G8, These Are Our Demands
By Paul Buchheit
29 February, 2012
Countercurrents.org
It's fitting that the G8 is meeting in my beloved but beleaguered hometown of Chicago this May. In a city with the highest sales tax in the country, where the state tax rate was recently increased by 66% and property taxes went up $300 per homeowner, and where 2012 state education spending was cut by a greater percentage than in any other state, a tax break of $85 million per year was given to the largest and most diverse financial exchange in the world.
The CME Group, made up of the Chicago Mercantile Exchange and the Chicago Board of Trade, had a profit margin higher than any of the top 100 companies in the nation over the past three years.
That leads us to another astonishing fact: an American mother pays nearly a 10% sales tax on shoes for her kids, while millionaire investors pay .002 percent (2-thousandths of a percent) for a financial instrument.
So our first demand is..
{First a disclosure. In keeping with the OWS Statement of Autonomy (Speak WITH us, not FOR us), the 'our' in "our demands" represents this writer's sense of the overriding needs of the 99%.}
So our first demand is for a financial transaction tax (FTT).
The FTT is sensible, equitable, and long overdue. And familiar to some of your more farsighted G8 members. The United Kingdom has had a tax on stock trades for decades. French President Nicholas Sarkozy insisted that his country, despite opposition from the European Union, would institute an FTT. Germany favors a tax, as reportedly do Brazil, Argentina, and South Africa. Belgian finance minister Didier Reynders observed, "All goods and services are regularly subject to tax, so I don't see why financial transactions would have exceptional protection."
Let's review the advantages and disadvantages of an FTT. First of all, it has extraordinary revenue-generating potential, on a global scale. The Bank for International Settlements reported in 2008 that annual trading in derivatives had surpassed $1.14 quadrillion (a thousand trillion dollars!).
For the U.S. alone, revenue estimates by the Center for Economic and Policy Research and the Chicago Political Economy Group approach a half-trillion dollars annually. My hometown's CME Group handles about 3 billion annual contracts worth well over 1 quadrillion dollars. One-thousandth of 1 percent of that (about a dollar for every $100,000) would pay off the total budget deficit of Illinois.
The FTT would also limit the speculative trading that contributed to the financial meltdown in 2008, and which continues to devastate Greece and other financially troubled countries.
What are the disadvantages? Bankers, trade associations, and conservative research groups have concocted a variety of arguments against the FTT, including its effect on ordinary investors, the practicality of collecting the tax, and the risk of exchanges bolting to other countries. But ordinary investors and retirement funds can be exempted from the tiny amount they might be taxed; the modern electronic trading system can easily incorporate a new fee; and a global tax would leave nowhere for tax avoiders to hide.
The Wall Street Journal calls the FTT a "sin tax" which would punish Main Street. It seems, rather, that Main Street has been punished by the absence of an FTT. Considerable support for the tax exists outside of the financial industry. Bill Gates, George Soros, prominent economists, Catholic development groups, National Nurses United, the Pope. In 1989 Lawrence Summers recommended a securities transaction tax. Even Fortune admits, "There is growing consensus from diverse corners of society for some sort of financial transaction tax."
So, G8, that brings us to our second demand: a trillion dollars of annual FTT revenue committed to a global cooperative of alternative energy research and development. It's a win-win-win-win. (1) Labor-intensive jobs in wind turbine and solar panel and electric grid construction; (2) Environmental gains; (3) Less dependency on foreign oil; and (4) A common goal for the countries of the world.
Studies by independent laboratories and research institutes confirm that the alternative energy industry has more job-creating potential than the fossil fuel industry. Growth in wind and solar is unlimited, whereas oil and gas and coal are inefficient and increasingly difficult to obtain.
Wind power alone could solve most of our energy problems, if we just show the farsightedness and political will. The Earth Policy Institute estimates that the installation of 2 million 2-megawatt wind turbines could provide half the world's energy needs (4,000 gigawatts) within ten years, at a cost of $600 billion per year. If the construction of two million wind turbines sounds daunting, consider that the world currently manufactures 50 million automobiles per year. And technology is adaptable. During World War 2, automobile factories were retooled to produce almost a million aircraft.
Much of the world is already powered to a significant degree by wind. The U.S., China, and Germany combine for 100 gigawatts. Denmark is close behind. In Spain, where Cervantes' Don Quixote once tilted at windmills, over half the country's energy needs have been met during periods of strong winds. According to the Earth Policy Institute, an acre of land in Iowa is 300 times more efficient as a producer of wind power than of ethanol.
Some analysts feel that solar energy will be the dominant source of electrical power in the future. The American Solar Energy Society estimates that solar resources in the U.S. Southwest can supply over four times the current U.S. electricity needs.
There are problems, of course, most notably the challenge of transmitting wind- or solar-generated electric power over long distances. A 2009 report from the Pew Center on Global Climate Change lists the principal barriers as cost, means of transmission, and the integration of diverse power sources.
But China and Germany are making rapid progress with super-grids that can transmit power across continents. Energy storage will be provided by batteries and fuel cells. The technology is in place, waiting for expansion.
So, G8 members, these are our demands: a Financial Transaction Tax and a commitment to Alternative Energy. They complement each other. A particularly eloquent argument for the matching pair is made by CIDSE (International Cooperation for Development and Solidarity).
We borrow the earth from our children. We want them to look back with the sincerest appreciation for what we have done for them.
Paul Buchheit teaches Economic Inequality at DePaul University. He is the founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at [email protected].
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