Actually, who are these ‘taxpayers’ Bini Smaghi of the ECB is talking about? April 13, 2011
Posted by WorldbyStorm in Economy, European Politics, Irish Politics.trackback
Check this out.
In an opinion piece in today’s Financial Times, Mr Bini Smaghi said Ireland’s taxpayers should foot the bill as they are the ones that benefitted during the pre-crisis boom years and elected the governments that regulated the banks as the problems built.
”The principle of ‘no taxation without representation’ should work both ways. If taxpayers have the right to share in decision-making, they must also accept the consequences,” Mr Bini Smaghi wrote. ”As long as the accountability of supervisors to taxpayers is primarily a national affair … then there is a high risk that taxpayers will foot most of the bill. They should not complain when it actually happens.”
Let’s think about this a moment. Does it make any sense?
Firstly there is the small point that not all taxpayers voted for these policies, let alone shared in ‘decision making’ and it’s quite spurious of him to suggest otherwise. In a PRSTV system that we have the likelihood that individual voters can ‘game’ the outcome of an election is lesser than in any other system, even if one believes that voters have the power to divine such matters.
More to the point this evades all culpability of the institutions that were actually directly charged with supervision of the financial sector including the ECB itself. John Bruton isn’t someone usually referenced on the CLR, but he made a valid enough point last month when he noted in a speech to the LSE last month that the ECB didn’t attempt to utilize powers it has under article 14 of its statue to instruct our Central Bank to engage with the ‘fiscal and macroeconomic risks related to the property boom in Ireland’.
Moreover it also ignores the point that, as noted earlier today here in the post just before this one, by Cragg and Stiglitz, that:
But it is important to recognise that these mistakes are at least partly attributable to following deregulation and liberalisation policies that were advocated by the IMF and ECB and that these policies provided significant benefits to the financial sector.
Interesting though that Bini Smaghi would come out with this now.
What possible political purpose he thinks it serves is quite another matter. Or perhaps in the wake of the result of the Icelandic referendum he’s hoping to scare us to keep others in line.
By the way, what an expedient reading of capitalism that man has:
Mr Bini Smaghi said that while in theory, shareholders, managers and bondholders should bear the costs of a bank being restructured, in an open system like the euro zone’s such problems were never black and white as they could pose systemic risks.
Today’s competitive markets, whether we seek to recognise it or not, are driven by an international version of Adam Smith’s “invisible hand” that is unredeemably opaque. With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.
Alan Greenspan, FT oped, March 2011
http://crookedtimber.org/2011/03/30/with-notably-rare-exceptions/
Yes, it’s amazing isn’t it?
This runs precisely counter to Smaghi’s argument in that governments, let alone citizens, aren’t meant to interfere with markets.
Smaghi’s point is so patently self-serving because he’s part of an elite who denied any agency to the people he’s now blaming.
The markets invisible hand is meant to work – oh yeah, except when it doesn’t.
Yet another brilliant example of how they twist their own arguments to justify their actions or inactions.
More simply put, previous FF governments published policy platforms items like decreasing class sizes and simply ignored the platform after the elections.
Other initiatives like light handed or no financial regulation were never discussed and simply allowed to conform to neo-liberal ideology without input from the electorate.
The overall sense one had of FF was that they did what they wanted aided and abetted by a slick PR machine to make black seem like white. A huge chunk of the electorate either jumped aboard the bandwagon ignoring their own common sense or ignored the long-term implications as long as the new, shiny miracle economy delivered goodies to them. Tbh, often I was flumoxed at how the economy seemed to leap forward year after year when everyting I’d been taught and experienced said we were living in bubble land. I never jumped on the bandwagon but was sorely tempted a few times.
I’d characterise the Irish electorate as gullible – terribly so. And they’re no less gullible today than they were 10 years ago.
Mr. Smugli is either woefully ignorant of the political dynamics or disingenuous in the extreme. Feck him and his ilk.
He’s pimping a political version of the ‘perfect information’ myth of neo-classical economics. Most politicians that ran for office in the last decades had either no critical understanding of macroeconomics or, if they did, kept quiet about it to the benefit of their sponsors.
The idea that the electorate were either informed or educated on the essential financial instabilities of the system is just laughable. You had to be stubbornly intellectually curious or just a stubborn leftie to go against the hegemonic discourse.
The crisis has been a short sharp education in these matters and will continue to be as the sovereign default roll in.
Bini Smaghi’s position is partly propaganda, but in part represents the genuine intellectual other-worldliness of the financial elites with respect to the position of the rest of the capitalist class, let alone the rest of us.
[...] have to wonder, as with a letter in the Irish Times this week which follows on from this discussion here: As Lorenzo Bini Smaghi points out in his controversial article in the Financial Times, taxpayers [...]