Like Money in the Bank

One of the more interesting, and even, in my eyes, ridiculous events at the MDG Summit last week was a session that was deceptively titled “Innovative Financing for Development”. Always keen to hear about where the fabled “new money” for development would come from, I made it a point to attend this event, in the hope that I could tap into the most radical thinking in terms of generating funds for development. I got to hear radical thoughts, for sure, but of a slightly different nature.

What was touted as a session Innovative Financing turned out to be deliberations (which I felt were self-aggrandizing) on a proposed Currency Transaction Tax. That was it. No talk about the International Finance Facility for Immunization, no talk about optimization of the funds available through the Global Health Initiative. Nothing. Innovative Financing to these folks was levying a Currency Transaction Tax (CTT) on all international currency transactions.

To be fair, I have to acknowledge the promise in the idea. International currency flows at mind-boggling volumes from one location to another. In 2010, this volume has swollen to USD 4 trillion a day. Yes, that’s 4 trillion A DAY. The estimate is that a taxation of barely 0.005% on this amount would yield a sum of USD 33 billion a year, which would then be channeled into development efforts throughout the world. I have to hand it to the fairness of the idea of a tax on currency flows that until today have largely been unaccountable to international regulation. The argument continues to state that a proportion as small as 0.005% will have no noticeable effect on the volume of these transactions, which does seem reasonable. Finally, of course, the world of development could do with 33 billion dollars of spare cash.
Now, for the critique. What I found most disturbing at the discussions were the attitudes the panelists and indeed the members of the audience had towards the whole idea. There was such a strong sense of self-righteousness and entitlement that one would have imagined the money that the CTT would yield was something that they themselves had worked hard for. I watched in astonishment as each panelist proceeded to rail against the banking system and the entire financial establishment. They brandished their pitchforks and torches to ferret out the immoral and “criminally obscene” profits that the financial world was making. It’s time “they did their bit” to help an ailing world.

Now, I’m certainly not a Wall Street sympathizer, but there were several things wrong in the approach of the panelists and the audience that day. First, they must realize that they are demanding a pound of flesh from none other than the richest people on the planet outside of Hollywood. These guys got rich not by being conscientious, or socially aware, but rather with their eye on the bottomline. It would be foolhardy to believe that moralistic patronizing would carry water with an organization as far down the road to perdition as Goldman-Sachs. A different approach is required.

My second issue is political. The talk that morning portrayed bankers as monsters capable of no good whatsoever. In talking of the bankers as “the bad guys”, you are immediately making enemies of them, and they are a poor choice of foes. If money makes the world go round, the folks in the banking sector have it spinning like a crazy top. These are powerful people, with powerful friends. If you try to push a tax through without having them on board, you will fail. You will lose a confrontation; so don’t even attempt it. There is another way.

When President Obama was still Candidate Obama, most people on Wall Street knew he would lean further on the left. They knew he’d tax them, and that they’d earn less if he was elected; and yet, Wall Street voted for him, with both hands. Incongruent, you think? Not so, say I. Contrary to how we typically portray them, bankers are not ogres, with greenbacks for irises. They are human beings, and feel the entire range of human emotions, greed being only one of them. They know when a need exists, and they know when they are being called upon to contribute to the health of society as a whole. This is the asset we have, that each one of them is human, and hence, vulnerable to the humanistic agenda we preach. However, we can sell this agenda to them only as long as we have them on our side. The minute we push them away, we lose their sympathy, and more importantly, we lose their money. If we treat them as partners and equals, they would come to the table of discussion and the CTT may yet be passed. All we need to do is convince them. In order to do this, we need to prove to them the legitimacy of our cause. Alas, it is at this point that my third and biggest concern lies.

My final concern is the moral prerogative we have, as the development community, to ask Wall Street to make sacrifices and do its bit. Most of the events around the Summit happened in the most deluxe hotels, and served the finest food and alcohol. Maybe this is just me, and it’s unfortunate if it is, but we do not present the image of being a community with a scarcity of resources. If we need any sort of moral legitimacy in asking the financial world to contribute its share, we need to show some austerity in our own gatherings. I would find it extremely hard to say to somebody in Morgan Stanley that I’d like some of his money – for free – so that I can throw a party for my friends at the Helmsley Hotel. Yet, this is exactly what we seem to be doing. A banker making his way from Wall Street to 3 UN Plaza will hardly be able to see any distinction in the excesses.