Adbusters, the group that is largely responsible for the Occupy Wall Street protests, has come out with their own idea for a simple demand:
On October 29, on the eve of the G20 Leaders Summit in France, let’s the people of the world rise up and demand that our G20 leaders immediately impose a 1% #ROBINHOOD tax on all financial transactions and currency trades. Let’s send them a clear message: We want you to 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.
Personally, I don’t think the Wall Street protests need to have a single demand, undiluted by anything else. The requirement for a single, simple demand is a red herring created by the corporate-owned media in order to frame the debate. If you change the current list of demands to a single demand, they will just find some other thing to complain about.
But I think the protest movement has already succeeded in doing something that was vitally important to our country, which was steering public discourse away from endless rhetoric about the need for smaller government, and back towards real discussions on how we can repair our economy.
But watch this brilliant video promoting a Robin Hood tax in Britain (starring the incredible Bill Nighy):
UPDATE: The more I think about this, the more I believe that while this should not be the only demand, it is a very good demand to focus on before the upcoming G20 talks.
7 Comments
What really gets me is how much money a 1% tax would generate. They’re talking billions of dollars (well, pounds, but still the point is the same). It just goes to show how much money is floating around out there. And really, is a 1% tax going to make a huge difference in the overall wealth and prosperity of the banking industry? No. It makes a lot of sense, but of course that means it’s going to be ridiculed and called a harbinger of the Islamo-communist regime that the cons believe the OWS movement is trying to usher in.
The video is not even talking about a 1% tax, it is talking about 0.05%, which would raise between 100 billion and 200 billion pounds (one British pound is currently $1.60, so that’s a chunk of change). And that’s in Britain alone. A 1% tax in the US would raise a stunning amount of money.
For more info, see http://en.wikipedia.org/wiki/Robin_Hood_tax
Jeff: When you ask is the 1% tax really going to make a huge difference in the prosperity of banks, the answer is definitely yes for certain types of trading. When you look at high frequency trading, or even some high volume day trading, investors are making their profits in the fluctuations of a stock’s price. When you get into high frequency trading, you’re talking about fractions of a percent gained per trade. A 1% tax would eliminate the profitably of any trade gaining less than one percent, thus eliminating a large chunk of trades done in the modern markets. I think this is a very good thing, and is one of the reasons I support this tax.
Jake makes a very good point. I’ve done articles in this blog on high frequency trading and the terrible things it is doing to the market. Any law that reduces the amount of high frequency trading would be a blessing.
I completely agree IK and Jake. Short term “day trading” has turned much of the market into a slot machine. Futures have always been the big wheel at the carnival, but equities and bonds were not created for that purpose.
While I’m in favor of a tax of this form, I think it’s necessary to realize that this is tax on transactions, not on profits. It’s as if there were a tax on revenues, not profits.
However, there is a precedent for this: Value Added, or Sales Tax.
Up to a point, market liquidity is important so that regular investors (not necessarily micro-second or day traders, but you and I), can get a fair price. The only thing worse than a market with high frequency traders skimming off the top is a market with no liquidity where simply everyone gets ripped off, every day (see the Bond markets, for example).
So the right balance needs to be found. I would be interested in some solid numbers, but I suspect a 0.05% transaction tax would hardly affect the overall costs involved in high frequency trading.
PS: and if it did, and put the breaks on HFT, then that’s not necessarily a bad thing either.
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