I’ve said before that I’m entirely happy to listen to arguments that we need more, less, different or even no regulation of the financial markets in order to make the current events less likely in future. This particular justification though is one we can reject out of hand.
Most importantly, the international financial system has failed to meet two obvious requirements: of preventing instability and crises, and of transferring resources from richer to poorer economies.
I’m not sure we do want to prevent instability or crises: I was absolutely delighted when the Soviet Union fell over in a rather large crisis and with a great deal of accompanying instability. But I’m absolutely certain that we can reject that second idea out of hand. For we don’t actually want to transfer resources in that manner at all, from rich to poor.
(Allow me a caveat here, yes, of course we want to transfer food aid, vaccines and so on and the money to pay for them but that’s not what is being talked about here.)
There is indeed gross, shaming and disgusting poverty in the world and yes, we’d certainly like to do something about it even if only out of empathy with our fellow men and women. But crating up the wealth we enjoy and shipping it off (even if that were possible) isn’t the way that we’re going to alleviate that poverty. For the problem isn’t the way that such wealth (the resources being talked about) is distributed, it’s that some parts of the world currently create it and some others don’t. Why this is so is really rather the heart of the study of economics: not “why poverty?” but “why and how wealth?”.
An early and correct, so far as it goes, answer to that why and how wealth question was offered by a Scot we’ve just unveiled a statue to: “peace, easy taxes and a tolerable administration of justice are all that are required to lift a country from barbarism to opulence” seems to ring a bell. We might now want to go further, I for one am absolutely delighted that my taxes in part pay for vaccination campaigns abroad just as I am that they do at home.
But when we talk about what we might or might not do with hte international finance system we need to be absolutely clear. The aim is to allow the financing of trade, the movement of capital, the sending of remittances, certainly, but not the transfer of resources or wealth themselves.
Instead of the transfering of resources what we’re trying to do is facilitate the creation of more resources. After all, it’s not that complex a thought, that we’ll cure poverty by creating more wealth, is it?