Capital

Barack Obama has managed to gather enough votes in the U.S. Senate to pass a law on financial reforms for the biggest reform since the stock market crash and subsequent Great Depression of the 1930s. Monitoring of the financial sector will be strengthened, and customers will be better protected when purchasing financial products. Derivatives and hedge funds — the triggers of the financial crisis — will be put under tighter control, and big banks must meet stringent capital requirements.

And although Wall Street took an unprecedented lobbying offensive (according to the New York Times, the largest bank, J.P. Morgan, paid up to $7.7 million to Congress members and their parties last year alone), they did not manage to stop the law. However, this series of measures was unthinkable five years ago, when returns on investments seemed to grow sky high, and there was no action taken on bonuses and special payments to the bankers.

Those days are definitely gone. A financial crisis — which in turn provoked a global recession, which is still being digested — has made it clear that there should be a countervailing political power against the only truly globalized world power of capital. Not only in the United States, but also in the G-20 and the European Union, politicians know that they had to grab deeply into the Treasury, at great cost to their taxpayers, to pay for the rescue of a sector that could not go bankrupt and had been imagined untouchable. This requires that sector to pay the price.

Not only are increased supervision and a return to traditional banking now promoted as a remedy, but also, gradually, the idea of a capital tax in one form or another is being proposed. That would only be logical. However, a minimum tax on financial transactions (now totally untaxed) or a tax on capital gains (nonexistent today) would not be fair. When labor in the real economy gets almost unpayable because it is nearly taxed away to half its value, then governments are obliged to find new bases for taxation. That is certainly the case in the financial sector, which is still standing because the taxpayers enabled it to continue.