By Bernard Hickey
The Occupy Wall Street movement has gone global in the last month and has even spread as far as New Zealand, albeit in a toned down and diffused way.
Many of the complaints of the movement are valid, although the situation is different here.
The way Wall Street investment bankers took control of economic policy in America and Europe over the last 20 years was shocking and disastrous. The populace are only now waking up to the fact that all (yes 100%) of the economic growth created in the last 2 decades went to the wealthiest 1%, most of whom were bankers or hedge fund managers, because regulations were eased to allow banks to grow massively.
The real outrage happened 3 years ago when the banks blew up and were rescued by US and British taxpayers, yet the bankers responsible for the explosion of unsustainable debt kept on paying themselves egregious bonuses and salaries and gambling with the backing of their government guarantees.
Now those who have either seen their real incomes fall or have lost their jobs are rightly calling for massive reform of taxation and regulation to shackle the investment bankers. Even some of the richest bankers, bureaucrats and thinkers agree.
We haven't had the excesses of the investment bankers here. Our banks are relatively simple, albeit equally large, concentrated and profitable. There was some awful behaviour in the finance company sector which forced several very large taxpayer bailouts that had much of the whiff of the bailouts on Wall Street. We were lucky most collapsed before our deposit guarantee was introduced.
New Zealand also hasn't seen the complete transfer of income growth from the 99% to the 1% over the last 20 years, but there has still been a widening of the gap between the richest and the poorest. Last year's tax cuts accelerated that movement and the property boom from 2002 to 2008 created a two class society of rich property owners and tenants.
The scale of the outrages and the damage was proportionately lower here, but there's still plenty for Occupy New Zealand protesters to campaign for:
1. A land tax to rectify the massive transfer of wealth to the landed generation and make our budget more sustainable.
2. Reverse the tax cuts for the highest income earners, which are not working to boost economic growth and are being paid for by foreign borrowing.
3. We should join the European push for a global Financial Transactions Tax to forcibly reverse the financialisation of the economy.
4. We must avoid taxpayer bailouts of our biggest banks. The Reserve Bank's Open Bank Resolution proposal is heading in the right direction.
5. The retirement age needs to be extended to 67 over time, as recommended by the Retirement Commissioner.
6. Our banks must further reduce their reliance on flighty foreign bank funding that can freeze in a crisis.
7. We must pull out of Free Trade agreement talks with America, which is an enemy of free trade and bankrupt both politically and financially.
8. We must balance our budget as quickly as possible to reduce the burden of debt on future generations.
9. That means reducing consumption of imports, saving more, producing more and exporting more.