Date: 12 Feb 15
By: Frank Gue, B.Sc., MBA, P.Eng.,
2252 Joyce St.,
Burlington, ON L7R 2B5
905 634 9538
For: Editors, The Economist,
Re: “Still kicking”, p 63 of Jan. 312 edition, re the FTT “bad idea” 168 words
Little will be heard of this until we read that the financial transactions tax (FTT, Tobin Tax) has once more been dropped, owing to its promoters’ inability to get past the outrage of financiers whose oxen would be gored. Indeed, the practicalities of getting agreement among scores of jurisdictions dooms such efforts.
One way of getting one of the main benefits of an FTT (suppressing the violent oscillatory movements of capital into and out of an economy) was pioneered by the Chinese: impose a small delay upon every financial transaction.
This would be non-significant to any investor legitimately wishing to finance a productive, value-added enterprise; but would destroy the ability of an HFT to cause destructive waves of microsecond-spaced, no-value-added transactions, because an HFT’s profits depend upon light-speed turnover of funds.
Further, it would require little agreement with other jurisdictions; and would tilt FDI movements in the direction of productive, long-term investment rather than toward non-productive speculation.
There’s life in the FTT idea yet.
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