Re: [OPE] The limp finale of the Tobin tax

Jurriaan, lots of what you say is true, but surely there are two
overarching benefits of a Tobin Tax:
* putting sand in the wheels so there isn't so much financial
speculation; and
* restoring a bit more control over financial markets to national
authorities.

The main argument against work on a Tobin Tax that Attac comrades -
sharp as nails, not whacky - haven't dealt with, in my view, is that to
do this properly you probably need a global state, and the only
institutions out there that have the capacity to start this process are
the BIS and IMF, and to strengthen them in this manner would be utterly
counterproductive (witness Stanley Fischer's support for a Tobin Tax
when he was IMF Acting MD, so long as he would get the funds). Attac
strategists generally say that the beneficiary would be the UN, but in
my view that's not a great improvement unless there's a specific
routing, e.g. to the AIDS medicines fund that now looks badly underfunded.

I asked Stiglitz about it in 1998 and he said he wouldn't support a
Tobin Tax because it would be too easy to get around using derivatives
and other indirect instruments.

Ciao,
Patrick
(about to start a sabbatical in Berkeley where I can focus lots more on
this sort of thing and less on the swamp of South African politics - see
e.g., http://www.storyofcapandtrade.org which begins a conversation
about the [de]merits of financial market hegemony)

Jurriaan Bendien wrote:
> The Tobin Tax used to be a centrepiece of the whacky ATTAC program, until it
> went mainstream in the course of the slump. I wrote about the Tobin Tax on
> OPE-L 23 March 2007. I said, the Tobin tax "is unlikely to be a winner".
>
> It looks like I am correct, although a few more additional reasons have
> recently been mentioned for why such a tax is unlikely to be implemented.
>
> Britain and Sweden's governments in particular had opposed such a tax, while
> France and Germany's governments supported it.
>
> The Dutch newspaper Volkskrant (2 Sept 2010) now reports that the EU thinks
> the proposed tax on financial transactions is hardly feasible. According to
> a "confidential" report by the European Commission, which will be discussed
> next Tuesday by the EU finance ministers, practical and legal problems make
> it uncertain that the state would receive sufficient net income from it, and
> guarantee that banks and funds would behave less speculatively. Eight
> arguments against the transaction tax include:
>
> - that the tax would have to be levied not just on speculative activity, but
> also on "legitimate" transactions by pension funds and governments (level
> playing field idea?).
> - it would raise the cost of credit, and and by implication raise prices.
> - financial institutions would simply shift their speculative operations
> abroad.
> - the complexity of transactions makes implementing and enforcing the tax
> difficult.
> - the tax would interfere with the neoliberal principle of the free movement
> of capital.
> - the total yield of the tax, as against collection costs, is uncertain and
> cannot be reliably estimated.
> - tax revenues would be unequally distributed; Britain, a world financial
> centre, would get 70% of them, while other EU countries would be financing
> the tax collection.
> - a more effective method would be a levy on the income from financial
> activities, but it is a 'blunt instrument', that would also raise the cost
> of credit and lead to new kinds of tax evasion.
>
> As I mentioned in my posts on regulationism, the main idea of the
> bourgeoisie is that if the financial institutions took a big financial
> knocking as a result of investments which were too risky ("wrongly pricing
> risk") then they will think twice about doing stuff like that again.
> Likewise, consumers will think twice again about taking on dodgy loans. And
> therefore the idea is, that you really don't need so much extra regulation,
> because people will regulate themselves. This is itself a dodgy idea
> however, because it neatly displaces the issue - that the financial burden
> of the slump is shifted to those least able to evade it. You guessed it, the
> workers.
>
> J.
>
>
>
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Received on Fri Sep 3 00:40:08 2010