By some astonishing oversight, the TUC Blog has failed to report an extremely important view on transaction taxes.  This is quite odd, since Touchstone has been assiduous in keeping us up to date every time they find some tenuous reason to proclaim support for Robin Hood Tax, and the TUC is nothing if not a bastion of unbiased, principled reportage. *

Thanks to Tim on ASI, we have the considered, economist views of the World Bank  And they echo the points made here and elsewhere: that RH taxes are not the fleabite that the TUC et al suppose they might be; therefore they would have a profound effect on behaviour; not necessarily to stop ‘bad’ things but certainly to make ‘good’ things like saving and investing more expensive; and therefore that they would fail to address the very real problems that afflict banking, finance, and the incentives thereof.  Quoting from Tim’s post:

Although the side-effects would include a sizable restructuring of financial sector activity, this would not occur in ways corrective of the particular forms of financial overtrading that were most conspicuous in contributing to the crisis  … financial transactions taxes could be a threat to fiscal stability if overoptimistically seized upon as a reason for abolishing more reliable revenue sources.

It is only in the febrile atmosphere following such a financial crisis that such ideas can gain any traction at all.  Perhaps, though, the supporters of the Robin Hood Tax could come back with some ad hominem complaint against the World Bank.  You know: they’re only in it for themselves, they don’t understand economics as well as people like nef, they’re just a bunch of Orange Bookers, mature stuff like that ….

*A method sometimes applied is to say “X thinks that Banks are a problem.  So too does the Robin Hood Tax Campaign! See, our mission to solve every world problem with an utterly painless charge on wicked activity is gaining adherents every day!”  It is awfully convincing.

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12 thoughts on “Robin of Locksley once more

    1. Wasn’t there a rather protracted series of conferences and summits and them having to rename the thing a Treaty and not a Consitution, plus I hear the hourly rates of getting ex-French Presidents to knock up something are fearfully high?

      yes, I kinda recall that. Thanks for the link. Unfortunately, when it appears on the ASI it often falls into the ‘they would say that wouldn’t they’ pot for the RHT people who then ignore it. Trouble with the internet

    2. They could just take the currency transactions out of their proposal. Then it would be more likely to be fine (legally, I mean).

      Or they could do as you say and get EU leaders round a table for another Treaty. But I thought that was the goal of the Robin Hood campaign – to forge a global consensus on their idea?

      1. Trouble is, currency transactions may be those with a stronger theoretical basis – people have worried about currency misalignments for a long long time. Think Plaza, Louvre accords, the mighty £ from 1976 to 1985, and so on.

        But —-all to do with fixing the global financial crisis.

  1. From the people who brought you “the minimum wage would be a disaster”!

    For me, the point of the RHT is not that it would be a practical measure – but that it maintains the political emphasis on the people who caused the crisis…

  2. I find your argument to be as disingenuous as Tim’s, Giles, which is rather disappointing. I don’t necessarily agree with the Robin Hood Tax, but it’s hardly the case that only people who are not as economically sophisticated as you or Tim subscribe to it. Okay so there’s NEF, but there are also some bright economists who support the tax, like Dean Baker or Joe Stiglitz. Baker predicted the crisis and Stiglitz apparently received some prize or other for his work (Globel? Slobel? What was it again?), so I dunno… You write that supporters of the tax will resort to ad hominem complaints, the suggestion being that they don’t understand economics well enough to offer a proper critique (er, which is actually ad hom). So you seem to be saying that neither Baker nor Stiglitz understand economics… Really?

    I mean, I cringed when I read this post.

    1. Uncringe. My ad hom point was a mild dig at the way Richard Murphy has savaged me both publicly and in an email.

      I think Stiglitz supports some sort of transaction taxes, and some sort may make sense at the margins. But the RHT campaign is for multi-hundred-billions, and is sold as being a straightforward social-justice argument, laced with ‘well finance only really does wicked and destabilizing things things, so constraining it is always good.’ Joe S is a genius of economics, who understands how markets can be unstable and has no doubt argued for constraining globalised capital flows on rational grounds. But this is far from what RHT people call for.

      The thing is, the RHT people cannot have it both ways: a massive proposal that would raise $00bns and deal with everything, with all the populist fun you can have, and then ‘support’ that is in reality of much smaller, more nuanced plans that aim historically at very different problems to those that have just shattered the financial world. Some sort of transaction tax in some situations may make sense. Brazil’s current charge on inflows? Quite possibly. A worldwide imposition of stamp duty-style charges on equity trading? Mad.

      1. I thought Stiglitz backed the RHT? A cursory Google suggests so. Baker certainly does. I’m pretty sure Krugman does too. According to the RHT website, there are literally hundreds of economists who support the tax.

        Again, it’s not something I’m necessarily behind (I favour outright banning huge swathes of the unproductive and socially malignant money machine), I just wanted to note that your characterisation of the supporters of the tax as economic illiterates was unfair.

      2. Tim Harford has failed to find the wholehearted support for the RHT that your cursory google search has

        http://blogs.ft.com/undercover/2010/02/the-robin-hood-tax-and-evidence-free-policy-making/

        but Anthony Hilton asserts it too:

        http://www.thisislondon.co.uk/markets/article-23804049-joseph-stiglitz-robin-hood-who-wants-to-tax-the-rich-for-the-poor.do

        So fair dos. Some people back a FTT and are economically illiterate. Some of those backing it are not, and their arguments are those that I have heard most on this blog. But JS’s support still seems very general – I have not read of him actually supporting 0.5% on equities, for example, which is where the $100s of billions would be raised.

      3. If neither Krugman nor Stiglitz support the RHT, then, like you say, fair enough. But there are obviously still quite a large number of economist’s signatures at the bottom of that letter at the RHT site (350, apparently). Again, I am not necessarily in favour of the tax, I just thought that your characterisation of its supporters was unfair.

  3. “0.5% on equities, for example, which is where the $100s of billions would be raised.”

    Well, sorta. The really big numbers come from taxing the nominal amounts on derivatives….rather than premiums, cash flows or anything, but the underlying nominal amounts.

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