could robin hood do good?

Last week, Syon sent me a link for a group called ‘The Robin Hood Tax’, advocating a financial transactions tax in the UK and globally. I have been thinking about it over the past week and decided to post some of my thoughts here. I hope some of you will respond, whether here or elsewhere, as we could all benefit from thoughtful dialogue.

To quote directly from the website, the pitch is broadly as follows:

The Robin Hood Tax is a tiny tax on bankers that would raise billions to tackle poverty and climate change, at home and abroad.

By taking an average of 0.05% from speculative banking transactions, hundreds of billions of pounds would be raised every year.

That’s easily enough to stop cuts in crucial public services in the UK, and to help fight global poverty and climate change.

There are a few implicit assumptions underlying the proponents’ line of reasoning. The first is that the volume of transaction in the financial services industry is unnecessarily large relative to the economic activity, and effectively just bloats the financial industry. As I will discuss below, I think there is some truth to this argument, although a tax as outlined must be globally adopted in order to address this. The second is that bankers and their speculative trading were largely to blame for the current crisis, and therefore it is appropriate that they should be punitively taxed. This argument, I think, oversimplifies the issue and has more to do with targeting misinformed public sentiment than in making a thoughtful claim.

Framing and the Fungible

While I believe there is merit in considering the implications of a financial transactions tax, I take exception with the campaign’s framing of the policy. Invoking Robin Hood alludes clearly to the idea of stealing from the rich to provide for the poor. The notion of the fortunate subsidizing the less fortunate in society is nothing new. Most developed nations, for example, have progressive income tax rates (the tax treatment of capital gains and dividends for US investors is a glaring counterexample). A tax on financial transactions may have substantive merit and should be defensible as a natural extension of this philosophy and through appeals to reason. Instead, the focus on vilifying bankers creates an adversarial scenario that appeals more to rage than to thoughtful consideration.

The other aspect that irks me is the false assertion that the revenues produced by the tax will solely serve to benefit domestic poverty programs, social services, and climate change initiatives. These are worthy causes, to be sure. While the framers may legitimately be advocating for this allocation, the reality is that existing commitments to these causes are likely to be reduced. Unfortunately, money is fungible. Governments have revenue and they have expenses. An increase in revenue will broadly impact the amount a government can spend, and is likely to do so across the board. While money from programs can be earmarked to a specific cause, there is always enough money to move around elsewhere in a budget to render this meaningless. Given the amount of discretion available to governments in setting budgets, it is at best naïve (and at worst misleading) to put forth the notion that these new revenues will be strictly additive to the intended programs.

Blaming Bankers

Are bankers solely responsible for the economic crisis, and are they fair targets of punitive measures? Without a doubt, bank share a role in the blame. On one hand, the banks in many cases took on irresponsible levels of risk in order to produce profits. Furthermore, their role in packaging huge amounts of risky loans surely contributed to a global decline in the quality of outstanding credit. When the banks were on the verge of collapse, governments around the world rescued them. Given this eventuality, should we be surprised that they were driven to take excessive risks? It may be unreasonable to expect corporations to act in socially responsible ways, which is why government is so critical to establishing boundaries and rules. In Canada, for example, banks are more heavily regulated than they are in the UK or the US. Consequently, these banks had few of the major problems that were happening elsewhere. Canadian authorities, on these grounds, have expressed skepticism about adopting a financial transactions tax in Canada.

In the case of the risky loans, I would argue that banks were trying earnestly to help society better manage risk. That the models underlying these efforts ended up being seriously flawed is hardly evidence of malicious intent. Moreover, many other agents were involved. Governments that irrationally and excessively encouraged home ownership, and most importantly that failed to adequately regulate the banks. Perhaps most significantly, the high frequency trading most likely to be affected by the proposed financial transactions tax is quite distinct from the securitization markets that were at the heart of the credit crisis. Thus, when the website claims “So it’s time for the people who caused this mess to pay to clean it up.”, it seems misguided.

My point here is that law and policy should prevent banks from being able to make a mess of the entire economy. To put in place a framework that motivates these institutions to act dangerously and to demonize them when they do so seems unreasonable.

