Month: August 2011

Finally, it is not clear why it views the fact that the [proposed EU financial transaction] tax will make it more difficult to construct trading algorithms as an unintended consequence. These algorithms may provide large profits to the people who develop them, but the benefits to the economy and society are likely to be near zero. If a transactions tax discourages skilled mathematicians and computer programmers from developing complex formulas for financial arbitrage and instead has them work in a productive area of the economy, then the tax will have been a great success.

Dean Baker nails it. The very existence of this sort of trading apparatus, which benefits only the company deploying it, relies entirely on what should be privileged knowledge (e.g. foreknowledge of trade patterns about to happen that can only be extracted and acted upon through either initiating the trade itself or privileged placement of what amounts to a compute cluster on a particular routing switch (or both)), and is the sort of thing used by Goldman et al. to, you know, screw their own customers by trading against their interests and/or simply profiting off what amounts to insider information, is as anti-market, anti-competitive, and the very essence of what all our anti-collusion, anti-insider trading, anti-trust, and anti-monopoly laws are intended to control. And these types of transactions do nothing for the broader economy beyond radically enriching a handful of folks who can only spend so much. And we’re a country with a giant aggregate demand problem. So there’s that.
But may the Flying Spaghetti Monster help anyone who tries to regulate this practice in any way, much less apply a nominal cost to such actions. This, along with rampant and abusive naked shorting, is the true scandal of Wall Street. (By the by: naked shorting is already illegal, but is basically never even investigated, much less litigated. In light of recent events, this should be the basis of a scandal…but that would require a functioning media. Look over there! A missing white woman!)
And, so far as I can tell, exactly zero is being done about any of it. And nothing will be done until after the next financial collapse. And it will only happen then if the collapse is sufficiently devastating that the entire structure of Wall Street finance is utterly laid waste (thus ending their political influence in the aftermath). Sounds like a time.
Source: cepr.net

GOP Loves Tax Hikes

Marginal Revolution’s Alex Tabarrok:

If Republicans have their way, taxes will increase next year by $120 billion. Republicans in favor of tax increases? Sadly, yes.

The post goes on to lay out its theories on the GOP loving only tax cuts for the rich and so forth. But I think this is wrong.

The House GOP is against this particular tax cut continuing solely because Obama wants it to continue. Any policy underlying that singular issue is beside the point. “Obama’s for it” is reason enough for them to oppose anything to the bitter end.

A simple experiment would clear this up for the broader electorate. Obama should choose two or three of the most dearly held GOP beliefs and take them up. Argue for their immediate passage. But he should be sure to stand clear of the microphone, as there will be a stampede of Tea Klanners vying to be the first to refudiate lower capital gains taxes, or an end to the “death” tax, or massive corporate welfare giveaways to our Galtian Overlords.
We’ve said it before, and Serious People tend to think it’s some kind of a joke when you point it out to them, but if he wants to succeed on the policy front Obama needs to come out against wind power, trains, lower taxes, and single payer health care. It’s the only way those issues will ever get any traction from either party.

Try it and see. It’s the awful truth of today’s politics and sadly how things “work.”

GOP Loves Tax Hikes

Diamond Rick Perry

Gail Mitchell: You said Social Security was unconstitutional.
Rick Perry: Social Security’s going to be there for those folks [currently receiving it]
Gail Mitchell: But you said Social Security is unconstitutional
Rick Perry: I don’t think I — I’m sorry, you must have… [and then stuffs his mouth full of popover]
Gail Mitchell: ???
Rick Perry: I’ve got a big mouthful […] I’m sorry, sweetheart
Lemkin: The old stuff-your-mouth-full dodge. This guy has a bright future in politics. That and this Gail Mitchell is tougher than any journalist on the bus.

Chait’s Venetian Blind Alley

Jon Chait unleashes the snark over a suggestion that we have a seperate Super Committee tasked only with “[encouraging] the new supercommittee to ‘go big, or go home.’”

What if we determined the membership of the meta-committee via some non-political selection method – perhaps through the creation of a new group containing, Republicans and Democrats, dedicated to finding the right mix of politicians of both parties, who would be tasked with coming up with a bipartisan plan to lobby the bipartisan supercommission to come up with a bipartisan plan to reduce the deficit?

Actually, the loyal Lemkin reader will realize we covered this one, er, one year ago:

Thirty electors were chosen by lot, and then a second lottery reduced them to nine, who nominated forty candidates in all, each of whom had to be approved by at least seven electors in order to pass to the next stage. The forty were pruned by lot to twelve, who nominated a total of twenty-five, who needed at least nine nominations each. The twenty-five were culled to nine, who picked an electoral college of forty-five, each with at least seven nominations. The forty-five became eleven, who chose a final college of forty-one. Each member proposed one candidate, all of whom were discussed and, if necessary, examined in person, whereupon each elector cast a vote for every candidate of whom he approved. The candidate with the most approvals was the winner, provided he had been endorsed by at least twenty-five of the forty-one.

