Lord Turner certainly made a splash last week with his comments on the social value of banks and support for a ‘Tobin Tax’. Larry Elliot of the Guardian, offered us his thoughts in an article called “Forgotten brainchild that could transform the banking casino”.  According to Elliot, Tobin argued that he sought,

“to make exchange rates reflect …long term fundamentals… {&} …preserve and promote autonomy of national macro-economic and monetary policy”.

According to Elliot the tax proposed is a tiny tax on FX deals, of the order of .175%. It makes me wonder how it would achieve these goals. I hope I don’t have to read the original paper, most economists are a difficult read at best. According to  Princeton Encyclopedia of World Economics hosted at http://google.com/books, which has an entry on Professor Tobin, it seems the Tax was first articulated in a paper called, “Prospects for Macro-economic Policy”,  published in The New Economics One Decade Older by the  Princeton University Press 1974, and developed in “A Proposal for Monetary Reform” in Eastern Economics Journal in 1978. In 1996, he revised his ideas in the light of developments over the previous 22 years, in the Prologue of, The Tobin Tax: Coping with Financial Volatility, edited by Mahbub ul Haq, New York, OUP. As stated these references were found in Google book’s entry on “The Princeton Encyclopaedia of the World Economy” and the article also references Keynes in the General Theory as arguing that a tax on Securities would reduce speculation.


I found this link, a .pdf, a copy of “A Proposal for International Monetry Reform” about two years after I first published this article. I have mirrored it here, A Proposal for International Monetry Reform


Where did the Tobin Tax come from?
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