Substantively Speaking

A financial transactions tax of .05%, while it may seem nominally small, would have tremendous effects on most traded markets. In particular, businesses that make profit through high frequency trading would be adversely affected. Keep in mind that .05% of the notional value of every transaction may represent a far more substantial share of the profit. With many trading strategies, this would probably eliminate all profit. So while the figure may appear small, the implications are huge. Those engaged in high frequency trading argue that they are providing a service by making markets more efficient and liquid, which benefits companies that use markets to finance themselves. I don’t find this argument terribly convincing. Primary market participants don’t typically have a need to transact at these speeds. The main beneficiaries turn out to be speculators who are involved in the markets to make money as secondary participants. To the extent that their businesses are harmed, this may not be socially problematic.

My substantive critique of the financial transactions tax is that these ends are only met if the policies are adopted globally and across asset classes. This is incredibly difficult to effect in practice. The Robin Hood website bizarrely cites a tax in the UK on stock transactions as evidence of why this idea could be successful. I say bizarrely because the consequences of this policy were a shift of stock trading from London to other markets, and a dramatic increase in the use of untaxed derivatives rather than stocks in London. Sophisticated investors were able to replicate the economics of a stock transaction through the derivatives, thus avoiding the tax. I entertain serious doubts about whether the proposed tax could be coordinated globally and across different types of financial transactions.

I think I’ve written just about enough for now! Thoughts?

food in my neighborhood

fort greene / clinton hill

socks like me

The owner pulled up in a Jaguar and came into the building. From where I was working, I could hear him speaking to one of the supervisors. Shortly, he came into our room, with a smile:

"Thought I'd come in and meet the summer hires."
He faced me. "So what are your plans after the summer?"
"I'm going to University."
"Oh, congratulations. Where will you be studying?"
"At Princeton."
A pause. "What are you doing here?"
"I needed a job, and I couldn't get one anywhere else."

On a quiet part of Power Dam Road, in Cornwall, there used to be a sock factory run by Richelieu Hosiery. I had a job working there the summer before I started college. Later, I would convince myself of a narrative that said I had taken the job in order to 'gain perspective' on things, but the truth is just what I told the owner: I took the job because I needed money and it was the best job I could find that summer in Cornwall. I'd been rejected by, among others, the City of Cornwall, a call center called Startek, McDonald's and KFC. This last one particularly stung, as I had been resubmitting my resume almost every two weeks. I'd heard rumors that the employees working the night shift got free chicken at closing time, and I wanted in. I told the local managers about how much I loved KFC, and about how I'd once even written to their head office, but to no avail. Maybe it was a problem with my cover letters, but I spent that summer working with socks.

I performed a variety of different functions relevant to the sock industry. Labeling socks. Sorting socks. Packaging socks. Counting socks. Moving socks from one package to a different package. I came to learn that any number of different sock 'brands' (Nautica, Polo, KMart, Osh Kosh B'Gosh) were exactly the same socks!

The task that I remember most vividly is stretching socks. Most people don't know this, but socks are very small when they are first sewn. They resemble baby socks. How do they reach their eventual adult size? Somebody has to stand in front of a large machine that with a conveyor belt carrying many feet-shaped metal casts. To his right is a board full of unstretched socks. As the belt moves, he has to take the unstretched socks and place them on the hot metal casts, taking care to line up the heel and toes. When the stretched sock comes back around, he has to remove it and place it on a second board for the stretched socks. I spent hours doing this, often burning my hands when I would accidentally touch one of metal casts. Sometimes, I'd put a sock on backwards, and share a conspiratorial laugh with the person working the machine next to me. Stretching socks is, to be frank, one of the most boring things I've ever done.

Motivation aside, working in the sock factory really did help my sense of perspective. It continues to remind me of just how fortunate I am to be in a situation where I can pursue almost any profession that interests me. It elucidates the mental resilience that people who work these jobs have. The thought of spending my days carrying out boring, menial tasks with no end in sight is a frightening one, but thanks to my summer at the sock factory, I can at least begin to imagine it.

hiatus

I apologize for the dearth of posts as of late. The blog is on hiatus, but I will return with full force in early February.

mr. nation

Imagine yourself at a dinner party, where everybody speaks English, but many are more comfortable in another language. There are enough people in the room to allow for several conversations to happen simultaneously. If three native speakers of Hindi are engaged in a conversation, should they feel a social obligation to carry on their conversation in English? I'm not sure where I fall on this question. Certainly, this action precludes the possibility that anybody at the table who doesn't speak Hindi can enter the conversation. Practically speaking, is this different from carrying on a conversation about a topic that certain members of the party can't speak to? I think it clearly is-- the feeling of not being able to meaningfully contribute to a conversation is surely different, and less isolating, from the inability to contribute in any way at all. Does the situation change if the majority of people at the table are conversational in Hindi? The sense of alienation for those who do not understand Hindi is stronger, I think. Perhaps we now have a stronger obligation to them, to attempt to carry our conversation on in English. While in this scenario, some may feel less comfortable in English, none will feel truly excluded.

