Posts Tagged ‘left wing’
Amid the flood of good intentions, nonsequiturs, revolutionary daydreams and Tea Party envy, you can find one shining idea that’s relevant and plausible in the Occupy Wall Street protests. It’s an established idea with an academic pedigree and a history of thoughtful support for years by some respected politicians and liberal thinkers: A tax on financial transactions.
The kernel of the idea came from a Nobel-prize winning economist James Tobin and is about 40 years old. Tobin thought that currency speculators were hurting the global economy and a small tax on their machinations would slow them down.
The idea evolved into something much broader, a tax on all financial transactions. The direct effect would be infinitesimal on little people, and negligible on investors of the buy-and-hold strategy along the lines of the famous billionaire Warren Buffett. But it would really hit the speculating class hard, the kind of frenetic traders who squeeze a multitude of minute amounts of money essentially by staying a fractional step ahead of the herd in all the financial markets.
It’s also been adopted by the anti-globalization subculture, which shouldn’t diminish its value.
Two years ago, Paul Krugman the New York Times’s liberal economist who conservatives love to hate gave his take on Tobin’s tax plan from the 1970s as updated and expanded by Adair Turner and Gordon Brown in the U.K.:
Tobin’s idea went nowhere at the time. Later, much to his dismay, it became a favorite hobbyhorse of the anti-globalization left. But the Turner-Brown proposal, which would apply a “Tobin tax” to all financial transactions — not just those involving foreign currency — is very much in Tobin’s spirit. It would be a trivial expense for long-term investors, but it would deter much of the churning that now takes place in our hyperactive financial markets.
This would be a bad thing if financial hyperactivity were productive. But after the debacle of the past two years, there’s broad agreement — I’m tempted to say, agreement on the part of almost everyone not on the financial industry’s payroll — with Mr. Turner’s assertion that a lot of what Wall Street and the City do is “socially useless.” And a transactions tax could generate substantial revenue, helping alleviate fears about government deficits. What’s not to like?
Krugman, who is sanguine about the Occupy Wall Street, is referring to the market collapse and subsequent government bailout of the financial industry three years ago. The OWS people have renamed the expanded version of the tax the Robin Hood tax, an appealing nickname to teenagers all over. Adbusters, which is often given credit as the spark for the OWS movement, is more exuberant than Krugman. In pushing for a global protest on Oct. 29 to demand this tax, Adbusters said it would “slow down some of that $1.3-trillion easy money that’s sloshing around the global casino each day — enough cash to fund every social program and environmental initiative in the world.”
Calling for a new march, Adbusters cites a series of marches around the world in 2003 “to stop President Bush from invading Iraq.” Adbusters said 15 million people protested back then, but it really didn’t stop the war. It’s also dubious that some small portion of the “easy money” would fund everything everybody ever wanted in social and environmental programs. Just because the hype comes from left doesn’t make it better than right-wing demagoguery. Here’s Adbusters version of the protests:
Alright you redeemers, rebels and radicals out there,
We’re living through a magical moment … #OCCUPYWALLSTREET has catalyzed into an international insurgency for democracy … the mood at our assemblies is electric … people who go there are drawn into a Gandhian spirit of camaraderie and hope for a new kind of future. Across the globe the 99% are marching! You have inspired more than you know. People are digging into Act One of the long Spring.
Its now time to amp up the edgy theatrics … deviant pranks, subversive performances and playful détournements of all kinds. Open your insurrectionary imagination. Anything, from a bottom-up transformation of the global economy to changing the way we eat, the way we get around, the way we live, love and communicate … be the spark that sustains a global revolution of everyday life!
Maybe so. But still, I hope that OWS can devote some of the heat and light (inasmuch as the media are still on the story) on the financial transaction tax. The government needs money to do its job, and the Republican anti-tax rhetoric is just about the biggest scam around.
I also think there’s a good precedent for just this kind of stealth tax, and it’s the banks themselves that are collecting the money and keeping it. Banks grab a small percentage — like 1% to 2% — of almost all transactions in the entire consumer economy and no one makes a peep. Everything at stores, online or in bricks and mortar is priced at credit card prices, and the banks just skim off their cut from consumers whether or not they use plastic or pay cash. It is a broad-based, regressive sales tax collected on every consumer transaction, only the taxpayer gets nothing back. It is also a great convenience to the banks, and a terrific engine for inflation when employment is high.
All that aside, this country once had an even better strategy to control rampant speculation. That was when banks were heavily regulated to prevent just the kinds of abuse that led to the Great Depression of the 1930s, which is pretty much what happened in the 1980s and happened in a big way in 2007 and 2008.
Deregulation began in earnest during Jimmy Carter’s administration and continued ever since. Despite the little meltdown in the late 1980s known as the savings-and-loan scandals, which cost the public billions, both parties continued tearing down the system, finally repealing the depression-era Glass-Steagall Act in 1999. We were done for then. It was only a matter of time. And I’d like to point out that the dismantling of banking regulation was largely bipartisan — that magic word everyone seems to love.
Banking regulation maintained a separation between gambling by rich people and the staid business of holding people’s money and making safe loans. Securities-selling hustlers could sink brokerage firms, but not the banks — which are not only really too big to fail, but also too important to our collective well-being.
It bothered the traders and brokers that there was all this money out there that they couldn’t touch. There’s a long-standing attitude among Wall Street types that risk can be managed and that a quick-thinking, fast-talking guy can outrun bad luck. I remember an expert telling me I was foolish to keep my retirement fund so “conservative.” Mortgage-backed securities were more his speed. They couldn’t fail, he said. It wasn’t long ago that these guys and some of their friends in Congress asked for but never got their hands on Social Security to play with. Now that would have been something.
But regulation, a reform of a legitimate government rather than revolution, would be a political problem for OWS, which was conceived as a revolutionary movement inspired by the Arab spring. What people did in the Mideast was a cool expression of people’s yearnings, even if chaotic and unlikely. And it brought out millions of ordinary people who risked their lives. With the millions, came the cameras and the headlines. But here, people can’t complain about the lack of coverage of a few hundred people who occasionally block traffic.
My mind reels at the implied comparison with OWS. Egypt is, indeed, a country where a huge number of people are dirt poor, where people have been denied elementary rights always, and where the choice for the future could well be between military rule and radical theocracy. It’s a sad predicament, but it is not the predicament of 99% of the people here, where people can, if they want to, vote out the Republican ideologues and demagogues from Congress, and they will have the opportunity to re-elect Obama. The political success of the right-wing in recent years is the problem. Not the Federal Reserve. Not even even greed is the villain. I’m afraid we’re stuck with greed as a part of human nature.
Now, the media can be manipulated, and often is. It was manipulated plenty at the dawn of the Tea Party, but there were some big money, sophisticated brains working on it, and they had a clear, easy-to-identify target: “that guy in the White House,” as many in the right-wing like to refer to our country’s first black president.
In the beginning, the Tea Party was perhaps an even more chaotic and brainless collection of far-out groups than OWS. An extreme libertarian survivalist is not any better than an adolescent anarchist. If anything the libertarians, gun nuts, and religious fundamentalists of the early Tea Party deserved even less coverage than OWS, but they got it. I’d like to see a good analysis of how that happened. But the point is that rather than to demand equal time to left-leaning fringe groups, I’d like to see some organize for badly needed political action. We’ve had enough of a lunatic fringe for a long time.
I’ll march for a fair tax system. Or for re-regulation. It doesn’t sound sexy, but we can’t keep shoveling money to rich people. Eventually we will all be dirt poor.