Well, since we are getting into the Tobin tax, let me note a much more interesting proposal, also much more radical and practical simultaneously, that was put forward (by me) during the Davidson seminar over on pkt about the Tobin tax. This is a proposal by Jacques Melitz of INSEE-CREST in Paris.
The proposal is a 100% net profits tax on short-term forex transactions, defined as less than one year. There would be no compensating compensation to those with net losses. This has the advantage of being collectible in the home countries of the traders in one lump sum rather than at every transaction, an approach inviting massive black marketeering. It would also hit specifically short-term transactions, in contrast to the Tobin tax which hits all transactions and may not reduce volatility as a result (see the Davidson pkt seminar on this point). Barkley Rosser On Fri, 22 May 1998 09:48:02 -0400 Doug Henwood <dhenwood at panix.com> wrote:
> Richard Marens wrote:
>
> >I recommend a recent Twentieth Century Fund paperback on security market
> >"reform" of a few years ago. Many of us know that the Fund got its start
> >with Filene (as in basement) money during the depression as a way of
> >promoting the humanization of capitalism, so the topic is logical. Tobin
> >(the model for Star Trek's Q?) himself contributed and ended-up having to
> >defend his tax in a special dissent because the other vaguely liberal
> >finance people (robert J. Shiller etc.) just couldn't swallow it.
> >Their arguments against are remarkable for their shallowness, fear, or
> >synchophancy (take your pick) and are worth reading just for that. The
> >title escapes me, but I think you can find it under Schiller's name in
> >books in print. And, it has the virtue of being written in english.
>
> It's called Who's Minding the Store? It was the product of a moment of U.S.
> ruling class thinking a few years back that worried that Wall Street
> capitalism was dangerously short-termist. It was always a minority view
> within the elite, and has now almost entirely been effaced by the present
> mood of triumphalism. There was a great Wall Street Journal front-pager
> just after Asia blew saying that the crisis proved that short-termism was
> the one true way.
>
> The book is a wonderful example of a certain kind of liberal thinking. It
> consists mainly of a long essay by Shiller on the excessive volatility of
> financial markets (excessive, that is, relative to underlying
> fundamentals). The implication was that basing real investment decisions on
> such a fickle guide would be extremely risky. But, having made this rather
> serious diagnosis, all they savants collected by the Twentieth Century Fund
> could recommend was the cultivation of a spirit of patience among portfolio
> managers. Even Tobin's modest tax proposal was considered too radical.
>
> Doug
>
>
>
-- Rosser Jr, John Barkley rosserjb at jmu.edu