Sunday, May 11, 2014

UPDATED: The 'Robin-Hood Tax' Gains Traction

In a declaration that will likely earn him the designation 'Enemy of the Capitalist State,' Pope Francis recently called upon the world to redistribute its wealth in order to reduce what is likely the greatest socio-economic scourge of our times, income inequality.

In his address to U.N. Secretary-General Ban Ki-moon and other U.N. leaders, the Pope said:

“Specifically, this involves challenging all forms of injustices and resisting the economy of exclusion, the throwaway culture and the culture of death which nowadays sadly risk becoming passively accepted” .

While Francis hinted that a more equitable tax regime would help in this goal, he was short on specifics. Perhaps progressive states in Europe have hit upon an elegant yet simple solution: the Robin Hood Tax, a.k.a. The Tobin Tax, also called, within its Eurpoean context, the European Financial Transaction Tax.

The levy, about which I have written previously on this blog, would be a painless and very progressive measure that could be used not only to address the aforementioned inequality, but also a host of other urgent issues confronting the world. It could create jobs; spur economic development beyond the financial industry; and combat climate change, global poverty and HIV/AIDS.

While it would be naive to believe that any one measure could solve all of our problems, the ability to mitigate them is clearly within the tax's purview.

In the current proposed version backed by an 11-nation coalition, here is how it would work, as reported by Katrina vanden Heuvel in The National:

The proposed tax includes a 0.1 percent tax on stock and bond trades and a tax of 0.01 percent on derivatives. It’s now expected that the tax will indeed be phased in, with the levy on stock-trades comprising the first step. Reportedly, the finance ministers involved in the negotiations plan to use the rest of the year to negotiate over taxes on derivative-trading, which could be introduced later in a second phase. While the German government is reportedly determined to get an agreement from the outset to include derivatives, there has been some resistance, including from the supposedly more left-wing French government.

Its benefits would be many. Opposition to it is fierce and passionate. But with every indication that it is rapidly moving toward a European implementation, a critical mass is being reached. The fact that progressivity is not dead in Europe should give us all enough heart to reignite our passion for a more equitable world, a world in which the neo-liberal agenda no longer completely holds sway as it gives to the few while willfully withholding from the many.

UPDATE: Well, it certainly didn't take long for the right-wing to react to the Pope's suggestion. Let's just say, they didn't take it well:


  1. Theodore Roosevelt, quoting Abraham Lincoln, put it this way, "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."

    'If that remark was original with me, I should be even more strongly denounced as a Communist agitator than I shall be anyhow. It is Lincoln's."

    Roosevelt continued:

    "One of the chief factors in progress is the destruction of special privilege. The essence of any struggle for healthy liberty has always been, and must always be, to take from some one man or class of men the right to enjoy power, or wealth, or position, or immunity, which has not been earned by service to his or their fellows.

    "At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will."

    'Every dollar received should represent a dollar's worth of service rendered - not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means."

    Roosevelt's "Square Deal" speech contains the blueprint for a healthy, stable democracy. It also demonstrates that there is nothing remotely radical in the very moderate policy advocated by the Pope. The only thing at all disturbing is to listening to the pro-oligarchic rhetoric of the FOX News shills.

    It all begins with the acceptance that, in a democracy, labour must be the superior of capital.

    1. All very true, Mound. Unfortunately, our present system, which fosters insatiable greed, prevents Lincoln and Roosevelt's logic from having any chance at a fair consideration. It also promotes the rabid absolutism espoused by so many, reflected, of course, in the terrible imbalances that exist today.

      In all things, moderation. There is no reason that couldn't have been the economic rule today, if we hadn't turned over the keys to the reprobates who think of themselves as Masters of the Universe.

  2. Lorne, income equality is a dream. Unfortunately the rich have a good grip on society and politicians. To make that dream reality does not look attainable -especially in North America. Sorry to be pessimistic.

    1. I don't disagree with your pessimism, LD. But the more voters who know about the possibilities, the greater the prospect for change.

  3. @LD - addressing income inequality does not mean imposing income equality. Some inequality is warranted due to genuine merit and market-considerations. It is when inequality becomes excessive, as is happening today, that intervention is needed. As noted by Krugman, Piketty and other economists too much income and wealth today is inherited meaning that the rich, by virtue of being rich, get ever richer while the poor, in consequence, grow ever poorer. Along the way, political power is likewise appropriated from the ordinary public to the wealthiest. Once economic and political power are "captured" you either must forcibly reverse it or democracy must be abandoned. Or else you just settle back before the giant flat screen with another cup of soma.

    I just got a steal on a new copy of "Capital in the 21st Century" that, along with about half a dozen other books, I'm wading through.

  4. You can take middle & lower income peoples IRA accounts & put a transacation tax on them. That is against income sharing.

    1. I have to confess, Anon, that being a Canadian I am not really conversant with the IRA accounts except that I know they are vehicles for retirement. I don't think targeting such vehicles is the intention of the tax although I realize that taxing transactions on institutional traders would likely filter down to the individual paying more in brokerage fees, etc. I guess it is ultimately a matter of perspective as to whether the benefits of such a low tax would outweigh the drawbacks.