The Occupy movement has been criticized for not having a consistent, unified message identifying the problem and solutions. Yet what has come through loud and clear is that protesters think there is something seriously wrong with how our national and global economies operate. The gap between rich and poor is growing. Many people face increased insecurity while those at the top take most of the economic gains. Financial regulation has been unable to rein in greed or the fallout it has caused at the household level.
That's what the "We are the 99%" mantra is about. It makes a good point.
What has been less discussed but is just as true is that the growing gap between the haves and have-nots also has serious impacts on the health of the global environment. Inequality and insecurity lead to greater environmental degradation in at least two ways.
First, wealth is highly correlated with pollution and consumption of natural resources. For example, greenhouse gas emissions that cause climate change are highest from wealthy people and wealthy countries.
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Second, those who are on low and fixed incomes or feeling insecure about their financial situation are, not surprisingly, often less concerned about the state of the environment—especially for global issues such as climate change or depletion of the world's fisheries. That's why polls often show the environment dropping below jobs and the economy as an issue of concern during recessions.
But there are solutions to the problems of economic and social inequality and the degradation of the environment. One of them is a financial transaction tax (sometimes referred to as a Robin Hood tax). We have an opportunity this week to move that solution forward. France is hosting a meeting of the G20 leaders, and the French government has added as a priority "new actions aimed at sustainably improving global stability and prosperity." Much of France's stated intention is to reform the way the global financial system works, and a financial transaction tax would be a significant and positive reform.
So what is a financial transaction tax? It's a small tax on all global financial transactions and currency trades. The tax would satisfy two objectives: it would slow down financial speculation and it would generate significant amounts of money that could be used to assist those hardest hit by global shocks, both economic and environmental. Most backers have called for the tax to be 0.05 per cent, a rate so low that it would have little real impact on long-term investment but would curb short-term speculation—and would raise about $400 billion per year.
Part of that revenue should be used to assist poor and vulnerable countries to face the impacts of global climate change. Rich, polluting countries such as Canada have promised to deliver that money because we are largely responsible for those significant impacts. And part of that revenue can help those who are most affected by economic upheaval, as many are facing now. In both cases, the beneficiaries of the financial transaction tax are those who are most affected by global problems that they had no hand in creating.
So this week's G20 meeting is a real opportunity. The financial transaction tax fits nicely into France's agenda and that's no coincidence—President Sarkozy publicly supports the tax, as do the leaders of other G20 powers, including Germany and South Africa. So do Nobel prize-winning economists Joseph Stiglitz and Paul Krugman. Bill Gates will even be in Cannes to urge world leaders to adopt the Robin Hood tax... and he's obviously from the one per cent. Let's hope this time our prime minister will be more open to this kind of innovative solution.