September 25, 2009
After a fruitful meeting with the Americans for Financial Reform, I briefly met Richard Trumka, the newly elected President of AFL CIO – the largest federation of trade unions in North America – and delivered a speech at a meeting with the ITUC. Here is the message I conveyed to our American friends:
The outcome of the upcoming G20 summit will be judged on what it can do to create jobs. Whether we take our cues from the OECD’s warnings, from top mainstream economists, or simply from observation, the unfolding menace to our economies is one: the financial crisis has been transformed into a jobs crisis.
This makes talk of an ill-thought "exit strategy" all the more dangerous. We must be honest: we are not confronted with a U-turn into growth simply because some journalists choose to talk about "green shoots". Unemployment remains alarmingly high. If we are to avert the prospect of seeing the number of unemployed climb even higher, we must remain firm. This is no time for pulling back from stimulus and investment.
If our economies were to plunge into a protracted slowdown, there is no telling when we would emerge and at what cost for our societies. One thing is for certain: we do not need an "exit strategy" from the stimulus packages – we need an "entry strategy" for the labour market. The primary goal for the G20 should be a commitment to creating sustainable jobs.
Afterall, it is also a matter of fairness, and justice. We will not allow workers to pay for this crisis twice: first by bailing out banks, and then by suffering cuts in public services and social protection.
The second commitment therefore, should be to ensure a decent life for workers as we come out of the crisis.
Finally, we must insist on proceeding all together. In an interconnected globe, a decision by some countries to go another way would spell trouble for everyone.
Of course, the G20 summit will also be about reforming our financial systems. The purpose of these reforms should be to avoid another such financial crisis in the future.
Industry lobbyists and the media are announcing that finance is ‘back in business’.
But finance shouldn’t go back to business as usual. In the absence of reform, even more crippling crises may develop in the years to come.
It is time to say openly that as things stand, finance just doesn’t work. Not without consumer protection, to protect families and their homes. Not without regulation of bonuses and renumeration, to protect our economies from short-termism and excessive risk-taking. Not without strong direct supervision of banks, hedge funds and private equity to prevent speculation and the reckless behaviour that brought us to where we are today.
It is time for brave measures that can ensure that financial services serve the real economy, such as a financial transaction tax. We are well-prepared for it, with a comprehensive study: a 0.05% share of financial transactions would allow for fair burden sharing and would by itself finance thousands of new jobs.
Posted by Poul Nyrup Rasmussen