You have to be power mad or government greedy to think the answer to our current economic problems is to tax lower tax countries more.
Step forward Mr Sarkozy, threatening to wreck the summit if he doesn’t get his way. Step forward Mrs Merkel and the core EU to support him.
You have to be mad or bad, to think the solution to the problems of world capitalism is to smash the windows and break the computers in a nationalised bank in the City.
Step forward the violent protesters against the G20.
The problem with the Franco-German stance is it makes no sense. It cannot possibly solve the current problems. Threatening more regulation and higher taxes in the future is not suddenly going to persuade people to buy more cars and homes, is not suddenly going to resolve the current impasse in the banks, nor will it suddenly make monetary authorities wise and supportive worldwide so we can carry on as if nothing had happened. Trying to tax people in Jersey more, or trying to limit what hedge fund managers can buy next year will not create a single job, write a single new mortgage, or buy a single new green source of energy.
The problem with the yobs and protesters is they have no positive agenda. Destroying wealth others have created does not make the poor rich. Invading a nationalised bank is an attack upon poor as well as rich UK taxpayers, as we all have to contribute money to repair the damage and to pay for the huge police presence to stop them smashing up more banks. Breaking windows means more energy will be expended making more glass to replace the ones we have lost. That means hastening climate change on their own theory, the very climate change they claim to want to prevent.
The G20 will cobble together a communique with hopeful words and confirmation of reflationary action already taken by the major countries. It will be a small step on the road to more world power for China. President Obama will fly east with his reputation for articulate charm intact and with the prospect of a nuclear arms agreement with Russia closer. No great harm will have been done. The G20 will not save the world, but it shouldn’t make the situation any worse.It will have put some money in the tills of some London businesses, whilst disrupting the lives of many other Londoners.
Even Mr Sarkozy will probably stay and eat all the meals provided for him. I don’t care whether he does or doesn’t. He just reminds me why I think the EU can be such a deeply unhelpful organisation dedicated to too much useless regulation and to high taxes, at a time when we need lower taxes and good regulation of the things that matter most.
The EU’s vast and expanded army of regulators over the last decade was looking the wrong way and regulating the wrong things in financial services. Instead of rewarding these regulators with higher salaries, bigger bonuses and more assistants, to make a bigger mess in the future, we should be changing regulation for the better. We need fewer regulators, but ones who can see where the true problem lies. We need people who understand the need for prudent regulation of overall cash and capital. We need people who can reduce all this box ticking process driven detailed work which did not stop a single dodgy mortgage or stave off a single banking failure. We need regulators who understand that making everyone show a passport and a gas bill before conducting a transaction does not prevent money laundering and is a waste of time and money.