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Thread: Robin Hood Tax

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    ))) joke, relax ;) coqauvin's Avatar
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    Default Robin Hood Tax

    I'll be the first to admit that I know nothing about this, and economics is certainly not my field of expertise, much less interest, but I still found this concept intriguing.

    [ame="http://www.youtube.com/watch?v=qYtNwmXKIvM"]YouTube- The Banker[/ame]

    In a nutshell, the idea is that all non-consumer banking transactions would have a small tax placed on them. The video goes a little extreme about it saving the world and bringing dead babies back to life, creating world peace and all that jazz, but in spite of that, I think it's a genuinely good idea.

    Part of my thinking on this came from reading an article about oligarchies. It's really just an opinion piece by some poli-sci professor, but he was discussing the nature of oligarchies and how his view of an oligarchy is " a group of social elites with sufficient power (economic, political, religious, etc.) to destroy the society by their actions. In other words, if society can function without you, you are not part of the club." (http://www.ginandtacos.com/2010/04/01/too-big-to-fail/). He then said that the real oligarchies around America are the banking and financial institutions. We're at the point where they can fail, point out it will ruin the economy and have the government bail them out with no strings attached to the money.

    The issue, though, isn't the bailout, it's more: what are effective means of shifting the balance of power away from financial institutions and back the to government? Is this even a good idea? What kind of impact would the Robin Hood Tax have?

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    Strangle Hazard thank mr skeltal's Avatar
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    This field is something that is new to me but with the recent economic events I have made an effort to try to read up on it more. From what I understand, this "Robin Hood tax" of tons of money while only taxing a small percentage will never work because what it appears they are talking about is the derivatives markets. Wealth is created out of thin air as a small portion of money is put on the line, is insured through a CDS*, and then they can use 90% of that money again to buy more derivatives since it's technically in their reserves still per accounting rules. Repeat about 20 times, and you have a swap market worth 50 trillion dollars that is created in just the last decade or so, however it doesn't take a rocket scientist to realize this is not real actual money because it is worth many times the GDP of the entire world.
    To your comment about shifting the power towards the government, I believe you're absolutely right. By putting more money out in the markets through these bailouts we will surely have more inflation which any economist will eventually concede is a hidden tax against the poor and middle class. I say eventually because American and the EU subscribe to Keynesian economics which basically states the free market can be pretty efficient but must have government regulation to ensure maximum stability and efficiency. Mainstream economists that subscribe to this belief understandably have troubles understanding how it could possibly go wrong. I disagree with that completely and am in favor of free markets, but the Keynesian view is what we have today in our governments. I believe that it leads to bigger and bigger government power and an extremely well-hidden tax on the common man through inflationary macroeconomic policies.


    * edit: CDS = credit default swap. It's wall street lingo that basically means that if I'm a bank I can buy someone else's debt, insure it through a company like AIG Insurance, and if they default on their obligation I get paid no matter what. It led to banks thinking they could make money on investments completely risk-free but obviously that was a pipe dream that didn't quite work out so well.

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    ))) joke, relax ;) coqauvin's Avatar
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    I don't think it's just the derivatives market. The impression I get is that any transaction done by a non-consumer (what I assume ((so many assumptions)) to be any business/corporation) will get hit with a small percentage. Establishing a minimum business size (say, 10 employees, or earns $X/a) and having every organization (exluding NPOs and social programs) paying for it seems to make the most sense.

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    Merry fucking Christmas Atmosfear's Avatar
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    Coqauvin, realize that even a so-called "small percentage" change is still going to have far-reaching consequences.

    I get that the common person generally wants more stable financial markets in order to minimize the effects of the boom and bust cycles, but there's a fundamental flaw to me to have a government espousing inflationary spending on luxury programs and then asking businesses to foot the bill.

    I'm ok with diverting some of the money in the financial sector (particularly derivatives because, as Scarf described pretty accurately, the market is so far removed from any actual production) into the production and non-financial services sectors. But this type of tax only makes it more difficult for businesses to continue production and improve employment.

