So, now the European Commission has decided that the Robin Hood Tax would be pro-growth after all (provided even a small proportion of revenues are invested in creating jobs). Given where the UK economy is these days, that’s kind of case closed. And given the ‘growth at all costs’ neo-liberal mantra of the last 30-odd years in this country, that is (or should be) the whole political and economic establishment on board too.
More important still, from Oxfam’s perspective, the current non-growth (to put it politely) is hitting the poorest the hardest. Incomes are falling; public service cuts are hitting people on low-incomes worst; benefit cuts are biting; and unemployment is high but stabilising, albeit at the cost of people being forced into part time work. Get the economy going again, and those undeniably bad things start to get better. Once again, this time for people who care about poverty in the UK – case closed.
And yet. If we value things like overcoming poverty and environmental sustainability, it is the type of growth that matters, not growth itself. Oxfam’s work developing a well-being index for Scotland demonstrates that, for the people of that country, there’s a lot more to life than GDP. How to get the right kind of growth is an urgent but difficult question.
If the above is one for the pro-poor contingent, the political and economic establishment might want to pay heed to the growing realisation, among the likes of the (scarcely anti-establishment) World Bank and IMF [PDF], that economic growth circa 2007 is something of a busted flush. The rewards went to the richest, while incomes at the bottom stagnated. Since 1981, personal debt as a proportion of GDP has more than trebled [PDF].
We developed a society in which those at the bottom need to borrow to survive, and those at the top have enormous amounts of money to lend. The financial sector expanded until it reached crisis point. Even if we manage to repay or write off enough private debt to get the system up and running again, those same contradictions come back into play. As two IMF economists put it, ‘any success in reducing income inequality could therefore be very useful in reducing the likelihood of future crises’.
What does this all have to do with Robin Hood? Well, in the immediate term, a tax on some of the richest people in the world can help to shift some of the burden of economic failure away from people in poverty – helping to fund essential services in the UK and abroad. That investment will do far more for our short- and medium-term economic prospects than taking money from the pockets of the poorest. It will also edge us towards long-term sustainability, by reducing inequality, and discouraging harmful speculation.
When it comes to a Robin Hood Tax, the UK stands to gain more than most.
Moussa Haddad is Economic Justice Policy Officer for Oxfam's UK Poverty Programme.
Oxfam GB’s paper on the impacts of the economic crisis and its political response on people in poverty, and how we can start to build ourselves sustainably out of the situation we’re in, The Perfect Storm, is published next month.