Guess who French President Nicolas Sarkozy invited to dinner at the World Economic Forum in Davos? The take-from-the-rich, give-to-the-poor hero of the downtrodden, Mr. Robin Hood. Or, some might say, the legendary bandit, Robin Hood.
Sarkozy is making it clear to the high-powered gathering of business, economic, and policy personages in Switzerland that he is in favor of a global financial transactions tax. Some call it a "Robin Hood tax." Buy or sell a financial instrument, perhaps any financial instrument, then there would be a tax applied. There are rather a lot of financial transactions every nanosecond of the day, so that could generate a lot of revenue. The Robin Hood part becomes clear when you hear Sarkozy's idea for how to use the proceeds: take the cash and use it to develop the economies of poor countries.
A single European head of state calling for a new tax is one thing. However, Sarkozy
was speaking for more than France when he invoked the idea in Davos. Currently,
Sarkozy holds the rotating presidency of the Group of 20 club of richer nations and
this Robin Hood tax is something he wants the G20 to seriously look into. The United
States, for its part, has never embraced a financial transactions tax. You can imagine
what Wall Street thinks of it. Among the major concerns of market players: it's a tax.
Secondly, it's a tax that could drag down the pace of trading. Sarkozy's suggestion is
that maybe a little brake on the financial system that bought us the 2008 meltdown is just
what the world needs.
If the financial industry isn't likely to cheer Sarkozy's plan, it is getting the big A-OK
from global anti-poverty and anti-hunger groups. Oxfam's chief, Jeremy Hobbs, released a statement saying:
"President Sarkozy's comments offer a real opportunity for the G20 to put the interests of the poor ahead of those of big banks and make a Robin Hood Tax a reality. The G20's president and the IMF [International Monetary Fund] are both pushing for the financial sector to pay more so finance ministers meeting next month now have no excuse for inaction."
Sarkozy acknowledges that not all G20 countries are fond of the transactions tax. He
suggested a smaller group of "pioneering" countries, with France presumably among
them, might blaze the trail.
The French President was also at the center of some additional fireworks during the Q
& A section of his keynote presentation at Davos today. JP Morgan Chase chief Jamie
Dimon stood up to challenge Sarkozy, suggesting that much of the reform that is needed for the banking system has already been accomplished and that the danger now was of too much regulation from the G20. "Too much is too much," Dimon said.
Sarkozy fired back with a quick review of how unsustainable behavior in the financial
services industry had come at the cost of millions of jobs around the world.
After giving an example of securitization gone bad, Sarkozy concluded "Are we in a market economy or a mad house?"
Incidentally, the financial transactions tax, or "Robin Hood tax," has yet another name.
Some refer to it as the Tobin Tax, a moniker that could cause initial concern among Boston commuters who use their city's famous Tobin bridge across U.S. Route 1 every
day. Actually, the Tobin in Tobin tax refers to James Tobin, winner of the Nobel Prize in economics. Tobin saw his tax idea as a way to penalize financial players who too aggressively play short-term games with currencies.
Watch Nicolas Sarkozy's speech at the World Economic Forum: