Tax speculation - save the planet

[Johnnywas]

The idea has been around for some time that Governments should tax international currency transactions to prevent speculators profting from short term movement in currency prices.  According to James Tobin the the tax would be effective if it were set at about 0.5% of all the exchange transactions

The tax could be levied by the UN and used to meet the UN's Millenium development goals including reducing extreme poverty, reducing child mortality rates and fighting disease epidemics. It could also  be used  to provide finance for investment in low carbon technology in developing countries which would also help the poorest.

In a world where decisions by multinational companies and the big nation states impact on the worlds population we need the United Nations to be properly funded in order to deal with the uneven impacts of world development.   


j

[Jon Teunon]

Firstly I would like to see far more effort going towards closing down Tax Havens, which according to estimates by the Tax Justice Network, about one third of the world's assets remain untaxed in off shore accounts and that:

"….the amount of funds held offshore by individuals is about $11.5 trillion – with a resulting annual loss of tax revenue on the income from these assets of about 250 billion dollars. This is five times what the World Bank estimated in 2002 was needed to address the UN Millenium Development Goal of halving world poverty by 2015. This much money could also pay to transform the world’s energy infrastructure to tackle climate change."

As well as the fact that they are also used by organised criminals and terrorists...

[Strategist]

In case there's anyone here interested in Tax Justice who is unaware of Richard Murphy's site, may I recommend it as highly as I can:
http://www.taxresearch.org.uk/Blog/

I honestly don't think there's a more prolific or essential blogger currently active for information you'll not get elsewhere.

Hat tip to Charlie, came to it from the excellent list of links on the right hand side of his own blog page http://itslifejimbutnotaswknowit.blogspot.com/

[Johnnywas]

thanks

i do occasionally look at Murphy's site.

This is a good article on the Tobin Tax by Larry Elliott

http://www.guardian.co.uk/business/2009/nov/09/bank-tax-pays-for-development

also  Paul  Krugman on the economics -

http://www.nytimes.com/2009/11/27/opinion/27krugman.html?_r=1

[Brigg57]

I have to disagree about Richard Murphy's blog, which I find misleading and full of bluster - Keynesian without Keynes' intelleigent appreciation of changing realities. His snorting at the possibility of a debt crisis in Greece a week or so ago said it all for me after a growing dissatisfaction with what he was writing - Greece is now plunged into a crisis whihc loos set to spread to Spain and Portugal. As Greek workers strike and riot, the support for the Socialist govt in Spain is crumbling.

Brown and Darling are key supporters of the Tobin tax, and has been stymied by Obama - I can see why on both counts. Brown is worried that high tax rates on banks in the UK might lead to a flight of top crooks from London to New York and Shanghai, among other places, thereby reducing the UK's reputation as top crook centre in the world. A Tobin tax would end that, preserving London's crook status. Obama had different interests, though who knows? They may yet converge.

My only problem withg a Tobin tax is whether it would do the trick of just taxing the crooks a little. Obama's lates plans to separate banking and investment capital have real problems - of definition. Boring as ditchwater - as boring as bankers love it. Bankers are a lot cleverer crooks than MPs - they employ clever people, rather. They are usually one step ahead of laws because they employ the best lawyers. This is a real problem - it comes down to power, not inequality, in the end.

Jwas, that's a nice idea. An international body armed with such powers could certainly do that - shame the UN is on another planet.

[Johnnywas]

Jwas, that's a nice idea. An international body armed with such powers could certainly do that - shame the UN is on another planet.

another world is possible

[Strategist]

Brigg said

Richard Murphy's blog, which I find misleading and full of bluster...His snorting at the possibility of a debt crisis in Greece a week or so ago said it all for me after a growing dissatisfaction with what he was writing

Interesting!  I'm willing to entertain the possibility that Murphy isn't infallible, if you can make your case clearly.  I can't find the post on Greece to which you refer.

In the interim, I'll stick with the positives outweighing the negatives by about 99 to 1 as far as he is concerned.

Just as one example, his campaign on country-by-country reporting is brilliant and could really change the game on the global citizen being fucked over by the big corporations, and all purely through a little bit of glasnost - just letting us all see the way they move their money. 

[Brigg57]

Strategist,
Rob has been posting extracts from Murphy's blog for quite a while here, and I've been criticising most of them as they appear. I shouldn't reject them because of Murphy's political economy, because any information is welcome. I prefer teh FT, and can’t afford much more.

The post on the Greek crisis, courtesy of Rob, is as follows - http://www.taxresearch.org.uk/Blog/2010/01/26/investors-flock-to-greek-bond-issue/

I see the difference as one between someone who thinks the economic and financial system basically works, but has to be regulated because of greed; and my own, which is that greed is the consequence, not the cause of a fundamental instability in the capitalist economic mechanism itself. I'm not a dogmatic Marxist on this(I dislike Marx fundamentally on his approach to history and ideas), but wrote a series of posts on Marx's economics in which I argued that he shouldn't be taken as Zeus but was providing the beginning of an understanding of how the capitalist economy works. Like all my posts, they’re intended for debate, and I don't follow with monologues if the debate seems to hit its limits. Maybe I'm wrong to do that, I’m never sure.

