• John Langmore

13 January 2010International support is growing for a low but effective tax on financial transactions. In Inside Story, John Langmore looks at an idea whose time has come

NEARLY forty years ago the eminent macroeconomist James Tobin proposed a tax on foreign exchange transactions as a means of “throwing some sand in the well-greased wheels” of financial speculation. The idea attracted little attention at the time, and it wasn’t until twenty years later that I first learnt the detail of Tobin’s proposal. In the meantime he had been awarded the 1981 Nobel Prize for economics.

By the early 1990s I was deeply concerned by the power of international financial markets to dominate national economic policy. When the Parliamentary Research Service listed an article Tobin had published in the Financial Times in December 1992, I wrote to him and he sent me his original proposal. I was persuaded by his argument and started advocating that the idea be studied more closely. At the next Labor Party national conference the party platform was amended to include support for a study of the Tobin proposal, and with ministerial support I was able to speak about the idea at preparatory meetings for the United Nations Social Summit in New York in 1993 and 1994...

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