1/4% Tax on all stock trades pushed in NY Times today

[tortoise]

This is interesting, I think. It's the latest from our friend Dean Baker. Here's the url, which I've purposefully not posted as a link:


w-w.counterpunch.org/2011/11/04/the-specious-case-against-a-financial-transactions-tax


This is the smoothest, most professional presentation I've seen from him. Seems to me he's tightened his arguments, perhaps in response the the excellent work of Robert Greene, among others.

In so tightening, however, he's conceded a point that effectively turns F.T.T. into a political third rail. In fact, Kudos to Mr. Baker for intellectual honesty--the first of it I've seen from him--but I think he's torpedoed F.T.T. in the U.S. in the current recessionary environment.

Thanks for the Christmas gift, Mr. Baker!

 

[justrading]

Quote from tortoise:

This is interesting, I think. It's the latest from our friend Dean Baker. Here's the url, which I've purposefully not posted as a link:


w-w.counterpunch.org/2011/11/04/the-specious-case-against-a-financial-transactions-tax


This is the smoothest, most professional presentation I've seen from him. Seems to me he's tightened his arguments, perhaps in response the the excellent work of Robert Greene, among others.

In so tightening, however, he's conceded a point that effectively turns F.T.T. into a political third rail. In fact, Kudos to Mr. Baker for intellectual honesty--the first of it I've seen from him--but I think he's torpedoed F.T.T. in the U.S. in the current recessionary environment.

Thanks for the Christmas gift, Mr. Baker!

There are some obvious flaws in his arguments.

When he says that if trading volumes reduce by half, investors end up bearing none of the cost of the tax, this is rubbish. If passed on in full, investors are paying the tax.

As for the analogy with trucking and efficiency, he glosses over the fact that reduction in the number of financial sector employees would be due to a shrinkage in the volume of services consumed, ie the sector shrinks and that is why the employees are reduced. This is not doing the same volume with fewer employees, and is not an increase in efficiency.

Logic is not his forte.

 

[tortoise]

Quote from justrading:

There are some obvious flaws in his arguments.

When he says that if trading volumes reduce by half, investors end up bearing none of the cost of the tax, this is rubbish. If passed on in full, investors are paying the tax.

As for the analogy with trucking and efficiency, he glosses over the fact that reduction in the number of financial sector employees would be due to a shrinkage in the volume of services consumed, ie the sector shrinks and that is why the employees are reduced. This is not doing the same volume with fewer employees, and is not an increase in efficiency.

Logic is not his forte.

In fairness to Baker, I believe he covers this with his point about finance being an "intermediate good," like trucking. This, in and of itself, is a legitimate argument--eg, it has defensible methodological foundations. I believe it's use here also brings it under the category of reductio ad absurdum, but that's getting into the Christmas gift.

 

[justrading]

Quote from tortoise:

In fairness to Baker, I believe he covers this with his point about finance being an "intermediate good," like trucking. This, in and of itself, is a legitimate argument--eg, it has defensible methodological foundations. I believe it's use here also brings it under the category of reductio ad absurdum, but that's getting into the Christmas gift.

I'm afraid I do not buy his premise that "intermediate goods" are simply a means to an end, and as long as that end is unimpaired, all is well.

He makes that point in;

"If this does not prevent the industry from performing its essential role of financial intermediation, then the tax will have effectively made the industry more efficient."

In a deep recession, people consume and travel less. This leads to shrinkage of, for example, trucking and air travel. By his argument this is fine as goods are still trucked and people and cargo still flown as required, so all is well. This ignores the fact that there is shrinkage in the transportation sector and by extension the economy that this sector is part of.

By his logic, let's slap a tax on airline passengers. Fewer will travel and the sector will shrink, but that's OK because those who really need to will travel anyway and the airline industry would be more efficient. Thanks to Baker, we now know that taxes improve efficiency.

As you note, Christmas has come early this year. Perhaps that's why there is a thread "Xmas Rally Has Finished".

 

[tomdavis]

Quote from tortoise:

This is interesting, I think. It's the latest from our friend Dean Baker. Here's the url, which I've purposefully not posted as a link:


w-w.counterpunch.org/2011/11/04/the-specious-case-against-a-financial-transactions-tax


This is the smoothest, most professional presentation I've seen from him. Seems to me he's tightened his arguments, perhaps in response the the excellent work of Robert Greene, among others.

