Editing Tobin tax (section)

===Tobin's concept===
James Tobin's purpose in developing his idea of a [[currency transaction tax]] was to find a way to manage exchange-rate volatility. In his view, "currency exchanges transmit disturbances originating in international financial markets. National economies and national governments are not capable of adjusting to massive movements of funds across the foreign exchanges, without real hardship and without significant sacrifice of the objectives of national economic policy with respect to employment, output, and inflation."<ref name="Tobin"/>

Tobin saw two solutions to this issue. The first was to move "toward a common currency, common monetary and fiscal policy, and economic integration."<ref name="Tobin"/> The second was to move "toward greater financial segmentation between nations or currency areas, permitting their central banks and governments greater autonomy in policies tailored to their specific economic institutions and objectives."<ref name="Tobin"/> Tobin's preferred solution was the former one but he did not see this as politically viable so he advocated for the latter approach: "I therefore regretfully recommend the second, and my proposal is to throw some sand in the wheels of our excessively efficient international money markets."<ref name="Tobin"/>

Tobin's method of "throwing sand in the wheels" was to suggest a tax on all spot conversions of one currency into another, proportional to the size of the transaction.<ref name="Tobin"/> In the development of his idea, Tobin was influenced by the earlier work of [[John Maynard Keynes]] on general financial transaction taxes.<ref name="Jubilee-trans"/><ref name="Reiermann"/>

Keynes' concept stems from 1936 when he proposed that a [[Financial transaction tax|transaction tax]] should be levied on dealings on [[Wall Street]], where he argued that excessive speculation by uninformed financial traders increased volatility. For Keynes (who [[John Maynard Keynes#Personal life|was himself a speculator]]) the key issue was the proportion of 'speculators' in the market, and his concern that, if left unchecked, these types of players would become too dominant.<ref name="Keynes">{{cite web |url=http://biblioeconomicus.googlepages.com/KeynesJohnMaynard-TheGeneralTheoryOfEmploymentInterestAndMoney.pdf |title=The General Theory of Employment, Interest and Money |pages=104, 105 (Chapter 12, Part VI) |author=John Maynard Keynes |year=1936 }}{{Dead link|date=April 2023 |bot=InternetArchiveBot |fix-attempted=yes }} (Online publisher: Project Gutenberg of Australia eBooks; via biblioeconomicus.googlepages.com)</ref>