Gaming Our Economies
Numerous US legislators are proposing a new tax on stock trades to slow down social-media-fueled meteors like GameStop. But such a tax would actually make things worse by prolonging the time it takes for a meteoric price rise to correct itself and reunite with reality.
SAN DIEGO – “God does not play dice with the universe,” Einstein once assured us. True. Instead, a gaggle of geeky gamers with goggles, toggles, and Robinhood-like finance apps are determining our future. Long before GameStop made headlines for its meteoric 1,700% flash and crash, and the US Congress demanded testimony from hedge fund executives (in person and by Zoom), key parts of the economy were already being gamed.
Now, numerous US legislators are proposing a new tax on stock trades to slow down social-media-fueled meteors like GameStop and AMC theaters (whose share price suddenly quadrupled). US Senator Bernie Sanders calls his bill the “Inclusive Prosperity Act.”
John Maynard Keynes and his Yale disciple James Tobin floated the idea of a financial transactions tax long ago. President Joe Biden should resist the urge to pursue it, because such a tax would inflict more pain on small investors, rather than add sanity to stock markets. It would prolong, to use another Einstein phrase, “spooky action at a distance.”