The Tobin Tax could change the world

17th March 2000

Our inflation rate has hit 4 per cent, almost twice that of the European average, said the newsreader, with a puss on him designed to show the gravity of the situation.

The next story is Mozambique. The newsreader brightens up to tell us that the flood waters are receding. For a moment it seems that the news in Ireland is bad and the news in Mozambique is good.

Context. It’s all about context. Ireland happens to be one of the wealthiest countries on the globe while Mozambique is one of the poorest. We’re worried about the quarterly rise in inflation – they’re worried about having no houses and no food.

The only reason that Mozambique has made it on to our screens is because of the drama of the situation. Every other day there is the normal high infant mortality, hunger, land mines left from the civil war and general destitution. People are living on a dollar a day.

The floods, which would be a disaster in any case, wreak extra havoc on a country with no resources, no means of obtaining any resources and a crippling debt to spend any resources on before anything can be spent on the people.

You don’t have to be a bleeding heart liberal to know that this is a scandalous situation in a world of plenty; that a modest reallocation of resources could alleviate a huge amount of suffering.

Up to now, the means people in the First World had to support development was to give money to charity. But it is obvious that charity alone cannot solve the immense problems in the Third World and that the world economic system itself is responsible for the lopsided development on this planet.

Over the last 20 years the global economy has itself undergone sweeping changes. In the late eighties the ‘Big Bang’ heralded the integration of the world financial markets and now money zooms around cyberspace at the speed of light.

In fact, this money is now the mainstay of the world economy. Every day up to $2 trillion is traded on the foreign exchange markets ($2 trillion is $2 million million).

Only some 5 per cent of that amount is needed to finance international trade. The rest is speculation. In 1975 80 per cent of currency transactions financed trade. This shows the scale of the change that has taken place.

So it’s a new world but with all the old problems. Into the breech stepped James Tobin, winner of the Nobel Prize for Economics, who spotted the trends some time ago and proposed a tax on international currency transactions. The tax would be of the order of 0.25 per cent and would realise some $250 billion annually to be spent on the developing world.

This idea is now called the Tobin Tax and the campaign for its implementation is gaining ground worldwide. It would be, in effect, the first world tax and would reflect the integrated nature of the world economy and its responsibility to its least well off citizens.

Ireland is one of only 200 nation states in the world and an influential member of the richest club in the world, the EU. We could make a huge difference by adopting the Tobin Tax as part of our foreign policy. You can help by passing a motion in favour of the Tobin Tax in whatever organisation you belong to.

The campaign for the Tobin Tax here is called attac-Ireland, phone 2984879, website http//:attac.org/ireland. This time we could really change the world.