A solution to the global meltdown needs to balance both sides of the ledger. Adanali Tolga/ CP Photo
Wow. It's unanimous. Just ask the G20. Government spending to stimulate the top economies of the world is no longer a sign of suspect social welfareism hijacking good global citizenship.
It's a watchword of planetary corporate responsibility. Cool.
But there are several pieces missing from the current G20 consensus. Above all is the necessity of linking any solution to the current economic emergency to the even larger global environmental crisis.
But leaving that elephant in the room aside (a nearly extinct metaphor, sad to say), the basic "New Deal" equation was revived only lopsidedly by the G20 last week. They left out the tax side of the story. We will pay big time if this isn't addressed in the new global picture.
John Maynard Keynes, the original tax-and-spend economist whose theory was adopted during the Great Depression, got it that there are plenty of good economic reasons for a strong, well-funded state. His basic model spawned the social welfare state that prevailed until the Reagan-Thatcher era adopted the now-discredited anti-tax, anti-government-regulation, neo-con ideology typified by the Bush era.
Solid physical and civic infrastructure and a social safety net, he demonstrated, don't merely provide a better life for citizens. They are also a great source of positive economic development through job creation and other spinoffs.
For an example of the unintended positive effect of even misguided government spending, we need only look at the last election. It wasn't a complete waste after all. That $300 million did inject short-term stim into Ontario's challenged economy, even offsetting the job loss numbers expected last month due to the province's declining manufacturing sector.
The simple truth is that government attention to the welfare of those on the bottom and middle rungs of the financial ladder keeps the consumer spending pump primed. The greater the number of people who fall out of the spending class, the fewer there are to buy the cars and goods that companies need to sell to stay in business, which explains the sudden concern for the unemployed among the Harper/Bush fraternity.
It truly is a circle of interdependence that can no longer be denied.
But governments need new injections of revenue to keep the stimulation machine oiled, and there's one cash source no one is talking about: the very industry that has most demonstrated the need for government support - the financial sector.
The great Keynes himself proposed a tax on stock market transactions, with the aim of slowing down speculation, and the American Green party has adopted a platform supporting a "Keynes Tax." In the 70s, economist James Tobin proposed what came to be called the "Tobin tax'' on all currency transactions.
Each of these has merits and demerits. The chief criticism of the Tobin tax was that it would require a high level of multinational coordination. But global cooperation is now the name of the game. Some form of Tobin or Keynes tax needs to be on the table.
No, neither of these economists got it exactly right for our time. There is work to be done. But the basic concept of a new global tax on financial transactions to fund the liabilities of the global financial world and support the inclusion of the world's poor and middle class in the prosperity equation must be part of the new global platform waiting to be born.
It wouldn't have to be much money from each transaction to add up to a huge global hope chest that could give citizens the return they deserve on their current investment. This new pot of gold could afford the financial world the opportunity to do something possible and useful, like ending poverty and greening the planet.