Chosen by the gods
Image via Wikipedia
Someone told me yesterday that the Tobin tax would be a good thing in order to remove “stickiness” and “chaotic behaviour” out of the financial markets.
I don't see a Tobin tax as a good thing. Chaotic behaviour, as he called it, is good as it means evolution and opportunities. If you control everything (and that is meant in two ways: (a) the "stickiness referred to above and (b) transactions will be traceable in every detail), you will not have opportunities but only bureaucrats deciding what is best - I think in history we have plenty of examples that went wrong when bureaucrats were at the orders. Failing, and bubbles, crisis etc. are part of that, is good as it cleans up misalignments. You wouldn’t put a tax on sending emails just because it's chaotic and could for example influence markets.
The aim should be to go in the opposite direction and make other areas as fluid as financial transaction, e.g. world trade. Liberalising markets only stop to make sense when the world has become a huge internal market - until then markets should get even more interconnected and freer. Imbalances would build less often and would be more controllable - how often have you heard that within a country one (geographic) area has caused a country wide crisis because of imbalances?
I think after going for bankers’ boni, low tax jurisdictions and rescuing unviable banks with tax payers' money, this is just the next step hiding up errors committed until now and as in the case of low tax countries, the world will be bullied into a new adventure. In the end who will have initiative? The bankers who cannot make a fortune anymore? The traders that have to pay tax for what they do (on top of income, corporate and wealth taxes)? If governments had spent money wisely before, we wouldn't need to search for other sources of income. I would be really curious how many billions a year are spent only in subsidies for coal mines as opposed to "green" energy.
Where will be the end? How much more taxes do we have to pay to make up for failed enterprises and projects which are kept artificially alive? Are jobs really the reason or could we create more jobs, by using this money otherwise, i.e. by using it ourselves? Who decides who may fail and who not? If anyone finds a clear and objective rule in bail-outs and failures that happened in the past 24 months, I would be very surprised. In the end it is a new power game – someone has to control and decide. Since we are civilized people now, the power hungry do not gain power by making warfare or by having police states (save for certain exceptions). They decide who is allowed to live or die (economically). So we have a whole new kind of power structure, which has to be exported everywhere in order to work. The positive aspect is that bail outs make wars superfluous. We just decide whether we let Iceland down or not. But in the end – and I am no friend of conspiracy theories – this does not lead us anywhere else than being subject to even fewer people deciding our (economic) fates. Very often we have not even voted for them (Trichet, Bernanke, Barroso, etc.).
What we need right now is not more regulation, more taxes and more bail-outs, we need the opposite and clear and objective rules to play by. Elites could set these rules but under public control. I always use to say that laws 200 years ago were drafted by single persons and of much higher quality than nowadays – just look at the civil codes that came up around 1804 to 1811. They are generally the least amended laws of countries in contrast to, let’s say, any tax law. However, they were subject to public control (admittedly, some with a certain time lag). We only need rules on fair play and that if someone fails he has to leave the game and start over. This needs someone who enforces the fair play, but that is all. We don’t need gods to tell us how to move our chess figures in the play or overriding the rules of the game in order to save your king or queen or even some peasants.
It is a new road to serfdom that is starting to show and it is now urgent to stop this trend.