I would also add that there is the issue of moral hazard. Given the importance of these institutions to the economy, the Federal government, despite whatever ideological pronouncement a given Administration might make, simply will not allow these institutions to fail. But by that same token, this gives these insitutions an incentive to engage in very risky behavior. Liberal economists will cite this to argue for regulation, but when regulation has been tried in the past, we usually got the capture of the regulatory agencies by the institutions that they were supposed to be regulating. The best way to avoid this is simply to nationalize these institutions.
-- Wojtek Sokolowski <swsokolowski at yahoo.com> wrote:
--- Michael Pollak <mpollak at panix.com> wrote:
>
> So if we're dreaming, what you want it to change the
> tax discourse
> permanently. And for that, you want to say this is
[WS:] This also strikes me as a rather timid dream. A far more radical proposal would be socialization of the financial sector, that is, public ownership of financial institutions, like banks, stock exchanges and insurance.
An argument in favor of such a proposition can be made on the grounds of either the the market failure theory http://en.wikipedia.org/wiki/Market_failure or public theory http://en.wikipedia.org/wiki/Public_good which is mainstream economics. Baasically the argument is that these instituions are the lifeblood of modern economy so thier proper functioning is in everyone's interest, but only public ownership can ascertain their flawless functioning.
An addition argument in favor of such a proposal is that surpluses generated by intermediating financial transactions can be used to offset tax liability of citizens and corporations - which I am pretty sure would win a lot of public support.
Not to mention the fact that such surpluses should be publicly owned from the point of view of marxist theory of value.
In short, if one is dreaming about exploiting the current crisis, why not dreaming big? Why stopping at a wussy liberal proposal of taxing the rich instead of a really radical one of changing the ownership structuere of the economy?
Wojtek
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