Columnists

Alice Klein
Big fish will have to share profits if leaders back Robin Hood Tax

| June 18, 2010

I hear a helicopter flying outside my window as I write this. It's a reminder of how annoying it is to live under the upcoming G20's semi-militarized thumb.

But much as the G20 is a blight on Toronto-land, it is also our best global hope on the immediate horizon. I know that's a stretch. But while we gird for the typically depressing news when world leaders gather, there are bigger forces in play that just may deliver some unexpected small steps in the right direction.

For example, one supremely smart idea the expensively gathered could move toward endorsing would address the government debt crisis, the climate crisis and the outrageous blight of poverty in the developing world.

It is actually being pushed by Europe's conservative leaders and appears to have caught the interest of the U.S. president. In the UK, it has famous supporters like Ben Kingsley and Bill Nighy doing fabulous YouTube agitprop.

In the U.S., celebrity economists like Jeffrey Sachs, adviser to Ban Ki-moon, are on side. They call it the Robin Hood tax, because the term financial transaction tax (FTT) just isn't nearly as sexy or descriptive.

The idea that traders and speculators should pay a tiny tax on their dealings continues its surprising rise. It was actually the last G20 in Pittsburg that suddenly lifted the FTT from a lowly "utopian concept" right onto the world's possible to-do list. Then came another little adrenalin boost in November when the final Copenhagen agreement committed to exploring new financial instruments (like the transaction tax) to raise the huge billions developed countries need to fund climate change mitigation, and adaptation in the developing world.

Of course, our prime minister has done everything he can to prevent the global push from going anywhere. He sent his ministers around the world to pump his intransigent opposition to the FTT at the same time as he worked his hardest to keep that troublesome subject of climate change out of the discussions.

But there are signs that things may not be falling into place quite as Harper planned. Only a few days ago (Monday, June 14), the PM had to announce a turnaround on climate change after pressure from other national leaders and civil society forced him to put the issue squarely on the table.

And best of all, conservative politicians like Germany's Angela Merkel and the UK's David Cameron have insisted they will go with a Robin Hood tax on their own even if Canada prevents a global go-ahead when financial sector reform is discussed at the G20.

Seems that even a billion dollars of security won't keep the critical stuff from jumping across Toronto's new security perimeter into the centre of world attention.

But don't get too excited. Harper is still banking on his tax- and spending-cuts ideology winning the economic day, and he might be right.

Funny how he's so terribly sensitive about inflicting pain on the financial sector in the form of an "unfair tax" but has no problem advocating completely unfair hardship on those at home and abroad in need of public supports due to illness, youth, joblessness, disability or age.

He claims that a financial transaction tax would take money out of consumers' pockets. That's nonsense, since most consumers don't make enough trading transactions in a lifetime for the 50-cents-per-$1,000 traded to add up to more than a few cups of coffee.

But how much does the speculative currency frenzy that threatens the euro cost the real-world economy? In an FTT world, at least the public purse would get a boost and the urge to swarm would be tempered by the new tax levy.

Like the sword of Damocles, currency attacks pose a literal and ever-present threat of another cascading crisis. In fact, both the Toronto and New York stock exchanges experienced such speculative volume on single days in the last few weeks that there was fear of a system crash.

But Harper's most outrageous anti-FTT argument is that since Canadian banks didn't require bailouts like those in the States and Europe, it would be wrong to "punish" them with a new tax.

This is a stunner: the entire stimulus spending program (remember that?) was a taxpayer-funded response to the need to contain the economic crisis brought on by the financial meltdown. That response has brought the economy back to life, and now Canada's banks are making billions again.

The worst of it is that Harper's approach is not only messed up ethically and environmentally, but also economically.

Many economists (like Paul Krugman of the New York Times and Martin Wolf of the Financial Times) warn that contracting public expenditure at this delicate time in the recovery is seriously dangerous. They say it would not only retard growth but also trigger a deflationary spiral that would be much more difficult to break out of than the modest inflation resulting from a continued, albeit more restrained, stimulus approach.

Call me a hope-monger, but things are so bad right now that even small victories do warrant a tally, even if they haven't yet fully delivered.

The existence of the G20 is actually one of those. It's hard to believe that until 2008, only leaders from the eight richest economies had seats at the well-laden global governance table. Now, expensive as it is to host, the G8's ability to accomplish anything of real significance is pretty much past its expiry date. There is some ironic good in that.

But the G20 is another kettle of fish. All the world's a stage these days, and some new style of international governance keeps inserting itself into the script. With China, Brazil and India breaking all developing-world clichés and Europe's conservative heads of state actually spoiling for some Robin Hood action, a spectacle is unfolding that is no longer quite under anyone's control.

World events have provided a rocky lead-up to this meeting, not least of them the Gulf of Mexico bleeding oil from its injured mantle.

I'm not saying the earth will move next week, but I can't see Harper and his banker buddies going home completely happy either.

 

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