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Sharan Burrow Headshot

The Truth About Cats and Dogs

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As the G20 meeting looms, the anger directed at the banks is understandable. But it's a bit like being angry that a dog should chase a cat: we yell at the dog, but the real problem is that the dog is off the leash.

There is much righteous -- and rightful -- indignation washing around the globe right now as the second wave of the global financial crisis gathers pace.

Some have taken this anger to the streets, occupying financial districts. Others cling onto jobs that are under real threat. Many, many others simply wonder how the world has come to this.

What is common is recoil at the excesses of the world's financial institutions that appear committed to a form of Mutually Assured Destruction in their pursuit of profits.

They over-reached, got bailed out by governments and created the crippling public debt crisis, particularly in Europe, that now threatens the security and quality life of ordinary workers around the globe.

It is galling. But anger alone lets the banks off the hook.

Banks don't come with an internal switch that says "Enough! Let's slow down a little". Or "Let's just share this wealth around for the benefit of the community now." That's the job of government.

It's no wonder we hear so much about a 'disconnect' between the political class and the voters of developed nations -- a general lack of interest, and bewilderment in the state of affairs we call government.

When we see the banks get bailed out, with seemingly no consequences, while ordinary people pay the price with job and wage cuts through austerity measures -- who could blame a person for wondering where the loyalties of their elected leaders really lie?

We need a new political contract. The G20 leaders' meeting in Cannes next week is a chance for leaders to set a new direction for their governments and to reestablish a fractured trust with their citizens.

The jury is still out on whether we will see real leadership or just more of the same.

The London 2008 and Pittsburgh 2009 meetings were impressive. Without the bold leadership shown at those two G20 summits, many more financial institutions and many sectors of the real economy would have taken a much bigger hit.

But by Toronto in 2010 some leaders had changed, others were distracted and the orthodoxy of sharp austerity won the day, making victims of ordinary people and economic demand.

The concern from many attending Cannes is that this mindset will continue, that the focus will be how to help the financial sector get back on its feet, rather than the more pertinent question, what is the actual role of the financial system?

The start of the financial crisis saw promising rhetoric from governments around the world. The financial system would never again be in control of the real economy. Quality jobs would be at the heart of the recovery.

But 'slash and burn' has become the favored approach to managing the crisis, and the financial system is just back to business as usual and the cycle continues.

While workers were incidental victims of the first wave of the crisis, they are now under direct attack from their governments as the second wave sets in.

Workers' wages, their pensions and the bargaining rights that distribute wealth more equitably are in the direct line of fire, and basic and hard-fought for rights are now being characterized as 'luxuries' that need to be reined in as part of the austerity drive.

Instead of following through on comprehensive regulation of financial institutions -- the tail is now wagging the dog. Governments are dancing to the tune of the discredited orthodoxies of IMF 'labor and fiscal conditionality' and American lawyers peddling anti-worker policies.

Well it's time for we cats to start herding ourselves -- and demanding our elected leaders put the leash on the banks.

A first step would be to refocus on the reason we have banks -- to fund sustainable enterprise, to share risk, to facilitate the exchange of goods, services and ideas for the real economy -- and introduce measures to bring banks back to these basics.

Limiting the destructive risk-taking by large financial firms, and banks which are 'too big to fail' is needed.

A second would be to limit non-core activities, such as the manic pursuit of capital accumulation through derivatives trading, the so-called money market within a money market which fueled the original global financial crisis.

Creating a Financial Transactions Tax would go a long way to curbing short-term speculative trading, including high frequency trading.

And finally, we would broaden our focus to a comprehensive rethink of what it is we mean by economic growth -- grounding the concept in job creation rather than the cruder measure of wealth creation, as the primary benchmark of any global financial system.

Because ultimately it will be workers in productive employment, in economies around the globe, that will drive the economy out of this crisis -- not the bankers, the bond markets and the ratings agencies.

The international trade union movement will be at the G20 table, making the vigorous case for financial regulation, job creation, climate action and active labour market policies.

Time will tell whether Cannes will be the summit where leaders step up, but remember it is they -- not the bankers -- who were elected to lead, and begin the long process of winning back the trust of their people.

We need, they need, a new political contract.

Sharan Burrow is the General Secretary of the International Trade Union Confederation and a key voice of workers at the G20 meeting in Cannes.