By Amitabh Pal on December 11, 2009

British Prime Minister Gordon Brown unveiled an eminently sensible proposal this week: to place a 50 percent tax on all bankers’ bonuses in his country. But another, even more sensible idea of his last month was shot down by other nations, notably the United States.

This is a global tax on speculative financial transactions, also often called the “Tobin Tax” after the Nobel-winning economist James Tobin, who first came up with the idea. The notion has been around since the 1970s in one form or the other (I have a decade-old poster for the tax up in my office), but Brown deserves credit for attempting to resuscitate it. “Calculations by the Austrian government, which is keen on a transaction tax, showed that even if the number of deals fell by up to 65 percent as the fee dissuaded people from unnecessary trades, it could still raise $700 billion a year,” writes Heather Stewart in the London Observer.

But even Brown’s modest proposal was enough to invite a very public rebuke from across the Atlantic. “That's not something that we're prepared to support,” said Treasury Secretary Tim Geithner. With assistance from the IMF, the stalking horse of the United States, and Canada’s conservative government, the Obama Administration succeeded in strangling the idea in its crib, in spite of the fact that President Obama had earlier suggested that he was open to the notion. Germany and France have also voiced interest in such a proposal, but even their backing wasn’t even enough to prevent Brown from being humiliated on the international stage.

The Tobin Tax is an idea whose time is past due, however. As Brown pointed out, the social contract between the bankers and the rest of society has broken down over the past year. With their completely irresponsible actions in the mindless pursuit of profit, the denizens of the financial sector have led the entire world to the brink of the abyss. And the social costs have been much more staggering than most people can even imagine. The Harper’s Index from the June issue of the magazine quotes a World Bank estimate that 1,400,000 infants will die in the next seven years due to a global economic crisis caused essentially by the insatiable greed of financial wheeler-dealers.

And why shouldn’t we demand something back in return when we have spent so much in bailing out these fat cats’ behinds? Again, the public perception of the cost is far from the actual truth. In a superb piece for The Nation, Nomi Prins and Christopher Hayes calculate that if you factor in the entire range of handouts and subsidies the government’s various entities have doled out to the financial sector, the total bailout is $17.5 trillion, not the $700 billion TARP figure that is commonly quoted.

Apart from helping set up a fund for future bailouts and improving the balance sheets of governments, a Tobin Tax could also ameliorate the plight of the global poor and disadvantaged. In fact, this was what the tax was originally envisioned for.

Critics of a Tobin-type global tax say that it is too complicated to impose and too easy to evade. But Nobel-winning economist Joseph Stiglitz (whom I had the privilege of interviewing earlier this year) has said that this isn’t true due to the advent of modern technology. “The financial sector polluted the global economy with toxic assets and now they ought to clean” up, Stiglitz said.

House Speaker Nancy Pelosi has indicated her approval of such a global tax, and Representative Peter DeFazio and Senator Tom Harkin have recently co-introduced a bill that will impose a 0.25 percent transaction tax on the U.S. financial sector with the aim of raising $150 billion for deficit reduction and social programs.

“We need a shift in priorities in this country to ask not what America can do for Wall Street, but ask what Wall Street can do for America,” said Harkin.

We need to make this bill a reality in the United States—and then take it worldwide. It’s high time that the global financial sector contributed its fair share to society.

Add new comment

By submitting this form, you accept the Mollom privacy policy.

More

Subscribe to The Progressive and Get A Free 2015 Calendar

Abby Scher on the race to elect Maine's next Governor

Thirty years after the title year of George Orwell’s “1984,” the Oscar-worthy “Citizenfour” features a real-life...

By Victor Menotti

At a time when most Americans agree that the country has too...

By Wendell Berry

Manifesto: The Mad Farmer Liberation Front

Love the quick profit, the annual raise,
vacation with pay. Want more 
of everything ready made. Be afraid 
to know your neighbors and to die.
And you will have a window in your head.
Not even your future will be a mystery 
any more. Your mind will be punched in a card 
and shut away in a little drawer.
When they want you to buy something 
they will call you. When they want you
to die for profit they will let you know. 
So, friends, every day do something
that won’t compute. Love the Lord. 
Love the world. Work for nothing. 
Take all that you have and be poor.
Love someone who does not deserve it. 
Denounce the government and embrace 
the flag. Hope to live in that free 
republic for which it stands. 
Give your approval to all you cannot
understand. Praise ignorance, for what man 
has not encountered he has not destroyed.
Ask the questions that have no answers. 
Invest in the millennium. Plant sequoias.
Say that your main crop is the forest
that you did not plant,
that you will not live to harvest.


Say that the leaves are harvested 
when they have rotted into the mold.
Call that profit. Prophesy such returns.
Put your faith in the two inches of humus 
that will build under the trees
every thousand years.
Listen to carrion—put your ear
close, and hear the faint chattering
of the songs that are to come. 
Expect the end of the world. Laugh. 
Laughter is immeasurable. Be joyful
though you have considered all the facts. 
So long as women do not go cheap 
for power, please women more than men.
Ask yourself: Will this satisfy 
a woman satisfied to bear a child?
Will this disturb the sleep 
of a woman near to giving birth? 
Go with your love to the fields.
Lie easy in the shade. Rest your head 
in her lap. Swear allegiance 
to what is nighest your thoughts.
As soon as the generals and the politicos 
can predict the motions of your mind, 
lose it. Leave it as a sign 
to mark the false trail, the way 
you didn’t go. Be like the fox 
who makes more tracks than necessary, 
some in the wrong direction.
Practice resurrection.

Wendell Berry is a poet, farmer, and environmentalist in Kentucky. This poem, first published in 1973, is reprinted by permission of the author and appears in his “New Collected Poems” (Counterpoint).

Public School Shakedown

Progressive Media Project

Newsletter