Tobin Tax. Anyone want to help me build the Tobin Tax website?

[Joker007]

Taxes is theft.

No thanks, I will not associate this kind of ordeal.

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[AyeYo]

As I understand it, it's a tax on the trade, both ways.
For sure, it'll reduce profits for traders. Basically you'll neep more pips. But you know what ? That the point. It's not complex to understrand that speculation add a premium on the price for the average consumer.
Of course it it important to have some, but we can't have infinite one. We need to put a limit somewhere.

As for the 1%, it's not a fixed one. Different markets could have a differents one, maybe by targetting a max % of speculation transactions within a market.
There as been some work one the value of the %, i think you can find infos on the wiki page

It's not reduced profits and needing a few more pips, it's a straight up impossibility that completely eliminates retail trading.

Tell me how retail trading, NOT HFT, adds a premium for the average consumer.  As I just explained, this basically turns the market into straight buy and hold land for anyone that's not a billionaire or bank, which is exactly what the banks and trading desks want.  That allows them to move the market and take granny's pension fund to the cleaner with zero complication from retail traders.


Add an exemption for retail traders and I'm more likely to be in favor of it.  Personally, I think HFT should just be straight up banned.  That solves the HFT problem and doesn't hurt people that aren't involved.

[labestiol]

I don't have a lot of experience in trading/economy, maybe you can correct my thinking and tell me where i'm wrong.

(1) By doing speculation, you are expecting some winnings. Where does the money come from ? Is it only from wrong speculators, making speculation a zero sum game ? Or does it come by a premium on the last buyer ? (I think the answer is both)

(2) And for the tax, to me it's just a tax on your average pip/trade. If your (average rate - tax) is positive, you're still a winner. Since HFT has a very low expectancy, and play with volume, their winrate become negative.

[AyeYo]

I don't have a lot of experience in trading/economy, maybe you can correct my thinking and tell me where i'm wrong.

(1) By doing speculation, you are expecting some winnings. Where does the money come from ? Is it only from wrong speculators, making speculation a zero sum game ? Or does it come by a premium on the last buyer ? (I think the answer is both)

(2) And for the tax, to me it's just a tax on your average pip/trade. If your (average rate - tax) is positive, you're still a winner. Since HFT has a very low expectancy, and play with volume, their winrate become negative.

The market is a zero sum game overall.  The winnings do have to come from someone else, but can you explain what you mean by "premium on the last buyer" and then maybe I can provide you with a more relevant answer?  What you're saying applies to HFT, but I don't see how it applies to regular retail traders.


Your second point is a bit captain obvious.  The point I was making is that you would have to be a trading GOD to have an average profit large enough to cover the tax, never mind actually make any money.  The necessary risk to bank on 200 pip moves to just break even is well... no one would even bother.  That's  like betting your house on a 1:1,000,000 chance of winning a free coffee.  
Did you see the post I made with the example numbers?  How on earth am I supposed to cover $200,000 PER MONTH in taxes?  How is that feasible for anyone that isn't a billionaire/massive bank?  I know people that do THOUSANDS of FX traders per month, that's over $2 MILLION PER MONTH in taxes.  You can't possibly think any retail trader makes that much money.  If I made even 1/10 of that I'd be laying on a beach in the Bahamas blowing fat lines off porn stars with Charlie Sheen, not sitting here debating this with you.  

[labestiol]

The premium on the last buyer is perhaps not a good expression.
Let's take oil as an example. What i mean by this premium, is the increase of the price paid by at the pump, by the final consumer of the product, which is due tu speculation.

A recent report show that this increase due to speculation could be as high at 20%
http://ourfinancialsecurity.org/blogs/wp-content/ourfinancialsecurity.org/uploads/2011/07/FINAL-Wrap-up-Gas-Prices-Speculation-Call-6-30-11.pdf
http://www.youtube.com/user/TheRealNews#p/u/5/furSTUKwfOw

I'm ok with speculators making money, they are providing a service in markets, I just want to put a limit somewhere.

And about the tax amount, you're saying it won't be profitable without knowing how big that tax is. 1% is not a fixed number, i have now idea how low this tax should be, i just think there should be one.
Then we can make a bigger tax in comodities, a smaller in forex. Depend of the need for speculators within the market.
There will still be winner because we need speculators, there'll just be less.

