From Keynes's Proposition to the Robin Hood Tax: Historical Development and the Current Situation of the Financial Transaction Taxes

From Keynes's Proposition to the Robin Hood Tax: Historical Development and the Current Situation of the Financial Transaction Taxes

Abdülkadir Işık (Namık Kemal University, Turkey), Gamze Yıldız Şeren (Namık Kemal University, Turkey), Özge Selvi Yavuz (Namık Kemal University, Turkey) and Davuthan Günaydın (Namık Kemal University, Turkey)
Copyright: © 2015 |Pages: 12
DOI: 10.4018/978-1-4666-7308-3.ch014

Abstract

Along with the overthrow of the Bretton Woods system in the early 1970s, financial liberalization process started to be active in the whole world. The developing countries joined in the process by removing the obstacles on the capital flows in the 1980s. However, this process triggered subsequent crises and had destructive effects in these countries. Accordingly, the thought of excising the speculative capital movements, which were developed by J. Tobin through taking the idea of excising of security transactions of J.M. Keynes, came forward again. Then the feasible alternatives as two-staged Tobin tax of P.B. Spahn were suggested. After 2008 financial crisis, an implementation of financial transactions tax that has been drafted to be implemented across the EU has been brought to the agenda. In this chapter, it is aimed to discuss financial transaction taxes in the context of the European Union and Turkey from a historical view.
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The Process Necessitating Throwing Some Sand In The Well-Lubricated Wheels: Financial Liberalization And Crises

Since 1960's, while the replacement of fixed rate syste00m with floating rate system and liberalization of financial markets have been the primary factor of financial globalization, electronic communication have been the secondary factor in this process. With these developments, transaction processes in financial markets accelerated but the global financial bubble was followed by many macroeconomic imbalances and dramatic increases in financial crises. Floating rate and the liberalization of financial markets which yield negative results also disproved the prediction of economists who promote these policies (Felix, 1995).

The globalization of financial markets deeply affected bank loans, deposits, assets, debts, securities and physical capital but, when compared with others, the globalization of assets and debts was achieved much easier. After all, with the revolution in communication performing these transactions has become easier, faster and cheaper. The only obstruction standing before financial transactions is national regulations. After all countries were liberalized step by step, no obstacles stood before international financial flows (Tobin, 2000). These flows can be not only an instrument to channel savings of developed capitalist democracies into developing regions such as Asia, Africa, Latin America as productive capital investments but it also cause financial crises, depression, recession, or unemployment (Tobin, 2000).

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