Sarko to axe the Franco-German engine? | 91 comments (91 topical, editorial, 0 hidden)

Re: Sarko to axe the Franco-German engine? (4.00 / 4)

By putting severe restrictions on the free movement of capital to block arbitrage. Such restrictions were in place just a few decades ago throughout Europe, still are in place in many emerging countries. So there is no fundamental reason that prevents such restrictions. At the time, they were rather counter-productive because they were unilaterally decided by each country with short-sighted fiscal and political aims.

A uniform non-arbitrage taxation on capital flows between regions and business sectors (similar in implementation to the Tobin tax: add an extra spread by means of tax, to loan payments by one sector/region to a party in a more favored sector), agreed at EC level could enable preferential rates to underdeveloped areas, or eco/ethical businesses while controlling bubbles elsewhere, as was suggested in a previous diary by techno. It would eliminate the potential for "asymmetric shock" that was studied and dismissed before the EMU.

Pierre

by Pierre on Wed Sep 12th, 2007 at 07:51:45 AM EST
[ Parent ]

Re: Sarko to axe the Franco-German engine? (4.00 / 2)

Capital should be heavily taxed when it crosses a border. A simple flat tax might be okay.

Oye, vatos, dees English sink todos mi ships, chinga sus madres, so escuche: el fleet es ahora refloated, OK? — The War Nerd

by Carrie (migeru at eurotrib dot com) on Wed Sep 12th, 2007 at 07:55:29 AM EST
[ Parent ]

Re: Sarko to axe the Franco-German engine? (4.00 / 3)

I don't agree on the "heavily", nor on the "flat". I don't think all capital is evil, and practical implementation considerations call for a step-by-step surgical approach (if only to avoid toppling over a few areas with structural imbalances due to demographics and savings culture).

Pierre

by Pierre on Wed Sep 12th, 2007 at 08:10:05 AM EST
[ Parent ]

Re: Sarko to axe the Franco-German engine? (4.00 / 4)

Some might say this surgical approach is prone to political "manipulation," with politicians fiddling with rates and regional variances. Although imho all Capital allocations are political, it's just a matter of who has effective control over the political decision to allocate, and to what degree. And measures to increase the degree to which representatives of the people (as opposed to oligarchs) have control over this process is a good thing.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Sep 12th, 2007 at 10:07:46 AM EST
[ Parent ]

Re: Sarko to axe the Franco-German engine? (4.00 / 4)

Some might say this surgical approach is prone to political "manipulation,"

What is not ? (prone to manipulation)

Current trend of financial and trade globalization is also a manipulation affair, with lobbies keeping a lid on some business sectors, or wiping some others. And it was largely unchecked by populations (although westerners somewhat voted "yes" with their wallets, buying invariably the imported crapware).

In any case, the devil is in the details, and having public control of the details falls back to command economies, which do not compete very well with others in expansive eras. Of course, a command economy will be better off if the current system self-organizes into a catastrophic failure.

Pierre

by Pierre on Wed Sep 12th, 2007 at 10:19:10 AM EST
[ Parent ]

Re: Sarko to axe the Franco-German engine? (none / 1)

I would rate this comment a 5 if I could.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Sep 12th, 2007 at 10:46:49 AM EST
[ Parent ]

Sarko to axe the Franco-German engine? | 91 comments (91 topical, 0 editorial, 0 hidden)

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