Monthly Archives: February 2010

Are you looking at my FTT?

This is the substance of the reply I’ve posted on Duncan Green’s blog, From Poverty to Power:

Let’s start with my original post. I didn’t actually say that an increase in taxes on wealth would be “more progressive and transparent” than an FTT. I said that it keyed more directly into a deeper logic. You can dismiss this as an “academic exercise” if you want to; I see the notion that there is a link between historical carbon emissions, the contemporary distribution of wealth and the need to finance adaptation in poor countries not as a “first best solution” to be pronounced in “lofty tones”, but rather as an important broad principle, from which could be developed some powerful political narratives. Historical responsibility is almost always framed in terms of nations, provoking a defensive response, and surely a new perspective that recognises and uses that fact that not everyone in the North has done equally well out of the history of energy intensive capitalist growth could be useful.

Paying for adaptation is going to be a long term issue, and having a campaign that (rightfully) grabs an opportunity (although more on that below) should not be a reason for banning an exploration of wider ideas. OK, so I used the Robin Hood Tax launch as a peg to hang my post on – but, hey, that’s blogging. If a campaign supported by everyone from Bill Nighy to Angela Merkel can be so threatened by some thinking around the issues from an ultimately sympathetic viewpoint, it’s not very robust is it?

Now let’s talk about the politics. You say you see a window for the FTT which isn’t there for a more direct tax on the wealthy. You could be right, but I think there are good counter-arguments. First, in the wake of the financial crisis, people hate bankers, not financial transactions. They want the bankers’ wealth taken away from them. They want financial markets regulated.

Second, and within that mood, increases in taxes on wealth are a real proposition. Despite his embattled political position, Obama is putting forward his proposal to reverse the Bush tax cuts for the wealthy in his Budget.

On the other side of the equation, the incidence issue of a FTT is not just a nerdy debating point for pointy-fingered people, but a potential political weakness. Its opponents could try to make much of the likelihood that the tax will be passed through to ordinary people. Don’t forget that, in addition to the speculators and the banks, a huge range of major companies rely on futures and options to hedge currency risk in international business and trade transactions – the hedgies will pass the tax on to them, and they’ll pass it on to us. Think what the Daily Mail could do with that if it wanted to.

Lastly, however the money is raised, I also think you shouldn’t underestimate the importance of the politics of spending it – the last bone picked with Owen Barder in your post. Last September, we polled over 3,000 people in marginal constituencies to test views on various climate-related policies. Sadly, financial transfers to fund adaptation and mitigation in developing countries had little strong support, which also appeared vulnerable to arguments that corruption will prevent money from reaching the people it should. As you say, Oxfam and others continue to work on the “quality of aid” (as you put it), but I wouldn’t see that as something you should do separately from making the case for a FTT.

I’d like to think that being in favour of an FTT and wanting to develop a wider narrative and additional policy ideas weren’t mutually exclusive. For the record I am happy to get on board the FTT campaign bus. I just don’t want to leave my brain behind.

To avoid a brawl breaking out, we’re drawing a line under this issue now, and moving on to other themes.


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Taxing Politics

Oxfam’s Duncan Green has responded to Matthew’s Tobin tax posts of yesterday and also to Owen Barder’s post, which raised concerns about whether financial transactions taxes might have a regressive impact. Duncan’s argument is that a narrow window of opportunity for a Robin Hood Tax on financial transactions has been opened by the financial crisis which could raise cash for good causes. He urges Matthew and Owen to get behind the Robin Hood Tax campaign rather than proposing alternatives.

‘There’s usually a reason why the first best ones [solutions – a wealth tax, as Matthew proposes, for instance] are not already in place – it’s called politics,’ says Duncan. I feel sure Matthew will want to respond, but briefly – in my lunch break – my view is that arguing for a limited tax on wholesale currency transactions, which the literature seems to suggest would be transparent and probably not passed through to the banks’ customers, does not exclude arguing for other progressive climate and development taxes. Continue reading


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Waiting for Tobin

Waiting for GodotMy Tobin Tax post yesterday about a wealth tax for adaptation has attracted quite a lot of discussion, which is great. Much of it is along the lines of “interesting idea in theory, but it will never work in practice, unlike the Tobin tax”. The view seems to be that campaigners have been working on the Tobin tax idea for so long, all the angles have been worked out, so the “due diligence” has been done, as Andrew Simms of the New Economics Foundation put it in an e-mail (or at least, that’s what I think he meant….). Not everyone seems convinced – Owen Barder raises problems about tax incidence, and some right wing economists think the whole idea is impracticable and wrong. I guess they would say that wouldn’t they…?

As I said in the post, I’m not against the Tobin Tax, rather, mainly interested in exploring some of the deeper ideas about intergenerational justice and climate change. However, I do take issue Continue reading

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Tobin or not Tobin….

James Tobin in 1981Today’s big news (apart from the fact that we haven’t had a sterling crisis) is the launch of the Robin Hood Tax – aka the Tobin Tax. Having been around for years in the anti-globalisation movement, the idea of a tax on financial transactions was promoted by Gordon Brown and Nicolas Sarkozy amongst others last year as one way of financing transfers to  developing countries for adaptation and mitigation. The Copenhagen Accord includes the proposal to find $100 billion a year. The Robin Hood Tax people say that taxes ranging from 0.5% on transactions in stocks and 0.005% on currency transactions would raise $400 billion a year which would also help end global poverty.

The Tobin tax concept is supported by a wide range of people, for a range of reasons (for example, Paul Krugman seems keenest on its dampening effects on speculation). Leaving aside the issues of how the money is disbursed and spent, I’m pretty well-disposed to it as well, but can’t help thinking that for the purposes of raising finance for adaptation in particular, a straightforward wealth tax might not be better.

Continue reading


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Post-Copenhagen Positives

Writing in Foreign Policy David Roberts of Grist takes what turns out to be a refreshing view of the post-Copenhagen landscape. In particular, he quotes Terry Tamminen of California fame:

“Everyone is waiting for a U.N. deal, but carbon-cutting actions have been going on all along,” says Tamminen. “It’s been right under everyone’s nose. The Copenhagen Accord, having surfaced an existing web of national and subnational policies, may ultimately prompt a needed shift of attention and pressure to what is happening on the ground and what is required to link up and accelerate the many promising efforts already underway.” Continue reading


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Reports of the Accord’s Importance Exaggerated

In our letter published in the FT yesterday (Tuesday 2 February;  see post below) we asked in passing whether the Accord was the start of a new wave of climate talks or a ripple of leaders’ expediancy .

Since Sunday’s deadline, most media reports have leaned towards the former, taking the timely submissions from 56 countries as a signal that most of the big guns and some of the smaller ones support the Accord. However, a closer inspection of the important submissions – in particular those from the BASIC countries – bring to mind the famous words of Mark Twain but in reverse, hence the title of this post above. Continue reading

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Make climate change politics matter, Financial Times, 2 Feb 2010

Our letter is published in the Financial Times in response to Fiona Harvey’s commentary on the role of green groups in Copenhagen. Note: you may need an FT subscription to follow these links

Sir, Fiona Harvey is harsh on green campaigning groups whose members worked hard to raise the issue of climate change up the international agenda (‘Green is the colour of climate discord’, January 29), but she nevertheless has a point about the Copenhagen climate summit. The United Nations negotiations that led up to Copenhagen have always been and still are conducted in a green bubble, even if more than 100 leaders felt the need to attend on this occasion. Continue reading

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