A global financial transactions tax
The idea of a global financial transactions tax is gaining ground lately as reported today in the New York Times. The article notes that it has the support of “an array of influential champions, including the leaders of France and Germany, the billionaire philanthropists Bill Gates and George Soros, the consumer activist Ralph Nader, Pope Benedict XVI and the archbishop of Canterbury.” Unsurprisingly, though, the Obama administration is reported as being “lukewarm”.
I think the potentially breakthrough nature of this tax is that it may end up being global. Capitalism’s always been a global system and those with money have benefited immensely by the existence of national borders. The threat to flee a particular country or currency zone has always been a crucial weapon of the ownership class. While large countries have a great deal more power against global capital than many realize, a global solution would be far more effective.
That said, I don’t think a financial transactions tax is the best way to go. It misdirects our focus away from where the fundamental problem lies. Is the core issue one of excessive financial transactions or is it the threat to democracy and prosperity posed by massive inequality? Obviously I think it’s the latter. Instead of a tax on financial transactions, I prefer a tax on all wealth above a certain amount. Why should great wealth that doesn’t “transact” be exempt from tax? Is a global wealth tax politically impossible? Hardly. Such a tax would certainly be supported by vast percentages in every country were it ever put to a vote. The only true friends of the multi-millionaires and billionaires of the world are the politicians and corporate media. And of course the economists.
A global wealth tax isn’t a single bullet against an unjust social order. We need many other global actions as well and here’s two other ways I think we should attack concentrated wealth. First, utilizing the insights of Functional Finance and MMT, demand that monetary policy be structured to promote prosperity, not austerity. And second, demand that the giant oligopolistic corporations of the world, all owned by absentee “investors”, be operated in the public interest rather than for the profit of CEO’s and rentiers.
We should attack the concentrated power of wealth where it counts – a wealth tax, control of money, and control of mass production. The system’s clearly broken and is inevitably leading all of us into a never ending cycle of depressed living standards. Growing numbers are realizing we need radical solutions. The great beauty of a global tax is that it completely negates the most powerful argument against nation level attacks – the threat of capital flight. A global financial transactions tax, though, isn’t nearly radical enough.