To the Editor:
To argue whether the financial sector is --on the one hand--"allocating capital to its most productive uses" or--on the other--"financial wheeling and dealing, while getting little or nothing in return" is unhelpfully over-simple. The market does both, and it is not always clear which dollar is doing the one, and which the other.
We can, however shape the incentive structure so that more of the market is allocating capital to its most productive use, and just a casino rigged for the insider. A transaction fee on each asset purchased or sold will amortize towards zero for the long-term investor who is actually driving innovation and production in our society, while falling most heavily on the speculator who is in and out of the market in milliseconds. To run the American exchanges without such a fee while the rest of the world's markets already have one is to tilt our market towards speculation and away from investment.
Barry Haskell Levine