A Transaction Fee Might Save Capital Markets... & Protect Us From The Terminator!!
By David Brin, Ph.D.
Here's a vital issue under discussion (at last) on both sides of the Atlantic. Governments, both rich and poor, urgently need two things: a way to calm speculation in the financial markets and also new ways to raise revenue. In late September 2011, the European Commission proposed a tax or fee on financial transactions. This appears to be part of the newly announced European Union plan, with Britain the sole dissenter.
"A levy of just 0.1 percent -- or even just 0.05 percent -- levied on each stock, bond, derivative or currency transaction would be aimed at financial institutions' casino-style trading, which helped precipitate the economic crisis. Because these markets are so vast, the fee could raise hundreds of billions of dollars a year -- from the sector of the economy that made towering profits while being directly responsible for our present depression," writes Philippe Doust-Blazey in the New York Times.
Read the article. But note that it does not mention the top reason for such a tax! That it might benefit real human investors by slowing finance and equity trading back down to the speed of human thought.*
Would that necessarily be a good thing?
The concocted rationalization you will hear, in opposition to this proposal, is called "market efficiency." According to what's become a bona fide cult, any process or innovation that allows ever-smaller increments of trade to happen ever-faster is "efficiency," and that will automatically lead to better allocation of society's capital, and thus a skyrocketing economy.
This is wrong in many ways, starting with the pure fact that the flourishing of fast-cybernetic trading has directly correlated with the steepest decline in the health of capital markets in a century. Indeed, the increase in market volatility that we have seen lately, with sudden spikes in apparently random directions, can be generally attributed to this trend.**
more:
http://www.davidbrin.com/transaction.htm
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