The crash that shook the world

The crash that shook the world
October 8th 2018 / 
Robin Hood

Some of the world's poorest countries were hit hard by the financial crash and are still struggling to recover. For us to really fight poverty and the causes of climate breakdown, we need to transform our financial system - to make it work for people and planet.

On September 15th - the ten year anniversary of the start of the banking crash - we at Robin Hood Tax (alongside unions and other campaigning organisations) launched the 10 Years On campaign in the heart of the City of London. We demanded that a decade after the crash and austerity, we need a financial system that works for everyone.

In the UK, banks were bailed out and we were sold out. Since 2010, we’ve seen our hospitals and schools cut by £50bn - the same amount that bankers from the Big Four made in bonuses over the same period. Austerity hit those least responsible hard, with little impact on the system or people that caused the crash.

This is even truer for developing countries, where the actions of bankers in the UK and other rich countries hit public spending hard, and saw countries turn inwards, away from global development issues. We recently saw politicians meet in New York to discuss the Sustainable Development Goals - a series of targets to combat (among other things) poverty, climate breakdown and inequality. But not enough is being done to turn the tide on these pressing issues.

Wealthier governments have failed to meet their international commitments to poorer countries, with contributions stalling at 0.3%, less than half the 0.7% promised.

And it’s not just aid that’s been hit hard. In 2009-10, low income countries lost out on $65bn from tax - this could have paid for essential public services like health and education. Some countries are still struggling to recover from the banks’ crisis and money for these things are needed now.

Why the urgency?

Right now, 650m people live in extreme poverty, 800m people are malnourished and 57m children miss out on primary school.

These goals need funding. As it stands, between $3 and $11 trillion per year will need to be raised to meet these targets. While some of this can be paid for out of countries' taxes, aid budgets and investment, there remains a big funding gap of $2.5bn per year.

What can we do about it?

We need to make sure that those who can afford to help, make a contribution to reaching these goals. A Robin Hood Tax could go a long way to hitting these targets. A global tax on financial transactions (those largely done by the financial sector, not people), could raise up to $500bn every year. And we know they work: existing taxes already raise $30bn a year. And we know they can help people: France brought in a financial transactions tax in 2013 and spends 50% of it on aid and helping people living with HIV/AIDS, TB and malaria all over the world.

We could do more.

Current proposals are cause for hope, particularly in Europe. 6 months of the EU FTT (which could raise £19bn/year and is in the later stages of talks) could plug the funding gaps for childhood immunisation, malaria protection, and mother and child malnutrition, helping save over 7,000 children’s lives in developing countries every day, with money left over to send 90 million children to school a year.

And if we’re able to push this out across major financial capitals everywhere, it wouldn’t just help raise money. It would also make our financial system a lot safer. A Robin Hood Tax can help prevent the damaging types of trading that led to the financial crisis in 2008.

And on the tenth anniversary of the crash, we can’t afford not to change our financial system for good.