In your example you're talking about a 200pip average to break even. How about a 20pip then ? maybe that's already enough to make HFT non profitable

[AyeYo]

The premium on the last buyer is perhaps not a good expression.
Let's take oil as an example. What i mean by this premium, is the increase of the price paid by at the pump, by the final consumer of the product, which is due tu speculation.

A recent report show that this increase due to speculation could be as high at 20%
http://ourfinancialsecurity.org/blogs/wp-content/ourfinancialsecurity.org/uploads/2011/07/FINAL-Wrap-up-Gas-Prices-Speculation-Call-6-30-11.pdf
http://www.youtube.com/user/TheRealNews#p/u/5/furSTUKwfOw

Ok and what happens when speculation forces prices DOWN instead of up?  Trading is equally likely to bring prices down as it is to ramp them up.

I'm ok with speculators making money, they are providing a service in markets, I just want to put a limit somewhere.

And about the tax amount, you're saying it won't be profitable without knowing how big that tax is. 1% is not a fixed number, i have now idea how low this tax should be, i just think there should be one.
Then we can make a bigger tax in comodities, a smaller in forex. Depend of the need for speculators within the market.
There will still be winner because we need speculators, there'll just be less.

In your example you're talking about a 200pip average to break even. How about a 20pip then ? maybe that's already enough to make HFT non profitable

While I understand where you're coming from, this is the same flawed thinking that makes a gas tax to lower oil consumption seem like a good idea.  In both the case of this tax and a gas tax, the people that are the LEAST problem to the system (retail traders and broke-ass people that can hardly afford gas to begin with) are the hardest hit, while those that are actually detrimental to the system (the big banks and people driving around in Hummers) can easily afford the tax so it has little to no effect on them.

You can't hit big players by taxing everyone equally.  When you tax everyone equally, the people hardest hit are the ones that were struggling to begin with, the littlest guys that weren't hurting anyone.  Meanwhile, you have next to no effect on the wealthy leeches and manipulators you're trying to stop.  This is why I'm saying that this tax wants to be viable, it needs an acception for retail traders and investors.

[niemivh]

If you think traders that are seeking to make speculative profits would be 'demolished' paying a 1% tax I guess that's your interest to uphold.  Not to make this about me, but just for an example, I pay more than 25% of my income in taxes, a large amount in property taxes and others.  Most people pay sales taxes on everything they buy, but if those who's 'work' consists of buying and selling scrips of paper that represent other peoples work, ideas and productive capacity can't afford to pay a scant 1%, I understand.  It is a 'free market' we are trying to uphold here.  I guess they will pay when they pay that 15% capital gains that they are working so hard to eliminate.  What you say?  Deferred taxation on earnings?  Never heard of it.

That's just it though, it's not a 1% tax.  It's a 1% tax on EVERY trade, that's a 2% tax round trip.  That means I'd be paying $2,000 round trip for each standard lot ($100,000) FX trade.  Think about that for a second... $2,000.  That means I would need a many sigma event of a 200 pip move JUST TO BREAK EVEN. 

And that's just ONE trade.  I average over 100 trades per month, so that's over $200,000 PER MONTH in taxes.  You can't be serious if you think that doesn't totally shut down retail trading. 

In order for anyone to actually trade with that kind of tax, we'd have to have little to no leverage.  So instead of being able to comfortably trade standard lots with a $50,000 account, traders would need more like $2,500,000, and that tax would still be crippling.  That's not money normal people can come up with, so it DOES wipe retail people out of trading, leaving only the mega money (the banks) to trade. 

So now you've got a market with ONLY banks trading and any normal Joes actually in the market are buy and holders... who are now being crushed even easier by the banks because the banks are the only ones moving the market.

One of the primary purposes is to shut down the existence of HFT as we have established that it is parasitical - at least, my arguments as to why it is parasitical have yet to be countered based on anything derived from the tangible universe in which we live, but I eagerly await any angle on this which I have yet to consider.  There are a few ways I interpret the latter part of your post: that the big HFT banks would be able to continue with HFT?  Or that big non-HFT operations would simply squeeze the little guys out of the market?

