Why Is One of Sanders’ Most Important Proposals Being Ignored?

By Robert Reich
Alternet via USW Blog

Why is there so little discussion about one of Bernie Sanders’s most important proposals – to tax financial speculation?

Buying and selling stocks and bonds in order to beat others who are buying and selling stocks and bonds is a giant zero-sum game that wastes countless resources, uses up the talents of some of the nation’s best and brightest, and subjects financial market to unnecessary risk.

High-speed traders who employ advanced technologies in order to get information a millisecond before other traders get it don’t make financial markets more efficient. They make them more vulnerable to debacles like the “Flash Crash” of May 2010.

Wall Street Insiders who trade on confidential information unavailable to small investors don’t improve the productivity of financial markets. They just rig the game for themselves.

Bankers who trade in ever more complex derivatives – making bets on bets – don’t add real value. They only make the system more vulnerable to big losses, as occurred in the financial crisis of 2008.   

All of which makes Bernie Sanders’s proposal for a speculation tax right on the mark.

He wants to tax stock trades at a rate of 0.5 percent (a trade of $1,000 would cost of $5), and bond trades at 0.1 percent.

The tax would reduce incentives for high-speed trading, insider deal-making, and short-term financial betting. (Hillary Clinton also favors a financial transactions tax but only on high-speed trading.)

Another big plus: Given the gargantuan size of the financial market and the huge volume of trading occurring within it every day, this tiny tax would generate lots of revenue. 

Even a 0.01 percent transaction tax (a basis point is one-hundredth of a percentage point, or 0.01 percent) would raise $185 billion over 10 years, according to the nonpartisan Tax Policy Center.

Sanders’s 0.5 percent tax could thereby finance public investments that enlarge the economic pie rather than merely rearrange its slices – like tuition-free public education.

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It’s Depressing But True: The Bankers Run the Show

By Ellen Brown
Web of Debt Blog via Alternet

April 8, 2015 – According to a new study from Princeton University [3], American democracy no longer exists. Using data from over 1,800 policy initiatives from 1981 to 2002, researchers Martin Gilens and Benjamin Page concluded [4] that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of – or even against – the will of the majority of voters. America’s political system has transformed from a democracy into an oligarchy, where power is wielded by wealthy elites.

“Making the world safe for democracy” was President Woodrow Wilson’s rationale for World War I, and it has been used to justify American military intervention ever since. Can we justify sending troops into other countries to spread a political system we cannot maintain at home?

The Magna Carta, considered the first Bill of Rights in the Western world, established the rights of nobles as against the king. But the doctrine that “all men are created equal” – that all people have “certain inalienable rights,” including “life, liberty and the pursuit of happiness” – is an American original. And those rights, supposedly insured by the Bill of Rights, have the right to vote at their core. We have the right to vote but the voters’ collective will no longer prevails.

In Greece, the left-wing populist Syriza Party came out of nowhere [5] to take the presidential election by storm; and in Spain, the populist Podemos Party appears poised to do the same. But for over a century, no third-party candidate has had any chance of winning a US presidential election. We have a two-party winner-take-all system, in which our choice is between two candidates, both of whom necessarily cater to big money. It takes big money just to put on the mass media campaigns required to win an election involving 240 million people of voting age.

In state and local elections, third party candidates have sometimes won. In a modest-sized city, candidates can actually influence the vote by going door to door, passing out flyers and bumper stickers, giving local presentations, and getting on local radio and TV. But in a national election, those efforts are easily trumped by the mass media. And local governments too are beholden to big money.

When governments of any size need to borrow money, the megabanks in a position to supply it can generally dictate the terms. Even in Greece, where the populist Syriza Party managed to prevail in January, the anti-austerity platform of the new government is being throttled by the moneylenders who have the government in a chokehold.

How did we lose our democracy? Were the Founding Fathers remiss in leaving something out of the Constitution? Or have we simply gotten too big to be governed by majority vote?

Democracy’s Rise and Fall

The stages of the capture of democracy by big money are traced in a paper called “The Collapse of Democratic Nation States” by theologian and environmentalist Dr. John Cobb. Going back several centuries, he points to the rise of private banking, which usurped the power to create money from governments:

The influence of money was greatly enhanced by the emergence of private banking. The banks are able to create money and so to lend amounts far in excess of their actual wealth. This control of money-creation . . . has given banks overwhelming control over human affairs. In the United States, Wall Street makes most of the truly important decisions that are directly attributed to Washington.

Today the vast majority of the money supply in Western countries is created by private bankers. That tradition goes back to the 17th century, when the privately-owned Bank of England, the mother of all central banks, negotiated the right to print England’s money after Parliament stripped that power from the Crown. When King William needed money to fight a war, he had to borrow. The government as borrower then became servant of the lender. (Continued)

Continue reading It’s Depressing But True: The Bankers Run the Show

How Class Struggle Emerges Under the Democratic Tent

Centrist Dems Ready Strike against Warren Wing

By Kevin Cirilli
Progressive America Rising via The Hill

March 2, 2013 – Centrist Democrats are gathering their forces to fight back against the “Elizabeth Warren wing” of their party, fearing a sharp turn to the left could prove disastrous in the 2016 elections.

For months, moderate Democrats have kept silent as Sen. Warren’s (D-Mass.) barbed attacks against Wall Street, income inequality and the “rigged economy” thrilled the base and stirred desire for a more populist approach.  

But with the race for the White House set to begin, centrists are moving to seize back the agenda.

The New Democrat Coalition (NDC), a caucus of moderate Democrats in the House, plans to unveil an economic policy platform as soon as this week in an attempt to chart a different course.

"I have great respect for Sen. Warren — she’s a tremendous leader,” said Rep. Scott Peters (D-Calif.), one of the members working on the policy proposal. “My own preference is to create a message without bashing businesses or workers, [the latter of which] happens on the other side."

Peters said that if Democrats are going to win back the House and Senate, "it’s going to be through the work of the New Democrat Coalition."

"To the extent that Republicans beat up on workers and Democrats beat up on employers — I’m not sure that offers voters much of a vision," Peters said.

Warren’s rapid ascent has highlighted growing tensions in the Democratic Party about its identity in the post-Obama era.

Caught in the crossfire is the party’s likely nominee in 2016, former Secretary of State Hillary Clinton, whose husband took the party in a decisively centrist direction during his eight years in office. (Continued)

Continue reading How Class Struggle Emerges Under the Democratic Tent