Wednesday, February 10, 2010

Tobin Hood tax??

As Guambat mentioned in a post last November, world leaders (except in America) were calling for imposition of what was then termed a "Tobin tax".

As explained in the post, the idea was the brainchild of James Tobin, an American economist, Noble Prize winner. He came up with the idea back in the 1970's. He proposed a minuscule tax, at least as measured on a per transaction basis, on currency transfers to discourage purely speculative gambits without interfering with the real business of currency transfers.

The current idea is to attach it to derivatives to discourage the speculative volatility seen in the markets and the speculative bubbles that have predominated in financial instruments of late.

Curiously, we now, suddenly, are seeing it caste as a "Robin Hood tax".

Robin Hood banking tax 'would raise billions'
Last month, the World Economic Foundation gave its backing to a levy on financial institutions that would be used to help bail out banks in any future crisis. The call was backed by politicians and the International Monetary Fund (IMF) at its gathering in Davos.

Meanwhile, the European Union has been calling on the IMF to back the plans for a so-called "Tobin Tax" on international transactions.

The tax, named after the Nobel Prize-winning economist James Tobin, was originally designed to raise funds for developing nations, but many supporters now say it is one way to ensure that banks do not take excessive risks that could trigger another financial crisis.

Under the Robin Hood Tax plan, the tax would not be levied on banks' transactions with their high street customers.
The outcome of a debate is all about how you frame it. Curiously, the people framing the debate as a Robin Hood matter are not people opposed to the idea. Guambat says "curiously" because he is certain that anything as populist sounding as a Robin Hood anything is bound for derision.

It appears the Robin Hood proponents are all from the lands of the Sheriff of Nottingham:
A coalition of charities, unions and aid agencies have called on the UK's political parties to support a global "Robin Hood tax" on financial transactions that could raise up to £250bn every year to fight poverty, protect public services and tackle climate change.
Guambat reckons they ought better be advised.

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