Former J.P.Morgan Managing Director backs financial transactions tax
On Thursday, key US groups came together to call for a financial transactions tax (FTT). The AFL-CIO (their TUC) were involved, as were Oxfam America, the Global AIDS Alliance, veteran US Senator Tom Harkin, and others. They probably count as the usual suspects, but John Fullerton is anything but. He’s the Founder and President of Capital Institute, a think tank dedicated to “harness the power of capital and markets to evolve a more just, resilient, and sustainable economic system”. But more importantly he’s a former managing director of J P Morgan, the Wall Street investment bank, and he said:
“I am here to express my support for a Financial Transaction Tax.”
Fullerton’s speech sets out three good reasons for an FTT: it would combat market short-termism, it would improve the resilience of the market, and it would raise much needed money for public goods like fighting climate change and global poverty, and plugging the hole in government budgets (more on this by TUAC’s Pierre Habbard, by the way). He said that there was only one bad reason for an FTT which was top punish the people who caused the crisis – we must resist that temptation! But he also has a lot to say about how an FTT would affect liquidity – one of the main objections to FTTs raised by economically literate people. His response is that liquidity would indeed be reduced by an FTT in good times (but not by enough to make a difference – a trade worth making) and that, in bad times, the main problem is not liquidity but resilience, so the FTT’s main impact is positive.