On the other hand, when we convert the conversation to English, it is very likely that the quality of discourse will degrade. The bounds of conversation, in terms of ideas, concepts, and argument, is always constrained by the linguistic abilities of the speakers. One chooses which ideas to express from the range of available ideas, and this range is probably both broader and deeper in one's native tongue. Furthermore, while we make the English speakers more comfortable by switching to English, we are inevitably making the Hindi speakers less comfortable. Given that there are enough people for multiple conversations to be happening, should we really insist that they all happen in the shared language? Is it worth trading the quality of dialogue for a more complete sense of linguistic inclusiveness?

To make matters worse, the dialogue may be crippled because certain ideas do not translate. This has always been a fascinating (and humbling) idea to me. Culture and language are so closely intertwined; anybody who speaks multiple languages and has experienced multiple cultures has surely experienced that there are terms and phrases for which no suitable translation exists. The subtle meanings, implications and subtext in a phrase may be dependent on a cultural understanding generally only held by speakers of the language. This is a fascinating, if unnerving idea. Many areas of knowledge and ways of understanding are inaccessible without learning the relevant language.

At times I take for granted that English is, in some sense, the closest thing to a global language. All around the world, people grow up with the understanding that to be successful in a global sense, learning English is a near-necessity (at least so far). My Hindi and Punjabi, while conversationally adequate, are by no means strong. I'd have trouble carrying on a conversation of any depth in these languages. Despite having studied French and Spanish through school, I can't say that I speak either language very much. I opted out of studying them in college, and told myself that this was the right decision, since "I'm no good at learning languages." When I think about it now, it seems sort of obnoxious; arrogant, even. An luxury afforded to me by the fact that I speak the language of the conquerors. I think about when my mother first moved to Saskatchewan, and she would answer my father's white friends' questions with the word "yes" and a smile, regardless of what the question happened to be. I think about the fact that she overcame this with grace and persistence, and became a fluent speaker of English. She never had the option to decide that she wasn't very good with languages.

I have a friendly banter with Ming, the man who runs my neighborhod laundromat. "Mr Nee-teen!", he'll exclaim, when I walk in every Saturday morning. He is most comfortable speaking Mandarin, but he's made a life for himself here. His happiness and energy in this city of foreign tongues is inspiring to me. Whenever he takes my laundry, he writes down my name on a ticket and hands it to me. When I was first coming in, I'd tell him my name, and he'd write down "Mr. Nitin". Soon, as we began to recognize and know each other, he would take to writing it down without asking. One day he mistakenly wrote "Mr. Natin", and began writing my name this way for a few months. Most recently, this has morphed into "Mr. Nation." I chuckled at the irony the first time I saw this; perhaps I ought to brush up on my foreign language skills.

morning birds

fort greene, 6:50 am.

a quartet for humanity

A few days ago, I had the privilege of bearing witness to a beautiful experience. The C train was stopped at Hoyt-Schermerhorn station; four older gentlemen had a quick discussion on the platform, and decided to board the train together before the doors of the train closed. One man held a small paper bag. They surveyed the car, smiles on their faces, until one said to the others "Let's tell them about it. Let's talk about Him." With this, they began to sing a harmonious quartet; they sang a Christian hymn, and engaged people gently. It was a welcome change to the crowded isolation and social sterility that so often characterizes the anonymity of riding on a train. A good many people dropped money into the small paper bag. At the next stop, a homeless woman stepped onto the train, and stood by the door, withdrawn, while the men continued to sing. The lead singer approached her quietly, reached into the bag, and handed her some bills. She accepted the money without a word, signing the cross on her torso in gratitude. She seemed obviously hard up, and the scene was heartwarming (I use this word with the full knowledge of the cliche it normally carries).

