Pope and the Tobin Tax

The Pope favors a Tobin Tax. The Tobin Tax is a charge on foreign exchange transactions and the Pope is the head of a small city state and a large voluntary organization, both in Rome. The opinions of Duncan L. Niederauer, CEO of the New York Stock Exchange, on Transubstantiation are unknown.

The Tobin Tax was proposed by a Nobel laureate, and may have merits, though its impacts would doubtless be complex. By taxing financial transactions it would, marginally, reduce the information publicly available in the market. It would raise money, and some people have earmarked this for global funds. The justice of a global tax which would fall principally on just three countries – the UK, the US and Japan – can be disputed. The practicality of the proposal, when two of the three countries that would be net contributors have vetoes on the UN Security Council, is also open to question.

But why should the opinions of a religious figure on a complex financial question be taken seriously? The Pope, of course, is entitled to any opinion he likes. But why should the media treat his opinions as news? The Catholic Church claims more than a billion followers, but numbers alone are not the point. The English soccer club, Manchester United, has 660 million followers, but no-one treats the opinions of its manager and players on complex financial questions as being of any interest.

Perhaps people consider this a question of morality? But no-one thinks it is immoral to convert one currency to another. And while currency traders can earn large salaries, it is hardly a major contribution to global inequality. Those players at Manchester United earn more, and even they are eclipsed by entrepreneurs like Bill Gates and Steve Jobs or entertainment stars like Michael Jackson and Paul McCartney.

True, the issues are different. Gates and Jobs have made hugely innovative contributions to technology. But does anyone think there have been no innovations in banking? Or that financial systems do not contribute as much to business as IT systems? Jackson and McCartney were justly rewarded for the brilliance of Thriller and Hey, Jude, but financial innovations have invisibly enriched our lives as much their art. Sports stars are, demonstrably, the best in their field. But the fact that it is harder to rank bankers does not mean their success does not deserve to be rewarded. Why is it a question of morality how much a banker is paid and not how much an athlete is?

That financial innovations are harder to understand than sporting success, the iPad, or musical brilliance does not make it any less worthy. In fact its very complexity is part of why talent in the field is in such demand. Frankly, this columnist cannot explain to you exactly how innovations in banking have impacted your life, yet you can see for yourself the impact of Windows and the iPod. But the difference between visible and invisible effects is not one of morality. It is not, therefore, one in which the Pope has any particular expertise to offer.

Questions of taxation are of interest to many. But so is sport, but the Pope’s views on baseball are rarely sought. It is recognized that the Pope is just a lay observer, with no special insight to offer. The same applies in banking.

Article provided by Quentin Langley
Lecturer in PR and Political Communications,
School of Journalism, Cardiff University

%d bloggers like this: