Changing the world on the quiet

Image of Simon Kuper

One day some years ago, France’s president Jacques Chirac and Brazil’s president Lula were on a plane together. The tall patrician Frenchman and the short proletarian leftist had become buddies. Chirac, in his seventies, was worried about his legacy, and so both men were keen to do something about global poverty. In the plane Lula said, “The real atom bomb isn’t in Iran or North Korea. It’s hunger.” But, he and Chirac lamented, rich countries wouldn’t increase aid to poor people. And so the presidents asked their fellow passenger, Chirac’s foreign minister Philippe Douste-Blazy, to do something.

Douste-Blazy – a bespectacled cardiologist from Lourdes – told me the story the other night over Italian food in Paris. The mid-air conversation led to something: the creation of Unitaid, an international drugs-purchasing agency that Douste-Blazy now chairs. Hardly anyone has heard of Unitaid (and Chirac disliked the English-sounding name). However, since 2006 it has raised $2.2bn to buy medicines for some of the poorest people on earth, largely through a small tax on plane tickets. Now Douste-Blazy wants to go further: to use financial transaction taxes [FTTs] to help poor, sick people. This is actually happening. This is a story about changing the world on the quiet.

Perhaps the most important event last decade, away from the news headlines, was the international fight against Aids, malaria and tuberculosis. Unitaid did its bit. When Douste-Blazy visited his hero Bill Clinton at home in Chappaqua, New York, Clinton advised him to tell drugs companies: “I’m giving you money not for one year but for several years. How much do you agree to decrease the price?” This proved a smart strategy. The price of the anti-malaria drug Artemisinin, for instance, fell from $7 to $0.33.

Sometimes, development policies work. Deaths from malaria fell by more than a quarter last decade, says the World Health Organisation. Death rates from tuberculosis should halve between 1990 and 2015 everywhere outside Africa. Many people with HIV are finally receiving treatment.

The world was growing healthier – and then the economic crisis struck. Now western aid is falling. American charitable donations have declined since 2007. Douste-Blazy says, “Rich countries will pay for this crisis with a rise in unemployment. Poor countries will pay with a rise in deaths.” What to do? “We must look for ideas.”

His big idea is “microdonations”: gifts so tiny that the donors don’t even notice they are giving them. Unitaid began with the levy on plane tickets, implemented by several countries. In the swish bar of Paris’s Hôtel le Bristol one morning, Douste-Blazy pointed around him: “All these people here paid €1 on top of their flight. They don’t even know it! And if they flew business class, it was €10. It’s painless.”

Now he sees a new source of microdonations: the financial industry. Douste-Blazy argues: “Certain sectors have benefited enormously from globalisation: financial transactions, tourism and mobile phones. We need to tax an economic activity that’s only done by the rich, and tax it so lightly that nobody will notice.” Moreover, he points out, this tax would be popular. And it would save lives.

Douste-Blazy lobbied France’s president François Hollande with text messages. Hollande seems to have read them. Addressing the UN general assembly in New York last month, the president mentioned France’s new 0.2 per cent tax on financial transactions. “France will commit at least 10 per cent of revenues of this tax to development,” he said, to applause from the assembly. “Let’s introduce this tax across the world and ensure that revenues go towards development.” He cited Unitaid as “an inspiration”.

Richard Murphy, director of Tax Research UK, calls France’s modest tax “a gesture”. But he adds: “It is paving the way for a more significant European movement. It’s indisputable that there is a trend towards FTTs.”

France and Germany are now trying to get a group of European countries to introduce FTTs. About 40 countries already have one. Inevitably, the financial industry claims such taxes will destroy life as we know it, but then the UK has long had a 0.5 per cent stamp duty on share trading and banks haven’t exactly fled London. Some economists say such taxes would reduce short-term liquidity in markets. Other economists welcome the prospect of a little less hot money. Douste-Blazy says, “The true combat now is not whether countries will introduce this tax. They will. The combat is: to whom will they give the money?”

An FTT shouldn’t be cast as a punishment for bankers. Rather, it’s a wonkish choice to take money from where it can be missed. Hollande is often depicted as a banker-eating Bolshevik. In truth he’s a wonk, a details man: Bill Clinton without the charisma. So is Douste-Blazy. “Everything is in the detail,” he told me. “Politics taught me that. And medicine too.” Lives are saved not by ideology or personality but by boring details that hardly anyone wants to read about.

See also Gillian Tett: When tablet turns teacher

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.