Feared by the banks, loved by the gullible

In explaining how he avoided falling into the common liberal trap of supporting the Iraq war, Dan Davies listed the maximGood ideas do not need lots of lies told about them in order to gain public acceptance“. The fact that all the main proponents of the Iraq war were lying like rugs about WMDs inherently casts doubt on the case for war, even if you believe that a war for regime change would have been justifiable in its own right.

I was reminded of this when looking at the website for the Robin Hood Tax campaign (the Robin Hood Tax is the new, nauseatingly cute, name for the Tobin Tax on financial transactions):

The Robin Hood Tax will not impact on personal banking or on retail banking. That’s because it targets a distinct area of bank operations – high-frequency large-volume trading, undertaken by financial institutions in the ‘casino economy’. 

If you change money to go on holiday, send remittances abroad, invest in a pension fund or take out a mortgage, you will not be affected by this tiny tax.

The Robin Hood Tax consists of a levy on:

financial assets such as stocks, bonds and foreign exchange, traded both physically and as derivatives (options, forwards, futures and swaps).

Hence, any money you change (whether for a holiday or for remittances) and any investments that your pension fund makes will, very obviously, be taxed under it. The tax will, definitely have a negative impact on ‘good’, non-casino-y transactions like people buying shares in companies to generate income for their retirement, or companies converting euros from their export sales into pounds.

This doesn’t, in and of itself, make the Robin Hood Tax a bad idea. That negative impact could well be outweighed by the benefits of the revenue raised and of dampening the speculative excesses of the global financial system (I’m sceptical of the latter: we all know with each successive crisis the speculative excesses of the GFS turn out to be concentrated in areas that aren’t regulated or taxed or indeed understood. But that’s for another day).

But the tax’s proponents are simply lying that the negative consequences for the real economy simply don’t exist, rather than acknowledging them and saying that the benefits are larger. And that definitely triggers my Iraq filter.

9 thoughts on “Feared by the banks, loved by the gullible

  1. That Richard Murphy wrote the TUC's report backing the RHT and also the RHT campaign's Budget submission….well, that's really all we need to know about crap arguments being used to support something really….

  2. It would be better for them to put some numbers on it – £500 of holiday money at 0.005% would be taxed 2p (spreads would widen too, but to what extent that filters down the vastly higher ones at personal level I have no idea)

  3. Hmm. If we're playing the man rather than the ball, I'd back Tim (or, indeed, a mad tramp dragged off the street) over Richard Murphy any day of the week.

  4. I'd rather not back either of them. In fact, I'd rather leave them to it, take the ball, and start a new game elsewhere.

    But unfortunately, I suspect wherever we pitched up, Wrongstall would track us down and try to interpose himself. Oh look, here he is now:

  5. On the other hand, Tim isn't currently one of the people behind a massive lying-based campaign to change financial policy.

    Well, unless you reckon that UKIP are a massive lying-based campaign to remove us from the EU and hence completely change the UK's financial and trade situation… oh, bugger.

  6. "It would be better for them to put some numbers on it – £500 of holiday money at 0.005% would be taxed 2p (spreads would widen too, but to what extent that filters down the vastly higher ones at personal level I have no idea)"

    Both points are absolutely correct. But the RHT's problem is that they've said, up front, that we peons won't have to pay this tax. It'll all fall on the eeevil bankers.

    Which quite clearly it won't, as you note, and thus they're lying.

  7. Given the massive, massive, absurd spreads charged on retail forex, I would say that anyone thinking a 2bp tax would go straight onto the price rather than being absorbed by Travelex would be either a) trying it on or b) Worstall. Tax incidence on pension funds is possibly a more interesting question, but given what's happened to comm and spreads in the London market over the last ten years I very much doubt it there either (particularly since this tax would presumably replace SDRT).

    You might also want to consider the startling truth that lots of people from the ordinary working class don't actually have pension funds.

  8. Yes, spreads on retail forex are crazy – but why on earth wouldn't Travelex and their partners-in-extortion try passing the cost onto the consumer to keep their profits up? (see: oil price vs retail petrol price).

    And yes, lots of working class people don't have pension funds. Had the RHT lot said "if you don't have a pension fund, there's nothing to worry about", then that would have been honest.

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