By focusing on regulation and bonuses, are world leaders missing the point?
In 1971 the late Nobel laureate James Tobin proposed enacting an infinitesimal tax on all cross-border currency trades. Though it could be as small as one-tenth of one percent, the tax would generate enormous sums of money due to the sheer volume of trades. A modern variant on the Tobin tax would levy an equally small tax on all market transactions. For the ordinary purchase of stocks and bonds, the cost would be trivial – with no perceptible effect on buyers or sellers. But for the more complex, highly-leveraged derivative transactions – the very ones that sunk our economy – the cost of the tax would add up quickly, helping to dampen speculative excess and temper the wild flows of global capital. It would break the cannibalistic cycle of derivatives feeding off derivatives and money feeding off money. And before long – trade by trade, dollar by dollar – the tax would steer our global system back on course … hard work and entrepreneurial zeal would become valuable commodities again.
French President Nicolas Sarkozy is urging his fellow G20 leaders to introduce a Tobin tax, but his initiative is being largely ignored. Send an email to Barack telling him we need systemic change … tell him to take up Sarkozy’s proposal and start slowing down fast money with a Tobin tax.
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