...is shown to us here by the Austrian Robert Murphy (if he was not joking, that is). The video below is rather old now, but was an eloquent little campaign video with Richard Curtis and Bill Nighy for the Robin Hood Tax, a tax on bank transactions proposed after the great financial crisis and bank bailouts. (As an aside, Bill Nighy is such a great actor!)
Murphy complains that “They’re trying to simultaneously make it look like (a) the banks won’t be taxed a lot and (b) the banks will be taxed a lot.” But any honest reading of it would be this: it sounds big, but, comparatively speaking, isn’t really for the banks themselves that are such wealthy institutions; it is big, comparatively speaking, in terms of what could be done with the money. The tax on certain speculative transactions would be 0.05% – not even 1%.
Curiously, although it is not the issue I am really raising above, there is a heterodox Keynesian/MMT objection to the Robin Hood tax, as argued by Bill Mitchell here, not because taxing destabilising speculative transactions is a bad thing (it certainly is a good thing), but because the Robin Hood tax might (1) tax certain useful speculative activities as well and (2) in the grand scheme of things, in terms of effective measures that could solve the underlying economic problems, it is a rather mild idea, not radical enough.
Thursday, February 7, 2013
How to Mangle the Message of The Banker
Posted by Lord Keynes at 7:48 AM
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"in the grand scheme of things, in terms of effective measures that could solve the underlying economic problems, it is a rather mild idea, not radical enough"ReplyDelete
I think the video says it would raise $300B plus. This is bigger (at least according to some quick googling I did) than the profits of the entire UK banking sector. Are you really supporting the view that bankrupting the banks is a "rather mild idea"?
Rob Rawlings@February 7, 2013 at 8:20 AMDelete
"I think the video says it would raise $300B plus. This is bigger (at least according to some quick googling I did) than the profits of the entire UK banking sector."
5 minutes of research would have shown you that the $300-400 billion is a estimate of the global revenue from such a tax (on case it was ambiguous in the video):
"This month, 350 prominent economists, including Nobel prize-winner Joseph Stiglitz, have publicly backed a proposed ''Robin Hood tax'' on speculative financial transactions, which could raise about $US400 billion ($A450 billion) a year worldwide to prop up failing infrastructure, boost health and education resources, fight poverty etc."
In any case, you have presumably read the size of the tax: 0.05% on certain speculative transactions. Hardly ruinous.
"Philip Pilkington: The Fear Industry – Austrian School Propaganda and the Gold MarketDelete
By Philip Pilkington, a writer and research assistant at Kingston University in London
THURSDAY, FEBRUARY 7, 2013
When you survey the websites and the pundits of Austrian economics on the internet you tend to get a niggling feeling that they’re trying to sell you something. Of course, every writer is ultimately trying to earn a living but with many Austrians it seems to be a little different. It feels more like many are just churning certain content out in order to flog a certain line which, while certainly not quite mainstream, nevertheless seems geared toward generating if not income then at least traffic. To say that some of this comes across as spam-like would be slightly unfair, but not too unfair. After all, there is a high degree of repetition and the ultimate aim does seem to be to get the punter into the gold market or something similar.
But the sheer scale by which the fear industry has taken off is, to be frank, quite surprising. We have all seen the likes of Peter Schiff as a regular guest on the American business news spouting vague talking points about the impending dollar collapse and gold reaching $5000 an ounce. Is he trying to flog something? Probably, he does run an investment fund after all that seems to take strong and uncompromising positions in gold that have a history of losing investors boatloads of money. But beyond that one gets the impression that he just likes the attention."
What is a destabilizing speculative transaction?ReplyDelete
All human acts are speculative. All!
There is the smallest chance that even the safest act will not give the results sought.
You suggest that it may be possible to discern between useful and non-useful speculative transactions. This is just another example of how Keynsians contradict themselves by both insisting they want free markets and want to incentivize certain "good" transactions while penalizing the bad ones. No one can do this because you will invariably destabilize with your decisions on what is good and what is bad.
We could have just not bothered to bail out the banks and not bothered them for and additional tax!
Why do you feel you can make bankers behave while simultaneously babying their every move? Just throw them out into the real world. Make them seek and service customers. Let them fail when they don't satisfy their customer's needs. It would be the end of government regulation of the financial sector and a boon to those bankers who want to help people instead of relying on government fiat money and bailouts.
Anthony LimaFebruary 7, 2013 at 6:00 PMDelete
What is a destabilizing speculative transaction?
The kind of speculative transaction that blows unsustainable asset bubbles in housing or financial assets.