Reply #54: Nonesense, Sir

[The Magistrate]

To call the present financial markets 'the greatest price discovery and wealth creation mechanism ever devised' is a joke in extremely poor taste. What they in fact are is a system of side bets, the sort engaged in by spectators around a craps table on whether or not the shooter will make his point. They produce nothing; they siphon off capital from productive enterprise. The pyramids of speculative wagering erected over the actual production of useful goods and provision of valuable services dwarf the amounts of money involved in real economic activity, and must sooner or later crush real economic activity, destroying enterprises and livelihoods of real use. The only thing this system does efficiently is to concentrate wealth in the hands of sharpsters, and impoverish the people as a whole.

The entire concept of the 'capital gains' tax is rooted in two egregious notions: first, that income from investment should be taxed at a lower rate than income from work, and second, that without such favoritism, people would not try and make more money than they already have. The latter notion is nonesense, as people always want to make more money than they have, and not only will attempt to do it without favoritism, but in thee face of considerable obstacle and risk. The former notion is simply a carrying forward of the notion that those who labor are lesser creatures than those who do not that is at the root of all systems of aristocracy and exploitation.

A tax on the sale of financial instruments, levied as a percentage of purchase price just as a tax on the purchase of goods is, would have several useful benefits. It would certainly enable a reduction in the taxes levied on wages and sale of goods and services falling chiefly on working people. It would make available for social use a portion of the wealth generated by productive enterprise. It would doubtless serve as some break on speculation and the rapid churning of financial instruments which does great harm to the stability of markets, and to the economy and society they serve.

It is a bad, a damnable mistake, to set up the market as supreme, to make it the ruler all serve rather than the servant of the economy and society which supports it. Like fire, markets are good servants but poor masters.