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Issue No. 130 | 05 April 2002 |
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Lights Out on The Hill
Interview: Change Agent Industrial: Balancing the Books Unions: Breaking Out Politics: Pissing on the Light on the Hill History: Of Death and Taxes International: Now That's a Strike! Satire: Mugabe Voted Miss Zimbabwe: Denies Election Rigged Poetry: Flick Go The Branches Review: Red, Red Clydeside
The Soapbox Sport Week in Review Postcard
 Puplick's SermonChikka's LegacySocialists in the UKOrganising GloballyGrape DisappointmentUnion Resignations : Crisis or Opportunity?
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History Of Death and Taxes
***************** James Tobin said "I have nothing in common with these anti-globalization rebels." Tobin has passed away but the Tobin Tax lives on as a powerful symbolic idea. The break between man and idea happened some time ago. The Tobin Tax is now a powerful symbol for many NGOs and activist networks around the world. The best know is the French based ATTAC (now translated as Association for the Taxation of financial Transactions To Assist the Citizen) that was launched in 1998. ATTAC was the prime mover behind the first World Social Forum at Porto Allegre in 2001. James Tobin himself disowned the politics of people whose ideology he didn't agree with. In this he was like the man whose ideas inspired his interest in economics - John Maynard Keynes. Tobin has described himself as a disciple of Keynes and as with Jesus Christ's' disciples, he had more flaws than his guiding light. Keynes' Ideas and What Became of Them Keynes too was very opposed to leftists, although he did flirt with the British Labour Party at one time. Keynes was a person who early on felt that managing international finances was best left to a few good men in the City. Perhaps if they had the same enlightened views as Keynes this may have been almost a good idea. However this was a political impossibility given the sensitivity of politicians to lobbying from certain quarters. It would also be a removal of any prospect of democratic input into monetary and fiscal policy (faint hope such input would have of a hearing notwithstanding). Later in Keynes life, after World War II when international financial institutions were taking shape, he also saw that this was a dangerous idea, as he fought unsuccessfully to prevent the IMF and World Banks taking the form they did. The world system and these institutions have been described as Keynesian since 1944 and Bretton Woods, but as George Monbiot points out "in truth, Keynes bitterly opposed them. He predicted that if the world economy was managed by these means, the wealth and power of the creditor nations would be massively enhanced, while the debtors would sink ever further into poverty and dependency. He called instead for an "international clearing union" which would automatically redeem imbalances in trade and cancel debt, by the ingenious means of forcing creditors to pay interest on their international currency surplus at the same rate as debtors. Once again, the United States objected. It threatened to withhold its war loan if the British delegation, led by Keynes, persisted with his proposal, and he was forced to back down and agree to the formation of the bodies which later became the World Bank and IMF. In a letter to the Times soon afterwards, Keynes conceded that the commercial policies the new bodies would permit may prove to be "very foolish" and "so destructive of international trade that, if they were adopted, Bretton Woods will have been rather a waste of time."". Tobin was a classical US liberal establishment figure and as with Keynes in England, he had strong links to the US establishment and worked closely with the Kennedy administration and was an advisor to George McGovern during his unsuccessful run at the Presidency in 1972. This was also the time his idea of a tax on international currency transactions came out. The Bretton Woods system was in crisis, largely because of the way the US had financed the Vietnam War, and currency speculation was developing as computer transactions were beginning to dominate. So he suggested a tax of 0.1% to 0.5% on foreign exchange transactions. With foreign exchange trading now running at about $2 trillion per day, the finances here are enormous. Ideas On The Loose This was the idea that has been taken on by what Tobin called "the wrong side" in an interview he did with German magazine Der Spiegel. "I have nothing in common with these anti-globalization rebels" he said. This is where the establishment economist reveals his alarm about how what he thinks is "his" idea being taken over by others and also his difference from Keynes. He says he supports the IMF and World Bank and the WTO, all institutions that ATTAC is calling for the abolition of. He says that the revenue from his proposed tax should be put at the disposal of the World Bank. I think ATTAC would see this as the drunks in charge of the hotel. Tobin states that he believes in the market and free trade. Daivd Moberg in InTheseTimes.Comquotes Susan George, spokesperson for ATTAC and long time critic of the power of transnational corporations and the world economic system, who looks at thinks very differently. "People feel that there's a public sphere, a social sphere - something outside the market". They want freedom from the "dictatorship of the market" imposed by "financial globalization." Tobin called for the IMF to be strengthened and broadened. Here the key difference is the small liberal regard for their own intelligence, and the general disregard for discussion of their views with people. In his Der Spiegel interview, Tobin says that ATTAC did ask him to speak with them, but he refused. Tobin did advocate the reining in of the markets, particularly in comments made after the 1997 Asian crisis. He lauded the role played by Greenspan in the strong expansion of the US economy since the early 1990s, another example of his faith in economic experts to know what's best for the rest of us. The Tobin Tax idea has been supported by moderate politicians from some European countries and Canada. French Prime Minister Lionel Jospin seems to favour the idea, much to the horror of the British Labour Party. While the French left parties aren't exactly wildly radical, Will Hutton compares the politics there very favourably with the situation in England - "the dreary laws of Gradgrind economics that we accept as axiomatic ...are being disproved daily by our old rival....Vive smart regulation. Vive the social contract. Vive high public spending. Vive la France." The tax itself, as Tobin himself saw later on, has great implementation problems and the main economic critics of it see this as the great stumbling block, apart from neo-classical economic opposition to its interference with efficient market mechanisms. For a good rundown on the practical and political arguments over the Tobin Tax, and its prospects see a paper from Oxfam by Heinz Stecher Stecher gives a brief rundown of the groups who are using the symbolic idea of the Tobin Tax as their organising focus, including ATTAC, but also the Canadian Halifax Initiative, the Californian-based Tobin Tax Initiative and many other US groups, the UK based War On Want, several NGOs in Brazil such as the Rede Bancos network, and the coalition of Catholic development agencies, CIDSE. Moberg and Susan George see the key to ATTAC and similar organisations as beginning to counter the main barrier to organizing on the left, the "sense of inevitability" about contemporary capitalist globalisation, by raising hopes that "another world is possible." For an overview of James Tobin's life and work see Godfrey Hodgson in The Guardian
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