If your business model is to make short-term trades all day this obviously would adversely affect your bottom line to a degree.  But it's hard to say how much as the exchange markets would look significantly different.  Estimates put the total amount of trade volume due to HFT at upwards of 70-80%, and that number is climbing.  To what we've already discussed through HFT you are affectively paying more at the exchange than you would otherwise be if HFT wasn't allowed.  So it does require a bit of imagination to see if this would be in your personal, short-term best interest which seems to be all that most consider.  Most the large banks are that you are probably worried about are insolvent and need to be liquidated in Chapter 7 bankruptcy, so I don't know to which 'big banks' you'd be speaking of that (in my perfect world) would be allowed to survive as is.

Another purpose is to raise revenue from the financial sector which has been having windfall year after windfall year and yet another reason is to drain the speculative swamp that is the financial markets.  Too much money is sloshing around the currency markets for certain, and I'd rather have a 1% Tobin Tax on this flow than capital controls which will probably be here soon anyway.

It may be the case that even after HFT was effectively stopped that this 1% tax would not be in your best interest, and that's your position to uphold.  My desire through this tax is to prevent the national bankruptcy of the USA and the return to a real economy, not our spectral apparition of an economy that has and can only continue to exist through our world reserve currency status.  I fear that when that this rug is pulled out from under us it will result in a crushing level of poverty for the vast majority of US citizens (and the world) and/or World War III.  That's what I wish to avoid, but if your own personal self interest seems to outweigh this outcome, then by all means propose a better program to head off the coming crisis.

[niemivh]

If you think traders that are seeking to make speculative profits would be 'demolished' paying a 1% tax I guess that's your interest to uphold.  Not to make this about me, but just for an example, I pay more than 25% of my income in taxes, a large amount in property taxes and others.  Most people pay sales taxes on everything they buy, but if those who's 'work' consists of buying and selling scrips of paper that represent other peoples work, ideas and productive capacity can't afford to pay a scant 1%, I understand.  It is a 'free market' we are trying to uphold here.  I guess they will pay when they pay that 15% capital gains that they are working so hard to eliminate.  What you say?  Deferred taxation on earnings?  Never heard of it.

That's just it though, it's not a 1% tax.  It's a 1% tax on EVERY trade, that's a 2% tax round trip.  That means I'd be paying $2,000 round trip for each standard lot ($100,000) FX trade.  Think about that for a second... $2,000.  That means I would need a many sigma event of a 200 pip move JUST TO BREAK EVEN. 

And that's just ONE trade.  I average over 100 trades per month, so that's over $200,000 PER MONTH in taxes.  You can't be serious if you think that doesn't totally shut down retail trading. 

In order for anyone to actually trade with that kind of tax, we'd have to have little to no leverage.  So instead of being able to comfortably trade standard lots with a $50,000 account, traders would need more like $2,500,000, and that tax would still be crippling.  That's not money normal people can come up with, so it DOES wipe retail people out of trading, leaving only the mega money (the banks) to trade. 

So now you've got a market with ONLY banks trading and any normal Joes actually in the market are buy and holders... who are now being crushed even easier by the banks because the banks are the only ones moving the market.

Actually as I understand it, it's a 1% tax on the profit of the trade. So, if I you had $100,000, make a quick swap into Euros and back in dollars, and end up with $100,001. You would pay a tax of $0.01.

It's a tax on the turnover of the market, not the profits.  The problem in taxing profits as we have seen extensively is that it is harder to implement, requires a much bigger bureaucratic apparatus (anything to minimize unnecessary bureaucracy we should be in favor of), doesn't gain as much revenue and is meaningless against the myriad of tax havens all over the planet.

[niemivh]

As I understand it, it's a tax on the trade, both ways.
For sure, it'll reduce profits for traders. Basically you'll neep more pips. But you know what ? That the point. It's not complex to understrand that speculation add a premium on the price for the average consumer.
Of course it it important to have some, but we can't have infinite one. We need to put a limit somewhere.

