Complaining about today's problems is one thing. I do it often. Here I am complaining about how the financialization of the economy has ruined things. But what about solutions?
One is something called the Tobin Tax. It's a measure that would throw a little sand in the speculative machine, increasing incentives on investment for productive use rather than speculation. A thousand economists have signed a letter to the G20 finance ministers urging them to adopt such a measure.
Hedge fund managers make as much in one hour as a middle class household makes in 47 years. And while the income earner in that middle class household is actually bringing overall value it's not clear that the hedge fund manager is doing so. The Tobin Tax would help. It's working fine in England, but Wall St is resisting and so far Washington is siding with them.
I've come out in favor of something like this before...but there are still two qualms I have with it.
ReplyDeleteFirst, as Mankiw mentions here (btw, he too generally supports the idea but with reservations), this might just mean the financial sectors will move to other areas with less Tobin tax structures.
Second, overall tax structures like this simply get passed on to the consumers so its the consumers that are worse off, not the big fat hedge fund managers.