Reprinted from The Common Good, No 59, Advent 2011
Jim Consedine
Greed is Good! Gordon Gecko’s famous declaration in the 1988 movie Wall Street has echoed down through the decades. Greed now forms a part of the very DNA of the global economic system. It sits at the heart of the financial crises of the past 20 years. ‘Greed is good’ has become an accepted market place ethic as witnessed by the obscene salaries and bonuses paid to the corporate, cultural and sporting elites in our time. Meanwhile the gap between the rich and poor has accelerated at breakneck speed.
The rage expressed around the world in recent months as the ‘Occupy Wall Street’ protests escalated is merely the latest expression of anger and disgust at an economic system that crushes the hopes of billions while rewarding a tiny elite who control the economic levers.
From New York to Rome, from Madrid to Sydney, from Toronto to Dunedin, on every continent and in hundreds of cities and towns in between, tens of thousands joined forces to vent their anger at the way democracies have been taken over by the rich and the super rich who exercise disproportionate power over peoples’ lives.
Of course, such rage cannot be maintained over lengthy periods – especially in the face of water cannons, mobilised police and countless arrests. It has since died down to a large degree. But that doesn’t mean anything has changed for the better.
New Zealand
In New Zealand, things were quieter. Multiple earthquakes in Christchurch, the aftermath of the Pike River Coal mining disaster and the Rugby World Cup sapped the energies of many. But the international economic virus that has affected so many parts of the world adversely these past months is alive and well here at home. The opening of the books by the Government in late October showed we had no room for complacency. They did not make for hopeful reading.
Economic gloom leading to further hardship is here to stay for the foreseeable future. The suffering will be compounded by the fact that much of the infrastructure which has helped the poor to manage in an unequal world is being deliberately underfunded by a government still dedicated to failed neo-liberal economic policies.
The General Election was fought largely on the management of the economy. What we generally had was spin with neither of the major players willing to tackle the underlying causes of global financial insecurity. Both major parties are locked into a global financial system that has shown itself unable to change to meet the huge inequalities it creates and the desperate needs of the poor and the disenfranchised.
Both major parties are locked into a global financial system that has shown itself unable to change to meet the huge inequalities it creates and the desperate needs of the poor and the disenfranchised. The system is unjust in its basic tenets, dysfunctional in its processes and unequal in its treatment of people.
The system is unjust in its basic tenets, dysfunctional in its processes and unequal in its treatment of people. That is why billions still die from malnutrition and treatable diseases fifty years after major countries committed themselves to the elimination of such scourges.
What can be done?
In Rome in October, the Pontifical Council for Justice and Peace produced a lengthy analysis looking critically at corporate capitalism, market values and the global economic system. In a document entitled Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority, the idea of a financial transaction tax (FTT) or Tobin Tax was among recommendations it endorsed. (Google – Vatican/Justice and Peace, for full document).
In its damning indictment of the current economic corporate model, the document says, ‘The inequalities and distortions of capitalist development are often an expression not only of economic liberalism but also of utilitarian thinking: that is, theoretical and practical approaches according to which what is useful for the individual leads to the good of the community. This saying has a core of truth, but it cannot be ignored that individual utility – even where it is legitimate – does not always favour the common good. In many cases a spirit of solidarity is called for that transcends personal utility for the good of the community.’
This is all Vatican-speak to say we need a radical overhaul of how we conduct economic life. It calls for a restructuring of ideology whereby the common good becomes the primary focus not individual gain. It directly confronts the spiral of inequality and deprivation amidst abundance that characterizes global capitalism. And it promotes some serious ways of dealing with the issues. One of them is the so-called financial transaction tax (FTT) or Tobin Tax. In Europe where it has a huge following, it is called the Robin Hood tax.
The Tobin ‘Robin Hood’ Tax
The original idea came from the late James Tobin, the Nobel Prize winning economist from Yale University, who floated the idea in 1972 for a financial transaction tax (FTT) on every payment across borders. It suggested a simple tax, for example of 0.1% – 0.25% but up to 1%, on all financial transactions across borders. Backers of the scheme today are advocating that it be introduced to a full range of financial markets, not just currency markets as proposed by Tobin. It is estimated that up to $200 billion could be generated each year. Cf Tobin Tax.org
The money accumulated would be placed in a special fund, specifically air marked for agreed goals – poverty alleviation, climate control, environmental protection and disease elimination to mention a few. These are all issues which individual nations currently cannot grapple with because of their size and cost.
The Vatican statement pointedly condemns ‘neo-liberal thinking’ and ‘the idolatry of the market’ and recommends ‘taxation measures on financial transactions through fair but modulated rates with charges proportionate to the complexity of the operations.’ The latter is pretty much what Tobin suggested 40 years ago. It is not promoted as a panacea for current problems. Only a complete restructuring of economic life accompanied by a radical shift in goals and values could attempt that.
This is substantive stuff. What the Vatican here is calling for is nothing less than an overhaul of financial sector and a reprioritizing of social goals. These goals are not new but have formed the content of the Church’s social teaching for the past several decades.
The Tobin Tax has won significant endorsements from a wide-ranging array of groups. It is now a world-wide movement. In April 2011 the European Parliament approved a report backing the Tobin Tax. It joined groups like the World Council of Churches, the AFL-CIO bloc of US trade unions, more than 100 NGOs like War on Want, Oxfam, the Rain Forest Action Network and many others.
The Vatican annointing the Tobin Tax is another step forward. This tax sits at the heart of the Gospel commitment to provide for the poor and marginalized. It makes sense in a world that deals daily in billions and trillions of dollars. Much of this is in the hands of speculators, financiers and international banks whose dealings create huge injustice and who are seemingly unaccountable.
God’s justice demands a better distribution of wealth and resources. The Tobin Tax fits squarely within the parameters of biblical justice and Catholic social teaching. Properly implemented, it provides a practical and realistic method of re-distribution of wealth.