As for the 1%, it's not a fixed one. Different markets could have a differents one, maybe by targetting a max % of speculation transactions within a market.
There as been some work one the value of the %, i think you can find infos on the wiki page

Thanks.  Someone who understands that all of the US can't just trade scrip all day long with all the value that that scrip representing coming from somewhere.  The Tobin Tax is just 1 part of many on a return to a productive economy based on tangible real world asset growth namely products that people can buy and increasing levels of research and output.  This would just 1 nail in the coffin on the dominance of finance (and you can call it whatever you want but it's the same general group: Wall St, the oligarchy, the corporatocracy, the New World Order, the American Elite) in our political system. 

I'm saddened for the USA to see that a country like Iceland could hit an average of $40,000 per capita income (before they were bullied and sabotaged by the UK) while the USA rolls around in a cesspool of economic, social, moral, intellectual, and spiritual decay.  It's amazing to think what life could be if we weren't ruled and duped by monetarists, Malthusians, zero-growthers and other fanatics of different insane ideological viewpoints.

[AyeYo]

One of the primary purposes is to shut down the existence of HFT as we have established that it is parasitical - at least, my arguments as to why it is parasitical have yet to be countered based on anything derived from the tangible universe in which we live, but I eagerly await any angle on this which I have yet to consider.  There are a few ways I interpret the latter part of your post: that the big HFT banks would be able to continue with HFT?  Or that big non-HFT operations would simply squeeze the little guys out of the market?

Big non-HFT operations would continue.  They wouldn't squeeze little people out of the market, the tax would do that for them.  What would be left of the little people would be buy and holders, now getting severely raped by markets controlled only by big money, because retail traders would be no more.


We do not disagree on HFT and we do not disagree on the need to get our economy back to reality, or at least more distant from money making money.  We don't even disagree on the potential usefulness of this tax... but why can't there be an exception for retail traders?   You keep overlooking this point.



Additionally, while I hate the financial services industry as much as you do, we both acknowledge that it IS a large part of the economy.  This tax would decimate it, and what becomes of all the millions of people that work in that industry?  The tax will make them jobless overnight, but there won't suddenly be a glut of manufacturing jobs for them to jump into in the same time frame.

[niemivh]

The faux 'trump card' that libertarians use frequently is something along the following lines: "if you have to use force to enact anything then it invalidates your justification", and "force" is painted with as large a brush as possible.  I see this argument alluded to and used all over this forum.  For some, I'd say it's actually their prime "philosophical" mantra.  This 'reasoning' is so deeply flawed.  It gives special status to the status quo.  It makes enacting any means of justice impossible.  It reduces any attempt at social cohesion into an absurd exercise in futility.  But it's so easy; it's really more of an escape clause from deeper levels of understanding what justice is.  Things become very simple and cartoonish when you adopt this world view.  You identify problem "A" in the world but you can't do anything about it because that would require use of "force".  Within this ideology, the only thing you can do is to provide "choices" to people.  Understanding sociology and game theory exposes the absurdity of this position, much of what is viewed as 'choice' in a social context is nothing of the sort.  There really is so much I can say on this topic, but I'd rather hear what this forum has to say regarding a defense of this world view as popularized by Ayn Rand in Atlas Shrugged.


Just to show the absurdity of this argument I've created the following mad-libs below.  They are not a perfect comparasion, but I believe they get the point across.

If you don't like a multi-national corporation raping your country then start your own multi-national corporation.  Everyone who thinks it's a good idea will join it.  Other's won't unless you force them to.  We'll then let people figure out how great your multi-national corporation is.

If you see problems with your culture then start your own culture.  Everyone who thinks it's a good idea will join it.  Other's won't unless you force them to.  We'll then let people figure out how valuable living in a culture with your values are.

If you want to live in a state with your ideal conditions then start your own state.  Everyone who thinks it's a good idea will join it.  Other's won't unless you force them to.  We'll then let people figure out how valuable living in a state with your ideal conditions are.

If you want to live in a country that it's a global empire then start your own country.  Everyone who thinks it's a good idea will join it.  Other's won't unless you force them to.  We'll then let people figure out how valuable living in a country that isn't a war all the time is.

If you want to live on a planet where there is no war, poverty, disease, exploitation, misery and famine then build your own planet.  Everyone who thinks it's a good idea will join it.  Other's won't unless you force them to.  We'll then let people see how valuable your planet is.

