A European financial-transactions tax
A leading article on Europe’s proposed financial-transactions tax, in this week’s Economist, is eloquent on the problems it would encounter. For example, many financial transactions would simply move elsewhere.
The article is strangely silent, though, on why such a tax might have benefits; some leading economists have pointed out that reducing the quantity and speed of financial transactions could reduce the tendency for ‘momentum trading’ to create financial bubbles (3.3.4) and might also encourage shareholders to play a greater part in company governance (3.5.6).
The Economist article implies, correctly, that restructuring global financial governance (3.5.5) would require almost unprecedented international cooperation – but that is not a reason for abandoning the attempt.