The recent stock market volatility could have been restricted by a tax on transactions that would make the small quick score less attractive.
Ken Zinn is the Political Director of National Nurses United, the nation's largest union and professional association of registered nurses. He is a 32-year veteran of the labor and progressive movements in the United States and is one of the leaders of the US Robin Hood Tax Campaign.
Paul Jay, Senior Editor, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.
Last week on various stock exchanges across the country, but mostly in New York, tens of thousands of trades took place of some of the major stocks—Best Buy and RadioShack, American Airlines, and others—trades done by what they are now calling rogue algorithms. I love the term rogue algorithms. It's like they're—came from space and nobody created these things. At any rate, we're told by the press this is a sign of more instability in the stock exchanges. And there's calls for regulation, very little of which we have seen so far.
Now joining us to talk about this trading and a possible solution to it is Ken Zinn. Ken is a political director of the National Nurses United, which is the nation's largest union and professional association of registered nurses. He's a 32-year veteran of the labor and progressive movements in the United States, and he's one of the leaders of what they're calling the U.S. Robin Hood Tax Campaign. And he joins us from Washington. Thanks for joining us, Ken.
Ken Zinn, Political Director, National Nurses United: Glad to be with you.
Jay: So let's start. Let's just fill in some of the details for people that haven't followed the story of what happened. Some people call these cheetah traders. In fact, we were told by Bart Chilton from the federal commodities trading commission that something like 500 to 600 people at Goldman Sachs are employed doing nothing but working on these kinds of quick in-and-out algorithm tradings, although I don't think Goldman's algorithm is to blame for this particular incident. But it's a very widespread thing that's happening, and here's where it kind of went out of control. So what exactly happened, to start with?
Zinn: Well, there was a firm out of New Jersey, Knight, that is one of these high-frequency traders, or flash traders, as they're also called, that trade on the markets using computers. And those computers use algorithms calculated to make profits on a tiny fraction of the margin. And what happens is they trade on the millisecond. They buy, they sell, they buy, they sell. And what happened was the trades went horribly wrong last week, and the market had a huge downward turn in the stocks that were being traded. It was very scary. So there's huge volatility in the markets because of these high-frequency traders.
Jay: Now, the reality of this is that people like Chilton at the—give me the initials again. [unintel.] Federal commodities trading commission. He's—they've been pushing to try to limit, regulate, get them out of the market, these flash traders, with no success at all. There was supposed to be something came out of Dodd–Frank that would do that, and they can't get any of these regulations passed. So what is a possible solution to this, given that it not only causes instability for traders in the markets, but there's some evidence it actually does create bubbles, price bubbles, including food price bubbles?
Zinn: That's right. So one of the solutions that we're proposing is the Robin Hood tax, which would be a small tax on the buying and selling of stocks, bonds, derivatives, and other financial instruments, because if they are doing these trades based on, you know, algorithm calculations, we believe that a small tax that they would calculate in would make a lot of these trades not worth it. And so it would put sand in the wheels of the market, which would be extremely valuable to the markets that are experiencing this volatility. Right now one of the effects is that many investors are moving away from the U.S. markets because they're too volatile, and if you can't trust the markets to provide some stability, people are going to look elsewhere.
Jay: And the idea here is that when these flash trades take place, usually, although not always, there are very tiny differences between what they're buying and selling at. So a small tax might just tip the scales to it's not worth doing the trade. And I suppose you could keep—if you actually had a government or a regulatory body that was interested in doing this—which is a major question mark—but if you had that, they could keep raising this tax a little bit, enough to make these flash trades not worth doing.
Zinn: That's right, I mean, clearly in the instance last week. There was another flash crash two years ago where trillions of dollars literally were lost in 15 minutes of trading. Now, some of that gets recalculated and gets recouped, but nonetheless it's this frightening situation for some companies. They almost lost their entire value in 15 minutes. So, again, if regulators are asleep at the switch, we need a mechanism that will put sand in the wheels of this process and slow down the flash trading so that there's some stability in the market.
Jay: Now, why are the nurses at the forefront of this fight? National Nurses United, California Nurses Association, which helped give birth to NNU, why are you guys so involved in this? Some people might suggest this doesn't have anything to do with nurses particularly.
