Michael H Goldhaber on Fri, 11 Dec 2009 03:40:55 +0100 (CET)

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Re: <nettime> Paul Krugman: Taxing the Speculators ( - aka 'Tobin Tax')


As I see it, the high earnings of some banks and hedge funds can be  
viewed as the modern (computerized) form of coin shaving, in effect  
stripping off other's wealth as those others attempt to profit . The  
sources (eventual losers) are  many pension funds , public and  
private, mutual funds, charitable foundation endowments, average stock  
investors, anyone who "saves" (very much including Chinese workers as  
well as investors), recycled petrodollars, university endowments,  
insurance funds and so on. More or less, the high earnings in are  
"robbing Peter to pay Paul." And the high earners, at various times do  
include funds of all these sorts as long as they have invested in the  
right coin shavers of the moment. So there is in fact a partial  
"Public Trust" already acting in the way you suggest, at times  at  
least funding real jobs in education, health (through hospitals and  
other charitable foundations who invest their endowments) and so on.   
The successful endowments of course compete with less successful one  
or publicly funded entities for star professors, doctors, etc.,  
leading the res to to increase fees, find ways to cut corners, or hire  
part-timers to seem competitive. (I've discussed much of this on my  
Blog, in more detail http://goldhaber.org/blog/?p=147   http://goldhaber.org/blog/?p=149 
  http://goldhaber.org/blog/?p=151 http://goldhaber.org/blog/?p=155 )

Meanwhile, as financial firms seem to be better at profit making than  
say industrial ones, the latter compete by also trying to cut  
corners, , moving jobs abroad, automating, lowering wages and  
benefits, etc. the increasing inequality (domestically at least) then  
puts pressure on private consumption (since higher "earners" tend to  
"save" more). Financial firms themselves inevitably compete with each  
other by taking ever-greater risks. The result is the sort of money  
economy the US has had in the last couple of decades, with frequent  
bubbles —which eventually burst — and more and more froth. When a  
downturn occurs, public funds that have gone into supporting the  
portion of institutions such as schools and hospitals  that have had  
to compete with the well endowed ones are further imperiled —since  
states are not allowed budget deficits, and increased taxes are made  
to seem unpopular — leading to greater inequality, and so on.

I don't quite see how a smoother system of the sort you propose could  
work, since it would mean everyone stealing from each other, in  
effect., and to an equal extent. Krugman's suggestion of the Tobin  
tax, if it were effective, would lessen the profits form speedy  
transactions more than it would raise government revenues, I think It  
would help limit inequality, but would not undo the damage of the last  
thirty years, for which a wealth tax seems the best remedy as far as I  
can see.

But the deeper problem is the growing scarcity of attention, and the  
resultant heightened competition for it. Even the Wall St. traders who  
rake in tens of millions or even several billion each year do not do  
it so much for what the wealth will buy them as for the symbolic value  
of looking good ot their peers, it would seem. Meanwhile competition  
for attention through other channels escalates. Scholars, surgeons,  
trial lawyers and others lust for stardom, and stardom also means high  
incomes. (The kinds of public services such as education and medical  
care that you emphasize are mostly ones that must offer attention to  
ordinary citizens, which helps explain why they will stay unequal.)  
Even those on the left who praise equality don't necessarily accept it  
in practice, for you can be a star leftist (in a relatively small  
arena, admittedly, but still an arena) . How the public good gets  
supported when hyper-individualism rages is the real difficulty.

(There's also more about the attention economy  — as I define it— all  
over my blog, of course. )


On Dec 10, 2009, at 7:31 AM, Nicholas Ruiz III wrote:

> btw - my thought never extolled the 'virtue' of the Code, that was never
> my assessment of it, I simply point to its metaphysical reality.

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