You’ve probably read about Jose Manuel Barroso’s proposal to tax all financial transactions in the EU. It’s a rather bad idea, for lots of economic reasons, some of which are explained by Tim Harford here. Even the European Commission itself, of which Mr Barroso is the president, figures that it will lower GDP by 1.75%.
This all misses the crucial point. This proposal is not about economics, or even evil banks. It’s about the distribution of power. The Brussels elite has long been frustrated about not being able to independently tax its subjects. Now they’ve realized that the financial crisis, helped along with some populist rhetoric, could well be the opportunity of a lifetime. Or at least, of their time at the top.
That is why the proposal is even worse than its economic impact suggests.