My thanks to
Gerard Foucher for pointing me to a fascinating article by a hugely succesful multibillionaire called Nick Hanauer, who openly admits to being a member of the 0.01% of the super rich. Published a couple of months ago, it is a warning message to his fellow zillionaires saying that unless they react soon,
the Pitchforks will be coming. In other words, things are getting so bad for the vast majority of the population, that there is a serious risk of a revolution. I think he is quite right.
Hanauer argues that business leaders should be forced to pay better wages. He points out that businesses need customers, but if the general population is so short of money, they can't buy anything, then businesses cannot flourish.
In a comment on his paper, I note that you don't even have to pay workers to work to give them the money they
need to be customers. Central banks could simply pay money directly to
citizens on their back accounts in the form of an unconditional basic
income. This would actually reduce costs for employers, because they
woudn't even have to pay $15 an hour. They could thus be even more
competitive.
And you want to know where the money could come from
to make these payments? Well, sure, the central banks can just create
the money out of thin air. After all, that's what commercial banks do
when they make loans - they invent it, and then charge interest.
But
as you probably know if you have been reading my blog, there's an even neater solution. Just impose a tiny financial
transaction tax on all electronic transactions. BIS figures show that
last year there were more than $3 quadrillion in transactions in the US -
0.01% on that would generate $300 billion to be redistributed. But the
BIS numbers are almost certainly underestmimated. I suspect that the
Options Clearing Corporation (not recorded in the BIS figures) may be
doing between $12 and $16 quadrillion in trades per year - off the
radar. Their webpage shows that they handled over 4 billion transactions
last year, generating $1.3 trillion in premiums. Scaling up existing
figures for NYSE Liffe (113 million transactions, and $46 billion in
premiums for $474 trillion in transactions), implies that OCC really
could be doing $12-16 quadrillion every year.
Put a 0.01% tax on
that, and you could pump trillions of cash into customers pockets
without even having to employ them. Best of all, no inflation, because
the total money supply would be unchanged. It would simply move existing
money from where it is mainly being used for pointless High Frequency
Trading by computers (who will never buy anything of value) to citizens
who would be able to go out and buy matresses, cars, books, CDs, meals,
cinema tickets.... you name it.
In fact, this idea of simply getting Central Banks to pay money direct to citizens instead of trying to stimulate banks to lend more, is catching on. Incredibly, the Council on Foreign Releations in the US has just published a tribune by two economists, Mark Blyth and Eric Lonergan, titled "
Print Less but Transmit More - Why Central Banks Should Give Money Directly to the People".
The paper has been picked up by
Ellen Brown and
Positive Money, and was translated into French in a piece in
Liberation on the 27th of August.
Things really do seem to be moving.
very interesting thanks Simon ... but what's the next move ? there were some proposals from French politicians, even right ward ones for such taxes but various lobbies made any effort especially in Brussels to undermine these attempts
ReplyDeleteCould you be THE JF Demonet ;-)
ReplyDeleteYes, there are moves to introduce
some form of Financial Transaction Tax - and the UK government is doing
absolutely everything to block it - claiming that it would have an
adverse affect on the City. Disgraceful and totally hypocritical - since
the UK treasury happily taxes anyone trading shares in UK registrered
companies (Stamp Tax) whereever they are - earning billions every year.
That's where my suggestion
is particularly neat. Because I propose that each central bank should
be responsible for imposing an FTT on ALL electronic transactions
denominated in their currency. Thus the ECB could claim 0.01% (or
whatever) of the massive amounts of Euro-denominated trades in the City.
How could the UK government possibly object? And if the Bank of England decides to zero rate transactions in Sterling, that's up to them.
The other suggestion
is also neat (I think). The FTT would be paid by absolutely everyone -
you, me, and everyone else - including the computers doing High
Frequency Trading. The City and the Traders could not claim that they
are being unfairly targetted, because everyone is treated absolutely
identically.
And of course, if the money is then distributed evenly among all citizens, it would also be absolutely fair.
Makes sense to me!