As I noted last week the European Union has concluded that the Robin Hood Tax would be illegal. This week it's the World Bank: they don't say it would be illegal, no, just that it wouldn't work very well and therefore shouldn't be done.
We will argue that attempts to raise a significant percentage of GDP in revenue from a broad-based financial transactions tax are likely to fail both by raising much less revenue than expected and by generating far-reaching changes in economic behavior. Although the side-effects would include a sizable restructuring of financial sector activity, this would not occur in ways corrective of the particular forms of financial overtrading that were most conspicuous in contributing to the crisis.
Ah, not raise much money and not stop the behaviour which led to the current problems. Hmm, that's not really a ringing endorsement.
For example, all that "speculative" trading on foreign exchange that we don't want so much of:
Close analysis of the minute-by-minute microstructure of the foreign exchange market reveals that most foreign exchange transactions (spot and forward) have nothing to do with speculation, but are instead undertaken to hedge risk and ensure liquidity.6 (The same would be true of interest rate swaps.)
Ah, there isn't any. On CDOs that spread the risk around, that left the "toxic waste" in their trail:
Interestingly, the failures in this structured finance market have little to do with frequent trading, or with complex sequences of transactions such as would be discouraged by a transactions tax.
The Robin Hood Tax would have no effect here whatsoever then.
Nor was there ever much revenue potential in these securities.
And wouldn't raise much money either.
Certainly not a panacea, and more likely a damp squib in terms both of revenue and efficiency gains (and perhaps more likely to result in efficiency losses), financial transactions taxes could be a threat to fiscal stability if overoptimistically seized upon as a reason for abolishing more reliable revenue sources.
In fact, the Robin Hood Tax would leave us with little tax money and worse off than we are now.
So, not just illegal but a bad idea as well. So perhaps everyone would like to concentrate their efforts on doing something useful instead? Something that might actually advance human civilisation like, perhaps, creating the both affordable and really good pork pie? Something both value enhancing and actually achievable?