In so tightening, however, he's conceded a point that effectively turns F.T.T. into a political third rail. In fact, Kudos to Mr. Baker for intellectual honesty--the first of it I've seen from him--but I think he's torpedoed F.T.T. in the U.S. in the current recessionary environment.

Thanks for the Christmas gift, Mr. Baker!

Baker's arguments are little more than far-left political demands thinly disguised as economic theory. He knows that if he makes a strong enough emotional plea ("punish the capitalists") the 99% will follow like lemmings.

I'll give Baker credit for being right about one thing: In the end, it's all politics. The 2012 US elections will be critical in deciding the fate of the FTT.

 

[tortoise]

Quote from justrading:

I'm afraid I do not buy his premise that "intermediate goods" are simply a means to an end, and as long as that end is unimpaired, all is well.

He makes that point in;

"If this does not prevent the industry from performing its essential role of financial intermediation, then the tax will have effectively made the industry more efficient."

In a deep recession, people consume and travel less. This leads to shrinkage of, for example, trucking and air travel. By his argument this is fine as goods are still trucked and people and cargo still flown as required, so all is well. This ignores the fact that there is shrinkage in the transportation sector and by extension the economy that this sector is part of.

By his logic, let's slap a tax on airline passengers. Fewer will travel and the sector will shrink, but that's OK because those who really need to will travel anyway and the airline industry would be more efficient. Thanks to Baker, we now know that taxes improve efficiency.

As you note, Christmas has come early this year. Perhaps that's why there is a thread "Xmas Rally Has Finished".

http://www.cnbc.com/id/45696542

 

[tomdavis]

Quote from justrading:

I'm afraid I do not buy his premise that "intermediate goods" are simply a means to an end, and as long as that end is unimpaired, all is well.

He makes that point in;

"If this does not prevent the industry from performing its essential role of financial intermediation, then the tax will have effectively made the industry more efficient."

In a deep recession, people consume and travel less. This leads to shrinkage of, for example, trucking and air travel. By his argument this is fine as goods are still trucked and people and cargo still flown as required, so all is well. This ignores the fact that there is shrinkage in the transportation sector and by extension the economy that this sector is part of.

By his logic, let's slap a tax on airline passengers. Fewer will travel and the sector will shrink, but that's OK because those who really need to will travel anyway and the airline industry would be more efficient. Thanks to Baker, we now know that taxes improve efficiency.

As you note, Christmas has come early this year. Perhaps that's why there is a thread "Xmas Rally Has Finished".

The ever-ambiguous Dean Baker never specifically defines "efficient" and never even attempts to discuss the interaction with "effectiveness" variables.

As your airline example shows, increased efficiency often causes decreased effectiveness resulting in higher costs than the benefits of any efficiencies gained.

 

[tortoise]

Quote from tomdavis:

The ever-ambiguous Dean Baker never specifically defines "efficient" and never even attempts to discuss the interaction with "effectiveness" variables.

As your airline example shows, increased efficiency often causes decreased effectiveness resulting in higher costs than the benefits of any efficiencies gained.

there's that. and there's the issue of j-o-b-s.

 

[tomdavis]

Quote from tortoise:

there's that. and there's the issue of j-o-b-s.

In Dean Baker's fantasy world of rainbows and lollipops it doesn't matter how many people lose their jobs because the government takes care of everyone with the hundreds of trillions of dollars they collect from the financial transactions tax.

Here's the Dean Baker theme song: http://www.youtube.com/watch?v=rkZ2_nKo7II

 

[tomdavis]

Quote from Robert A. Green:

We should not concede - give up the fight on - core euro zone countries passing FTT and then giving it a chance to snowball in the euro zone, EU and elsewhere including the U.S.

While I agree with you in principle, I don't see what can be done to stop Merkel/Sarkozy/Barroso from introducing an FTT to be adopted by a coalition of willing countries. There are 15 EU/EZ countries that will join Germany/France, no questions asked; and perhaps as many as 5 others that could be pressured into joining. It appears inevitable at this point. Do you have any ideas how we (or anyone) can stop this?

Our last line of defense, and perhaps our only line of defense, is our own politicians here in the US.