You can see that this idea makes reform impossible.  Hence its lack of merit.

The larger your vision, the more effort you need to make it a reality. Why is this a surprise?

Status quo bias is a feature of reality. libertarianism acknowledges this, nothing more.

Most statists really overestimate how difficult it is to build a coalition of people who can agree on a complex issue and how to keep the coalition "pure" and corruption free. Libertarians have tried a lot of activism in the US. Libertarianism loses the political test because there are very few people for whom the "what's in it for me?" question is answered.

In my country, India, there are very few people who even agree to libertarian ideas. How long do you think it is going to take for me and the 1000 or so libertarians in India to convince 900 million indian adults?

You are free to consider this overly cynical, but the present libertarian world-view is built after a lot of trials of political activism that have failed, or are humongous projects on their own.

The law is a ham handed tool. It should not be used to make subtle changes in the world. If you start upon this path, there is no end to it.

The statement that "politics should stay out of economics" is the most political statement that can me made.  Typically it is made by the libertarian monetarists who become obsessed with the icons and symbols of an economy rather than how the whole system functions and to what purpose does it exist.  There is no economic system not upheld by government law, order and protection and no government not supported and reliant upon it's economic system.  They are in a symbiotic relationship; hence the term "Political Economy".  Unfortunately slippery slope arguments like this are hard to quantify and really are an unobserved phenomenon but make a great campaign slogan.  Can you (or anyone) point to an event subject to the 'slippery slope' phenomenon?  You can't because no such thing exists.  The observable historical reality is that government is going to be a vehicle for the interests that control it.  It always has been.  Anything that you'd accredit to a "slippery slope" I can show you the conflict between 2 interests in which 1 did not show up to the fight or not in sufficient strength to "carry the day".  Perhaps they didn't show up to that political struggle because they believed that "The law is a ham handed tool.  It should not be used to make subtle changes in the world.  If you start upon this path, there is no end to it."   That sounds like a great belief to convince your opposition of: a world view that seeks to eliminate opposition by invalidating the human right to be heard in the halls of government, subjecting its adherents into a blind alley of being a political inert mass, a political jellyfish adrift on a sea that truly is your master to which you have no say and no control.  To relinquish your self determination to a pitifully naive ideology that has and never will attainable, or should even be sought, should be given its due credit the social and economic dysfunction of our present global condition.

Unless the average person can identify what is in their best interest and organize and fight for it then please don't naively think that others will not fill this power vacuum.

[niemivh]

Taxes is theft.

No thanks, I will not associate this kind of ordeal.

If the world is filled with more than a small fringe minority that truly believe this then we can all expect to be very, very poor, very soon.

Perhaps these crude anti-historical ideas will die when people become so impoverished from their implementation that they'll be forced to pick up some books and read.

[niemivh]

As I understand it, it's a tax on the trade, both ways.
For sure, it'll reduce profits for traders. Basically you'll neep more pips. But you know what ? That the point. It's not complex to understrand that speculation add a premium on the price for the average consumer.
Of course it it important to have some, but we can't have infinite one. We need to put a limit somewhere.

As for the 1%, it's not a fixed one. Different markets could have a differents one, maybe by targetting a max % of speculation transactions within a market.
There as been some work one the value of the %, i think you can find infos on the wiki page

It's not reduced profits and needing a few more pips, it's a straight up impossibility that completely eliminates retail trading.

Tell me how retail trading, NOT HFT, adds a premium for the average consumer.  As I just explained, this basically turns the market into straight buy and hold land for anyone that's not a billionaire or bank, which is exactly what the banks and trading desks want.  That allows them to move the market and take granny's pension fund to the cleaner with zero complication from retail traders.


Add an exemption for retail traders and I'm more likely to be in favor of it.  Personally, I think HFT should just be straight up banned.  That solves the HFT problem and doesn't hurt people that aren't involved.

Problem: how would you prove that someone is HFT?  Who would police it?  How would you pay for whomever would be policing it?

BIG Problem:  How would you prevent those charged with policing it from falling under the sway of those that they are supposed to police?