Zinn: Well, we do get told that. It's always a bit patronizing when women are told that they don't know enough about the financial markets. In fact, nurses know quite a bit, because they're seeing at the bedside in acute-care hospitals across the country the massive health impact of the economic crisis that we're all living through right now, and they're seeing patients present in hospitals with all sorts of diseases that were not prevalent before, health conditions that are aggravated by the crisis, people literally who are choosing between taking their medications and eating, or taking their medication and seeing their doctor or paying their rent or paying their mortgage. And so we're sort of at the front lines of this economic crisis.
And nurses are patient advocates by vocation, by ethics, by license. And we understand that we can't just advocate for patients at the bedside; we have to do that in society at large. So one of the main reasons why we've been advocating for the Robin Hood tax is that the tax, in addition to curbing this horrible speculation that occurred last week, could actually raise billions of dollars of revenue every year that could be used by government to meet human needs, whether it's health care, whether it's saving people from foreclosure, dealing with the HIV/AIDS crisis, climate-change mitigation, any number of issues that we're told over and over again by government that there's just simply no money.
Well, there actually is money. It's in Wall Street. Wall Street caused the economic crisis several years ago. They got bailed out by the taxpayers. We think that it's time for them to give back.
Jay: What kind of buy-in are you getting on this campaign, first of all, from other major unions? And then are you getting any buy-in at all from the leadership of the Democratic Party? I know there's no support from the leadership of the Republican Party, but are you getting any at all from the Democratic Party?
Zinn: Well, first, when we launched the Robin Hood Tax Campaign in May, we had 6,000 people all dressed in Robin Hood hats in Daley Plaza in Chicago on the eve of the G8 summit. We have the support of a number of unions, a number of community groups, religious organizations, environmental groups, student organizations. It's really brought together this unique array of organizations that normally wouldn't have cause to work together. But because the Robin Hood tax has the prospect of raising up to $350 billion every year just in the U.S. alone, people are very interested because they all need revenue for the programs that our communities so desperately need.
Jay: But this is going to have to be passed by Congress, so, you know, you're going to have to get support of people in Congress. Are you getting any? I mean, what's the real politics of this?
Zinn: Well, in fact, I was just on Capitol Hill before I came to do this interview. We are talking to a number of members of Congress.
But your basic point is absolutely true. We don't have nearly the kind of support on Capitol Hill yet that we need, which is why we think we need to build a mass movement of people, so that Congress will finally have the nerve to stand up to Wall Street. We were told by one aide on the Democratic side in the Congress that Wall Street owns this place, meaning Capitol Hill. Well, certainly that's true. And so in order for the American people to get their representatives to stand up for the American people instead of for Wall Street, we're going to have to really build a mass movement to push them to do that.
But we have support. I will just note that President Obama, who thus far has not come out in support of this Robin Hood tax, two days ago called Mitt Romney the reverse Robin Hood (which is an interesting appropriation of the language of our campaign), called him Romney Hood. And that's funny. Of course, it's true, but it's also not enough. We need the president to actually be Robin Hood himself, not just accuse his opponent of being the reverse Robin Hood. And he needs to come out and support this tax, because it's not only good policy, it's good politics as well.
Jay: I mean, but there is some reality to this that when he's not campaigning in election, President Obama has not been so tough on Wall Street. There's some rhetoric, but in terms of real policy, it does not lead one to think that he would support this.
Zinn: Well, that's right. I mean, I think we have to push them to do so. He's not going to do it on his own, even though there's—one of his biographers said that he was for it before he was against it. He's being challenged now in all sorts of fora to come out and support this, but so far he hasn't. And so, again, we need to build a mass movement across the United States to push the president to do the right thing and come out in support of the Robin Hood tax.
Jay: And how are you doing in terms of leaderships of other big unions? Are they supporting this? Are they participating in it?
Zinn: Yeah, a number of unions are. They've endorsed steelworkers, communication workers [unintel.] the postal workers, the machinists. A number of unions have come out and endorsed this campaign and are solidly behind it. So we're very happy about that.
Jay: Okay, Ken. Thanks very much for joining us. And we'll keep checking in on this campaign as the work unfolds.
Zinn: Thanks very much.
Jay: And thank you for joining us on The Real News Network.