In the years since the 2008 economic crisis, financial transactions taxes (FTTs) have gone from a fringe idea to a policy that is in mainstream policy debates. They are seen as a way to both raise large amounts of money and to slow the pace of churning in financial markets. For this reason, most progressive Democrats have come out in support, and even the Clinton campaign provided a hat-tip to some form of taxation on high frequency trading.

This is a welcome change from where things stood before the crisis, when the only people supporting FTTs were the far left of the party. As a long-time proponent of an FTT, I welcome this change, but even many of the proponents of FTTs don’t realize the full benefits of such a tax.

To get some bearing, it is first worth recognizing how much money is potentially at stake. The Joint Tax Committee projected that a modest tax of 0.03 percent on all trades of stocks, bonds, and derivative instruments, along the lines of a proposal by Representative Peter DeFazio, would raise more than $400 billion over the course of a decade. This is roughly equal to 0.2 percent of gross domestic product (GDP. This would be enough money to cover 60 percent of the cost of the food stamp program.

However, the really great benefit from these savings is that they will come out of the pockets of many of the richest people in the country: Wall Street traders and hedge fund partners. An FTT will radically reduce the income of a group of people who stand at the very top of the income ladder. By reducing the opportunities to get rich through trading, we will force many of these high flyers to look for jobs in designing software, biotech, or other areas in which their skills may still command a premium, even if they don’t provide the millions they could expect on Wall Street.

And, the increased flow of people into these other high-paying professions will put downward pressure on the pay there as well. In effect, we will be reducing the number of very high paying positions in the economy, meaning that these positions will on average pay less as a result. We can think of an FTT as the equivalent of job-killing robots for the very high paid crew.

This is a great example of a clearly defined policy that will directly reverse some of the upward redistribution of income over the last four decades. Of course, FTTs still face an enormous uphill battle before they could be implemented. As with other policies that would reverse the upward redistribution the problem is not the difficulty of designing the policy, the problem is the power of the rich people who don’t want a fairer and more efficient economy.

First, Republicans are professional politicians. Yes, so are most Democrats. But the parties are not the same.
The Democratic Party is a coalition of interest groups, with some shared views but also a lot of conflicts, and politicians get ahead through their success in striking compromises and finding acceptable solutions.
The G.O.P., by contrast, is one branch of a monolithic structure, movement conservatism, with a rigid ideology — tax cuts for the rich above all else. Other branches of the structure include a captive media that parrots the party line every step of the way. Compare the coverage of recent political developments on Fox News with almost everywhere else; we’re talking North Korea levels of alternative reality.

And this monolithic structure — lavishly supported by a small number of very, very wealthy families — rewards, indeed insists on, absolute fealty. Furthermore, the structure has been in place for a long time: It has been 36 years since Reagan was elected, 22 years since the Gingrich takeover of Congress. What this means is that nearly all Republicans in today’s Congress are apparatchiks, political creatures with no higher principle beyond party loyalty.

What Are the Potential Drawbacks?

For bankers, brokers and high-frequency traders, there are many potential drawbacks to an FTT. Many of them might lose their bonuses and some of them might lose their jobs. Investment banking and financial trading in general would likely become less profitable. Some ultra-luxury industries that depend on huge bankers' bonuses, like yacht-building, fine watches, auctioneering and exotic travel could also suffer.

On the other hand, banks and financial companies can be counted on to spend aggressively to quash, defeat and water down any potential FTT legislation that comes before Congress. In the post-Citizens United era of unlimited corporate campaign spending, it is hard to imagine a tax that is so closely targeted at one (very rich) industry becoming law. A triumph of democracy and good economic policy over unlimited corporate spending power is always possible, but it is perhaps unlikely in today's United States of America. Better luck in Europe.

AI is a problem for jobs, say the majority of Americans, but it’s someone else’s problem.

Nearly three-quarters (73 percent) of US adults believe artificial intelligence will “eliminate more jobs than it creates,” according to a Gallup survey. But, the same survey found that less than a quarter (23 percent) of people were “worried” or “very worried” automation would affect them personally.

One survey conducted by Quartz last year found that 90 percent of respondents thought that up to half of all jobs would be lost to automation in five years, but 91 percent said there was “no risk to my job.” Another study from the Pew Research Center in 2016 found the same: 65 percent of respondents said that 50 years from now automation would take over “much” of the work currently being done by humans, but 80 percent thought their own job would still exist in that time frame.

“The development of full artificial intelligence could spell the end of the human race,” the world-renowned physicist told the BBC. “It would take off on its own and re-design itself at an ever increasing rate. Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded.”

One wonders if the AI of the future will use this type of denial thought process in their robotic brains or just snip this code out as some form of unwanted baggage. Either way, workers jobs will be lost overall and it will not matter what the CEO makes anymore for these workers.

Capital needs labor to operate, to create a return on investment and, ultimately, to grow. Labor needs capital for wages. Each needs the other and none can do it alone. So labor needs capital as much as capital needs labor. And, while the labor vs capital balance of power has fluctuated closer to one or the other throughout history, classical economics claims that, given their mutual co-dependence, in the long run, we end up [more-or-less] in an equilibrium. This equilibrium is, at least in theory, an ideal win-win scenario where capital is happy that its return on investment is growing and labor is happy that its wages are rising.

Today we are approaching a qualitatively different watershed moment which will fundamentally shift the balance of power and have profound social and political implications.

For the first time in history capital will be able to create, rather than hire, most, and eventually all, of the labor it needs. So the long-standing relationship of mutual co-dependence between capital and labor will be profoundly altered and the equilibrium taught by classical economics will no longer hold. Not even in theory. Because the incentive for paying wages will be strongly negative, given that technologies such as AI and robotics exhibit simultaneous rise in productivity and a fall in cost. It’s like having workers who produce more and more while getting paid less and less. And, the best thing about it is that one can create and multiply one’s own “labor” force, or cut it when needed, increasingly faster and cheaper. No humans required. And, since the above change is a result of technological changes such as robotics and AI, the resulting unemployment is called technological unemployment.

Some say that we have heard similar Luddite arguments before and things worked out for the better. But today’s tech unemployment is not your grandfather’s tech unemployment when we had people pushed out of one kind of manual job and into another. Because capital still needed labor to run machines, oversee production and manage resources. But today the machines can run on their own. Production can be monitored with sensors. And resource allocation and management can be done by AI. So capital needs less and less labor, until eventually, it may need none at all. Not human labor anyway.

On Monday, the Democratic presidential hopeful Sen. Bernie Sanders announced a new tax plan aimed at bridging the pay gap between the highest-paid top executives and their employees.

Sanders' Income Inequality Tax Plan would tax "companies with exorbitant pay gaps between their executives and typical workers."
"The American people are sick and tired of corporate CEOs who now make 300 times more than their average employees, while they give themselves huge bonuses and cut back on the healthcare and pension benefits of their employees," Sanders said in a statement. "They want corporations to invest in their workers, not just dividends, stock buybacks and outrageous compensation packages to their executives."


The plan comes on the heels of Sanders' separate wealth-tax plan to tax the nation's ultrarich.

CEO pay has become a hot topic, especially as it has been increasingly called out by economists, politicians, and even activists such as Abigail Disney, who described the former Disney CEO Bob Iger's pay as a "moral issue" when she testified before the House Financial Services Committee earlier this year.

Sanders' campaign said the inequality tax would raise an estimated $150 billion over the next decade. The revenue generated from the tax would be used to pay for Sanders' plan to eliminate existing medical debt.