Letter: Would you refuse a banker’s bonus?
Monday 24th January 2011, 6:05AM GMT.
Letter: Recently your correspondents (letters, various dates) have discussed bonuses paid to bankers and others.
At least one of these categorised these bonuses as “obscene”.
I have one question to put to that correspondent.
If as a result of your skills, technical ability and hard work you had generated a substantial amount of wealth, your employer decided to recognise your work by paying you a bonus at the end of the year.
In range of a thousand pounds to one million pounds, at what amount would you refuse the offered bonus on the grounds that you considered it repugnant?
FN Goodwin
Church Stretton
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I have one question to put to FN Goodwin:
Why are banks still paying huge bonuses to staff when they have been responsible for losing vast amounts of money, resulting in reduced profits and shareholder dividends, and in many cases requiring taxpayer bail-outs?
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Rob, at the investment side of a bank as far as I know it, it works like this;
a) An individual gets paid a great deal
b) If said individual fails to make a profit and sharpish they are likely to get dismissed equally sharpish (hence the reason for the large pay packet – no one applies for a hire and fire job without it.)
c) If they do make a profit their renumeration is increased through bonuses in line with the profit they made.
Hence the point the writer makes is valid – shouldn’t a person who contributed to the profits of an organisation be rewarded in line, even if the company made an overall loss. Example; In a war they still give bravery medals to the soldiers who fought on the losing side.
Equally the point your make is valid – if you individually have made a loss you should have gone not taken a bonus.
And this is the problem – I don’t think the public is satisfied that enough investment bankers are on the dole, nor their managers, nor their chief execs. I don’t think most people object in principle to bonuses per se.
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Nice theory, but the other night I was watching a TV item about Goldman Sachs – whose profits are down, shareholder dividends down – and bonuses going up.
There is no obvious relationship between the performance of bankers and their bonuses.
…and no banker or financier ever created wealth – they just shuffle it around and take a percentage, even if in doing so they devalue its asset value.
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Rob, theory is right, practice is wrong (hence my last paragraph). As for wealth creation – wealth mirrors the law of conservation of energy, nobody creates it.
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If on the other hand banks abandoned, good lending practices and caused a debt bubble that has now collapsed creating a world wild crisis for which we all are being forced to suffer the consequences.
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Answer forthcoming via Letters page.
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Pay the bankers bigger bonuses! It is their reward for doing well and in the case of RBS and Lloyds the better they do the better off the taxpayer is. The money lent to RBS and Lloyds is being paid back at a profit to the taxpayer so its not a bad deal really.
The reason for the large losses is to a great extent due to the Labour government making it too easy for people to declare themselves bankrupt and effectively wipe out their debts. So should you blame the banks or your friends and family who chose to borrow carelessly? Or is it the banks that were encouraged by the government to lend carelessly? I just find it ironic that the people that moan the most seem to be the ones that have IVA’s against their name or have been declared bankrupt, and these same people are the ones that blame everyone else for their own ridiculous spending habits.
Now everyones moaning about bonuses and shouting for additional taxes on those that already pay the higher rate of income tax at 50%. The bankers that bring so much wealth into this country are now re-locating to other places such as Malaysia where they don’t get taxed so heavily. So now the UK really is losing out.
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if they are doing so well as to be able to pay billions in bonuses should they not pay back the money they borrowed first?
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If they do not pay the bonuses then the best staff will simply work elsewhere!
Imagine that you are a trader at RBS and your wage was capped to a respectable £50k a year. Would you continue to work there for the love of it or go and work at a rival bank that was offering £200k a year basic and a quite achievable £500k a year bonus?
I’m guessing your next argument will be cap wages at all banks in the UK. Well if that happens then as many positions as possible will be moved outside of this country costing many billions more in lost taxes. Whereas at the current rate the money will be paid back much quicker than originally intended, and at a profit to the UK taxpayer. Not a bad deal at all really.
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Let them go then.
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Yeah, let them go. So the thieving, grasping scum-bags will take their money with them, but better that than allow them to hold the country to ransom. Of course, people deserve to be rewarded when they generate profit for their company, in the same way that burglars deserve to be rewarded for the effort and skill they expend when they break into your house and steal your telly.
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They didn’t “borrow” any money. When they were bailed out, the UK government gave the banks a huge amount of cash in return for taking a majority shareholding. We the UK citizens now own shares in those banks – shares which have now risen in value to the point that when sold, we will make a profit on the deal.
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So where’s my bonus ??
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The reason was not because people declared themselves bankrupt! The reason is because the banks loaned money beyond the value of the security.
I owe money to the bank via a mortgage, the bank has first call on all of my assets, only if the bank had loaned more than the value of my assets would I cost them any money by declaring myself bankrupt.
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Squire,
If, as you claim, the banks are paying back the money we lent them, and at a profit to boot, and given that almost half of the national deficit (or some 30% of GDP) is solely down to bailing out the banks, then why are we all having to suffer tax increases, cuts in essential public services, pay freezes, and, with today’s news, the promise of a a real recession due to shrinkage in the economy?
If you take the banks’ share of the debt out of the equation (because according to you it’s being paid back at an acceptable level) then we’re left with a debt level of just 32% of GDP – not an unusally high figure, and certainly not one that would give rise to the savage cuts in our police, NHS etc. lined up by the current government.