If you want to debate that, be my guest.
.

[Brigg57]

oops - forgot.

Jwas, you're absolutely right - a better world has to be possible.

But the Tobin tax is in this world, and we have to point to its likely use in this world as a tactic to rpeserve and protect geographical cetnres of exploitation and fraud, as well as the way in which such a tax could be used in an international society which paid more than lipservice to human rights and starvation.

I'm sure that Tobin himself would want your solution - so would I.

[Johnnywas]

there seems to me an opportunity to forge a broad agreement that the financial sector should pay more tax and the rate should be set internationally

James Tobin was a moderate Keynesian who had no plans for the revenue raised by a  tax on currency  but thought that a currency tax would reduce speculation in currency

the alter globalisation movement (see attac) want to tax all fianncial transaction to fund development in third world

http://www.attac.org/en/whatisattac/international-platform
   
Brown and Darling want the tax because they are attracted to the idea of generatingh more income from the financial sector but they are scared of finance capital fleeing London if they raise taxes   - and while its obvious that they are both compromised by their own timidity they do have point - not only will Britain become poorer as a result of that flight but to the extent that capital exits the UK the tax won't help the country balance its book either if the financial sector casts off jobs in London     

there is however another reason for wanting a international tax  on  speculation. that is that we want the people in advanced countries to organise politically to manage the consequences of an increasing globalised world

we might hope that to be achieved through a socialist international but the political left has traditionally demanded action by the state. it is true that the anarchists tended to posit instead unions or cooperatives but  Unions and Cooperatives  are not better organised than the United Nations. there are few genuinely international unions outside of the wobblies 

one of the issues is that the United Nations is not "democratic"

but we can't wait until the United Nations  and all its members become democratic before we begin to solve the problems of climate change and world poverty

by demanding action from the United Nations we may force it to reform  in a  democratic direction.  the EU started as an Iron and Coal agreement and has gradually evolved so that now it increasingly has the form of a democracy and perhaps the aspiration to become a democracy.

so how difficulty is it to create a United Nations ?

Its not easy - but how many of the left have invested effort in local action groups, in community campaigns, in building from the bottom. the answer is that the local this has been the main focus of a political investment by generations.

no serious effort has gone into global governance even though socialist are meant to believe in the value of collective action. instead of building collective institutions we have relied on the small, the micro and frankly sometimes the trivial. the result is that at a national level politics is dominated by competion and rivalry. and where those rivalries are supressed it is by free traders. free traders whose logic is don't do anything.       

but we do  need to do something - we need to find  collective to solutions  to problems which are running out of control. i don't want tariff wars but we need to provide direction and planning to industry.  we need global action.

at a global level, politics is currently marked by the absence  of politics - but the absence of politics isn't the absence of  power and exploitation.

to create an international democracy we need international institutions with a defined purpose. if the tobin tax provides that purpose then all the better. 

[Jon Teunon]

I can't see the States allowing the precedence of letting the UN have the power to co-ordinate this kind of policy. What next - a harmonised global tax rates, leading onto socialism (sic)!! It would make Obama look 'weak' in a country whose electorate appreciate macho knee jerk 'statesmanship'...

[Johnnywas]

right wing republicans don't like it you say

never mind -

war on want have just produced a rather neat little video

http://www.waronwant.org/campaigns/financial-crisis/the-robin-hood-tax

[Strategist]

The post on the Greek crisis, courtesy of Rob, is as follows - http://www.taxresearch.org.uk/Blog/2010/01/26/investors-flock-to-greek-bond-issue/

Reading that post, to me it seems to be "snorting" at the idea that the British will have a bonds crisis, not at the idea that the Greeks will.

And by the way, it looks like the EU is mounting a counter-attack on the specualtors, and (maybe?) the people who have taken short positions on whatever it is (euros, Greek govt debt??) are going to have their fingers burnt. 

I see the difference as one between someone who thinks the economic and financial system basically works, but has to be regulated because of greed; and my own, which is that greed is the consequence, not the cause of a fundamental instability in the capitalist economic mechanism itself.....If you want to debate that, be my guest.

I dunno if Murphy is a pure Keynesian in that sense.  But even if he was, he may still be proposing some practical reforms that will do some good at the margin in the short term, that any Marxian could support. 
 

[Strategist]

PS Just reading more posts on Richard Murphy's blog - he has an amazingly prolific output, and to me, they seem top class.

I genuinely can't think of a campaigner out there mixing it in the real world who's landing more punches on the financial services sector right now. 

[Brigg57]

Jwas, JT , Stategist,.

Strategist – that article was drawing a parallel between Britain and Greece to show that a bond crisis is an illusion and right-wing panic. If only. If I were an investor following Murphy’s advice, that article would give me pause for thought as to whether I should be getting me a different adviser. Bond markets are volatile, and fragile, and the mere threat of a crisis can frighten the most radical of governments; if Murphy is in a comfort zone about them, all I can suggest is the old maxim – if you can keep your head while all around you others are losing theirs, then you may have missed something.

