"Make the bankers pay"?

[Lyev]

I have gotten myself stuck into a lot of arguments recently with goddamn lib-dems about the state of the economy. Apparently I'm "naive" and "utopian"; personally I think faith in neoliberalism is naive. Anyway, there's a few points on which I'm a bit murky.

(1) What are the practicalities of actually "making the bankers pay"? I know it's used as a slogan a lot of the time, but I don't know whether this would or could ever actually happen.

(2) If the £1.2 trillion* of the bankers bailout didn't come from tax-payers money, where would it have come from? This sort of links into the first question.

(3) How can the trade deficit be properly dealt with, without ripping into public services? Various things that come to mind are abolition of Trident, end to Afghanistan etc. but does this actually plug up all of the hole?

(4) Lastly, on a bit of tangent, when we talk about the strain on health service, and private-public partnerships etc., what do people mean, precisely, when they talk of "abolishing" PFIs? How would this be done? Simple re-nationalisation?

*I can't remember if £1.2 trillion is right or not. I fairly sure I read it somewhere, but I could have just pulled it out of my arse. It does seem like an atrocious amount of money.

Anyway, as a socialist and revolutionist (not a reformist) discussing something like this is rather problematic, because it's all discussed within the narrow framework of capitalism. For example, when I have discussed such issues with my dad he argued that, although the bankers get paid far too much, they have a rather specialist knowledge and would just find work elsewhere if they weren't paid the amount they are. Thoughts? Anyway, thanks for your responses comrades.

[Lyev]

Does no one want to have a go at any of these questions? Don't feel at all obliged to answer all of them at the same time. Thanks.

[ZeroNowhere]

(1) What are the practicalities of actually "making the bankers pay"? I know it's used as a slogan a lot of the time, but I don't know whether this would or could ever actually happen.The bankers don't have to pay for anything, because they mostly haven't done anything wrong. Generally that slogan seems to be tied to the notion that greedy bankers caused the current crisis, which I would say is fairly ludicrous.

As for actually expropriating the bankers, I would see that as problematic, firstly because the current government certainly is not doing that, and secondly because it would probably lead to problems with capital flight. Thirdly because one could perhaps make the bankers pay by nationalizing the banks, which wouldn't be an improvement. Fourthly because if we have a socialist revolution, we can hardly make the bankers pay, because they won't have any money to do so.


(2) If the £1.2 trillion* of the bankers bailout didn't come from tax-payers money, where would it have come from? This sort of links into the first question.
However, there are some major things wrong with the notion that workers are paying for “bailing out the bankers”. First, the bailout money isn’t really tax money; the US and other governments are borrowing the money, just like they normally borrow to cover budget deficits. So workers will pay for the bailout, not by means of higher taxes, but because the extra borrowing will boost interest rates, which in turn will tend of depress businesses’ investment spending. And this will tend to reduce economic growth, job creation, and wages.

More important is the fact that the purpose of the bailout and the other government interventions isn’t to make the rich richer, or to protect owners of capital. We can see this in the case of the Federal Reserve forcing Bear Stearns to be sold off at a fire-sale price back in March. The owners of Bear Stearns took huge losses; they were forced by the Fed to sell their shares for a fraction of their market price. Or consider the US government’s takeover of Fannie Mae and Freddie Mac, the huge mortgage lenders, in September. Here again, the owners, the shareholders in these firms, received nothing from the bailout.

The purpose of all of these interventions is instead to try to save capitalism, the systemitself, not the wealth of the wealthy. The US Treasury, the Fed, and other governments are bailing out the financial sector, not because they care about enriching the rich, but because a collapse of financial institutions that are “too big to fail” could well trigger such panic as to cause lending to stop, bringing the financial sector-and with it, the “real” economy-crashing down. They have been crystal-clear about this throughout the crisis. I suspect that when they let Lehman Brothers, a big Wall Street firm, go under in mid-September, we were seeing the start of such a panic, and that this is why the authorities then rushed in, in emergency fashion. In the next several days, the US government bought AIG, the big insurance firm, it announced a system-wide $700 billion bailout, and so forth.
-Andrew Kliman (deals with the US, of course, but natheless relevant).

[Lyev]

The bankers don't have to pay for anything, because they mostly haven't done anything wrong. Generally that slogan seems to be tied to the notion that greedy bankers caused the current crisis, which I would say is fairly ludicrous.

As for actually expropriating the bankers, I would see that as problematic, firstly because the current government certainly is not doing that, and secondly because it would probably lead to problems with capital flight. Thirdly because one could perhaps make the bankers pay by nationalizing the banks, which wouldn't be an improvement. Fourthly because if we have a socialist revolution, we can hardly make the bankers pay, because they won't have any money to do so.

-Andrew Kliman (deals with the US, of course, but natheless relevant)Thanks for your reply. I've never really thought the bankers caused the crisis themselves. It's just quite a populist slogan; I think people want someone to blame. It also helps the bourgeoisie a lot if the blame is directed onto the people within the system, rather than at the system itself. So the working class have to pay indirectly, so to speak; and I suppose any other form of bailout is incompatible with capitalism? It's in the very nature of capitalism to make the working and middle class to take the brunt of the hardship. Also, where do the USA, and countries like it, borrow their money from? Does the recession affect, at all, the institutions that lend the money; why is it they have lots of money to lend whilst everyone else doesn't? Are these the people that are involved in printing money?