There has been considerable discussion of speculation as a factor driving up the price of oil, corn, and other commodities. Undoubtedly, speculation had played a role. (I don't know how much, my guess is that it is not the main force in most cases.) There are many plans to crack down on speculation, but as a practical matter it will not be easy to distinguish between speculative dealings and normal business purchases of commodity futures (that is if there is a hide your motive). A simple way around this problem to treat speculation like casino gambling, just tax it. A set of modest taxes on financial transactions (e.g. 0.2 percent on a future trade, 0.25 percent on a stock trade) could raise an enormous amount of money -- on the order of $150 billion a year. It would have almost no impact on real investors, but it would take a big bite out of the hides of speculators. In the past, economists such as Lasrry Summers and Nobel prize winners Joe Stiglitz and Jim Tobin have supported financial transactions taxes. It would be nice to see the media allow some discussion of the issue.
--Dean Baker
