First published on 03.10.2011.
Two major waves of celebrity activists are trying to change the way financial institutions do business.
The first is a very in your face wave, with prominent individuals from the world of entertainment notably the film-maker Michael Moore and the actress Susan Sarandon joining in with the “Occupy Wall Street” campaign.
Although fascinating and salient as an exercise in mobilization (much via social media) and street protest, the decision of these celebrities to join in on the so-called “general assemblies” appears largely to be motivated by a desire to lend their voices in solidarity with the mass of demonstrators wanting banks and Wall Street to pay “their fair share” in the wake of the protracted recession.
In the context of the bailouts and resumed bonuses, such activities are not entirely surprising. If there are some echoes from earlier waves of protests for example at UN World Conferences punctuated by the mix of an often communal feel with a sense of conscious-raising, there are also concerns that the atmosphere could turn confrontational along the lines of protests directed at G8/G20 summits, and International Financial Institutions meetings in recent years.
Yet, amid the attention given to the entertainment celebrities operating as outsiders, there is a need also to see how a different type of celebrity from the world of business – Bill Gates – is acting as an insider in the campaign of change with respect to financial institutions.
As opposed to the embrace of street protests by movie stars or directors, the role of Gates as a reformer is a paradoxical one. Gates has a well-deserved reputation for being a hardheaded businessman. Anti-trust actions against Microsoft were not only taken by the US but by the European Union.
Even in his innovative initiatives on public goods issues, notably with regard to health (where the spending of the Bill & Melinda foundation rivals the World Health Organization) Bill Gates has remained skeptical about the ability of governments to deal with global issues of crucial importance with needed intensity.
The invitation and the acceptance of the offer from the G20 to Bill Gates with respect to the commissioning of a feasibility report on a tax on financial transactions is therefore marks a decisive shift in the manner by which global public policy is conducted in the 21st century.NGOs such as Oxfam International and Bono’s ONE have done a very impressive job of combining public relations stunts with an effective delivery oriented approach.
And Bono himself has been able to gain bilateral one on ones with key political leaders.
But for a non-elected individual to gain privileged access to the central ‘crisis committee’ vis-à-vis global economic governance is a very significant move.
In style Gates’ key point man on the financial transaction file (Geoff Lamb, a former senior official with the World Bank and deputy-director of the Institute of Development Studies at the University of Sussex in the UK) has gained what is in effect Sherpa-like or advisory status in the decision-making process of the G20.
Moreover, in substance, the issue of a financial transaction tax has moved into the core of the G20’s agenda in the run-up towards the Cannes summit at the beginning of November.
If an insider, however, Gates has demonstrated on the financial issue as on global health policy a willingness to take risks. The discussion note to the G20 argued that it was possible for quite a small a tax of 0.1 % on equities transactions and 0.02 % on bonds to raise $48 billion (US) if put into place across the G20 membership, or $9 billion if confined to larger European economies.
Such ambitious reform-minded thinking played immensely well to an NGO community deeply concerned about developmental aid budgets at a time of austerity.
Additional proposals added to the luster of the proposals. The raising of tobacco taxes supports the Gates Foundation’s concerted endeavors on health; plus a tax on bunker fuel for shipping attracts support from environmental groups.
The accentuated role of Bill Gates on the issue of global taxation – no less than the efforts by Warren Buffett to push for higher taxes on the ‘mega-rich’ in the US – are not guaranteed success.
Economically, financial centers within the G20 fear that the introduction of transaction taxes on a less than universal basis will drive financial activities away to more competitive sites.
Politically, there are obvious risks in pushing an agenda that is not only supported by extremely credible NGOs (with Oxfam International and others declaring that this is a tax whose time has come!) but the more radical advocates such as Hugo Chávez.
Still, both efficiency and equity arguments along with Bill Gates’ own skill and determination may carry the day.
Some technical experts argue that the original rationale for a financial transaction (the so- called Tobin tax, after the Nobel-prize winning economist James Tobin) has been reinforced by the sheer complexity of the 21st century financial system, and especially the proliferation of high-frequency traders.
The most compelling argument, though, is the same logic that has brought out the demonstrators to Wall Street and other financial centers: a prevailing mood that one way or the other the financial sector should “make a fair contribution” to wider society.
