The financial services industry went from having a 19 percent share of America’s corporate profits decades ago to having a 41 percent share in recent years. That doesn’t mean bankers ever represented anywhere near 41 percent of America’s labor value. It just means they’ve managed to make themselves horrifically overpaid relative to their counterparts in the rest of the economy.
A banker’s job is to be a prudent and dependable steward of other peoples’ money – being worthy of our trust in that area is the entire justification for their traditionally high compensation.
Yet these people have failed so spectacularly at that job in the last fifteen years that they’re lucky that God himself didn’t come down to earth at bonus time this year, angrily boot their asses out of those new condos, and command those Zagat-reading girlfriends of theirs to start getting acquainted with the McDonalds value meal lineup. They should be glad they’re still getting anything at all, not whining to New York magazine.–Matt Taibbi, Rolling Stone (FEBRUARY 8, 2012)
Thanks for Marc Batko over at Demandside for pointing out this hilarious video with Richard Curtis (“Four Weddings and a Funeral”) and Bill Nighy (“The Constant Gardener” and “Love Actually”) promoting the Tobin Tax or Robin Hood Tax (“robbing the rich to give to the poor”) campaign in the U.K.
Tobin Taxes are excise taxes on cross-border currency transactions. Any national legislature or financial regulatory commission can enact them — and multilateral agreements can be made to enforce them. The revenue is explicitly dedicated to basic environmental and human needs.
According to Jim Tobin, the a Ph.D. Nobel-laureate economist at Yale University who first introduced the idea, such taxes will “help tame currency market volatility and restore national economic sovereignty.”
Read the whole article from The Guardian here). What do the financial experts say about how this kind of tax would work?
Experts’ view of the Tobin Tax:
Joseph Stiglitz, professor of economics at Columbia University: “A tax structure that does not reward short-term, very speculative gains would be good. If you were investing for a year or five years or 10 years it would be a small tax but if you were holding it for just one minute it becomes a very high tax. The important question is implementability. It’s designed to tackle high frequency activity for which it is hard to find any societal benefit. The only question is, can it be effectively implemented? Will it be circumvented? There’s a growing consensus it can be implemented, if not perfectly, effectively enough to make a difference.”
Ann Pettifor, fellow, New Economics Foundation: “The proposed currency transaction tax (CTT) represents the tiniest grain of sand in the wheels of global, mobile capital, and places very little restraint on the movement of international capital. For that reason CTT will be welcomed, ultimately, by international financial institutions. The proposal lacks a framework of democratic, accountable governance for the disbursement of funds collected under a CTT scheme. NGOs and treasuries are debating whether funds should go, for example, to national treasuries; to the Global Fund to fight Aids, TB and Malaria, or to the UN for mitigation and adaption to climate change. Until disbursement and distribution of CTT revenues are accounted for in a democratic, fair, and transparent way, the CTT will be vulnerable to attack.”
David Kern, chief economist at the British Chambers of Commerce: “It may have potential. I’m not sure it’s the most appropriate thing. I think the main argument against it is that it’s most unlikely to be implemented globally. If a tax could be applied it would have beneficial effects … My reservation is that for the UK to engage in this unilaterally would be a very dangerous thing to do because it would destroy the country’s financial sector. People and businesses would migrate to other places. If the US and big European countries implemented it as well then it would not harm our financial sector as much.”