Irrespective of my views on the accuracy and validity of their literal message, I felt as though I was seeing something fundamentally good. The men had visible warmth in their hearts, and nobody on the train seemed bothered-- on the contrary, most people I saw were smiling at the scene. These externalities of benevolence are, in my mind, some of the strongest reasons to view organized religion and communities of faith as a good thing. Examples abound, whether they are soup kitchens, free schools for the destitute, or the men lightening up so many days with their subway song. Put simply, people who profess to be religious often do great things, and in many cases, will assert that religion motivates them to act in the ways that they do.

On the other hand, if our measure is to be a utilitarian one built on tangible outcomes, then reason demands that we examine the full range of consequences. Now the picture is more muddled. What so often brings us together perhaps more often divides us. Think of the way certain major religious groups have sought to suppress the teaching and discovery of new and relevant scientific knowledge on global warming and on evolution. Consider the way Hindu fundamentalism has been used to galvanize large segments of the Indian population into tacitly and actively supporting the alienation and displacement of so many Indian Muslims. And this is only a start to the list. It is hard to think of any major community of faith whose name has not served at one point or another as cover for systematic killing and displacement.

There are some clear problems with my reasoning above. First, it could be argued that in each of the examples above, the behaviour of some small subset of a group is being used to describe the group as a whole. I take exception with this characterization. Those who choose a community, and then resort to complacency and a failure to actively tackle wrong behavior from within said community bear some of the responsibility. Furthermore, the sorts of division and communalism frequently engendered by fervent political movements seem to affect more than an insignificant minority. Perhaps more persuasively, my reasoning glosses over the fact that historically, religious and political systems have been so closely intertwined. Thus, attributing the actions to religious rather than political motivation can be seen as an arbitrary decision. To this, I would respond that many consider themselves more beholden to their religious convictions than to their political convictions. The fact that systems of political power may exploit this is hardly a defense of the negative impacts of religious communities of belief.

Ultimately, however, these arguments of consequentialism and of political and religious power are rendered moot by the 'truth card.' These contingent arguments are irrelevant if a religious philosophy espouses absolute truth (a claim confidently and impossibly made by most all religious groups). I remember one day when we were rehearsing Bach's St. Matthew Passion, our choir director said "this music makes you want to believe." I've fallen into this sort of thinking myself. How can something so beautiful not be divinely inspired? This sort of reasoning is flawed, and sells humanity short. Isn't a better explanation that the majority of composers at this time were working for some sort of religious institution? Has the last century, with its proliferation of secular artists, failed to produce beauty? We need to recognize the potential and ability of humanity itself to inspire, independent of the need to believe.

On consequences, there is no clear answer. If the question comes down to truth, then we are left in an intractable situation, for no amount of reasoning will lead to concensus. And critically, vast numbers of people are claiming ownership on absolute truths that are, to be plain, contradictory. Do I believe in God? Probably-- but I doubt that anybody knows very much about him, least of all those who profess most loudly to.

grimaldi's

Grimaldi's is one of those legendary New York pizza places that you always hear about. One of the many establishments said to have the best pies in the city, the wait for a table is normally an hour or more. They don't sell slices (you have to order an entire pie), they won't take your credit card (cash only), and the menu is charmingly short. If you haven't come for the pizza or the calzone, you're in the wrong place.

I first heard about Grimaldi's when I was a summer intern living downtown Manhattan. This mysterious pizzeria in Brooklyn was said to be the perfect way to complement an afternoon walk across the Brooklyn Bridge. So one afternoon, I set off on a walk across the bridge, with the intention of going to Grimaldi's on the other side. Unfortunately, when we got off of the bridge in Brooklyn, we couldn't find Grimaldi's! Everybody had told us that it was "right on the other side of the bridge", but none of the people we now asked could tell us how to get there! Most claimed not to have even heard of Grimaldi's. In the end, we went back home without the pizza; it would have to stay a legend in our minds.

Today, about five years later, I finally made it to Grimaldi's. The pizza was mediocre at best. The sauce lacked depth, and the cheese to sauce ratio was too high; the crust was great, but the pizza generally lacked flavor. It tasted fairly bland. The experience was fun, but this pizza was not worth the wait. Lucali's will, for the moment, easily retain my #1 spot, followed closely by Lombardi's and John's.

