"This is all surreally hypothetical, but I'll play a little longer. "
I think the really interesting question here is "What is the attraction for so many (and not just liberal economists but those who call themselves Marxists) of the "surreally hypothetical"? I'm not opposed to hypothetical questions as such -- in fact it seems to me that certain categories of hypothetical questions lie at the heart of any form of systematic theorizing -- i.e., any systematic understanding of human practice.
But there has to be some control over utter incontinence in the spinning of such questions. It seems to me, for instance, that Lou Proyect's post on the Japanese novelist represents the most theoretically sophisticated of all the posts on the "Krugman" thread. Paul Sweezy, in several of his writings (though I forget the precise texts) has offered one test of hypothetical reforms (or rather, of the criteria to be met by a proposed reform before it is even worth chitchat): If the working class possessed the political power to institute a given reform, would it also have the power to overthrow capital? And if no less power is needed, then why even discuss that particular reform.
The hypothetical Tobin Tax seems to be precisely an instance of such. Leaving aside the abstract desirability of this reform, *Who* has the power to bring it about?
(1) It seems self-evident: The inner circles of the various leading capitalist nations.
(2) For individual progressives, liberals, marxists to pretend that their opinion or actions are of any significance seems a beautiful instance of the sort imaged in one of the "Height of" jokes popular in the early 1950s. "What is the height of arrogance? A flea approaching an elephant with intentions of rape."
(3) What would be the preconditions for the working classes (national or international) to force such a reform? I suggest that the process which would build such preconditions would be more or less synonymous with the process by which capitalism could be smashed.
(4) So when a leftist asks the question, "Should we support the Tobin Tax?" he/she is asking, in disguised form, some such question as the following: If by some horrible mischance socialist revolution were within our grasp, how could we most gracefully return power to the capitalist class?"
Carrol
P.S. Try another analogy. It is as though someone living in a "mobile home" should spend her time deciding whether, were she worth several hundred million, it would be worth closing in the front stoop.