Could it be that the banks are not paying back the money as quickly as they should? After all, a £3.5bn levy vs. a £7bn bonus budget doesn’t seem to reflect any balance – don’t forget, it’s our money they are spending on these bonuses as things stand.
Could it also be that the cuts are ideologically driven, and that the ‘highest debt levels’ are a lie propagated (and propagandised) to allow for protection of the wealthy at the expense of the rest of us?
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Don’t go telling the truth Peter – it only upsets people. They’d much rather go along with the “let’s not be beastly to the bankers” ine that’s increasingly being touted by the media, where the “recession” is the result of some (as yet unidentified) natural catastrophe.
I expect it will be the subject of some awful reality TV show before long.
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As a separate but equally emotive subject – why are the British government still paying out billions from tax revenue in foreign aid to countries like China? Beggars belief.
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Oh don’t worry. We’ll be getting it back very, very soon. I give it to late 2000s, early 2100s. Then we’ll be grateful for every bit of aid we can get and no compunctions as to where it came from.
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Gary,
The total foreign aid budget for the UK is £7.7 billion for 2011. That’s about the size of the bankers’ bonus piot too, and tiny compared to the levels of debt they ran up.
If you think foreign aid is spent for altruistic reasons, you’re being naive. It’s spent to allow influence in certain areas of the world – for example we spend money in areas where if we didn’t do so, extremist influence (and money) would replace it.
In China’s case, bear in miond the size of the Chinese economy. We need good trade relations with China, and I’m afraid foreign aid is part of the palm-greasing associated with that – if we stopped offering it we would lose more than we gained. It’s distasteful, as are many aspects of international diplomacy, but we need to see it as an investment.
I’m afraid in this case we simply can’t just blame our woes on foreigners…unless, of course we’re including the US banking system!
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offer me a bonus an find out. see the issuew isnt would i accsept it the issuw is. is it right to offer them given the sitution are countrys in. look at u.s. thay wanna print a billion dolla bill just so thay can then go an give it to the bankers an thay cry poverty.
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Step away from the keyboard. The man in the white coat will be along shortly to take you back to your room.
If your comment is supposed to make sense, I, and the rest of the educated world, missed it.
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No Tyrone man, you jus dont get it man! Da banks iz totelly screwing fings up so now mi job seekas allowance is not enuff to buy fags and weed, last week i ad to give up fags so i cud afford weed innit
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You seem to be able to speak Chav as well as English – perhaps the Star will retain you as resident translator….?
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Gotcha, I musta not bin finkin strait.
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FN Goodwin? F Goodwin ? Fred Goodwin ? Fred the Shred ? Fred the ‘egomaniac’ leader of RBS whose battle with John Varley as to who would own ABN Amro sealed the fate of the Bank ?
My my, surprised to see you here, but at least now the letter makes perfect sense.
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LOL
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Does any one really care?, it is in the job contract they have . How about we take back the wages of some of our our public sector workers who have not done a jot for years , I am sure we could find a few . But no we will not do that we give them early retirement instead.
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Andrew,
Which public servants would you take money from? Nurses perhaps? Police officers? Doctors? How about people who run our prisons?
Or those in the DWP who ensure that pensioners and those unfortunate enough to find themselves out of work get the miserly benfits they’re entitled to?
Perhaps you’d like to see those who provide the myriad of local services you so obviously take for granted punished for the bankers’ greed?
Can you please be specific and name those who you believe ‘haven’t done a jot for years’? Is this view based upon personal experience of working in the public sector, or just on tabloid-fed ignorance and prejudice?
And also – how much do you think junior public servants are paid? – It’s probably far less than you think.
Wouldn’t it be better if we closed the sort of loophole that allows the likes of Sir Philip Green to place all of the profits from his Top Shop enterprise in his non-domiciled wife? Now that would bring some cash to the coffers!
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Peter as you well know I was referring to the over paid pen pushers , managers, non job types, poor teachers, poor police officers, poor gp’s,etc etc yep peter we have a few out there who have been playing the system for years and getting away with it . Not really in to the tabloid stuff to be honest but worked in a very minor role in the public sector for 17 years before realising if you want better you get out and work for it and not free load , seek some way to get out on the sick which I think has been proved by the amount of PS workers who were on incapacity benefit? , I also witnessed people given given early retirement and it was enhanced instead of being made redundant, and the managers saying it was the only way to get rid of poor staff with out any union trouble .
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Andrew,
You still fail to provide any specific examples. You talk of ‘overpaid pen-pushers’. Funnily enough I’ve never seen such a job advertised – cna you advise specifically of one such role?
Yes – I’m sure there are lazy and incompetent police officers, GPs, and even (whisper it carefully) members of the armed forces. Guess what? There are plenty of lazy an incompetent people working in the private sector too, and getting away with it in large companies.
If you’re looking for overpaid people, perhaps you should take a look at directors and senior managers of large companies and corporations, whose pay far exceeds that of senior public servants and whose remuneration has continued to rise at levels far above inflation throughout the recession.
As for early retirement and redundancy terms,public servants are paid what is in line with their contracts of employment
– and is often far less than the Tory press would have us believe. Don’t forget, the average so-called ‘gold-plated’ public sector pension is just £7,000 per annum.
You’ve failed to grasp the true nature of the problem. 95% of the wealth in this country is owned by just 5% of the people. If we’re to clear the deficit, we need to be taking more from that wealthy 5% of people, rather than constantly bleeding the 95% for it.
