There was once a time when no one who is the least bit worried about maintaining intellectual credibility would ever say something as idiotic as this:
Anti-tax zealots denounce all taxation as theft, as depriving citizens of their right to spend their hard-earned incomes as they see fit. Yet nowhere does the Constitution grant us the right not to be taxed. Nor does it grant us the right to harm others with impunity. No one is permitted to steal our cars or vandalize our homes. Why should opponents of taxation be allowed to harm us in less direct ways?
I hardly know where to begin, but since that bit of nonsense is certain to be ridiculed high and low across the blogosphere, let me focus on this other memorable quote from the article:
When the transactions of financial speculators fuel asset bubbles, they increase the risk of financial meltdowns. A small tax on those transactions would reduce this risk.
While that may be the popular tripe in academia, as usual it doesn't bear any relationship to what actually goes on in the markets. Speculators don't cause asset bubbles, poorly structured regulation and government generated incentives do. The real estate bubble was caused by congress not by the people who gave them what they wanted. Even the run up in energy prices from last year (not actually a bubble... but I'm sure an imbecile like this says it was) was actually caused by the government's hysterical energy policy which makes exploiting domestic energy all but impossible (limiting supply) and simultaneously makes the cost outlook for foreign energy more expensive by weakening the dollar with massive debt.
Actually, I can make the argument that the exact opposite claim is true, and unlike this idiot, my view is supported by reality. Bubbles only occur when regulation and other government generated incentives overwhelm the yin and yang of the normally functioning market, and make only the option of a rising price work as a risk adjusted trade. When that happens, it effectively eliminates short sellers who by their very definition are speculators. Their presence is precisely the thing that prevents asset bubbles because the more a specific market rises the more of it they sell. And when the market begins to fall again, they're the ones who buy into that to prevent a price collapse. they add stability through their speculation, nothing more. In fact, it's the absence of short sellers that causes asset bubbles.
I'm sure this dimwitted political hack would say "oh... I only meant high frequency speculators who don't help the markets in any way". And when he says that, he gives himself away as an obvious intellectual fraud and useless deconstructionist buffoon of the lowest order. I believe he would say something like that only because HF trading is politically unpopular right now and he's just trying to kick them when they're down. In reality, all high frequency speculation does is it makes the market more responsive.
Think of the market as a poll. When government implements a policy the market reacts to it showing precisely what people expect to have happen with the sum total of governmental action, and the corporate responses to it. They aren't saying what they would like to have happen ... hopes and dreams no matter how shiny and rife with rainbows and unicorns are all ignored in the markets; the markets are all about results. And what high frequency trading does is that it causes the markets to shows those expectations in hours rather days or weeks. That's all.
I get a little annoyed that such an obvious fool with so little actual knowledge has the credibility necessary to get his Op-ed published anywhere...even in the New York Times. Since he teaches at that liberal laughing academy Cornell University, he's also deeply involved in the indoctrination of young minds as well. That's a shame because it's one more University whose graduates I now don't dare hire. They all end up misunderstanding reality so much that it takes them years to unlearn what they've been taught, and I don't usually have that kind of time.
It really is tragic what the media and academia have been reduced to when it comes to economic commentary. There was once a time when if a man dared say something this stupid he'd be ridiculed far and wide. Now he's celebrated across the academy and published in the New York Times, and only the people in industry are the ones who ridicule him. The piece is rife with intellectual stolen bases, places where policy intent is used in place of policy results, and where disastrous unintended consequences are are totally ignored. But I've come to expect no less from the people involved. Too bad that we've been reduced to such a level that something like this can pass as part of a serious policy discussion.
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