Activity 2: Loads of money and the Tobin Tax

Aims

To recognise the scale and implications of worldwide foreign exchange transactions, and to examine the viability of the Tobin Tax.

National Curriculum links

Pupils should be taught:

1(e) about how the economy functions; (j) about the wider issues and challenges of global interdependence and responsibility

2(a) to research a topical political, spiritual, moral, social or cultural issue, problem or event by analysing information from different sources, including ICT-based sources, showing an awareness of the use and abuse of statistics; (b) to express, justify and defend orally and in writing a personal opinion about such issues, problems or events

Resources

• Activity Sheet 2.1
• Access to Microsoft Excel (optional)

Activity

• Before handing out Activity Sheet 2.1, tell pupils that in 1998 the annual global trade in all merchandise and services (excluding currency trading) was $6.5 billion (write $6,500,000,000). Explain that speculators trade currencies to make profits when the exchange rates vary. Ask pupils to write an estimate on a scrap of paper of how many dollars they think are traded annually in this way.
• Pupils read the background information (which contains the answer to the above).
• Pupils might make a pie chart or graph showing foreign exchange trade and merchandise and services trade. Microsoft Excel makes this easy.

• Using the information on Activity Sheet 2.1 and further research from the Internet so that pupils can give a presentation to another class group about the Tobin Tax, or use it as the basis for an assembly.

Differentiation

With the statistics worked out for them in advance, pupils could make a pictorial wall display to illustrate the volume of money in global markets.

Extension

• Work out the area of the $100 bills (156 x 65mm) involved in one day’s global transaction and compare it to the size of a town/city/region/country.
• Research the website of a company engaged in foreign trade such as J P Morgan or Merrill Lynch. Do any ethical considerations come across in their mission statements?
• Write an e-mail to the Tobin Tax initiative (see www.ceedweb.org) giving your views on their proposals.

Discussion

Why would the Tobin Tax be difficult to implement?