If we were to attempt to close the £120bn tax gap caused by tax avoidance (legal but morally inexcusable) and tax evasion (illegal, but not pursued) then we’d be well on the way.
We have a timetable for halving the deficit in 4 years, which according the Governor of the Bank of England, we’re going to stick to , even though it will cause the greatest squeeze on standards of living since the 1920s. He said this speaking at a banquet at the Mansion House – what a hypocrite!
Where is the timetable for the banks to pay back the 30% of GDP they owe us? I’ve seen absolutely no details of that from the current government of their plans to make the banks pay up.
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Well said Peter, I am getting a little sick and tired of this continual attack on public sector workers, most of it based on the inaccuracies published by certain sections of the tabloid press. I know a few people who retired from the public sector and they are getting pensions of the amounts you suggest not living the life of luxury.
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Peter, in light of your view above that the small number of very wealthy people should be helping those who are suffering cuts in services, (a view, which I fully agree with), what do you think of the idea of an international Tobin Tax on currency speculation?
This tax would not be paid by most ordinary people.
The largest burden of this 0.05% tax would be borne by a very small group of very rich people, who make significant investments in institutions such as hedge funds, which trade currencies frequently.
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they would not have earned a penny if it wasnt for the tax payer, therefore the bonuses should go to the taxpayer, every year until their global crutch of subsidies and taxpayer backed insurance is over and then they need to be restructured to allow them to fail and pay for it themselves like any other business that fails
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Many people have skills and technical ability,
but they don’t get billions from the taxpayer.
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What do other contributors think about the idea of introducing a ‘Robin Hood Tax’ on international financial transactions?
It is a very simple idea: each time a currency is exchanged into another, a tiny tax would be levied.
This would have the double effect of raising money for important long-term issues like tackling poverty, climate change and meeting the Millennium Development Goals, and at the same time dissuade short-term currency speculators, whose activity is not what Adair Turner would call ‘socially useful’.
A Tobin Tax could be a long-lasting, positive legacy of the tax-payer-funded bank bailout and the country’s anger at the bonus culture’s ugly revival.
This ‘Robin Hood’ tax idea got a boost 2 days ago when Nicolas Sarkozy, France’s President, who is now president of the G20, called for a £62bn TOBIN TAX on banks.
Oxfam, the TUC, the World Development Movement, the Jubilee Debt Campaign, the Tax Justice Network, UNICEF UK and support the Robin hood tax.
The Taxpayers’ Alliance and the financial services industry oppose the Robin Hood Tax.
What do people in Shropshire think?
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Great, as long as they don’t go wasting the money on a load of useless windfarms..
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‘Useless’?
Windfarms supply nearly 20% of Denmark’s energy. Around 90% of the national output from the windfarms is exported. And investment in windfarms has boosted Denmark’s manufacturing industry and income from exports to places like California.
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Two points:
1) You forgot to add “when the wind is blowing”. Denmark still retains a full retinue of power stations (or imports from countries like Sweden) for when it’s not blowing, as does the UK.
2) Those exports to California meant that the buying companies had to purchase Danish currency to pay for them – your Tobin tax would have made them even dearer by taxing the conversion.
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1) Scientists are finding ways to store wind power for energy use when there the wind is not blowing.
The 3 main wind power storage methods currently being implemented are battery, compressed air and hydrogen. We could discuss these in more depth if you want, Rodney.
Another solution for the problem you raised is the UCTE, a Europe-wide transmission grid, which sends power from Denmark to Spain for example when Denmark is windy, and from Spain (which gets 13.7% of its power from wind) to Denmark when Spain is windy.
2) Do you really believe that Californian wind energy companies will be deterred from buying kit from Denmark because of a 0.05% tax going to good causes, Rodney?
The Tobin Tax is aimed at currency speculators, not at ordinary trade.
Currency speculators deal in high volumes of money and rely on very small margins, so the 0.05% tax is more of an issue for them because it renders their speculative activity less profitable.
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Oh Huw, don’t you understand that if you put a tax on every transaction, then all that will happen is that the poor old consumer will be made to pony up the money. It could be higher charges, the end of free accounts (if you’re in credit) or maybe even less lending to small businesses than current occurs.
A “tiny tax” to stop speculators?
Do you mean like the larger transaction stamp duty already levied on share transactions? That doesn’t seem to stop speculation when an opportunity is seen. But consumers suffer through higher pension fund charges.
Or do you mean like the huge VAT levied on oil swap transactions? That 20% seems to have affected oil speculators not one little bit. But consumers suffer through higher fuel charges (we can’t all cycle to work, Huw).
Or do you mean like the stamp duty that was levied on property transactions. That variable charge did nothing to stop speculation in the property market. But consumers suffered as the possibility of cheap housing evaporated before their very eyes.
Taxes on businesses ALWAYS get passed to the consumer. If that was not the case, then instead of raising VAT from 17.5% to 20% recently, the government could have raised it to 99% and no harm would have been done.
Taxing the bonuses themselves, now THAT would be an idea. Oh, silly me! They already do that at a rate of 50% plus N.I. charges. Doesn’t seem to stop bankers accepting them though, does it?
