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The Tobin Tax Idea and
World Prosperity and Security
Lucy Law Webster, April 3, 2006
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The Millennium
Development Goals
(MDGs)
1.
Eradicate extreme poverty and hunger
2.
Achieve universal primary education
3.
Promote gender equality without gender disparity in
education
4.
Reduce infant mortality by 2/3
5.
Improve maternal health
6.
Combat HIV/AIDS
7.
Ensure
environmental sustainability in country policies, halve
the proportion of people without access to clean water
8.
Develop a global partnership for development that
expands market access and reduces debt.
……..
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The
Center for War/Peace Studies has advanced a proposal to combine
a commitment to weighted voting in the UN to facilitate making
binding UN decisions, with a proposed currency transfer tax to
generate the money needed for development to provide a new more
stable basis for peace and security.
The
idea of a Tobin tax was proposed in 1972 by James Tobin, a Nobel
laureate economist at Yale. The primary initial intent was to
stabilize exchange rates by discouraging speculation. However
Professor Tobin himself expressed the view in his later years
that the proposed tax might not be worth establishing for that
purpose, but he retained his support for the secondary
objective, to provide funding for global public goods such as
reducing world poverty, disease and to address global warming.
It
was originally suggested that a currency transfer tax would
reduce “noise” from market trading while allowing traders to
respond to fundamental economic changes. At the same time
various economists have said that a tax rate high enough to
deter speculation would significantly hamper efficient financial
intermediation.
A
logical response to this fear is to have a tax on currency
transactions that would be so low that it would not distort
market behavior, but would nonetheless generate revenue. Even a
tax of 0.02% would generate some $40 billion to $60 billion per
year.
That
would be enough financial support to meet the Millennium
Development Goals by 2015 if at the same time the recipient
countries reformed their policies, strengthened institutions and
improved the delivery of services to their people. Thus an
agreement to combine a commitment to a currency exchange tax
could be an important part of a package to reform the
decision-making system in the UN and to, at the same time,
obtain a new commitment from leaders of the poorest countries to
replace corrupt governance with people-centered development
programs including those defined by the MDGs.
The authors of the three
papers on The Tobin Tax and on Weighted Voting can be contacted
at:
Lucy
Law Webster lucywebster@lvistas.net
Myron W. Kronisch Mwkronisch@aol.com
Joseph Schwartzberg schwa004@umn.edu
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