Stat of the day: 1,000

The band of merry economists that has written to G20 finance ministers urging them to adopt the 'Robin Hood' tax

by Dave Waller
Last Updated: 09 Oct 2013
Economists are notoriously bad at reaching a consensus, both with each other and even with themselves (hence Harry Truman’s famous quip about wanting to meet a one-handed economist, who wouldn’t always tell him ‘On the one hand… On the other hand…’). So the fact that 1,000 economists from 53 countries have all signed up to a letter demanding a tax on financial transactions demands attention. The group reckon this Robin Hood tax – so called because it takes from the rich and is redistributed to the poor – could raise hundreds of billions of dollars to fund development projects. And, they say, given the cataclysmic effect of unregulated financial activity lately, it’s ‘time for the financial sector to give something back to society’.

The economists claim a tax like this is not only ‘technically feasible’ but also ‘morally right’. The signatories – include Jeffrey Sachs, director of the Earth Institute at Columbia University and adviser to UN S-G Ban Ki-moon, Dani Rodrik from Harvard, and Ha-Joon Chang from Cambridge – argue that in a world of haves and have-nots, it’s a decent idea for the former to do what they can to help the latter. They’re riding a popular wave: G20 chair Nicolas Sarkozy has commissioned Bill Gates to examine innovative ways to fund development, while France and Germany are keen on the idea of a financial transaction tax. So too are the UK public: a recent Oxfam poll found that 51% supported the idea of a financial transaction tax, which only 17% opposed.

 However, the ‘technically feasible’ bit is likely to be the big sticking point. It’s going to be hard to make this work unless everyone introduces the law at once – which will be devilishly hard to achieve politically. And even if it does happen, will it just mean that consumers are lumbered with extra costs so banks can protect their margins?  It’s hard to argue with the sentiment behind this, but the practicalities look hugely complicated.

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