Global Solidarity at the G20?
Global Solidarity at the G20?
Darrel Moellendorf: Global Solidarity at the G20?
Conservative governments in France and Germany backed a proposal for a tax on financial transactions that carried the day at a recent EU summit. The proposal, in preparation for the June 26-27 G20 meeting in Toronto, states that, ?The introduction of a global financial transaction tax should be explored and developed further in [the G20] context.? Although the language was scathingly criticized as damnation by faint praise by the European Greens, it strikes me as remarkable that a proposal for global solidarity of this sort should have made it so far.
The trick of a tax on financial transactions?also known as a Tobin Tax after its advocate, Economics Noble Laureate James Tobin?is to target unproductive short-term speculative investments, and not long term development conducive investment. Tobin?s idea was for a tax that would provide some much needed stability to currency markets vulnerable to speculative attack. But the idea was quickly picked up as a potential source of global public revenue that could be used to combat poverty, to fund development, and more recently to support adaptation to climate change. The European proposal has broad support on the left, including the European Greens, the Party of European Socialism, the European Trade Union Confederation, the International Trade Union Confederation, and a network of European NGOs.
A 2008 Austrian study found that a global general financial transaction tax, which would be more costly the shorter the time frame of the investment, could summon revenues of 0.49 to 1.52 percent of global GDP at a tax rates of 0.01 to 0.1 percent. This would amount to a chunk of change in the range of about $30 to $90 billion. How progressive the proposal would be depends on how the monies are used. At the high end of the range, the revenue would just about solve the problem of financing the pledge made last December in Copenhagen to provide $100 billion annually, starting in 2020, to help developing and underdeveloped countries cope with climate change. It would also nearly double total Overseas Development Assistance.
That a proposal with such potential for global solidarity should even be under serious discussion is encouraging evidence of the way in which the global financial crisis has provided political openings. But there is little chance of the proposal?s success at the G20. Europe remains divided over it, with England apparently hostile; and the Obama administration is not at all on board. Still it may not be the end for the tax. The Germans appear prepared to push on. Wolfgang Schäuble, the German Finance Minister, argued recently that if non-European countries oppose the tax, then Europe should proceed alone. And according to the Sunday Times, he said, ?And if we have a problem with Britain, then I think we should try it with the eurozone.? Such experiments would be welcome and perhaps the beginning of something bigger.
[Editor’s Note: Those interested in the FTT can read more about it in an article by Bill Barclay, forthcoming in Dissent‘s Summer 2010 issue.]