There was a reason I was in favor of this over the idea of just 'banning it', it is because these questions came to mind and there was no workable answer.

Perhaps you should be considering the following from your angle: how much would the tax need to be to eliminate HFT by implementation but "save" the retail traders?

In addition the big market worth going after is the currency markets, not the stock markets (as much).  Is that where you do most your trading?

[niemivh]

I don't have a lot of experience in trading/economy, maybe you can correct my thinking and tell me where i'm wrong.

(1) By doing speculation, you are expecting some winnings. Where does the money come from ? Is it only from wrong speculators, making speculation a zero sum game ? Or does it come by a premium on the last buyer ? (I think the answer is both)

(2) And for the tax, to me it's just a tax on your average pip/trade. If your (average rate - tax) is positive, you're still a winner. Since HFT has a very low expectancy, and play with volume, their winrate become negative.

The market is a zero sum game overall.  The winnings do have to come from someone else, but can you explain what you mean by "premium on the last buyer" and then maybe I can provide you with a more relevant answer?  What you're saying applies to HFT, but I don't see how it applies to regular retail traders.


Your second point is a bit captain obvious.  The point I was making is that you would have to be a trading GOD to have an average profit large enough to cover the tax, never mind actually make any money.  The necessary risk to bank on 200 pip moves to just break even is well... no one would even bother.  That's  like betting your house on a 1:1,000,000 chance of winning a free coffee.  
Did you see the post I made with the example numbers?  How on earth am I supposed to cover $200,000 PER MONTH in taxes?  How is that feasible for anyone that isn't a billionaire/massive bank?  I know people that do THOUSANDS of FX traders per month, that's over $2 MILLION PER MONTH in taxes.  You can't possibly think any retail trader makes that much money.  If I made even 1/10 of that I'd be laying on a beach in the Bahamas blowing fat lines off porn stars with Charlie Sheen, not sitting here debating this with you.  

Are you just referring to the securities markets being a zero sum game or the entire economy (the larger Market) being a ZSG?  I disagree with both points, the latter more than the former, but both nevertheless.

Why do you think that a 'large bank' would be trading a making losses in these markets because they are the only one's who can afford it?  So by virtue of their deep coffers they are doing trades that net less than 1% profit?  Why would they do that?  Simply because they can afford to throw money down a hole?  Am I missing something in your argument?

[niemivh]

The premium on the last buyer is perhaps not a good expression.
Let's take oil as an example. What i mean by this premium, is the increase of the price paid by at the pump, by the final consumer of the product, which is due tu speculation.

A recent report show that this increase due to speculation could be as high at 20%
http://ourfinancialsecurity.org/blogs/wp-content/ourfinancialsecurity.org/uploads/2011/07/FINAL-Wrap-up-Gas-Prices-Speculation-Call-6-30-11.pdf
http://www.youtube.com/user/TheRealNews#p/u/5/furSTUKwfOw

Ok and what happens when speculation forces prices DOWN instead of up?  Trading is equally likely to bring prices down as it is to ramp them up.

I'm ok with speculators making money, they are providing a service in markets, I just want to put a limit somewhere.

And about the tax amount, you're saying it won't be profitable without knowing how big that tax is. 1% is not a fixed number, i have now idea how low this tax should be, i just think there should be one.
Then we can make a bigger tax in comodities, a smaller in forex. Depend of the need for speculators within the market.
There will still be winner because we need speculators, there'll just be less.

In your example you're talking about a 200pip average to break even. How about a 20pip then ? maybe that's already enough to make HFT non profitable

While I understand where you're coming from, this is the same flawed thinking that makes a gas tax to lower oil consumption seem like a good idea.  In both the case of this tax and a gas tax, the people that are the LEAST problem to the system (retail traders and broke-ass people that can hardly afford gas to begin with) are the hardest hit, while those that are actually detrimental to the system (the big banks and people driving around in Hummers) can easily afford the tax so it has little to no effect on them.

You can't hit big players by taxing everyone equally.  When you tax everyone equally, the people hardest hit are the ones that were struggling to begin with, the littlest guys that weren't hurting anyone.  Meanwhile, you have next to no effect on the wealthy leeches and manipulators you're trying to stop.  This is why I'm saying that this tax wants to be viable, it needs an acception for retail traders and investors.

