(The writer of this article is attending an international NGO Conference in Stockholm on Nuclear Disarmament and Non-proliferation. See www.nucleardisarmament.se. The goal of the conference is to gather the International Movement against Nuclear Weapons and to facilitate coordination of strategies that will lead to a successful NPT Review Conference in 2010.)
Today's news is that Gordon Brown has proposed a global tax on financial transactions at the meeting of the finance Ministers of the G20.
They call it the Bank Tax, which may be OK, considering that Brown goes further than Nobel economist James Tobin in his original proposal at the beginning of the 1970ies. When the US abandoned the gold standard and let the dollar float against the other currencies, Tobin suggested a 0,5-1 percent tax on the trade in money. The rate of the tax which Brown now proposes would be just a fraction of 1 % (perhaps 0,001 % , or even 0,0001 %), but it would also cover the so called derivatives business in addition to the buying and selling of money.
What are the derivatives? In his movie Capitalism - A Love Story, Michael Moore has a scene where a Wall Street banker tries to explain the matter to a man from the street. The more the banker explains, the bigger the confusion and disbelief of the listener.
The Bank for International Settlements in Basel (BIS), which produces the statistics about the global trade in currencies and derivatives, describes derivatives as 'OTC foreign exchange and interest rate contracts'. The BIS estimates that the daily turnover of the trade in derivatives was $4.2 trillion in April 2007, while that in traditional foreign exchange markets amounted to $3.2 trillion. (1 trillion = 1000 billion = 1 million million.)
What these staggering figures mean is that even a very minimal "bank tax" could raise a yearly revenue of tens of billions of dollars.
But here we meet the fundamental problem of the global tax proposals of Gordon Brown and the other G8 leadres. The crux of the matter is that global taxation requires global representation.
The old slogan "No Taxation Without Representation" is still valid today, more than 250 years after the British colonists first used it in the 13 American colonies.
Who shall have the right to decide about the tax rate? The global taxation may raise tens, maybe hundreds of billions in revenue. Where and how to invest these billions? Who are to decide? Will it be a consortium of bankers led by Gordon Brown?
It seems that the "bank tax" will be more or less just that. It will be a tax that is implemented not only by the bankers, but also for the bankers. The tax management will most probably be trusted to The International Monetary Fund (IMF).
Freely, the IMF takes its decisions by vote. There are 2,216,193 votes in total. Of these, the USA has 371,743 (17%), the twent-seven EU countries have 710,786 votes (32%), Japan has 133,378 (6%) and Canada has 63,942 (3%). Major decisions require an 85% supermajority. Therefore, both the USA or the EU (on the condition that the European countries reach agreement among themselves) have voting power enough to block any important decision.
What could be more important in our global political economy than global taxation and the redistribution of the global tax revenue?
The question should probably be put in a slightly different way. Why can we not have a new Financial Transaction Tax Organization (FTTO), where decisions can be taken in a democratic way by representatives of all the nations who, each one, have one vote, and where also the organizations of the civil society can have a representation? (1)
The reason is our obsolete world political system. People now have have begun to understand that the common ecological problems, such as the climate crisis, require global political solutions. Humanity now also, for the first time, has an Internet, which may be a necessary precondition for a common human understanding, and, therefore, of the common solutions.
Since 1945, the world political system has been dominated by powers who build and maintain weapons of mass destruction (WMD). The WMD has stood in the way of the development of the United Nations. They are still one major obstacle to global democratization, and to the necessary global redistribution of common gods and public services. Therefore, we must tell Gordon Brown and the the other leaders of the triad of North America , Europe and Japan, which dominates the world of finance and the IMF: No Global Taxation Without Denuclearization.
Denuclearization means, firstly, the abolition of the WMD. Gordon Brown and the UK could start by abolisihing the Trident missiles, painting the nuclear submarines yellow and turning them into a Museum. France is also well placed to take the lead in this. In my view, contrary to what we constantly hear being repeated in the media and by the official experts on nuclear disarmament (2), as well as, unfortunately, by the present political leaders of the EU-countries, neither the United States nor Russia are very likely to lead the world in the right direction. (When presidents Obama and Medvedev put forward visions of a world without WMD, then we, who are not Americans or Russians, should of course be happy and support them, anyway.)
Whoever wants to take the lead should abolish his WMD, unilaterally. Unless at least one of the present nuclear states decides to break the link between its kind of power and its own WMD, the process leading the goal we all want to see reached, the agreement and implementation of a global nuclear disarmament convention, will probably never take off.
Denuclearization, it must be added, is not only about abolishing the existing stockpiles of nuclear weapons.
Firstly, the production and proliferation of new robotics, genetics and nanotech WMD now also has to be prevented (3). These new, and all future WMD must be included in our vision of a denuclearized world.
Secondly, no new nuclear power plants must be buils, and the existing ones must be dismantled. For heavens sake, from where does all the plutonium come, for the bombs and the proliferation of the bombs? Here, again, the denuclearization initiative could, and should, come from Europe.
To sum up: Don't Nuke the Climate! No Global Taxation Without European Denuclearization!
(1) (Political scientists and lawyers have indeed drafted treaties on global transaction taxes, with proposals concerning democratic tax management; see e.g. www.nigd.org/ctt.
(2) See, for instance, the 60 Recommendations by the WMD Commission in the report "Weapons of Terror".
(3) See the article "Will the Future Need Us?" by the computer scientist Bill Joy, in Wired 4:2000.