By now, the Cyprus government is still haggling with EU (and its banks) over how to save Cyprus economy, without anyone paying for it.
But just a few days ago, they almost managed to get away with a “deal” to pay for it by “taxing” 10% of all bank accounts in Cyprus. This didn’t have much of a shock value in the West, except for perhaps in Cyprus, where the populous protested and forced their representatives to vote “no” on the “deal”.
It should come though as no surprise for the pessimists, because Western Democracies have had a string of such “deals”, which gives new means to the lack of accountability.
Representative “democracies” really ONLY have 1 leg to stand on for its claim of superior legitimacy, that it is “accountable” via its representativeness, through “votes”.
Except lately, it seems, the accountability is turned upside down. People can feel it, it FEELS like the government representatives, voted into office by the People, seem to be more accountable to the banks (and other elites), and less accountable to the People.
“Too big to fail”, “too big to prosecute”, the messages of excuses are every where, but people can’t put their fingers on what’s wrong with the system.
The answer is: The system of “votes” is being distorted into a system of “do-overs”.
What do I mean?
“Votes” were meant as a final Consequence for politicians’ decisions. If politicians do wrong, they get voted out.
But in today’s many “democracies”, it doesn’t matter what politicians do, the People vote for “do overs,” so politicians also vote for “do overs”. Why? Because NO ONE want to suffer the consequences.
Oh, the banks and corporations are failing because of politician’s lack of oversight? “Do over”! Banks and corporations and government get more money, to fix a financial market that should not have collapsed.
Cyprus was a glaring example of the “do over” system going to the extreme: Ex Post Facto Taxation (which under most systems and rule of law, is considered to be unconstitutional, although is somewhat OK in US).
Ex Post Facto Taxation is also what’s called “retroactive taxes”. 1 other case of retroactive taxes is where the Indian government raided Nokia’s office in India, claiming that Nokia owed some millions in unpaid retroactive taxes. Ex Post Facto Taxation is where the government impose a new tax on something that you did or earned back before the new tax law period. I.e., I bought a new house back in 2009, and if the government decide to pass a new law in 2013 to tax me additional 1% for my house for the year 2009, then this would be an Ex Post Facto tax. (The unfairness is obvious: Had I known that the new house would cost me an additional 1% in 2009, I might have decided against buying it, or could have done something to remedy or avoid the tax).
Ex Post Facto Taxes are effectively “Do-overs” for failed economic policies, because if the voters KNEW about such taxes, they probably would NOT have voted for the same politicians who are now taxing retroactively for their own bad planning and to aid banks and corporations. I mean, think about it: If you were a voter, and you knew that the politicians suggested that they should BAIL out the banks and the corporations, would you have voted for these politicians?? Not likely.
The Cyprus “raid” on bank accounts was Ex Post Facto Taxation, but they didn’t call it that. It was essentially a tax on all bank deposits, made years before the tax law. If people had known about such a tax years back, they probably would have rather put the money in their own mattresses rather than into the banks in Cyprus.
But this only point to why there was little shock generated in the West over this, the West has been doing equivalent of “Ex Post Facto Taxation” for years now to save their economies.
Really, any time the government is spending money that they don’t have, it is “Ex Post Facto taxation” which, by printing more money, is taxing the value of all money held by the People.
Worst part, like Cyprus, the taxes go to save only the Elites, who keep the politicians in power.
Cypriots balked at the deal, because that deal was a little too direct. There was almost no pretense that the government was raiding private pockets to save their own rich, and to save the hides of their own politicians. But in the end, if Cyprus just printed more money, would that not also be “Ex Post Facto taxes”? Yes, just none of the new taxes will go to EU banks at least.
*So there you have it, the last vestige of accountability has gone from the Western Democracies. Votes don’t mean any thing now, because the governments are doing all kinds of “deals” retroactively to back the wealthy and the elites, at the expense of the populous. Sure, there is always the NEXT election cycle, but by then, those votes are just really just “polls” after the fact. You can’t force them to cough up the money they already taxed you.