And you can be sure that £62 billion of consumers money handed over to governments would be no more a legacy of the bailout or an expression of the anger of country at the revival of bonus payments (did they ever go away?) than the current shouts of anger are. But it would certainly be a big bonus to the politicians who collected it in – no prizes for guessing where it would end up, tackling their “poverty”, not ours (something that more and more of us are going to experience before long).
I don’t want any more of my money going to bankers or politicians though picking up the bill for a Tobin Tax. It was a bad idea when Gordon brown kept suggesting it, it’s still a bad idea when you suggest it.
No. Just pull the rug.
Demand the bail-out back with immediate effect. Cash and then assets such as property if necessary. Treat banks in the same way that banks treat companies when they feel like it – foreclose the loans immediately. Savers are protected, so no danger for them, and investors learn that the rewards they get are a function of the risks they take. Let the debt obligations to other institutions fail through bankruptcy – at the moment, we are guaranteeing the funds of lenders to the banks, and they’re taking interest in reflection of “risk”, but they’re not actually taking risk because the UK government has acted as guarantor of last resort. They can’t collect from bankrupt companies, so let them whistle for the money. They may in turn fail, but a breath of fresh air through the whole system may be no bad thing.
It would take less than 24 hours before other banks or companies stepped in to pick over the pieces and start some banks afresh. Any employees made redundant and then re-hired by any new regime would then no doubt be offered contracts without bonus payments included.
You can be sure that any company seeing assets like that available at a knock-down price would snap them up and have them working again within a very short time. Why, we could even have an extended “bank holiday” for a week during which the horse-trading could be conducted. And please remember, it’s US and European entities that are in trouble. Plenty of money sloshing around in China and other emerging Asia countries in general. I’d be quite happy to have their efficiency and money injected into the system. A true banking revolution, that would be most welcome.
Another consumer tax would not.
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The problem with your alarmist arguments, Rodney, is that the Tobin Tax is NOT another consumer tax, as you very well know.
(Ordinary consumers buying currency for their foreign holidays account for just 0.1% of the $800,000bn worth of currencies traded across the world every year.)
No. The Tobin Tax is a tax, which takes a minuscule cut from the other 99.9% of bank transactions and targets the revenue at the poor, whose lives have been made much worse by the knock-on effects of the crash.
It is a tax on an activity (currency speculation), which most people consider less socially useful than the international trade in goods and services, yet which accounts for 50 times more than goods and services in dollar terms.
International currency exchanges are not taxed -because of successful lobbying of politicians by banks in the past.
Do you think it is fair that these transactions have been thus far excluded from tax, Rodney?
And do you think it’s fair that the banks carry on as if nothing ever happened when the numbers of vulnerable people are swelling.
You would prefer the banks to be shut down and swallowed up by new banks.
But what would be the long-term benefits for society at home and abroad of your solution?
The long-term benefits of a Tobin Tax would be a steady stream of funding for: tackling poverty in the UK (50%), measures to tackle climate change here and abroad (25%) and the Millennium Development Goals (25%).
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Huw,
As someone who regularly predicts the dire doom-laden consequences for our grandchildren of climate change and peak oil, surely you’re the last person to be cricising others for ‘alarmist arguments’!
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Peter.
Do you think a Tobin Tax will be damaging to ordinary people, if it targets money at poverty at home and abroad and at measures to climate change?
925 million people around the world are going hungry every day.
Do you think their plight will be helped or hindered by the undeniable changes going on in our climate?
How would you raise money to help these people?
The Tobin Tax puts the international currency markets under more democratic control.
Is this not a good thing?
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” Alarmist arguments ” From the man who tells us the Worlds going to end if we don’t all start riding bikes and training fairies to produce our electricity..
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I wasn’t being alarmist stating that 925 million people go hungry every day and that the world’s governments have committed themselves to helping these desperate people through the Millennium Development Goals.
Nor was I being alarmist saying that the Tobin Tax, which targets currency speculation with a tiny 0.05% tax, would be a good way of financing the MDGs.
What is alarming to me is the deafening silence, which greets well-documented statements of fact on these discussion threads and the insistence from some that climate change, peak oil and global hunger do not exist.
How would you raise money to help these people, spencer?
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Huw,
The idea of a Tobin Tax has been around for quite a while.
I suspect the overwhelming view of the majority of Shropshire residents, is they would support it, until,
1. They realised it was costing them, pennies, on the foreign holiday cash.
2. The primary beneficiaries are those struggling with third world debt and poverty. And we know the reaction of the insular bigots of this county to the provision of overseas aid.
I for one, support it.
And in answer to the question “would you refuse a bankers bonus”
No. But I would try and do some good with it.
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I wouldn’t bother answering the question “would you refuse a bankers bonus”, Rupert, because I see it as an irrelevant red herring.
Don’t you?
Rather than putting ourselves in the position of hypothetical bankers struggling with non-existent moral dilemmas, I’m sure Shropshire people would prefer to imagine what it is like for the very real people around them losing their jobs, houses and public services.
These very real cuts in our quality of life are visible to all and a direct consequence of bankers’ actions.
The Robin Hood tax would be a good way for the banks to step into the breach they created.
Yes, Nobel Prize-winning US economist, James Tobin, first introduced the idea of a tax on currency speculation in 1973, so it HAS been around for a long time.
However, the Tobin Tax’s time has surely come now, at a moment when the British public has lost patience with bankers’ bonuses.
You say you support the Tobin Tax but then say it wouldn’t be supported by others.
