I’m not really equipped to interpret the communiques released by the Vatican. But it seems there was a pronouncement this week that has the Pope weighing in on financial reform. Specifically, the Pontifical Council for Justice and Peace supports the idea of a Financial Transaction Tax (FTT) as a means to better promote social justice and solidarity.This undoubtedly has the Pope’s blessing, so to speak, and is significant in its recognition that social justice is a priority, revenue has to come from some place, and high finance should increase its contributions to the public coffers worldwide.
A small tax on financial trading could raise significant revenue to fund for many cash strapped governments. It is an idea that has been discussed in the US context, but for some reasons Wall Street and the big banks have not come around. But perhaps it is indicative of a growing sea change that the idea is gaining prominent and diverse supporters. Not only has it been spotted on Occupy Wall Street protest signs but German Chancellor Angela Merkel and former British prime minister Gordon Brown have also endorsed the idea. And this weekend, Bill Gates is on his way to the G20 summit to argue that it is one way that governments can generate new resources to support international development efforts.
There’s certainly an upside to having this policy implemented internationally, because if it’s implemented everywhere no one will be disadvantaged. While Gates may see this policy as a means to fund specific initiatives (see his Washington Post op-ed), what makes this idea attractive to me is not the earmark for specific activities but the new revenue that could be generated relatively painlessly. In the context of rising inequality and a widening racial wealth gap, calling it the “Robin Hood” tax does not hurt either; its redistributive potential is an added bonus.