Global finance has become a popular target from both the left and, more recently, the right, particularly the nationalist right. As Senator Josh Hawley, Republican of Missouri, said at the recent National Conservatism Conference, what he called the “the cosmopolitan economy” has encouraged multinational corporations to move jobs and profits overseas and then “rewarded these same corporations” for “investing their profits not in American workers, not in American development, but in financial instruments that benefit the cosmopolitan elite.”
Renationalizing finance is a pressing task for any transformative government. But so far, only the left has any tangible plans on how finance can be brought down to earth and tamed toward more humane ends.
Spin a globe and you’ll see a colorful mosaic of states snug in their national borders. But the world of finance has long ceased to work this way. There are nearly 200 sovereign countries, but globally only a few dozen banks matter. We don’t live in a world of islands but inside what has been described as a “matrix of interlocking corporate balance sheets.” Financial institutions operate across territories with little respect for borders, wreaking havoc on the ability of countries to plan for a sustainable future.
Despite recent criticism from some nationalist conservatives, the right has largely ignored the problem, distracting voters instead with fantasies about migrant workers and refugees as the true perpetrators of inequality.
President Trump tapped Goldman Sachs heavily to staff his cabinet and plans no walls for the movement of money over borders. The systematic defunding of the I.R.S. means that even routine audits are becoming rare, let alone the investigation of taxable income held offshore. Rather than extend tax surveillance outward, the 2017 Trump tax plan slashed the corporate tax at home.
In Britain, the situation is yet more farcical. Jacob Rees-Mogg, a leading Brexiteer and the new Leader of the House of Commons, worked in finance for decades and remains a partner in the hedge fund management firm he co-founded — now managed through subsidiaries in tax havens. Boris Johnson, Britain’s new prime minister, wants to turn Belfast into a tax-free zone. Recently he announced “whenever corporation tax is cut it yields more money” — but failed to add that this money has mostly been going to share buybacks.
Even when the problems are acknowledged by the right, as in the speech by Senator Hawley (who, to be clear, supported the Republican tax cuts), the details are foggy and more time is spent targeting the “cosmopolitan elite” than offering effective, concrete solutions.
By contrast, on the left, ideas are crackling. Elizabeth Warren recently announced her “economic patriotism” agenda, with financial reform at its heart.
Other proposals from what The Guardian called the “new left economics” target venerable institutions of financial management. Central banks — long seen as bastions of economic orthodoxy — are being called on to help avert an environmental catastrophe. Climate change poses imminent risks to financial stability that need to be factored in to central bank models.
Talk of encouraging “patient” rather than impatient capital through public investment banks is also on the rise. Nations have long relied on such banks to fund public infrastructures, but they can be reoriented toward financing technological innovation whose benefits accrue to society without the shackles of draconian rent-seeking intellectual property regimes.
Re-regulating the financial industry is also a priority. Ms. Warren has advocated a “21st century Glass-Steagall Act.” It would separate commercial from investment banking (as the original act did until its repeal in the late 1990s), thereby reducing the risk of banks being too big to fail.
Common Wealth in Britain and the Roosevelt Institute in the United States, two progressive think tanks close to camps of Jeremy Corbyn and Bernie Sanders, have broken new ground by suggesting that employees could receive small stakes in the corporate dividends that normally only go to executives and stockholders. They have floated the idea of national “social wealth funds” similar to what exists in Alaska, Norway, and the Cherokee Nation. Both ideas are designed to undercut the core principle that has guided the world of finance for the last half-century: that shareholder value is the lodestar of human action.
These plans take aim at economic globalization and the power of finance, opening them to the charge of nationalism. But politically, they are far from simply appealing to narrow interests. Played correctly, the left-wing version of nationalism looks two ways at once: inward, to renationalize control of finance, and outward, to make sure the benefits of domestic innovation are shared globally.
John McDonnell, the British Labour Party’s shadow chancellor, recently called for a new global architecture underpinned by democracy, solidarity and equality. His plans include scaling up funding for green investment and making British-led innovations freely or cheaply available to developing countries.
