March 31, 2010
For the first time in history we have the ability to eradicate large-scale extreme poverty and the suffering it brings. The question is whether we have the will to do it. Growing support for a global financial transaction tax – known as the Robin Hood Tax – offers an exciting glimmer of hope this really could happen.
For almost 40 years I have advocated that those of us fortunate enough to live in affluent nations have a responsibility to help those who cannot meet their basic needs. If we accept we have an obligation to save a small child who has fallen into a shallow pond, even if that will ruin an expensive new pair of shoes, then don’t we have an obligation to do at least as much for children in developing countries dying from easily preventable diseases?
Contrary to the popular belief that poverty is a black hole into which we could pour an endless amount of money without seeing any results, aid to the poor really works.
Fifty years ago 20 million children died before they reached their fifth birthday. Today it is down to 9 million – still far too many, but remarkable progress considering that the world’s population is now more than twice what it was in 1960.
If resources can be mobilised, it is possible to lift hundreds of millions of people out of poverty and alleviate the death and suffering of the billion people surviving each day on less than what most of us spend on a bottle of water.
The response to the global financial crisis shows trillions of dollars can be mobilised at barely a moment’s notice when governments think the stakes are high enough.
If we can raise that much to save the banks and boost our own economy, can’t we raise even a small fraction of that to help a billion people in extreme poverty?
(It would be a small fraction. Jeffrey Sachs, who led a United Nations taskforce on the cost of meeting the Millennium Development Goals, estimates this would cost $US135 billion ($147 billion) in the first year, rising to $US195 billion by 2015. The goals include halving the number of people living in extreme poverty.)
The idea of a tax on global financial transactions, with the money going to help the poor, has been around for decades but without going anywhere.
Now 350 economists, including Sachs and the Nobel laureate Joseph Stiglitz, from more than 35 countries have signed a letter to the leaders of the Group of 20 countries calling on them to impose a tax on financial transactions.
Suddenly the leaders of Europe’s three biggest economies – Angela Merkel of Germany, Nicolas Sarkozy of France and Gordon Brown of Britain – are promoting a financial transaction tax as a way to fulfil commitments to domestic budgets, climate change and international development.
At the G20 summit in Pittsburgh in September world leaders asked the International Monetary Fund to draw up a plan for such a tax. It seems the global financial crisis has provided a window of opportunity for a shift in the readiness of governments to ho2ld the financial services sector to account.
Jubilee Australia and a coalition of local organisations are launching the Australian arm of the global Robin Hood Tax campaign, ”turning a crisis for banks into an opportunity for the world”. Its goal is to build on the current momentum to achieve commitment to a financial transaction tax at the G20 summit in Toronto in June.
The tax would be levied on every financial transaction between financial institutions, but not on transactions conducted by individuals. The tax could raise as much as $US400 billion a year for poverty reduction, climate change action, world health, education and more.
Achieving a financial transaction tax in June is a real possibility – but “how much?”, “from whom?” and “to what end?” will be crucial. Support from, and pressure on, the major G20 members is essential to achieving equitable and transparent answers to these questions.
Regrettably, the federal Treasurer, Wayne Swan, did not support the tax at the G20 finance meeting in St Andrews in November. Australia has come through the global financial crisis relatively unscathed. The
Prime Minister, Kevin Rudd, is in a position to take a lead and advocate on the basis of justice – not economic self-interest or political expediency.
Peter Singer, author of The Life You Can Save, is professor of bioethics at Princeton University and Laureate Professor in the Centre for Applied Philosophy and Public Ethics at the University of Melbourne.