It's odd, but I almost found it difficult to admit that the pizza wasn't great. In an attempt to counter the hype, I'd preemptively lowered my expectiations. I wanted Grimaldi's to have a fair chance, and I think it did. Nevertheless, there is no denying that the pizza disapointed. There is a sense in which I question my judgement, given how much my own conclusions differ from popularly held opinion. I remember that a few months ago when I saw The Class with a friend, I was underwhelmed. I thought the film was good, but not great, and I had a number of sound reasons and arguments for feeling the way I did. When I went home and saw that it had a staggering 98% on Rotten Tomatoes, I could almost feel my actual view on the movie changing. How could so many people be wrong? Such is the power of the crowd.

In both cases, though, I think my judgment was sound, contrary to mass public opinion. Certainly, in matters of taste, there doesn't always need to be an objective right answer. It also helped to have a friend present (in fact, the same friend in both cases!) to reaffirm that I wasn't crazy, and that every now and then, hype really is just hype.

girls

Laura

Since last night, I've been listening to the new album by Girls, called Album, almost continuously. I like to listen to different types of music, and occasionally, I will get into rhythms where I spend weeks listening to old, comfortable music that I know, and that is 'pleasant.' Album is a nice album, in that it reminds me of what rock sounds like, and why I like it so much. This is a work that, to my ear, makes no pretenses about being groundbreaking, but is just very, very good. It sounds reminiscent of very aesthetically conscious efforts of the late 60s-- in particular, it really evokes The Velvet Underground and Nico to my ear. At times, the songs are simple variations on four bar blues.

The song above, Laura, is by far the poppiest song on the album; the rest of it has a grittier, darker edge to it. Laura makes me think of Sloan. Please give it a listen, and I think you'll want to hear the whole album afterwards. I highly recommend it.

zoo ambivalence

As a child, I loved the zoo. At some point, like most children, I became intensely interested in learning as much as I could about different kinds of animals. This was probably also encouraged by a Canadian school system that was, at the time, very much focussed on educating students on issues around environmentalism. While green issues that have only recently become part the mainstream conversation in the USA, I was fortunate to have grown up with an active awareness of these important issues. Getting back to the point, though, I loved to learn about animals. For a period of a couple of years, I even collected wildlife cards, that my parents graciously funded. Every month I would get 20 new ones in the mail, and I would spend hours reading about them and then try to tell anybody who would listen that pandas weren't bears and about just how slowly sloths ate their food.

The zoo was, thus, incredible. Poring over a book, no matter how intently, simply fails to capture the beautiful majesty of seeing a tiger up close, in the flesh. Beyond that, the zoo is an environment where noise is ubiquitous, making it an ideal place for kids to cut loose. I think the big cats and the monkeys were my favorite animals at the zoo, but much of the appeal was in the mere presence of so many different types of animals in one place. Lately, though, my experiences have been more mixed. I remember visiting the Bronx Zoo when I was a summer intern in NYC and finding the whole thing inexplicably disappointing. I chalked it up to the Bronx Zoo being subpar, relative to others that I'd seen. Still, that didn't seem to fully explain it. As a friend recently noted-- "It's weird. The zoo seems like it should be so much fun, but it isn't."

A few years ago, I had an experience that brought clarity to my feelings. It happened while I was visiting Robe in DC, who at the time, was living very close to the zoo. On our way to meet a friend, we decided to walk through the zoo and see some of the animals. In the monkey house, I abruptly and unexpectedly experienced a strong sense of pathos when I saw the orangutan behind in a small white room behind glass. Looking at him, I saw not a wild animal, but an old man, kept unjustifiably captive. I saw intelligence in his eyes, and most troubling, I saw what seemed to be a tragic sense of resignation. Across the room, a gorilla threw himself at the glass with such force that the loud thud made people gasp. The whole thing really messed with my head, and the zoo suddenly became something barbaric and distasteful to me.

At various points since, I've described myself as anti-zoo. In truth, my feelings are more ambivalent. Zoos can and do serve important preservation and education functions. Ironically, many of those who crusade for the rights of animals may owe their love of animals to some seminal experience in a zoo. Still, I question whether the end justifies the means, and I lean towards concluding that it does not. In fairness, there is also a wide variance in animal treatment across different zoos. At the end of the day, however, they all still forcibly confine animals in unnatural habitats and put them on display for many thousands of gawkers each day.

What about open air preserves and protected park areas? These serve some of the same positive purposes, and do so in a way that is not cruel to the animals. Are these problematic as well? Would be interested to hear others' thoughts on the zoo issue.