Such plans strike at the heart of global finance: They aim to bring it back under sovereign control, and make it serve national goals and local priorities. This would benefit those left behind in the past decades of financial boom and corporate excess. Without such reforms, working people will continue to suffer.
For decades, it has been common sense that states have no choice but to don “golden handcuffs” and clear the way for borderless finance. Finance has not delivered the promised rewards. The United Nations recently reported that despite a massive recent expansion of global debt, investment in developing countries has only marginally increased, and that in rich countries has actually decreased.
What gains there are have accrued to the few. The profits of transnational corporations have increased, alongside their sophistication in using tax loopholes to pay as little tax as possible — ideally zero.
Even while corporate tax rates have dropped to historic lows, transnational corporations — with the support of bankers and lawyers — shift a growing share of their profits to tax havens around the world. Estimates suggest that this costs the United States approximately 15 percent of its corporate tax revenue.
Right-wing economic nationalists speak of increasing the welfare of “their” people, but they do so by scapegoating outsiders and turning a blind eye to — if not actively supporting — the very machinery that has helped produce domestic inequality.
Without democratizing finance, wealth will never be shared in a way that rewards people fairly for their labor. Absent a new plan for managing money as well as goods, the economic nationalism that contents itself with the occasional installation bought through tax cuts — like Foxconn’s incredible shrinking factory in Wisconsin — deserves all the scorn it gets.
The American working class deserves more than empty rhetoric and publicity stunts that swap new bosses for old, new walls to contain the same old inequality. For real change in this country, footloose financial capital must learn to walk with the rest of us.
Quinn Slobodian, a history professor at Wellesley College, is the author of “Globalists: The End of Empire and the Birth of Neoliberalism.” Alexander Kentikelenis is a sociology professor at Bocconi University in Milan.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
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Home » Analysis & Comment » Opinion | Everyone Claims They’re Worried About Global Finance. But Only One Side Has a Plan.
Opinion | Everyone Claims They’re Worried About Global Finance. But Only One Side Has a Plan.
Global finance has become a popular target from both the left and, more recently, the right, particularly the nationalist right. As Senator Josh Hawley, Republican of Missouri, said at the recent National Conservatism Conference, what he called the “the cosmopolitan economy” has encouraged multinational corporations to move jobs and profits overseas and then “rewarded these same corporations” for “investing their profits not in American workers, not in American development, but in financial instruments that benefit the cosmopolitan elite.”
Renationalizing finance is a pressing task for any transformative government. But so far, only the left has any tangible plans on how finance can be brought down to earth and tamed toward more humane ends.
Spin a globe and you’ll see a colorful mosaic of states snug in their national borders. But the world of finance has long ceased to work this way. There are nearly 200 sovereign countries, but globally only a few dozen banks matter. We don’t live in a world of islands but inside what has been described as a “matrix of interlocking corporate balance sheets.” Financial institutions operate across territories with little respect for borders, wreaking havoc on the ability of countries to plan for a sustainable future.
Despite recent criticism from some nationalist conservatives, the right has largely ignored the problem, distracting voters instead with fantasies about migrant workers and refugees as the true perpetrators of inequality.
President Trump tapped Goldman Sachs heavily to staff his cabinet and plans no walls for the movement of money over borders. The systematic defunding of the I.R.S. means that even routine audits are becoming rare, let alone the investigation of taxable income held offshore. Rather than extend tax surveillance outward, the 2017 Trump tax plan slashed the corporate tax at home.
In Britain, the situation is yet more farcical. Jacob Rees-Mogg, a leading Brexiteer and the new Leader of the House of Commons, worked in finance for decades and remains a partner in the hedge fund management firm he co-founded — now managed through subsidiaries in tax havens. Boris Johnson, Britain’s new prime minister, wants to turn Belfast into a tax-free zone. Recently he announced “whenever corporation tax is cut it yields more money” — but failed to add that this money has mostly been going to share buybacks.
