This chapter argues for aggressive securities taxation to curb short-term, speculative capital flows that partly cause financial crises. Much as with any potentially beneficial but highly dangerous activity, short-term speculative markets fairly impose heightened risks of financial crises only if they can be embedded within institutions that reliably compensate for the harm that crises do. Because reliable compensatory institutions are not established and in any case are arguably beyond the regulatory powers of governments, the dangerous activity must in fairness be curbed, even at great economic opportunity costs.
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