France Leads the Way on How to Treat Bankers

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Ben Cohen
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This image shows Nicolas Sarkozy who is presid...

Finally, a Western country has taken the initiative in actually making banks pay for the colossal damage they have done. From the BBC:

French President Nicolas Sarkozy has announced plans to introduce a tax on financial transactions. The 0.1% levy will be introduced in August regardless of whether other European countries follow suit. The tax is part of a package of measures set out by the president to promote growth and create jobs.... In an interview with French television, Mr Sarkozy said he hoped the tax would push other countries to take action.

"What we want to do is create a shockwave and set an example that there is absolutely no reason why those who helped bring about the crisis shouldn't pay to restore the finances," he said.

"We hope the tax will generate one billion euros ($1.3bn, £0.8bn) of new income and and thus cut our budget deficit."

Sarkozy is a center right politician attempting to introduce what is generally viewed as a left wing tax. The truth is that the financial industry is severely undertaxed, and anyone with a realist view of economics understands this. Above all, Sarkozy is a pragmatic politician who realizes that the status quo is completely unsustainable. He is behind in the polls to the socialist party and the public is eager to enact punitive policies agains the banks.

While there are political calculations at hand, it is quite a brave move to take the lead in introducing a tax like this - if it goes through, the argument becomes much more powerful for other leaders to do something similar.

The political pressure in Britain to enact a tax like this could be too much for David Cameron to fend off and the Conservative government might be spurred into action (despite having blocked similar proposals last year). It will of course be far, far harder in America due to the Republican congress and Democrats bought off by the banking industry. But the ripple effect in Europe should not be underestimated if Sarkozy does implement his plan. It will show that governments and the public do have the power to hold the banking industry to account, possibly marking the beginning of a new and more just era.

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