Rick Perry’s an idiot, and I don’t think anyone would disagree with that

Bruce Bartlett, former H.W. Bush Treasury official and Reagan adviser, minces words when asked his thoughts on Rick Perry. More evidence of Turd Blossom’s tentacles? Or just the party apparatus trying to help Perry out by appearing to denigrate his intellect while hedging bets against his inevitable defeat in a national election?
I’d say: A little from column A, a little from column B.

What Perlstein Said

So good:

There are few or no historical instances in which saying clearly what you are for and what you are against makes Americans less divided. But there is plenty of evidence that attacking the wealthy has not made them more divided. After all, the man who said of his own day’s plutocrats, “I welcome their hatred,” also assembled the most enduring political coalition in U.S. history.

The Republicans will call it class warfare. Let them. Done right, economic populism cools the political climate. Just knowing that the people in power are willing to lie down on the tracks for them can make the middle much less frantic. Which makes America a better place. And which, incidentally, makes Democrats win.

What Perlstein Said

Pity the Poor Corporations

jeffmiller:

“Romney is absolutely right. And this means that taxes on corporations are taxes on people. I’m not getting at the subtle point—and I don’t think Romney was either—that if capital is highly mobile internationally, a national government can’t make capital bear much of the burden of taxes and so the incidence is on laborers and consumers. No, I’m making the simple point that a tax on corporations is a tax on people. I remember that in addressing the issue in the 1980s, the late Herb Stein said that it’s as if people think that if the government imposed a tax on cows, the tax would be paid by the cows. Romney’s passion and clarity on this are admirable. And until now, I’ve found little to admire in Romney. Now, the next step for him—which a patient in a wheel chair tried to help him see but he couldn’t see—is to see that just as taxes on corporations are taxes on people, the war on drugs is not really a war on drugs: it’s a war on people.”

— Are Taxes on Corporations Taxes on People?, David Henderson | EconLog | Library of Economics and Liberty

Wonderful and so very thoughtful. But, by all means, let’s make corporations full citizens. It’s high time they were subject to the full tax burden of an individual; they should therefore be subject and required to pay an individual’s tax rates, which, let’s face it, will almost always be the top marginal rates: 35%. Good news there! They should have no problem with this change, as they are now American citizens and because it’s just exactly what they claim they are paying right now. Win/win for Our New Corporate Citizens.

Likewise, any time a person dies or is injured at the hands of a corporation, it can be tried for murder or assault and, if found guilty, this personification of the corporation can be executed or incarcerated (barred from doing business in these United States) for a period of years. Or, if they prefer, the corporate board can stand for the sentence. It all makes perfect sense. After all, corporations are people too! I’m sure they’ll welcome these changes.

File Under: Cogent

Hendrik Hertzberg deftly summarizes why Obama is systematically losing the left (the only folks who supported his Presidency to begin with):

Obama’s seeming refusal to hold [invoking the 14th Amendment to the Constitution] in reserve (“like the fire axe on the wall,” in Garrett Epps’s words) is emblematic of his all too civilized, all too accommodating negotiating strategy—indeed, of his whole approach to the nation’s larger economic dilemma, the most disappointing aspect of his Presidency. His stimulus package asked for too little and got less. He has allowed deficits and debt to supersede mass unemployment as the emergency of the moment. He has too readily accepted Republican terms of debate, such as likening the country to a household that must “live within its means.” (For even the most prudent householders, living within one’s means can include going into debt, as in taking out a car loan so that one can get to one’s job.) He has done too little to educate the public to the wisdom of post-Herbert Hoover economics: fiscal balance is achieved over time, not in a single year; in flush times a government should run a surplus, but when the economy falters deficits are part of the remedy; when the immediate problem is what it is now—a lack of demand, not a shortage of capital—higher spending is generally more efficacious than lower taxes, especially lower taxes on the rich.

The whole piece is fantastic, but this paragraph could easily form the basis of a savage, intellectually driven attack on Obama from the right. Well, it could if such a concept as “appealing to the intellect” or “thoughtful” even existed over there anymore. They’re too busy arguing over who loves the country the very most or who would starve the most children to death in their first 100 days to worry one little bit about convincing even a single Democrat or independent to join their particular crusade. For once: this is why the GOP will fail.

File Under: Cogent