September 20, 2015
By Tim Worstall
It’s a standard pejorative from people like me about those further to the left, those who would simply sling the taxpayers’ money around, that they must be invoking the magic money tree to pay for it all. And sometimes it is indeed just pejorative, a piece of political rhetoric. However, there are times when it really is an appropriate distinction to make. I think of Jeremy Corbyn’s plans (advised by one Richard Murphy) in my native UK to pay for everything simply by printing lots more money. That really is an invocation of the magic money tree and it works about as well as you’d expect, as Venezuela is currently finding out, Zimbabwe did so recently, and as historical examples running back though post-WWII Hungary and Weimar Germany all the way back to our own Henry VIII can illustrate. The Roman Empire had more than one episode of such monetary debasement as Gibbon points out as well.
This little example from Bernie Sanders is more complex and thus, to aficionados of such invocations of that fruitful topiary, more interesting. He is advocating a financial transactions tax: something which is clearly going to raise vast amounts of money by sticking it to Wall Street. It’s not difficult to get the populace applauding by threatening to stick it to The Man so if you’re a populist politician then why not advocate such moves? Except there’s two really quite important problems with the idea. The first is that he seems to have spent the putative revenue twice already, before we’ve even had the first of the candidate selection primaries or caucuses. Doesn’t bode well: how many times will he have spent it by the time he takes office?
The second is rather more serious, in that it won’t raise any money, indeed will lose considerable amounts for the Treasury’s coffers. Yes, sadly, this is true. An FTT costs the government revenue, not increases the amount it collects.
Read the full article at Forbes.com: Bernie Sanders And His Adventures With The Magic Money Tree