The European Commission's proposal to introduce a financial transaction tax is being referred to by the media as the "Tobin tax", from the name by the American economist (James Tobin, Nobel Prize in 1981) who presented it in 1974. However, the purposes, the entity and the tax base of the tax invented by the Yale economist are totally different from that of the European Commission. This discrepancy, and the misattribution of the name, was pointed out by John Williamson, the economist at the Peterson Institute for International Economics, who is responsible for coining another term that has entered the jargon of economic discussion, the Washington Consensus.
Again, Williamson explains, the term was applied to a different idea from the original one. In the intentions of the author he should have described that set of reforms (macroeconomic stabilization, microeconomic liberalization and opening up to globalization) with which the official institutions (in Washington, not only) were then pressing the governments of Latin America at the end of the 80s. But the term "Washington Consensus” has come to mean something else, that is, to describe a dogmatic belief, that is to say a total and full conviction, that the market offers solutions to all problems. In economists' thinking, the term has become synonymous with neo-liberalism or what George Soros called "market fundamentalism."
The same is happening with the Tobin tax. This provided for a rate of 0,5 per cent on currency exchanges, in order to discourage speculation; in the European proposal it becomes a rate of 0,1 per cent on all financial transactions with the declared aim of generating tax revenue and obtaining implicit distributive effects. Certainly Tobin did not intend to tax the purchases and sales of shares or bonds and the goal was rather to put grains of sand in the machinery of the capital market, thus jamming the global machine of speculation.
Why protest itself name is used for ideas a little different from the original ones? It's not just philological pedantry, Williamson clarifies, but to signal that one shouldn't give in too much to media language. In the case of the "Washington consensus" it is understood that giving importance to low taxation, to a limited role of the State, to the absence of interventions to change the distribution of income is equivalent to being on the same side as Reagan or Thatcher.
Giving the same name of Tobin tax to two taxes of different nature leads us to believe that the goal is to target speculation and not raise cash for Europe. The premise of the European document is certainly that "the financial sector played the decisive role in causing the economic crisis of which the governments and European citizens paid the costs." He also admits that there is broad consensus on the issue that the sector should contribute more adequately to taxes, but the proposal "also aims to create a new income stream that is able to gradually replace the contributions of the various countries to the budget of the European Union, thus relieving the coffers of national governments”.
This is the war booty of the European army against speculation.
