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Why Turner is right

A leading economist explains why a Tobin tax is a good way to bring the market to heel

By John Eatwell   November 2009

In his interview in September’s Prospect, Adair Turner, chairman of the Financial Services Authority, argued that many financial activities were “socially useless” and raised the possibility of a Tobin or transactions tax to restrain the explosive growth in financial transactions seen in recent years. Although criticised in many quarters, Turner’s proposals should be taken seriously.

The object of economic activity is to produce goods and services. Financial transactions are the means by which that production is funded. But in recent years transactions have grown much more rapidly than production and trade. This raises two big questions. First, why have they…

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