Not everything is going to be solved by the Tobin Tax, that is true.  There are other means for that I'm willing to discuss.  But how is a Tobin Tax 'taxing everyone equally'?  It's not.  It's effectively outlawing HFT in practice and not everyone has HFT server farms and multiple mathematician PhD's inventing custom exploitation algorithms to make gains on minuscule market moves.  Does everyone HFT?  No.  Do some people make their money off of frequently trading stocks in the short-term?  Yes.  These people it would have a variant impact on, but remember that 70% of the existing trades on the market wouldn't exist so it would be a massive shift in the existing system.  The Tobin Tax at a 'hefty' 1% returns more (what I would call) sanity to the markets: markets based on mid to long term investment to efficiently allocate capital.  The modern markets resemble more of a casino in their operation than a system to 'efficiently allocate capital'.  This would do a hell of a lot in returning to what it is supposed to exist for.

[AyeYo]

But how is a Tobin Tax 'taxing everyone equally'?

Because it matters not whether I'm Goldman Sachs, Citibank, myself, or poor grandma Jensen from the farm in Idaho.  If I do a standard lot FX trade, I'm slapped with a $2,000 tax liability just like that.


Again I'll ask, why can there not be an exception for retail traders?

[niemivh]

But how is a Tobin Tax 'taxing everyone equally'?

Because it matters not whether I'm Goldman Sachs, Citibank, myself, or poor grandma Jensen from the farm in Idaho.  If I do a standard lot FX trade, I'm slapped with a $2,000 tax liability just like that.


Again I'll ask, why can there not be an exception for retail traders?

Why should retail trader be exempted from this tax?  I've read everything that you've posted so far and I'm unconvinced that you should be not subject to this tax.  Please explain what you feel you are adding to the economy by making these trades?  Why should your ability to buy and sell and make minor profits on short-term speculative market gyrations be viewed by anyone other than yourself as beneficial?  I can imagine the arguments that you are going to make but I'd much rather you make them than me impose what I think they're going to be on you.

 

[blogospheroid]

The statement that "politics should stay out of economics" is the most political statement that can me made.  Typically it is made by the libertarian monetarists who become obsessed with the icons and symbols of an economy rather than how the whole system functions and to what purpose does it exist.  There is no economic system not upheld by government law, order and protection and no government not supported and reliant upon it's economic system.  They are in a symbiotic relationship; hence the term "Political Economy".  

I don't disagree that politics and economics cannot be separated. But do you agree that the law is a ham-handed tool to resolve issues that arise rarely?

Unfortunately slippery slope arguments like this are hard to quantify and really are an unobserved phenomenon but make a great campaign slogan.  Can you (or anyone) point to an event subject to the 'slippery slope' phenomenon?  You can't because no such thing exists.  

Ludwig Von Mises's book on interventionism and the real life experience of India's absolutely horrid license raj are full of examples of laws that have been passed ignoring economic effects and resulting in great suffering.

The observable historical reality is that government is going to be a vehicle for the interests that control it.  It always has been.  Anything that you'd accredit to a "slippery slope" I can show you the conflict between 2 interests in which 1 did not show up to the fight or not in sufficient strength to "carry the day".  Perhaps they didn't show up to that political struggle because they believed that "The law is a ham handed tool.  It should not be used to make subtle changes in the world.  If you start upon this path, there is no end to it."  

You should consider the cost-benefit analysis of the probability of your being able to convice a majority of the people in the government that affects your life and your ability to carve your own sphere of autonomy and voluntary trade.
And technological changes affect this, greatly. Before bitcoin, I was very skeptical of even the possibility of agorism. Now it seems really feasible.

I agree with patri freidman's ideas on this. The systems competing in the world are a function of the market for governance.

That sounds like a great belief to convince your opposition of: a world view that seeks to eliminate opposition by invalidating the human right to be heard in the halls of government, subjecting its adherents into a blind alley of being a political inert mass, a political jellyfish adrift on a sea that truly is your master to which you have no say and no control.  To relinquish your self determination to a pitifully naive ideology that has and never will attainable, or should even be sought, should be given its due credit the social and economic dysfunction of our present global condition.