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    ))) joke, relax ;) coqauvin's Avatar
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    Quote Originally Posted by Atmoscheer View Post
    Coqauvin, realize that even a so-called "small percentage" change is still going to have far-reaching consequences.

    I get that the common person generally wants more stable financial markets in order to minimize the effects of the boom and bust cycles, but there's a fundamental flaw to me to have a government espousing inflationary spending on luxury programs and then asking businesses to foot the bill.
    I'm well aware that a 'small percentage' will amass a huge amount. I don't really see anything wrong with insisting that businesses, especially ones that have proven to be extremely successful, are forced to foot a bill for the public. I mean, we just had a number of businesses fail, ones that don't produce concrete goods or wealth, and the rest of the public footed the bill to fix that.

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    Merry fucking Christmas Atmosfear's Avatar
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    Unfortunately, that's not true. The public is footing the bill for political maneuvering and inflationary pork. The amount of money that went to actually covering bad debts is a joke; this was a big pile of money that got earmarked by people who didn't understand the problem or the solution and now is getting spent by people who don't care to accelerate the recovery as much as they care to cross off line items on their political agendas.

    We don't need healthcare, we need jobs.

    We don't need 20 miles per gallon to "fix" roughly 2% of global warming cause worldwide, we need investment in clean power grids.

    We don't need to hire half a million people to assist with the census, we need to to hire half a million people to work on infrastructure as public reinvestment in economic growth.

    More public spending isn't going to fix anything; cutting back on the fat and realigning public spending to directly benefit long-term economic growth will fix these problems. Nobody was bitching about healthcare until someone threw out a fucking fantasy budget number and the actual recovery efforts cost a fraction of it. The healthcare system hasn't changed much (except that wonderdrugs that make our lives longer and more pleasant apparently became a right and not a priviledge) since Clinton, and no one had any problem with it until the role of government apparently shifted to acting as parents for whiny 9 year olds.

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    Journeyman Cocksmith Mr. E's Avatar
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    Atmosfear is right. In the long run something like this "Robin Hood Tax" is only going to serve to fund governmental pet projects that are more about posturing than progress. The problem isn't financial institutions being too powerful, the problem is that the government isn't (and for the past 60 or so years now generally hasn't been) thinking long term in coming up with solutions to very foreseeable issues.

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    ))) joke, relax ;) coqauvin's Avatar
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    Quote Originally Posted by Atmoscheer View Post
    Unfortunately, that's not true. The public is footing the bill for political maneuvering and inflationary pork. The amount of money that went to actually covering bad debts is a joke; this was a big pile of money that got earmarked by people who didn't understand the problem or the solution and now is getting spent by people who don't care to accelerate the recovery as much as they care to cross off line items on their political agendas.

    We don't need healthcare, we need jobs.

    We don't need 20 miles per gallon to "fix" roughly 2% of global warming cause worldwide, we need investment in clean power grids.

    We don't need to hire half a million people to assist with the census, we need to to hire half a million people to work on infrastructure as public reinvestment in economic growth.
    I can agree with this, for the most part. All this talk about saving the envrionment with the tax and everything on that line is all on the same level as saying the tax will cure aids and set up colonies on mars, oh and bring about world peace and turn the world into paradise. But I'm not talking so much about the commercial, which has its head so far up its own ass that I can't imagine anyone taking it seriously, but the idea of this tax is worthy of consideration.

    I understand, too, that most of what's being invested in now is mostly political posturing, but that's all part of another issue and I'll come to that later. North America really needs to invest in its infrastructure more than anything else. I would argue that health care counts as part of the infrastructure, as any government-funded public service does, but I see your points on the need now to improve the physical. But no company is going to invest in public infrastructure. We're sitting on an electric and sewer system built, for the most part, in the early 1900's with only minimal patch jobs to ensure they keep operating. The amount of money and effort required to overhaul this system and bring it up to modern standards will be astronomical, but again, no company is going to directly fund this. Provided infrastructure is made into a political issue, which I can see happening, although not necessarily in Obama's administration, the government can work on it.

