of effective financial reforms for the EU. It turns out they had been hoping that Rob Johnson, my good friend who is now heading up a new program on economic policy with the Roosevelt Institute, would have been with us today to deliver a speech, but missed his plane. Needless to say, it would have been warmly received.
As we explored the ways the GPF and Tides might collaborate over the coming period, and there were many, I had the sense that this wild-haired idea of coming so far was indeed a stroke of good fortune for us both. Our nascent project to establish a presence in Europe will get a real jump-start as we build this relationship on the many topics of mutual interest: financial reform, immigration policy, Afghanistan, gender equity, and advancing the possibility of a green economy. The PES/GPF network is comprised of our European counterparts, and we should look forward to getting to know them over this next period.
As the only American attending this conference (so far as I could tell), I wondered if the boatloads of our colleagues, jostling one another for a glimpse of the official sessions as the meetings in Copenhagen commence, will be as fortunate. Somehow, I doubt it.
I’m an outsider attending the 1500 plus PES Congress in Prague (this is the European Union Party that collects progressives, labor, social democrats, and socialists from the various national parties throughout Europe). At yesterday’s preliminary session, I heard several familiar arguments, and some surprising ones.
First, Poul Nyrop Rasmussen, the President of the PES (roughly “Party of European Socialists” in several languages) talked with distain about the last election, not because the PES lost the election for the EU Parliament, but because “the sofa party” won. Turns out the “sofa party” was not a political acronym, but literally a sofa. Some 56% of the electorate did not vote. Sounds like America. One reason, it turns out, is that the social democrats and the more labor-oriented socialists in various countries split their votes between 2 candidates and thus muddied the message and lost the EU election.
While out of power, though, the PES seems to be borrowing from the US experience, circa 2004, in assembling a broad array of interests to create a clear political program built around three enets: creating green jobs through substantial public spending on Climate Change, a reinvestment in education and re-education of the workforce, and, in a fashion far more aggressive than current American proposals, reform of the financial markets. They are decidedly not anti-market, but want to manage markets with and through effective regulation – an idea far more acceptable on this side of the pond. Much of their thinking is embodied in a new book, shared with many at the conference, called The Next Left. Not exactly a quick read for the next plane trip, but effective and discursive as an intellectual framework worth examining.
Just now, Poul Nyrup Rasmussen was re-elected to the Presidency of the PES for another term. 320 some odd versus 6 votes. On the stage, he joked that it seemed like a “soviet era” election and then seriously took pains to see the election as a statement of trust in the program they are trying to build. He is part promoter, part cheerleader, and part strategic advisor. Watching the well-orchestrated Congress, and just beginning to understand the implications for Europe that a revitalized PES might mean, I come away impressed with the prospects they have to shift leftward the political winds in Europe. What I’m curious about is just how they will build a relationship to the work of the Green Parties – a smaller, but effective pan-European party that concentrates its efforts on environmental issues.
Europe. The word conjures things romantic and complex. The place where some of the worst atrocities ever have been committed is also the place that Will Shakespeare, Maria Callas, and Van Gogh called home. It is impossibly diverse, fraught with ethnic conflicts, and yet boasts the EU – a vital political union that translates its affairs into more languages than we have states. They are learning to speak as one in dozens of tongues, to act as one through dozens of legislatures, and to build an economic engine that rivals the US and China. What is so fascinating to me is that what they are doing so defies their own history of intolerance, mistrust, and conflict.
Last night, I walked through Prague on a brisk, clear night. Large downtown squares were lit up with lights and huge Christmas trees and crowds thronged through wooden booths selling food, drink, and traditional gifts. Children and adults both sported little “devil’s horns” that lit up red or blue, while others dressed as angels or medieval knights – in reference to a tradition about which I was clueless, I’m sad to say. But the experience was transcendent. It is truly a magical spot, especially at this time of year.
So, what is motivating this diverse continent to come together in this way, difficult as it may be to do so. Is it just reactive? Is it in response to the history of the great World Wars of the 20th Century that devastated so many? Was it the crushing competitiveness of the postwar American economy? Was it the failure of ideology that drove the US, China, and Russia to such wasteful and unproductive times in the Cold War, where Europe was the reluctant partner and likely battleground? Or, was it a choice? Did these people look at what they’d experienced and decide they wanted something different? Whatever it was, something very fundamental here changed over recent decades. Something worth figuring out if we are ever to learn how to sort through the complex array of issues and conflicts before us.
