So, this Robin Hood Tax thing.
A few people on Twitter have posted links to this and commented about the video, in which Bill Nighy is certainly rather excellent. And most of the chatter around it has been reassuringly measured, but there are still a few voices getting a little over-excited and reminding me of some of the less imaginative people I work with.
By which I mean, responding to just about anything to do with finance by a knee-jerk “Tax the bankers” reaction. It’s far too easy to just decide that those bastards took our money so let’s take their money. The Bad Science mantra applies here.
I’m not going to turn this into an economics lecture, largely because I’d have to do loads of revision before I actually knew anything. I’m a small-l liberal, and don’t flat-out object to some sort of tiered tax system where the extremely wealthy pay proportionally more (you can tell I haven’t revised or I’d know at least some of the relevant terminology). But I’m also a half-assed libertarian (as I think my Facebook ‘political’ status will testify), and something of a capitalist, and the idea of tax hikes for the rich being taken lightly, or talked about like it doesn’t really matter because they’re rich and they deserve it, really rubs me up the wrong way.
So for one thing, I think the name they’ve chosen for this proposition is rather unfortunate. He’s supposed to be the sort of hero that the common man can always get behind, because most people consider themselves amongst the poor for whose benefit he’d be robbing the rich. And maybe at the time he was doing good and providing a legitimate form of social welfare that wouldn’t be provided by the state. But I’m not convinced that Robin Hood’s own style of redistribution of wealth has any place in our society today.
There needs to be a much better argument in place for installing a tax like this than “Those rich fat cats will never miss it”, or “They screwed up our economy, why shouldn’t they pay for it?” And I’m sure its proponents have better arguments, which I plan to start making a genuine effort to explore, under-equipped though I may be to understand any of it.
Obviously I’m not against all taxes. I like that we have state-funded emergency services, and the NHS, among other things. I think that while some people do very well in life, and others have crappy luck and struggle to get by, there should be some kind of institutional system in place such that the former are obliged, to some extent, to help out the latter. Yes, it’s a pretty primitive grasp of economics I’m displaying here, but it feels worth going back to the fundamentals to consider why “Tax the rich” is an over-simplification that we shouldn’t quite be satisfied with.
Though having said all that… the bastards did take our money.
A couple of things occurred to me watching the explanatory video, about the practicalities of imposing a tax like this. I’ve no idea if these are among the many important and relevant questions that other better-informed people are probably asking, but this is what I’ve got.
The scheme could raise many, many billions of pounds a year. That’s quite a lot of money, even to a really big bank. And although talking about “raising” all that money might make it sound like it’s being created by some cleverly discovered productive force which generates revenue out of nowhere in particular, it’s just money that’s being taken away from the banks. It’s done by taking a tiny, tiny proportion from each of many transactions, which make only the tiniest dent at the time, sure… but if all those individual charges add up to, say, £10 billion at the end of a year, then surely the effect is the same as if you just ordered them to pay a massive one-off fine of £10 billion. (Obviously not *quite* the same, for reasons which no doubt elude me.)
Either way, however small an effect it sounds like a 0.05% tax should have, it sounds more significant when you consider that it’d have the same effect as taking away tens of billions of pounds from some people, because that’s exactly what it’s doing.
Though off the back of that, my second ponderance is how the banks are likely to respond. Not in the sense of whether they’ll loudly object to the proposed changes, but whether their business practises will change to try and avoid such heavy penalties.
The tax is described as “a charge on all bank transactions that don’t include members of the public – bonds, derivatives, currencies, speculative stuff”. I can’t pretend to know anything much about how this kind of trading works, but it seems like it wouldn’t be unexpected for a tax on all such trading to significantly shift financial pressures and incentivise banks to start doing things differently. I can’t possibly imagine how, I’m not even sure I’d understand it if you explained it to me, and maybe it’s not even an important issue to raise. But it’s something that’s going to be costing these guys billions. Historically, giving away billions of dollars is not how many people choose to operate whenever they have a say in the matter. Mightn’t this effect the overall financial system in some ways, good or bad?
I’ll be staying mostly out of the debate on this myself, I imagine. I’ll be interested to see what comes of it, and what clever people have to say. In particular, I’ll want to hear the objections of people who aren’t on board with it, and what concerns they have to raise. There could be a significant economic impact of such a move that it’s way beyond my abilities to foresee, but if it’s just a matter of my libertarian sensibilities being offended, then I’m inclined to think that my libertarian sensibilities might just have to deal with it.
Also, a last-minute bonus question: Can this work? I’ve been waiting to see something of its like for some time, but have no clue how it might be made practical. I’m definitely waiting for Cory Doctorow to tell me what to think this time.