What’s the problem?
How easy is it for you to meet your basic needs, like housing or healthcare, without using the financial system? Do you think it should be possible to have an education or a home without plunging into debt, or healthcare and a pension without paying fee after fee to money managers? It’s very possible you are both a saver and a borrower – and modern financial engineering means it’s even possible your pension fund owns your mortgage, or your insurer owns your car loan – in other words you could be borrowing money from yourself and paying fees (twice) for the privilege!
The biggest corporations are also being diverted into financial activities – Apple and Microsoft are bigger financial players than many financial firms themselves. Even our governments try to solve more and more problems with complex financial engineering: the UK government recently sold some of its student loans to a group of hedge funds and pension funds so it could say it had less debt, even though they lost almost £800m on the deal, money that could have better been spent on education or health care.
What’s so bad about that?
The problem is that instead of meeting our needs in the best way for society we end up taking the way that makes most money for the financial system. Giving financial middlemen too much control over access to basic services can be costly, can exclude many people, can be bad for the environment, and gives financial firms too much power over societies. And it’s dangerous – we’re still suffering from the after effects of the financial crisis – and the bigger the financial system the worse the crisis. Right across the Eurozone our economies are only just recovering from the last crisis and it is everyday people who have paid the price. Meanwhile, our governments remain scared to help for fear of “upsetting” financial markets, meekly adopting policies of deregulation, privatisation and tax cuts that mainly benefit the rich.
What’s the alternative?
We must find new (and maybe rediscover some old) ways to meet our needs, including education, health, housing and pensions, without having to rely so heavily on the financial system. We need to find the ‘right’ level of financial services; let’s face it we didn’t need them for most of our existence! Together we can think of new ways for the 21st century.
How will it help?
Drastically reducing the role of finance in our everyday lives, in our governments and in our economies will give us the space and the opportunity to think of new solutions to meet the challenges of the 21st century and to make society safer and fairer, less exposed to unpredictable financial markets and their crises.
What steps could we take to get started?
- Coming soon