I disagree.
1) Buying euros or dollars is NOT something that your average Salopian does every day like buying food and paying for the heating, is it?
And besides, foreign holiday cash accounts for just 0.1% of the whole foreign exchange market.
Do you really think people in Shropshire would object to a 0.05% tax on something so occasional?
Would it really bother them if they knew that 99.9% of the BILLIONS raised from this tiny tax would come from banks?
And that the revenue from this tax was spent helping vulnerable people at home and abroad?
$800,000bn worth of currencies are traded every year worldwide.
This is 50 times the total value of ALL goods and services traded throughout the world each year. [Source: Stamp Out Poverty website]
Yet no-one in Shropshire would say that currency trading is 50 times more socially useful than making things or providing a service.
And I suspect no-one in our county believes currency trading should be exempt from taxation.
Do you really think someone would, Rupert?
And would Shropshire people really oppose a 0.05% tax like this if they only had to pay it once or twice a year, if at all?
2) You said that some people would object to money raised being spent abroad.
First of all, it is important to point out that the primary beneficiaries of the money raised (50% of revenue) would be poorer families in the UK, with 25% spent on climate change at home and abroad and 25% on helping fight poverty in developing countries.
Secondly, I reject your idea that Shropshire people are ‘insular bigots’, who have no interest for ordinary people struggling against the odds in developing countries.
People in our county are just as concerned for the welfare of others as they are in other parts of the world.
The Millennium Development Goals aim to tackle extreme poverty and hunger, achieve universal primary education, empower women, reduce child mortality, reduce maternal mortality, combat HIV/AIDS, malaria and other dieases, ensure environmental sustainability and develop a global partnership for development.
In the wake of the financial crisis, these goals are under threat and need finance urgently.
The Tobin Tax is the best way to fill the breach, and I think it would be very popular if more people knew about it.
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Huw, I’m still not sure that you understand the concept of World trade fully.
You state: “Buying euros or dollars is NOT something that your average Salopian does every day like buying food and paying for the heating, is it?”
Well actually, it is.
We don’t know that we do it, but every time a company buys something for us in the overseas markets, those goods are paid for using foreign currency. So buying currency [or rather .... paying a company to do so on our behalf] IS something that we do every day.
When we buy oranges, it’s from a source that has been paid in Euros (Spain) Shekels (Israel) or Dinars (Morocco), etc.
When we buy a Mercedes car, it’s from a source that has been paid in Euros (Germany) or Rand (South Africa).
When we buy bread, it could contain wheat paid for in Dollars (USA, Canada, Australia), Pesos (Argentina), Yuan (China), etc.
When we buy petrol or diesel, it’s from a market that trades barrels in Dollars.
When we use gas in our homes for the heating (as you mention), it’s more than likely from a source that’s been paid in Rials (Qatar).
When we buy a newspaper, it’s more than likely that it’s produced from paper from a source that’s been paid in Kroner (Norway), Krone (Sweden) or Euros (Finland).
The British Empire was dismantled long, long ago, Huw. Countries around the World have their own currencies now, they don’t use Pound Shillings and Pence any more. And they usually expect to be paid in their local currency unless they have a particular need for British Pounds at the time.
All the words that you write imply that there’s a huge foreign exchange industry out there whose sole role is simply to sell each other foreign money for fun, wit no other reason than that.
The foreign exchange industry is there, but currency is bought and sold to fulfil a need by traders for local currency to permit them to purchase goods to sell.
And if you tax the transaction, you tax the people buying the goods, NOT the banks or traders who will simply pass the charge on down the line until it stops with the final user – the consumer.
And of course, in true socialist guise, you say that it’s “only 0.05%”. Just like VAT was “only 15%”, but soon became “only 17.5%” and then jumped to “only 20%” recently. Once a new tax is implemented, the temptation to continue increasing it will be too great to resist.
So yes, here you have one person who DOES believe that changing money from one currency to another should be exempt from taxation.
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Thanks for those comments, Rodney.
I really appreciate the opportunity to discuss these issues with you in such depth.
Before living in your caravan did you work in the financial services industry?
I worked in the foreign department of a bank in Germany in 1985, where my daily work was to translate bills of lading (for things like motorbike helmets, car parts etc) to and from French, German and English.
For me this seemed to be what international banking was all about: trade in goods.
It was then, however, that I first became aware of another very important side to international banking: currency speculation.
Every day one gentleman came in to the bank to discuss which currencies to buy and sell with my senior work-colleagues.
He seemed to be doing very well indeed.
Since then the currency exchange market he traded in has expanded and today it is 50 times the size of the international market in goods and services, which you spoke of.
You said, ‘All the words that you write imply that there’s a huge foreign exchange industry out there whose sole role is simply to sell each other foreign money for fun, wit no other reason than that.’
What do you think that gentleman in the German bank was doing, Rodney?
He wasn’t buying motorbike helmets, oranges and wheat or selling Mercedes, paper, gas or oil.
He was trading in currencies.
George Soros made his billions from currency speculation.
Do you deny that this market exists?
Would you really say a 0.05% Robin Hood Tax is the same as 20% VAT?
And do you deny that the beneficiaries of a Tobin Tax would be the poorest and most vulnerable people in the world today?
How would you help them, in the age of budget cuts, without a steady stream of finance?
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Huw, if I had known that you were a banker in the 1980s as you say you were, then I would never have bothered replying to your comments.