I’ve no doubt that Murphy’s calls for reforms can be supported by any Marxian..they can even be supported by me. But I think a lot of reforms by Church campaigning groups, which are prolific in their charitable activities, can be supported by non-Christians like you. It’s called decency, rather than Christianity; a sense of justice, rather than Marxism or reformism.

But the politics (or religion in the other example I quote) behind  the reforms are what’s at issue. I hate saying this, but I’m not really a Marxist – haven’t been since about 1980, when I finally sloughed off historical materialism, and gradually pushed off the Marxist idea of the State. Having said this, I’m sure I’ll continue to meet people who for some reason will blame me personally for the Katyn massacre (it has happened!).

However, Marxism (the Marx of the first volume of Capital that is) provides an insight which Murphy and non-Marxists lack. I know that large parts of that book can be used to cure insomnia, but within the theory there is spelled out most clearly that insight – in looking at our economic mechanism, it sees beyond greed and fraud to recognise power as embedded within our economic dealings with one another; not any narrow political power of the State’s coercive machinery, but social power. This power breathes life into the capitalist class, galvanising it and directing it, purging it of its inefficiencies and expanding its rule intensively as well as extensively.

Murphy sees greed and fraud, inequality and selfishness - and hates it. I hate it too, but there are a lot of things I hate, and a lot of hateful things are probably here to stay – they’ll certainly outlast my ten minutes on this earth 

My worry is that Marx’s insight will be lost. I hope I’m wrong – they’ll always be there for better people than I am to take up and develop. But to develop a left politics forward from what’s been happening this last 30 years is what I see needed. Murphy isn’t really doing that, and those people who have control of our left-wing theoretical life aren’t doing that – not in my view. They’re putting forward abstract slogans and semi-understood economic formulae, and applying ti dogmatically to a fluid situation (the genuinely odd neo-liberal ‘theory’ is part of that - see Raymond Plant’s latest tome)

So, by all means read Murphy, but read him critically (as I try to read the FT critically). The sharpness of his attacks does strike me as bluster more than analysis.

Jwas JT – I can certainly see the point of pressure group activity on the UN. Parts of it are open to being pushed, and War on want is trying to point to another way of looking at the world than merely investing money ‘profitably’. I also think, Jwas, that you’re on the ball in pointing to the importance of international organisation and activity in resolving the social problems we face as a planet.

But the use of the Tobin tax as envisaged, which would be an excellent start to ending world poverty, flies in the face of power realities within the UN. In the end it is the U Nations, and the nation state is the deciding factor when it comes to all issues, especially economic ones. I think this is the upshot of JT’s comments. Lenin’s old comment on the League of Nations as a thieves’ kitchen stems from this understanding too. Within the UN, a few powers enjoy real power through the veto in the Security Council. It’s a bit of a sham, though better than nothing. To get real international action, a group of nations has to want it (which is why the UN arose). This isn’t to oppose the sort of pressure group activity as propaganda endorsed by Jwas and War on Want, but to accept its limitations.

[Jon Teunon]

Brigg and Jwas

Yes Brigg you did get my point - I was referring to Obama and the electorate in the post (and not 'right wing republicans'). The fact that the former two will have no interest in radically reforming the UN (and in effect give power away) is of course equally true of the other four nations with vetos on the Security Council (China, France, Russia and the United Kingdom).

The amount of popular pressure to successively overturn this reality would have to be immense and is presently conspicuous by its absence). An irreversible economic implosion in these countries might change matters, but this is not only impossible to campaign for, but also completely unwelcome - considering the accompanying human cost on a masss scale it would also entail).

I'm generally with Brigg on trying to concentrate on the systematic flaws of the system rather than focusing on the inevitable symptoms such as individual greed etc. The former is very complicated and contentious but surely what left politics should be about?

[Strategist]

Brigg: 

a bond crisis is an illusion and right-wing panic. If only... Bond markets are volatile, and fragile, and the mere threat of a crisis can frighten the most radical of governments

Thanks for a thoughtful post, from which I think this nugget crystallises a very important issue we need to understand better. 

Do we need to bow to the yoke on market "discipline" of state deficits on this occasion or can we successfully fight it off without having to overthrow the entire paradigm? Or, basically, the old reform -v- revolution issue revisited.   

On the matter of Richard Murphy personally,

So, by all means read Murphy, but read him critically...The sharpness of his attacks does strike me as bluster more than analysis.

I don't see him as an analyst, I see him a pugilist.  We're down an alley getting mugged by a gang of nasty banksters and, like the good Christian he is, he's coming to our aid by laying a few punches on our assailants.  I'm grateful to him for his work. 

If he gets some of his reforms (eg country by country reporting) through - or even simply raised up the public agenda - I think he will have made an extraordinary contribution as an independent activist. 

[Strategist]

Let’s not get hysterical about the UK’s finances...I [Richard Murphy] did not say that: Martin Wolf did.

From http://www.taxresearch.org.uk/Blog/2010/02/12/lets-not-get-hysterical-about-the-uks-finances/