Why the Tobin Tax - The Tobin Tax is Possible - Minutes of the Meeting
Patricia Lansdown
THE TOBIN TAX IS POSSIBLE!
Meeting / Debate Between Associate Members of ATTAC - Paris
Summary
On January 25, 1999, at the invitation of ATTAC, an international seminar was held at the Latin American House in Paris attended by economists, unionists and professionals from the worlds of banking and finance. The purpose of this seminar was to examine the realities of implementing the Tobin tax. Organized by a working group of the Scientific Advisory Board of ATTAC, it afforded an opportunity for analytical debate between economists and specialists from other European countries as well as from Canada and the United States. A final declaration was adopted which will be disseminated. That evening, a public meeting was held and approximately 300 members of ATTAC - Paris came to hear the outcome of the debate and to pose questions to participants at the seminar. At the rostrum was a panel consisting of Bernard Cassen, President of ATTAC, René Passet, President of the Scientific Advisory Board and four participants from North America, namely, David Felix, Alex Michalos, Howard M. Wachtel and Ibrahim Warde. Following are some of the more important exchanges between the audience and members of the panel:
Question:
Why was the topic of the seminar restricted to just the Tobin tax? Why were not other forms of taxation on financial transactions considered?
Bernard Cassen
We would have needed a much larger seminar in order to examine all the forms of taxation of capital and financial transactions of which the Tobin tax is only one. As it happens, this tax, aimed at speculation on currencies, is now in the public eye and this is due, in large part, to the work done by ATTAC. So, it is politically important to keep the tax’s feasibility in the forefront because it is high-profile and because of the interest shown by the media. Other work done by ATTAC, for which an article by Howard M. Wachtel appearing in the October 1998 edition of Le Monde diplomatique has already paved the way, will alternatively explore other forms of taxation.
Question
Who will collect the money accruing from the Tobin tax? Who will redistribute it and who will profit by it?
Bernard Cassen
The question concerning the disposition of funds generated by the implementation of the tax can be answered quite succinctly. In James Tobin’s mind (and in that of ATTAC’s), in essence, the first objective is to stop the erratic flow of capital which led to the ruin of East Asia, Russia and Brazil, without losing sight of other positive fall-outs of such a tax. For instance, it would release very large sums of money - the amount varying according to its scope and percentage rate - that could be used for social, ecological and cultural purposes. We have considered several methods of dispersal. For example, in its last Report on Human Development, the United Nations Program for Development (UNPD) estimated that it would take $40 billion a year to eradicate poverty, permit universal access to potable water, satisfy hygiene needs, etc. Some have suggested that the tax collected in Europe be used, at least in part, for local infrastructure projects, especially with respect to the development of the East as well as for the 71 countries of Africa, the Caribbean and Pacific (ACP) with which the European union would entertain special relations as part of the Agreements of Lomé. As far as the structuring of management is concerned, two candidates are excluded from the outset: the International Monetary Fund and the World Bank. There are nonetheless numerous possibilities; for example, an international agency or regional agencies under democratic control, with participation from unions, non-governmental organizations (NGO’s), etc. This particular area deserves further discussion and one would hope that ATTAC could elaborate the proposals and submit them to the various associations worldwide. Quite simply, the limited time of this seminar does not allow us to go very far down that road.
Question
Why not introduce capital controls in France the way Malaysia has done?
Ibrahim Warde
The Malaysian government decided, for the moment, anyway, to stop short-term capital flows, i.e., money entering the country for a few days and then leaving. The administration imposed a one-year restriction. It is important to compare the Tobin tax with other more general measures, such as this restrictive exchange, to better measure the advantages that the Tobin tax offers. One of its selling features is its multinational character: if a measure of this type was not introduced into the international monetary system, governments would try to protect themselves by local means, as in the case of Malaysia or Chile. The Tobin tax, on the other hand, would allow a country to avert isolationism. Furthermore, this tax - a tax which does not stop the movement of capital - is realistic, in that it is more easily acceptable to bankers, governments, etc.
Bernard Cassen
With the Tobin tax, financial flux continues, freedom of circulation is not affected; it is simply slowed down. As far as the control of exchange is concerned, there are ways and means for the entry and exit of capital. The control of exchange is forbidden in Europe by the single European Act and the Treaty of Maastricht. To regress, a revision of these treaties must be undertaken, one that I find of interest personally, but the enormous difficulty should not be underestimated. Such a revision would necessarily imply the unanimity of member states.
Question
You have stated that the first objective is to stabilize the international financial system. However, I have joined ATTAC to talk about the redistribution of wealth and the fight against inequality. These objectives cannot be of a secondary nature; if so, you will demobilize us.
Bernard Cassen
You are asking a fundamental question which I will try to address. The point of ATTAC, and the basis of its structure (i.e., the convergence of citizens and associations, unions, collectives and publications) is the joining of two encampments: the traditionally militant one - needed more now than ever to denounce the areas of finance that have resulted in disastrous consequences - and the precise and deliberated measures needed in order to loosen the vice of market dictatorship. These proposals must be the product of an expertise, or rather, a counter-expertise, to successfully oppose the proponents of the system, as that of Bercy or Davos. We intend to not only take the liberal ideology apart - the “only” way of thinking - by showing its hypocrisy and blindness, but also to bring to the public forum concrete arguments showing that alternatives exist, that another world is possible. The time required for research and development of proposals is greater than militant action and one must accept this lack of synchronicity. The two are, nonetheless, instrumental in any case.
Ibrahim Warde
Those among you who are of the impression that the Tobin tax is not sufficiently ambitious need only understand that there are powerful interest groups who would forbid the very mention of it. I was asked to write the first article to appear in Le Monde diplomatique on the Tobin tax because the person who asked, an editor of a very important study commissioned by the United Nations, had recalled the reaction of the journal, saying: “My superiors have asked me not to talk about it.” There exists a severe censorship to it. Before leaving the U.S., I undertook a small study to see how many times the words “Tobin tax” appeared recently in the American press. Although there are several millions of articles, it was only referred to seven or eight times. In a telephone conversation, James Tobin suggested to Bernard Cassen that there are more members of ATTAC than Americans who are familiar or even aware of it!
René Passet
This question brings us back to the fundamentals of ATTAC. The fundamental issue, for me, is the following: what are the respective places of mankind and the world of finance in contemporary economy? Where is the conclusiveness? Where are the means? Until now, I thought I knew. I was always told that the economy was a means of transforming the world to satisfy human needs. It walks right side up when it is used to satisfy human needs and upside down when it doesn’t. That is what has been happening since the 80’s, since Thatcher and Reagan opened Pandora’s box and unleashed the demons of capital flux. We have witnessed the financial sector becoming progressively autonomous and complex; finance is no longer the counterpart of actual economic exchange. The well-being of mankind, its productivity and growth are not its goals; rather, it is the realization of a financial patrimony, transforming productivity into a mad state of “productivism,” the perversion of economy. In future, while communications are bringing mankind closer, the gulf between the rich and those not continues to grow. The world is ruled by the profit motive, accumulation, by things which do not elevate it. Finance is not something which gives meaning to life because, as a tool, it cannot give meaning. We live in a society which has lost the notion of meaning because we have nothing more to offer than basic survival. It is obviously the financial sector that we consider to be the focal point of our present problems, and that is where we must strike. And, if our answers are not well honed, our discourse has no value. It must be realized that we are all caught between the desire to return to our beginnings and the desire to give technical answers to technical questions. There is the risk of us straying, but you are always there to keep us perpetually reminded of the true fundamentals. I have merely tried to define them.
