What’s Worse Than Ticket Scalpers? Stock Scalpers.

Sarah Anderson Co-Editor, Inequality.org

nternet bots immediately snapped up Beyonce’s presale tickets last year. And when the resale price rose above $1,000, the Beyhive was mighty peeved.

Ticket scalpers are indeed frustrating. But their Wall Street cousins — what UMass-Amherst professor Douglas Cliggott calls the “stock scalpers” — are far more dangerous.

Like online ticket scalpers, these financial predators use advanced technology to cheat the rest of us. For huge sums, they buy the privilege of locating their computer servers as close as possible to market exchanges. This allows them to get trading information a split-second faster than traditional investors.

So when a mutual or pension fund makes a trade, the stock scalpers see that trade on its way to the market. “They hop in front of it, buy it, and bid up what we want to buy and sell it back to us at a higher price,” explains Cliggott, a former JPMorgan Chase managing director.

The scalpers do this thousands of times a day, using computers programmed with algorithms that have no connection to the real economy. This “high frequency” trading makes up the majority of today’s market activity.

Many financial experts, including a former CFTC chief economist, have warned that high speed trading siphons profits from traditional investors. For the minority of U.S. workers who have any money at all in a retirement fund, that’s a bigger problem than missing out on a Beyonce concert.

Even more disturbing is the risk the high-speed traders pose for the global financial system. John Fullerton, another former JPMorgan Managing Director, points out that high frequency traders vanish from the market in a flash in times of crisis. “This can trigger a cascading effect as real money investors pull back in self-defense and at times flee in panic,” explains Fullerton, who currently leads the Capital Institute.

Jean-Philippe Serbera, a financial markets expert at Sheffield Hallam University, views the threat of a major “flash crash” as more likely today than during the relatively calm bull market of the past several years. “In a more depressed market, where there’s inevitably more volatility and traders are more downbeat,” Serbera says, “the worry is that flash crashes are more likely to get out of hand — possibly causing contagion around the world.”

There’s an easy solution to these problems: tax the stock scalpers.

Posted In: Allied Approaches

Union Matters

Members of Local 7798 achieve major goal with workplace violence policy

From the USW

Workers at Copper Country Mental Health Services in Houghton, Mich., obtained wage increases and pension improvements in their contract ratified earlier this year, but the benefit Local 7798 members were most proud of bargaining was language regarding workplace violence.

The contract committed the employer to appoint a committee, including two members of the local, to draft a workplace violence policy. Work quickly began on the policy, and just last week, the committee drafted and released its first clinical guideline focusing on responding to consumer aggression toward staff.

“We are so excited to have this go into effect,” said Unit Chair Rachelle Rodriguez of Local 7798. “This was a direct result of our last negotiating session.”

The guideline includes the definition of aggression and an outline of procedures, all of which will be reviewed yearly. And though this is just a first step in reducing the incident rates and harm of workplace violence in their workplace, it still is a big one for the local, and it wouldn’t have been possible without a collective bargaining agreement.

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There is Dignity in All Work

There is Dignity in All Work