A Currency Transaction Tax: A Stabilizing And Emancipating Mechanism

4101 words - 16 pages

A Currency Transaction Tax: A Stabilizing and Emancipating MechanismThe discourse of globalization spurs a cornucopia of confusion and controversy among scholars and pundits alike. The neo-liberal political elite, with steady and constant ideological pressure, is massaging globalization. The political elite have invested into multinational corporations, the power to leverage their political will in the global economy. Unfortunately, Economically Developed Countries (EDCs) exercise majority of power in international relations. In every round of trade negotiations the EDCs have staunchly supported the removal of artificial barriers to trade, while succumbing to domestic special interest demands of subsidies, particularly the agriculture sector. The EDCs have declared to the less developed countries (LDCs), their phoenix will arise from the ashes of cyclical and systemic social crises by adopting two doctrines of neo-liberal globalization; the deregulation of governmental controls and privatization of public industries; this is globalization, the seamless integration of international trade and investment via the free market system. However the deregulated flight, launched by privatization, out of poverty can cause states to experience economic growth at unprecedented and destabilizing rates. The destabilization is a product of unregulated capital movements. The destabilization is not a fault of the market rather it is an indication of human involvement or the human nature of centralized wealth communicating in the market. This communication in the market silences the indicators of the tops and bottoms of natural economic cycles, they capitulate to the immense momentum of large capital flows. This creates instability when sudden outflows of capital triggered by negative vacillations from economic and geopolitical events. The result is social destruction when the citizens of an afflicted country suddenly own worthless currency. The only gainers in tragic times of cascading currency crises are predatory international currency speculators like George Soros for instance . Currency crisis debates heat up when speculation is discussed as a factor in causing such events. One side argues speculation serves a legitimate function in the hedging of investments and a natural market mechanism to seek structural deficiencies. The other side believes deregulated banking sectors and capital market liberalization has created a haven for colluding currency speculators to operate. Colluding speculators can manipulate a fluctuation in the continuum of floating foreign exchange rates to extract a manufactured profit. Both sides of the debate realize the need for stabilization of economic development is required for LDCs to become EDCs. The intent of this essay is not to engage in the currency speculation debate; rather this essay will put together a line of reasoning for the implementation of a currency transaction tax. The tax will aid in creating economic stability on...

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