Just as a thought experiment, let's say that the election goes the way it should and the Democratic Party sweeps it in the landslide that really could be. So we, the non-insane portion of the electorate, have control over the federal government and hopefully made some progress unraveling teabag control over so many of the states. What do "we" do? And I guess it has to be stated as what is your wish list of progressive ideas? The number one challenge facing the United States is the Republican Party, for argument's sake let's assume that they have been rendered more or less harmless in the wake of a landslide election for the moment, what is number two? There is such a backlog of issues, such a huge pile of reforms necessary. What would you prioritize if you could have the ear of President Hillary Clinton and Speaker Nancy Pelosi and Leader Chuck Schumer? There is a good chance even with the professional liberal class of Democrats in charge, we progressives will get at least one thing from our list addressed. Last time it was health insurance reform, and judging on what Obamacare has actually done as opposed to what could have been it has made a real difference in the lives of many Americans for the good. This time around the issue that could make a real difference in the long run is the establishment of a financial transactions tax on stocks and bonds.
Of course, the sheer number and depth of problems facing this country and the world is breathtakingly immense. Why start there? My contention is that the force driving all the other problems is rooted in the fact that too few people have too much money and therefore power. Imposing what is in effect a sales tax on the things they buy will begin to drain the swamp of the speculative capital that has wrecked so much havoc on main street. Busting through the obstruction from the parasitic right and the resistance from Democrats who foolishly respect wall street as the paragon of professionalism will be difficult in the extreme, that's why it has to be the first thing done. Riding in a wave election and still beholden to the little people, I think there's a chance to ram it through. First, a tax on financial transactions could be very small, even 0.1%, just the establishment and legitimization of such a direct assault on entrenched privilege would be enough.
Income and wealth equality; a whole package of "social questions" that Thomas Frank, Robert Reich, Bernie Sanders, and so many others have articulated; is the cause of most problems and the impediment to addressing so many others. This country is so flooded with capital that the uber rich cannot find productive uses for it, or perhaps they don't want to. So they buy politicians, both personally while in office and guaranteeing future obedience through lobbyist jobs and other perks. This is just intolerable. The only way to start reducing the bribery, greed, and injustice at the top of our society is to drain that swamp of money that just corrupts people and distorts markets. That is why the financial elite have bought the important politicians in both parties and drive the price of entry into politics so high that only themselves or their servants can have a chance at power.
The primary effect of charging a sales tax on stock exchanges is to slow things down. That is how the original idea of James Tobin's tax was envisioned. He wanted the tax imposed on spot conversions of currency that would penalize speculation against currencies and stabilize economies, especially after computers skyrocketed the amount of speculation that occurs in those markets. That is a good idea too, as global capital now has the power to crush countries with attacks on their currencies. But just in terms of domestic financial markets a small transaction tax would slow down and stabilize markets too. Would the Dow Jones have lost so many points after the "leave" vote was tallied in the UK if people had to weigh paying an absolute tax for impulsive trades? It is likely enough investors would remember that the Brexit was actually non-binding, a momentary loss of reason by the mob that did not need to be repeated in the market.
The practical effect is all upside for the public interest. If trading is slowed down then mutual fund managers will have fewer opportunities to lard up pension funds with fees. Also, it will be more difficult for panics to set in if every investor has to weigh the tax they paid for a stock against the gains, they will on average wait a little longer. Plus, it will absolutely eat into the obscene compensation packages of managers and brokers. When a uniform cost like a tax is levied on all businesses of an industry, if there is any competition between firms they have to eat some portion of it or someone else will and steal all the business. There is a lot of competition between firms on wall street. And we won't even have to take seriously the moans and shrieks of outrage by the fat cats that a sales tax on stocks will sink grandma and grandpa, the usual line of propaganda whenever regulating wall street comes up, because average investors buy long. No, the tax will be borne most heavily by the big players that buy and sell all day, every day.
But the symbolic effect of taking on wall street by a Hillary Clinton administration, even in a way that will encourage stability in the market, will defuse so many of the detractors who say she is too cozy with the fat cats. It will be the first step in democracy finally reimposing regulation over an out of control and very dangerous sector of the economy that has so much power. It is really difficult to find actual dollar amounts for the trading on wall street, but it is likely in the trillions... per day. Therefore, even a 0.1% tax would raise significant revenue for a federal government always strapped for cash. That would amount to a billion dollars for each trillion bought, each day. A billion dollars not available for Goldman Sachs and the rest to lobby, bribe, and extort government. A billion dollars a day "redistributed" from the vultures and pirates who stole it. Maybe for once we could use it for something productive? Shoring up Social Security, Medicare, and Medicaid come to mind. Or, a real Public Option, infrastructure spending, buying back all of the toll roads and parking meters that have been privatized, even getting the cost of education down to what it was when our parents went to college or forgiving student loans. The possibilities are endless, the public needs are great, and once put in place the tax could be raised and lowered as one more fiscal tool to manage the economy.
Anyway, that's my Christmas wish. If you agree, share this post and let's make it happen.
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