There’s little worse than a banker who has pocketed his sizeable wedge during the capitalist, low-tax boom times, (à la loadsamoney, thank you very much), and then turns to salving his conscience by telling others that they should be taxed more when they’re already struggling to meet increased demands for their hard-earned money during a recession.
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I had an unpaid gap year job in the Bremer Landesbank in Oldenburg between school and university.
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Before you left in apparent disgust that I had once worked in a bank (with some very nice people, as it happens) you said that I didn’t understand the concept of World trade fully.
You said, ‘every time a company buys something for us in the overseas markets, those goods are paid for using foreign currency. So buying currency [or rather .... paying a company to do so on our behalf] IS something that we do every day.’
I thought this argument deserved a little more consideration.
Currently I am slowly making my way through Nicholas Shaxson’s ‘Treasure Islands’.
While consumers pay massive amounts of VAT in this country (and George Osborne calls it ‘progressive’ taxation), ) Nicholas Shaxson points the spotlight at the unimaginably large amounts of money whooshing round the financial markets offshore and untaxed, depriving governments of tax and thus depriving people of healthcare and education.
He paints a rather different picture from the one that you paint, Rodney.
He says (p8) that ‘more than half of world trade passes, at least on paper, through tax havens’ and (p12) that ‘about two thirds of global cross-border trade happens inside multinational corporations’, using ‘transfer mis-pricing’ to get around the taxman, shifting profits to low-tax countries and costs to high-tax countries.
Would you stick by what you said, Rodney, that the subsidiaries of multinationals (who account for most of world trade) are constantly buying and selling currency to buy each others products and that a 0.05% tax is therefore totally unacceptable?
Or would you agree that multinationals are NOT in fact buying currency on a daily basis?
According to the Tax Justice Network 99 of Europe’s 100 biggest companies use offshore subsidiaries to get out of tax, and in each country the largest user by far was a bank.
At a time of massive cuts in public services and 20% VAT at home and terrible poverty abroad, is it not time for democratic societies to start putting the banks and their untaxed activities under a bit more democratic control -and perhaps a 0.05% tax, Rodney?
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Having looked up at all those high buildings around Wall Street, and all the thousands of offices, with thousands and thousands of people looking at computer screens, my question is what do they do, to make all that money, they don’t produce anything for export
like say a car. Can somebody out there answer the question?
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A very readable book which explains the massive, highly profitable, untaxed flows of money around the globe is Nicholas Shaxson’s book on tax havens, ‘Treasure Islands’.
As a taster, the Prologue finishes with these words:
‘An impression has been created in sections of the world’s media, since a series of stirring denunciations of tax havens by world leaders in 2008 and 2009, that the offshore system has been dismantled, or at least suitably tamed. As we shall see, quite the opposite has happened. The offshore system is in very rude health -and growing fast.’
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Perhaps we should not forget that the mythical Robin Hood was a thief, he stole in order to create a a steady stream of finance to spend on his own pet projects, after of course deducting his own pay-off, how else did he manage to feed house equip and clothe his merry band, how much of the swag actually went to the poor, or was most of it swallowed up in operational costs and living expenses for the robbers.
The real beneficiaries of a Robin Hood Tax will not be the poor and disadvantaged – they are just the hook on which to hang the narrative- it will be to the benefit of those organisations which will administer the proceeds, just like the real beneficiaries of Robin Hood and his mob were themselves, only giving a little to the poor to justify their robbery. Now we have a merry band of international globalists, irrational Global Warming theologians. NGOs and NGOs posing as charities looking for a tax funded steady stream of finance for themselves in order to further their own pet projects.
Spain has also come out in favour of the Robin hood Tax, Prime Minister José Luis Rodríguez Zapatero said: “If we want effective global governance, if we want shared responsibility in the face of global challenges like the battle against poverty, then we also need a system of global incomes.”
“IF” we want effective global governance! WHO`S WE! Not me for one, I do not want Global Government with its own system of funding detached from our own government and I do not want to aid an intergovernmental organisation in an effort to evolve into a world government by creating its own funding stream. Obviously those in favour of this robin hoodwinking tax do, but they certainly have no right to drag us all down that road under the guise of helping the poor or saving the world from an equally mythical AGW apocalypse.
But with the inmates in charge of the asylum it is clear which way things are moving.
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So, Ken, how do YOU think we should help these people and combat climate change if you think that people proposing a tiny 0.05% tax on currency transactions belong in asylums?
Would you accept that there are 925 million hungry people in the world today and that ‘those organisations, which will administer the proceeds’ (known by people in democracies as ‘governments’) are finding it difficult to honour the obligations they made under the Millennium Development Goals?
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Hi again, Ken.
In an earlier discussion we had about student tuition fees and the Robin Hood Tax you claimed at first that you agreed with the tax.
http://www.shropshirestar.com/news/education/2010/12/13/letter-why-im-backing-the-students/ Thread #7 December 17, 2010 at 16:05
KA: ‘I did not offer a debate on the Green suggestions on tax avoidance or a Robin Hood tax on bank transactions, because as I said I do not take an opposing position.’
It was only after further discussion that you conceded your true position.
Now you call it a ‘robin hoodwinking tax’.
Which Ken Adams should people believe, Ken?
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Hi Huw
I do not oppose a tax on bank transactions, I oppose the suggested uses of the the tax.