Even when the problems are acknowledged by the right, as in the speech by Senator Hawley (who, to be clear, supported the Republican tax cuts), the details are foggy and more time is spent targeting the “cosmopolitan elite” than offering effective, concrete solutions.
By contrast, on the left, ideas are crackling. Elizabeth Warren recently announced her “economic patriotism” agenda, with financial reform at its heart.
Other proposals from what The Guardian called the “new left economics” target venerable institutions of financial management. Central banks — long seen as bastions of economic orthodoxy — are being called on to help avert an environmental catastrophe. Climate change poses imminent risks to financial stability that need to be factored in to central bank models.
Talk of encouraging “patient” rather than impatient capital through public investment banks is also on the rise. Nations have long relied on such banks to fund public infrastructures, but they can be reoriented toward financing technological innovation whose benefits accrue to society without the shackles of draconian rent-seeking intellectual property regimes.
Re-regulating the financial industry is also a priority. Ms. Warren has advocated a “21st century Glass-Steagall Act.” It would separate commercial from investment banking (as the original act did until its repeal in the late 1990s), thereby reducing the risk of banks being too big to fail.
Common Wealth in Britain and the Roosevelt Institute in the United States, two progressive think tanks close to camps of Jeremy Corbyn and Bernie Sanders, have broken new ground by suggesting that employees could receive small stakes in the corporate dividends that normally only go to executives and stockholders. They have floated the idea of national “social wealth funds” similar to what exists in Alaska, Norway, and the Cherokee Nation. Both ideas are designed to undercut the core principle that has guided the world of finance for the last half-century: that shareholder value is the lodestar of human action.
These plans take aim at economic globalization and the power of finance, opening them to the charge of nationalism. But politically, they are far from simply appealing to narrow interests. Played correctly, the left-wing version of nationalism looks two ways at once: inward, to renationalize control of finance, and outward, to make sure the benefits of domestic innovation are shared globally.
John McDonnell, the British Labour Party’s shadow chancellor, recently called for a new global architecture underpinned by democracy, solidarity and equality. His plans include scaling up funding for green investment and making British-led innovations freely or cheaply available to developing countries.
Such plans strike at the heart of global finance: They aim to bring it back under sovereign control, and make it serve national goals and local priorities. This would benefit those left behind in the past decades of financial boom and corporate excess. Without such reforms, working people will continue to suffer.
For decades, it has been common sense that states have no choice but to don “golden handcuffs” and clear the way for borderless finance. Finance has not delivered the promised rewards. The United Nations recently reported that despite a massive recent expansion of global debt, investment in developing countries has only marginally increased, and that in rich countries has actually decreased.
What gains there are have accrued to the few. The profits of transnational corporations have increased, alongside their sophistication in using tax loopholes to pay as little tax as possible — ideally zero.
Even while corporate tax rates have dropped to historic lows, transnational corporations — with the support of bankers and lawyers — shift a growing share of their profits to tax havens around the world. Estimates suggest that this costs the United States approximately 15 percent of its corporate tax revenue.
Right-wing economic nationalists speak of increasing the welfare of “their” people, but they do so by scapegoating outsiders and turning a blind eye to — if not actively supporting — the very machinery that has helped produce domestic inequality.
Without democratizing finance, wealth will never be shared in a way that rewards people fairly for their labor. Absent a new plan for managing money as well as goods, the economic nationalism that contents itself with the occasional installation bought through tax cuts — like Foxconn’s incredible shrinking factory in Wisconsin — deserves all the scorn it gets.
The American working class deserves more than empty rhetoric and publicity stunts that swap new bosses for old, new walls to contain the same old inequality. For real change in this country, footloose financial capital must learn to walk with the rest of us.
Quinn Slobodian, a history professor at Wellesley College, is the author of “Globalists: The End of Empire and the Birth of Neoliberalism.” Alexander Kentikelenis is a sociology professor at Bocconi University in Milan.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram.
Source: Read Full Article