Tim Harford lambasts the Robin Hood Tax campaign

Thanks Owen for pointing Tim’s column out. I particularly appreciate his pointing out (as you did) the lack of evidence for the RHT policy.

When I clicked through to the RHT website I examined the very long list of organizations involved in advocating for this unfortunate proposal. I was a bit surprised to see an organization on the list to which I regularly donate. Actually, I wasn’t just surprised, I was grumpy.

And this made me realize that people who give funds to organizations involved in both program implementation and advocacy, need information to judge their effectiveness at both.

An NGO may be relatively good at program delivery in developing countries, but relatively bad in policy advocacy. In fact, in perusing the list of RHT activist organizations, it seems to me this is true with respect to a number of organizations on the list. If more contributors knew their funds were going not to support good development programs but rather bad policy proposals, I bet they would be pretty grumpy too.

But, generally speaking information isn’t available to allow contributors to figure this out. And this seems important to me. Don’t we folks who are committed to the goal of making aid organizations more accountable need to pay attention to their activities in the advocacy realm too?

Perhaps these two activities should be de-linked (hearkening back to your CGD paper)? In that way potential contributors could support programs as distinct from advocacy (and vice versa). And, when selecting an advocacy organization, they could try to select those which are a bit more evidence-focused rather than those involved who are less (such as those involved in the RHT campaign).

Owen, I’ve just posted this on Tim Harford’s blog, in response to his piece:

Thanks for your two pieces on the Robin Hood Tax campaign. It’s good to know that news of the campaign has reached the FT, and we certainly welcome a robust debate.

I am rather mystified about your assertion that the main argument you got back in response to the original column is that Paul Krugman and Joseph Stiglitz support the campaign. I have looked back at the comments made on that piece, and only 2 of the 10 mention Krugman or Stiglitz, and one of these does so in the course of making other, more substantial, arguments. So only one out of ten is making the case that you claim is the ‘chief’ argument that you have been sent supporting the tax.

That leaves your more substantive point on what evidence exists to support the campaign. Here, it is important to recognise that a campaign is a very different type of communication to a newspaper column or a seminar. Campaigning messages have to be simplified, and they have to present the key point that a campaign is making, without getting bogged down in detail. It is unlikely that Obama would have won the US election had his slogan been a seventeen page policy paper rather than three words. I can see that is frustrating – many of us in the campaign with more wonkish tendencies have to constantly refrain from the temptation to add more and more and more to every leaflet or every slogan. But this is something that every campaign has to deal with and to attack the policy on the basis of campaign materials is a simple category error.

But you are right that the policy must be there to underpin, justify, and defend the campaign messages. We have spent months trawling through existing work and commissioning new work to answer the very questions you are posing. If you’re looking for references, I’d be happy to send you some of the papers that we’re using to develop our arguments.

Even armed with all the papers ever written on this subject, there is unlikely ever to be a definitive answer to the questions about incidence, volatility etc. The current spat about public spending and cuts demonstrates yet again that there are often no unambiguously right answers in economic policy making, just a balance of probability.

But on a balance of available evidence, I am confident that we are justified in the claims we are making – that a tax is practical (it won’t wipe out the markets, if applied at an appropriate rate for each market); that it will raise signficant amounts of revenue; that there is evidence that it may reduce volatility (though I accept that this is perhaps the area were the evidence is the most inconclusive, and I suspect that taxes on particular transactions will have a differential impact in different markets); and that the incidence of the tax will be progressive, certainly more so than other taxes such as VAT. On the latter two points, the argument about ‘an FTT’ is likely to be something of a red herring. In reality, an FTT would in reality be a family of taxes at different levels on different kinds of transaction, and could be fine tuned to maximise progressivity and to curb volatility only in areas where it seemed desirable to do so.

We really welcome your engagement on this, and would be happy to continue this correnspondence by email, on your blog, or in person, should you want to.