02 November 2011

Thank God for the Archbishop of Canterbury

... and the Vatican.

Now there is something I truthfully never ever expected to hear come from my lips!

But they get it. They understand the two TOTALLY CRUCIAL changes that have to be made to our financial system in order to avoid another full-scale global financial meltdown and all that might come with it (including conflict, which is why I expect they are so concerned).

At least I think they get it.

The separation of traditional 'high street' banking from the casino divisions is a no brainer, and I'm sure they understand that. It deals with the concept of 'moral hazard' - a phrase used and understood by both money men and priests. No bank should be too big to fail and no society, national or global, should have any truck with that notion.

The Transaction Tax or "Tobin Tax" is equally crucial but this is the bit I'm worried about. I've heard the Archbishop refer to the money it raises and how that would be used. No, no, no. If you think its objective is to raise revenue, you are wrong and you will lose the arguement for imposing it.

That's why I despair every time some moron in the media refers to it as the "Robin Hood" tax. Of course any cash raised is handy, but that's not the point. The point of a transaction tax is to control and curb the excesses of the financial markets.

The spivs and gamblers are dedicated to gambling with their plastic chip money as fast, efficiently and on as large a scale as possible. They are locked in a spiral of greed and ambition. To that end, their latest toys are the data warehouses where their computers use complicated algorithms to trade with each other at speeds up to 400,000+ transactions a second. Listen to this BBC World Service programme about High Frequency Trading (25mins) made over TWO years ago about the stuff they are up to already.

The concept of responsible share ownership counted in nanoseconds does not fly, and unless we move very quickly to impose a transaction tax across Europe and anywhere else that will accept it, they will bring their global financial house of cards down around our heads in less than a heartbeat.

So it's very important to realise that a transaction tax is our only scalable defence against future financial meltdown. What sums it might or might not raise is irrelevant.

The idea of taking money from the rich goes down well in public debate and in the tabloid newspapers but it is a trap. It you use that card you ignore the realities of trickle down economics - it doesn't matter if a rich man can buy yet another super yacht because that feeds the families of the 500 dockyard workers who built it and the companies who supply all the parts and services - and you play into the hands of the financial elite who take the moral high ground and point to the "politics of envy".

(There is a certainly case for stopping them parking their money in the Cayman Islands, or any other offshore tax havens - but that's a less crucial issue. That can come later.)

So, not a "Robin Hood" tax. A "Tobin Tax". Please!

Image: Scott Gunn