A tax on trading would be a great jobs program…for Bermuda, the Cayman Islands and Liechtenstein.  The EU wants to impose a tax starting in 2014, hoping to raise $57b.  Some economists (following Nobel Laureate James Tobin) and pundits argue that we should punish hyperactive traders and get them to cough up revenues by slapping them with a trading tax.  But unless the E.U. and U.S. strong-arm every country to follow, professional traders will just go elsewhere.  All it takes these days to run any business is a smartphone and a single-serve coffeemaker. 

Though I’m not a huge fan of high-frequency trading, more trading adds more liquidity.  Bid-ask spreads narrow; commissions get squashed.  Why do you think you can trade $50,000 worth of shares  for $7.95 today, rather than paying your broker $300, as in the early 1980s? Here’s a fair-minded story on the trading tax.  In the 1980s Sweden tried such a tax and then threw in the towel, as finance businesses fled to friendlier climes.  Yes, there are friendlier than climes than Stockholm, though it’s a beautiful city.  With unparalleled herring.