Who Benefits?
While most reforms are zero-sum games (taking from one person to give to someone else), the reform proposed on this site is a reform that benefits around 96% of society. This is a calculated figure, not rhetoric – the benefits will far outweigh the costs, and while some areas of the economy may need to go through a transition, the economy as a whole will be far healthier after the reform. This articles looks at both the winners, and the losers.
The Losers
It’s important to know who has grounds for resisting the reform – this groups will be the ones who spend most on lobbyists once legislation (in either the UK or the US) starts to make progress.
It is important to note that the financial loss to the following groups is far outweighed by the financial gain to wider society. Despite that, these groups will do everything they can to protect their own interests, so businesses, government and the public must be willing to ’shout louder’ than the lobbyists.
In brief the ‘losers’ are as follows (each link goes through to further information on how this sector of the economy will be affected):
- The retail (high-street) banking sector (but not to the extent that most people assume)
- Mortgage brokers and estate agents, who will never experience another debt-fueled asset price bubble in housing, as they did between 1997 and 2007. (On the flipside, they will also never experience such a total decimation of jobs and businesses in that industry as they did in 2008-2009).
- Loan sharks – as people’s depending on debt falls, and their job security increases, making it less likely that people will need to borrow from them)
- Lenders that depend on ultra-cheap borrowing (store cards, buy now pay later schemes, personal loans for people with poor credit histories)
- The credit card and personal loan industry (since funds available for lending will be directed essentially by the preferences of savers and investors, it is likely they will productive uses of their funds – investment in businesses, for example – over pushing debt onto consumers that don’t have the ability to repay).
Considering recent events, these groups may find it hard to drum up much sympathy or support from the wider public, but they could still be very effective in spreading scare stories in the media and direct to politicians.
The Winners
- Everybody else!
More specifically:
- Low paid workers
- The middle classes
- Small business people
- Entrepreneurs
- Asset management & wealth management firms; pension funds; mutual funds
- Stock brokers
- Corporations
- Environmental causes
- Infrastructure
- Public transport
- Education
- Health care
- Charities
- University students
One very interesting point to note above is that while commercial banking and the ‘debt-pusher’ side of the financial sector will reduce in size (and therefore oppose the reform), the ‘investment’ and wealth management side of the industry would benefit significantly. This means that – once they understand that they will benefit – they may become a strong ally in reform, and help to counter the lobbying power of the commercial banks. In addition, large corporations and small businesses would benefit from the reform. Public sector workers and taxpayers will benefit massively. University students may find the cost of educations drops. Environmental causes and charities will benefit from increased donations as people find their disposable income increases.
Putting It Into Proportion
On the information above, a rough estimate would suggest that 3-5% of the industries in the economy would be adversely affected by the reform, and around 3-5% of the population would find their income reduced as a result of the reform.
This means that 95-97% of the population would find their living standards increased as a result of this reform. In response to the question “who benefits?”, the answer is “almost everyone”!