Looks Like the Tobin tax is Gaining Currency*
The Tobin tax, basically a small tax (typically less than ¼%) on financial transactions to discourage rampant speculation and high frequency trading, is moving into the Overton window, and leaving the realm of "you're nuts," and entering the realm of "serious people can discuss this."
2 Weeks ago, Peer Steinbrück, Germany's finance minister, called for just such a tax, and today an OP/Ed he wrote calling for an 0.05% tax to, noting that German Foreign Minister Frank-Walter Steinmeier also supports this policy.
Personally, I'd much rather see the tax rate closer to ¼% than his proposal of 1/20%, but it's a good start.
According to his numbers, revenues would amount to, "$690bn a year, or about 1.4 per cent of world GDP," which, while nowhere near covering the bailout by taxpayers to the banks, AIG alone has sucked about 1/3 of that out of taxpayers, and total spending on the just the TARP is over $700 billion, does have the effect of making bankers feel the pain, and it also makes risky high frequency trading operations economically nonviable.
BTW, it's not just the Krauts who are beginning to look at this seriously. Adair Turner, chair of the Financial Services Authority in the UK, is calling for the same thing:
So Mr. Turner is proposing a few changes, none of which would make the bankers very happy. Tax financial transactions. Increase capital requirements. Shrink the financial industry, which, at its peak, accounted for roughly 11 percent of the British economy. Only then, he argues, can banks’ excessive profits — and bankers’ pay — be curtailed.I would also note that Turner has also explicitly stated that the size of the financial industry needs to be reduced because, "The City [the London equivalent of Wall Street] takes too much from British society and gives back too little. It has grown too big and too powerful."
It's interesting that this discussion has moved from "crazy people" like Dean Baker, who, we should note, was 100% correct on spotting the real estate bubble, and put his money where his mouth was, selling his condo and going to renting in 2004, though he has recently purchased a detached house to movers and shakers.
And not a moment too soon.
*Pun not intended.
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