    Except for, you know, the money. So where does the money come from? Current levels of taxation won't begin to cover the necessary costs. Two years ago, government funding for, I believe, mostly just bridge maintenance and survey, required $375 billion, and received $286 billion (http://www.msnbc.msn.com/id/20095291/). For water management: "The U.S Government Accountability Office estimates that nationwide up to a $1 trillion investment is needed in drinking water and wastewater systems over the next two decades." (http://www.nesc.wvu.edu/waterwedrink...astructure.cfm). 20 years is a long time (almost three times the length of a presidential term), but actually investing $1 trillion dollars in a single project that isn't the department of defense is something I've never heard of.

    This is why I think the Robin Hood Tax is a good idea. There are things America (including Canada) needs to invest in, and infrastructure is high on this list. Once it gets made into a political issue, having this kind of funding available for it would contribute greatly to getting the job done, or at least started.

    Quote Originally Posted by Atmoscheer
    More public spending isn't going to fix anything; cutting back on the fat and realigning public spending to directly benefit long-term economic growth will fix these problems. Nobody was bitching about healthcare until someone threw out a fucking fantasy budget number and the actual recovery efforts cost a fraction of it. The healthcare system hasn't changed much (except that wonderdrugs that make our lives longer and more pleasant apparently became a right and not a priviledge) since Clinton, and no one had any problem with it until the role of government apparently shifted to acting as parents for whiny 9 year olds.
    What do you meant by 'cutting back on the fat', though? When you're talking about government spending, this post (http://www.ginandtacos.com/2010/02/1...g-the-impulse/) seems pretty reasonable. When you mess with the budget, there are a few rules:

    # Touch social security and you're dead.
    # Touch Medicare and you're dead.
    # Raise taxes and you're dead.
    # Cut the military and you're dead.
    # Create a huge deficit and you're dead.
    # Defaulting on our debt is not an option.

    So where can the cuts be made to save up more money?

    I don't really want to get into the healthcare debate at all, unless it's pertinent to the discussion about the benefits this tax would have. That said, according to this one, lonesome chart, a deficit of over $1 trillion is run, and certain programs maintain their funding due to political manoevreing. Where will the money to deal with infrastructure come from? If you're talking about fixing infrastructure, there's a bill that is equal to or greater than the deficit that's being run. This is where I think this robin hood tax would be beneficial, although I'll admit my views are a little naive on the subject.

    Quote Originally Posted by Mr. E View Post
    Atmosfear is right. In the long run something like this "Robin Hood Tax" is only going to serve to fund governmental pet projects that are more about posturing than progress. The problem isn't financial institutions being too powerful, the problem is that the government isn't (and for the past 60 or so years now generally hasn't been) thinking long term in coming up with solutions to very foreseeable issues.
    Yes, but that's an issue about how government seems to function these days. Either we try to engineer a paradigm shift of epic proportions and get rid of individualism in the government, or we try to get the effect we want from the broken system we have. The first choice couldn't conceivably happen any time soon, not without some sort of catastrophic event that breaks down government power on a local level, or some other upheaval that breaks how the government currently operates. So, I would suggest making something tangible and overall beneficial (infrastructure) into a real political issue, watch the politicians take it up for political posturing (the right thing for the wrong reasons) and fund it with this tax.

    It will never work out that smoothly, but I still see real benefit coming from the tax, at least in this light.

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    kiss my sweaty balls benzss's Avatar
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    Apart from the fact this is a stupid and not really workable idea, doesn't it raise just a little more than fuck all money?

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    ))) joke, relax ;) coqauvin's Avatar
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    I still don't really see how it's unworkable, unless it was already explained through the whole derivatives thing, in which case, ok.

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