Robin Hood Politics Pt. 2

On Wednesday I discussed the Robin Hood Tax initiative where I praised those, especially the rich people who are embracing the idea.

I portrayed the Obama administration as being against, primarily out of fear that investors would go abroad with their money. The case is not so clearly defined. According to one administration official, there is actually support precisely to curb the risky activities that led the crises in the first place.

“The president is sympathetic to the goals that a financial transactions tax is trying to achieve and he is pushing for a financial crisis responsibility fee and closing other Wall Street loopholes as the best and most feasible way to achieve those goals,” the administration official said.

Labor unions and groups are supportive and organizing demonstrations in favor, They envisage the taxes levied to help finance job creation programs.

“The tax is a good idea because banks are where the money is. It’s the same reason Jesse James robbed banks,” said Rose Ann DeMoro, executive director of National Nurses United, which recently held demonstrations at the offices of 60 members of Congress in support of the levy. “The thing about the financial transactions tax is it’s stunning how quickly people get it and how fast they embrace it.”

I got the impression that Bill Gates and President Sarkozy envisaged using the money to help development in the worst areas of poverty, which I assume mean in Africa and Asia. Other political leaders are probably imagining using this as revenue to help plug government deficits.

We should not forget that this is a tiny tax for the individual. The EEC proposed a tax of $10 for $10,000 worth of transactions throughout the European Union which could raise $77 billion a year just in Europe.

An American version of this bill (imposing a $3 tax  per $10,000 of transactions) might raise $350 billion over the next decade. Kudos for some rare bi-partisan cooperation to Representative Peter DeFazio, an Oregon Democrat, and Senator Tom Harkin, an Iowa Democrat.

Mr. DeFazio envisaged the tax could “raise money to invest in the real economy,” but even he and his partner are skeptical the Republican caucus in Washington would accept any form of new taxes.

The opposition is already gathering, citing a fear that people will slow their investment rates. Kenneth E. Bentsen Jr., executive vice president for public policy at the Securities Industry and Financial Markets Association, released a statement saying:

“At a time when we face a slow economic recovery, such a tax will impede the efficiency of markets and impair depth and liquidity as well as raise costs to the issuers, pensions and investors who help drive economic growth,”

The British Chancellor of the Exchequers, George Osborne, called the proposed tax “economic suicide.” In this time of economic crisis, he said, the European Union “should be coming forward with new ideas to promote growth, not undermine it.”

Opposition on this side of the pond comes from Glenn Hubbard, past chairman of the Council of Economic Advisers under President George W. Bush. He described the Robin Hood tax is a “monstrously bad idea.”

“Such a tax isn’t really going to get at the banks,” added Hubbard. “It’s going to hit the people who own the assets that are traded,” like investors.

If you think Hubbard is just crying from the political bleachers, think again. He is currently an adviser to Republican presidential candidate Mitt Romney.

Ironically Britain, Hong Kong and Singapore (the latter two can be proud of the growth of their financial markets) all have such a tax in place.  In fact, and please don’t tell the Republicans, the US had imposed a tiny tax on stock trades between the years1914 – 1966. Socialists!

Finally, let’s remember why this tax is being proposed in the first place. There are too many people in this world who are starving, denied medicine and clean water, suffering from diseases that can be cured. And, as the British actor Bill Nighy, has described it, this is “a beautiful idea.”

“It would raise enough money to solve problems at home and overseas, and it could do it without hurting ordinary people,” Mr. Nighy said.

So simple. So true. So possible.

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Alon Shalev is the author of The Accidental Activist and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/ and on Twitter (@alonshalevsf).

Robin Hood Politics Pt. 1

I grew up in England’s green and somewhat socialist land hearing stories and watching movies about one Robin Hood, who lived in Sherwood Forest and robbed from the despotic rich to give to the poor. When King Richard the Lionheart came home from the Crusades having either liberated or massacred everyone in the name of freedom (freedom to be a Christian), and forgave Robin, restoring him as a member of the English aristocracy and letting him marry the king’s niece. Trust me, the movies tell it much better.

Oh Kevin - your aim if not your accent was true!

However, Robin of Loxley’s name is now being associated with a new tax idea: a seemingly insignificant levy on trades in the financial markets which would take money from the banks (the despotic rich) and give to the world’s poor. This would apparently be a tax on trades of stocks, bonds, and similar financial tools of investment.

The reality is that most of this support stems from our anger and frustration at how the world economy collapsed without the rich taking a significant hit. Right now we would happily hang the bank and monetary institutions heads in the village square, or at least stick them in the stockades and throw rotten dividends and pink slips at them.

Sir Robin (who was originally a member of the landed class – the top 1%) has attracted an exciting band of merry men (and women): the leaders of France and Germany, the billionaire philanthropists Bill Gates and George Soros, former Vice President Al Gore, the consumer activist Ralph Nader, Pope Benedict XVI and the Archbishop of Canterbury.

Now personally I am suspicious that the Pope would associate with Robin Hood, given the latter’s allegiance to the Church of England, but perhaps the Pope is being more strategic than his predecessors.

German Chancellor, Angela Merkel, who I began to trust when she got annoyed at President Bush trying to give her a public massage, told the German Parliament that “We all agree that a financial transaction tax would be the right signal to show that we have understood that financial markets have to contribute their share to the recovery of economies.”

The Italian Prime Minister, Mario Monti, has jumped enthusiastically into the foray by announcing his plans to impose such a tax as one part of a broad plan to fix his country’s ailing economy. He further invited other European countries to endorse the initiative.

Other European leaders seem are not so enthusiastic which seems a shame given that a number of analysts believe a broad agreement could create such a tax while keeping the financial markets (or rather those who are making tons of money from it) relatively calm. 

Simon Tilford, chief economist of the Center for European Reform in London claims that “There is some momentum behind this…If they keep the show on the road, they probably will attempt to run with this.”

As the Occupy Wall Street movement seems to wind down, I believe this can be a rallying cry with a practical, measurable outcome. I have written previously about my desire for the Occupy movement to become more strategic (see here and here). Members of the Occupy movement were already sporting bows and arrows, along with green and brown Robin Hood outfits (I used to have one, but would never wear the tights – part of my repressed British childhood, I guess) at the G20 Nations summit last month.

Frederic Nebinger/Getty Images -Demonstrators in Nice, France, last month urged the leaders of the Group of 20 nations to do more to help the poor.

At the summit, Bill Gates, who as we know is quite well off actually presented a plan similar to the goals of the Robin Hood movement, including a modest tax on trades of financial instruments that could generate $48 billion or more annually from the G-20 countries. I want to take this moment and, with the greatest respect, doff my green cap and feather to Mr. Gates. He is a member of the 1% who really cares.

Charles Dharapak/Associated Press – Bill Gates talked with Nicolas Sarkozy about a tax on trades of financial instruments.

His proposal garnered support from Ms. Merkel and France’s president, Nicolas Sarkozy, There are, of course, those who oppose the tax initiative, not surprisingly from the rich and their minions in the seats of power of the UK and USA. Britain’s prime minister, David Cameron, expressed serious reservations, saying “Britain would embrace it only if it were adopted globally.” This stems from a fear that if England was to adopt such a tax, investors would simply take their business from the London Stock Exchange and head elsewhere to countries who have not adopted this tax initiative.

This sentiment is supported here in the US by the Obama administration who fear that unless it is global, driving trading overseas would hurt pension funds and individual investors as well as financial institutions.

More on this on Friday.

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Alon Shalev is the author of The Accidental Activist and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/ and on Twitter (@alonshalevsf).