The apparent self disagreement arises from my initial misunderstanding of the term Robin Hood Tax, until you mentioned it I had not heard of it and did not understand the full implications of the suggestion. So yes tax bank transaction but no do not give 50% to an outside body to use for its benefit.
We are already helping poorer nations, I believe the only funding not to be cut was the overseas aid budget?
Similarly we are already funding climate change avoidance policies, I believe the Climate Change Act (2008) targets require rates of decarbonization far higher than those ever achieved by any large economy to date, and the act was the most expensive ever put before the British Parliament and will cost the British taxpayer over 18 billion each year for the next 40 years.
Then there is The Green Climate Change Fund agreed at Cancun that is going to cost a few more billion each year and the carbon market where companies must buy carbon credits and will pass on the costs to the consumer. Of course the banks are going to make a great pile of money out of this in transaction charges which you want to tax making this tax on air even more expensive.
We are already paying through the nose for our power as we are forced to support inefficient generation schemes such as wind power which requires a fully functioning back up system and it is going to get worse.
All this is based on an the contestable theory that our climate is being warmed by man and the use of carbon! Which even if it were true, none of the suggested responses that we are paying for will have the slightest affect, as human Co2 levels are set to rise for the foreseeable future.
My comment about the asylum being run by the inmates was not directed at those proposing the Robin Hood Tax, but the political leaders we have today. At this time after making a total mess of our economy and building up fantastic level of debt we are now being forced to pay back, they introduce new costs on the public with these the mind boggling expensive polices that will not address the problem even if it existed.
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Hi Ken.
You begin by saying you don’t oppose a tax on bank transactions, when later in your same piece it is clear that you are just as opposed to the Tobin tax as the financial services industry is.
Which statement should readers believe when the sands keep shifting?
As for the overseas aid budget, it is totally justified that the UK is sticking by its commitment, made with other developed nations in 1970, to give 0.7% of our gross national income as official international development aid, every year.
We made that pledge in 1970.
0.7%.
The UK has NEVER reached that figure, or come close.
In 1997 it was 0.26%, in 2008 it was 0.46% and in 2009 0.52% of GDP.
40 years after the commitment was made, the UK
is not predicted to achieve it until 2013. [Source: Parliament Briefings, Ian Townsend, SN/EP/3714].
As for climate change, we know that you put more faith in the wild beliefs of UKIP’s Deputy Leader Lord Monckton and Shropshire BNP members than you do in the public statements of every national science academy in the world.
All this while the world warms…
NASA reported on January 12th 2011 that 2010 was tied with 2005 as the warmest year on record.
NASA: ‘The temperature trend … shows the climate has warmed by approximately 0.36°F per decade since the late 1970s.’
You said that the climate solutions proposed are ‘mind-bogglingly expensive.’
How cheap do you think climate chaos is going to be, Ken?
I would say that this attitude is mind-bogglingly short-sighted.
The international insurance industry clearly sees climate change as something which could bankrupt it unless collective, international action is taken.
Do you think the world’s insurance companies are ‘irrational Global Warming theologians’, Ken?
And has it occurred to you that investment in the low-carbon economy is a wise, forward-looking strategic decision for our fossil-fuel-dependent country?
A green industrial revolution will make our economy more resilient to the widely predicted economic shocks ahead and simultaneously boost manufacturing and jobs?
The Tobin Tax is not a tax aimed at the public.
It is a tax which will benefit the public and help our future prospects as a species.
It is a tiny tax aimed at a massive international currency market, which would not strike most people as the most socially useful activity in the world today.
While UK citizens pay massive amounts of VAT and are rightly fed up with bearing the brunt for bankers’ mistakes, that massive international currency market is untaxed.
Is that fair, Ken?
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Why is it naturally justified that we stick to an agreement made in 1970? is it justified that we stick to all agreements made regardless of the age of the agreement? And when did the British public vote for this agreement?
Why should we be forced to lower our standards of living to help those who’s own governments decide to build nuclear weapons, whose own leaders salt away billions in Swiss bank accounts, instead of doing something to alleviate the poverty in their own countries.
You have no empirical evidence to support the computer based frenetic claims for climate chaos! It is just an hypothesis used to create scenarios based on the concept that Co2 is the main cause of dangerous global warming, an hypothesis which is strongly contested by other equally qualified scientists who do not do Post Normal Science (PNS). Also none of the computer based scare stories have actually happened, every time they fail they just move the goal posts, now any and all weather events are claimed to be caused by the trace gas Co2.
You base your doctrine on the claim that the science is settled because there is a consensus! when everything about your creed is disputed from the the underlying hypotheses that form the AGW assumptions to the idea of a consensus. Because it is a belief system you cannot therefore confront sceptical questions with rational science so are reduced to misrepresenting the arguments and demonising the sceptics in order to maintain the doctrine.
You say the earth is warming; that is questionable as they fudge the data and why are they still using suspect land based temperature curves when satellite readings have been available for 30 years, could it be because the warming trend is not present in the satellite records since 1979 and over what extent of time is the world warming? Because you can cut it at any point to indicate either warming or cooling.
The Alarmists intention is keep the wild AGW fiction alive until they hope at some time they have a democratic majority to enforce their desires or failing that to get it through international agreements. Hence you have turned your back on science and are trying to achieve your goals by political means. Your support of the Robin Hood Tax is in fact nothing to do with the hook of climate change or to help the poor but aimed at furthering the cause of global governance.
