For those unfamiliar with the Tobin Tax this brief comment is to help
understand the issues involved. The core of Tobin's proposal has two
controversial features which cause different groups to line up on line
up for and against the proposed tax.

Tobin's idea is to introduce a very small tax on short term financial
transactions. The idea is to place "speed bumps" on short-term "hot
money" ("hot" as in rapid, not illegal transactions) to take the profits
out of quick in-out financial transactions. The argument is that such
transactions can destabilize currencies and capital markets, and do
nothing to contribute to the efficiency or effectiveness of capital
flows.

The Tobin tax would mean that a financial transaction would have to look
attractive in terms of something more fundamental than the [electronic?]
ability to make lightening quick moves. The impact would be to improve
capital markets, but of course, this would be at the expense of the
quick in/out currency speculators so they are outspoken in their
criticism of the Tax. The falsely argue that it is anti-capitalist. This
is like arguing that automotive speed limits are anti-automobile and
against the automobile industry. The opposite is true of course. Fewer
would drive, or own cars, if there were no speed limits.

The other part of the Tobin tax is that it is proposed as a way to fund
international initiatives such as projects in developing countries,
projects for the poor, the budgets of international organizations, etc.
Here is where the opposition runs deep, especially in the United States
where there is deep suspicion of international organizations.

How long has it been since the U.S. paid its UN dues? How long has the
US not been a member of UNESCO? Recently the U.S. President deleted
funding for the UN Funding for Population Activity. Conservative groups
see the Tobin tax as a back door mechanism for (a) funding international
organinzations which they oppose, and (b) strengthening the forces for
"world government" which they -fo course- also oppose.

To sell the idea of the Tobin tax then requires educational efforts at
two levels. One should be relatively straight forward and that involves
explaining that the tax is a positive contribution to efficiency and
effectivenss in capital markets, i.e., one can support both capitalism
and the Tobin tax. (Important Point: This is not to say that one should
be pro-capitalism, just that being pro-capitalist is not a reason to be
anti-Tobin tax.)

The second level of education (and political decision making) has to do
with the proceeds from the Tobin tax. This is a value laden "should"
area. Where should the proceeds from the tax be used? Should they be for
economic development and where? Should they be used to support the
budgets of organizations? Should the organizations be local, national
and/or international? This is where a dialogue needs to occur and it is
important that this dialogue is not confused with the issue of the
impact of the tax on capital market efficiency and effectiveness.

Needless to say, those with a private interest in preserving the
casino-like card game of short term speculation will do all they can to
mix up the two issues - in the interests of extending the card game as
long as possible.

Sam Lanfranco
CLICK4HP ListMgt
Distributed Knowledge