Not thinking of entrepreneurial solutions is the real relinquising of self determination.
Thinking "Oh this problem will be solved only if I have 1000000 people on my side" is relinquishment.

[niemivh]

I don't disagree that politics and economics cannot be separated. But do you agree that the law is a ham-handed tool to resolve issues that arise rarely?

This isn't a problem that "arises rarely" it's chronic, it's widespread, it's perpetual.  It's going on everyday without exclusion.  How is that "rarely"?  How is implementing a law that stops parasitical activities "ham-handed"?

Ludwig Von Mises's book on interventionism and the real life experience of India's absolutely horrid license raj are full of examples of laws that have been passed ignoring economic effects and resulting in great suffering.

Nice selective quote mine collapse there by the way.  But you're avoiding the question I posed.
 

You should consider the cost-benefit analysis of the probability of your being able to convice a majority of the people in the government that affects your life and your ability to carve your own sphere of autonomy and voluntary trade.
And technological changes affect this, greatly. Before bitcoin, I was very skeptical of even the possibility of agorism. Now it seems really feasible.
I agree with patri freidman's ideas on this. The systems competing in the world are a function of the market for governance.

You start by convincing people, the politians usually play catch up.  This isn't execlusively for my own self interest, a foriegn concept on a forum such as this, I know.  If people are reasonable they'll be convinced, if they are ideologically driven on some market founded faith-based doctrine, then perhaps not.  But I'll never know if I don't try.

Not thinking of entrepreneurial solutions is the real relinquising of self determination.
Thinking "Oh this problem will be solved only if I have 1000000 people on my side" is relinquishment.

Quaint how you cede to me in this statement that you believe that you or I shouldn't be heard by our government for a redress of grievances but seem to hold tenable that there is no problem with that.  First of all how is anything to do with being 'entrepreneurial' related to taxation and regulation?  History provides testament argument against your second statement.  Mass movements are never easy but they only happen for those 'foolish' enough to believe they can change the system.

[niemivh]

One of the primary purposes is to shut down the existence of HFT as we have established that it is parasitical - at least, my arguments as to why it is parasitical have yet to be countered based on anything derived from the tangible universe in which we live, but I eagerly await any angle on this which I have yet to consider.  There are a few ways I interpret the latter part of your post: that the big HFT banks would be able to continue with HFT?  Or that big non-HFT operations would simply squeeze the little guys out of the market?

Additionally, while I hate the financial services industry as much as you do, we both acknowledge that it IS a large part of the economy.  This tax would decimate it, and what becomes of all the millions of people that work in that industry?  The tax will make them jobless overnight, but there won't suddenly be a glut of manufacturing jobs for them to jump into in the same time frame.

Reminds me of the argument that if you eliminated the income tax then all the tax preparation services would go out of business.  To me, this is as near a perfect example of the 'broken window theory' you can get in practice.  There is a large group of 100,000 or more people probably involved in preparing taxes and writing tax prep software.  If we eliminated this need or greatly reduced this need by only passing income taxes past a certain threshold then they would be out of a job, no doubt.  But they are already employed whatsoever from the government largess doing work with 0 productive capacity, scant justification for social necessity,  much of which basically involves trying their hardest to defraud the treasury by a maximum degree of tax avoidance, etc.  We must ask ourselves do we allow for the slow drain on our economy by fearful indecision in the face of the clearly wasteful enterprise that is solely propped up by government in the first place?  I would argue not.  Much of this argument applies to the financial services industry.

Our financial services industry needs to shrink.  It has been growing at the expense, not at the benefit of the 'real economy'.  It made 40% of corporate profits in the past few years.  I've heard statistics that it is roughly 17% of our entire economy now.  This is much too high and has only been allowed to exist through: the unsustainable financial deregulation that has been unmitigated disaster, nearly 0% interest showered on the too-big-to-fail banks, bailouts, regulatory capture, quantitative easing etc.

In my system though, there would be job-retraining programs and massive public works and research programs as there is no shortage of these things that need to be done.

I am much for ending the global empire too, but not in favor of dumping a million solders on the streets with no path for rejoining the workforce.