“If we want effective global governance, if we want shared responsibility in the face of global challenges like the battle against poverty, then we also need a system of global incomes.”
As it happens we ARE contributing to the poor nations and we ARE being heavily and increasingly taxed to support the carbon hypothesis. But nothing any nation the EU or the UN is doing is actually going to reduce human carbon emissions on a world wide basis, all they are doing is to transfer funds from the West to the less developed countries.
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A Tobin Tax on international financial transactions will NOT ‘lower our standards of living’, Ken.
It will raise them.
That is because the tiny 0.05% rate is aimed at international currency speculators and hedge funds, who deal in moving huge volumes of cash around the world’s banking system, potentially destabilising governments in the process (see point about Egypt later).
The Tobin Tax is NOT aimed at ordinary people, as VAT is.
(VAT lowers our standard of living, doesn’t it? Or would you agree with George Osborne that VAT is ‘progressive’, Ken?)
The Robin Hood Tax would be an effective and popular way of getting the international banking system to pay its way and provide a funding stream for people hit hardest by a banking crash and economic crisis, which they did not cause.
50% of the Tobin Tax would be spent on vulnerable people in the UK.
Services, which are being cut as a result of the reckless behaviour of some banks could therefore be helped by taxing currency dealing which is currently (and unfairly) untaxed.
25% would go to helping governments fulfil their international commitments to help the poorest and most vulnerable.
You said that ‘we ARE contributing to the poor nations’, conveniently ignoring the statistics I quoted which showed that we have never come close to putting even 0.7% of our GDP into improving people’s lives in developing countries.
You also said that Britons had never voted for the 0.7% agreement.
No, but we live in a representative democracy, Ken. That’s why we vote politicians in to represent us. And that’s why we write letters to MPs and newspapers and join protests when, we think, they get it wrong.
You spoke about ‘leaders salt[ing] away billions in Swiss bank accounts’.
I agree with you that this is scandalous and must be stopped.
But how are we to stop illicit flows of money out of the countries we are committed to help through the Millennium Development Goals, when the international banking system has so little democratic control?
And why do these unimaginably large flows of money escape taxation?
UNCTAD showed in a report in 2008 that the capital-poor developing world is exporting more capital to rich countries than it receives.
According to Global Financial Integrity, Egypt exports US$6.36 billion to rich countries every year because of trade mis-pricing and the sort of corruption you mentioned.
As GFI put it, ‘no wonder Egyptians are angry’.
If ordinary Egyptians are lucid enough to see that an uncontrolled, untaxed banking system is depriving them of vital funds for their health services and education systems, shouldn’t we in democratic countries be trying to bring these illicit flows of funds under some sort of international democratic control -and a tiny 0.05% tax?
As for your climate change points, how can I be ‘turning my back on science’ if I believe what the world’s science academies are saying about temperature increases and human causes, and you prefer to believe UKIP’s Lord Monckton?
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No you are only being selective, as are the IPCC, they have rejected normal science in favour of the Marxists inspired Post Normal Science, the UN IPCC process and reports – seem more interested in political activism than objective truth.
As the UN IPCC is the premier source all of the selective evidence on which your world’s science academies construct the case for imminent climate chaos caused by Co2 and as that evidence comes from so few sources which are all involved with the IPCC anyway. As so many scientists previously involved with the UN IPCC have subsequently resigned many complaining they have been misrepresented and as every UN IPCC report so far has been subject to serious questions regarding honesty. We have a right to know if that selective information is based on real evidence or if the UN IPCC believe they – can abolish the need to establish the facts and the truth and impose the theory on the basis of ‘values and beliefs’ – that’s the theme of the Marxist inspired Post Normal Science (PNS) isn’t it?
There are papers coming from real scientific studies being published regularly which throw doubt on the whole carbon hypothesis and the UN IPCC reports. The IPCC Chairman called one such “voodoo science” until he was forced to accept that the IPCC Claim was not based on any peer reviewed studies and had no base and was culled from a magazine article. Does that really sound like someone who should chair the worlds leading source of unbiased information on AGW?
As already stated you cannot confront sceptical questions with rational science so are reduced to misrepresenting the arguments and demonising the sceptics in order to maintain the doctrine. Monkton does not take the view you said, he believes the world has warmed, he believes man has some effect, he rejects the hysterical claims made by Gore and questions the IPPC system this you would know if you were actually interested in the truth. But then he is not a scientist, but many of these also reject the IPCC induced hysteria even though they recognise the warming.
Any tax you apply to banks will be passed onto the people in the forms of higher charges and costs so it will be the people who pay in the end, the banks will maintain their profit margins.
I am more interested in the 50% that will not be spent on people in the UK, but instead will go towards enhancing the prospects of global governance.
The increased taxes based on the trace gas Co2 hysteria is already lowering our standard of living and forcing people into fuel poverty and that is going to get worse. Who is making profits out of the carbon scam and the carbon credit scam if it is not the big industries including some of the worst polluters and others like Al Gore, the Chairman of the IPCC and yes the international banking system.
I did not conveniently ignore anything, your point about the 1970 agreement does not show we are not contributing to poorer nations so is immaterial to the subject of whether we do or not. You are asking for a higher level of funding and you are also asking that this be in the power of an outside agency.
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