JohnRawls wrote:If you are going to read it then think of this a systemic issue or issue of practices that are linked to each other right now and not as a one off example. It is pretty close to what I was talking about but it goes a bit further than just capital-labour relationship because it is an example:
It's one example, and it is a very good example. However, I think his prescriptions wouldn't necessarily solve the problem. Increasing competition is boilerplate capitalism. The tax and profit proscriptions are boilerplate Marxism. Thinking about it for a bit, I think the appeal of Marxism is that it does a great job of analyzing problems. So good, that people overlook piss poor quality of the prescription.
Mark Dice is kind of an ass, and most of his videos are politically-oriented, but he's funny and had a somewhat cogent commentary on Apple the other day. He bashes CEO Tim Cook's leadership, comparing him to John Sculley. He also puts in a clip of Steve Jobs, who has an interesting commentary about 3 minutes in that's right in line with the cultural problem your article addresses:
Back to your posted article, the critique of capitalism as being "hijacked" by financiers is spot on. However, I have big reservations about his solution.
Matt Stoler wrote:The solution to this political crisis is fairly simple (me: no, it's not), and it involves two basic principles. One, policymakers have to increase competition for large powerful companies, to bring profits down. Executives should spend their time competing with each other to build quality products, not finding ways of attracting former generals, or administration officials to their board of directors. Two, policymakers should raise taxes on wealth and high incomes to radically reduce the concentration of wealth, which will make looting irrational.(me: bad idea. It will also make innovation irrational, which is why communism doesn't work)
I agree that increasing competition would be a good thing, but trying to bring profits down is absolutely the wrong reason to increase competition. In my opinion, it's just stupid. It also fails to provide an analysis of other companies that do invest and who don't turn big profits; namely, Amazon. Whereas, a company like Tesla is in fact unprofitable, Amazon can turn massive profits, but chooses not to in order to avoid taxes. Instead, Bezos continues to innovate. Personally, I think Bezos is sort of a prick too, but he has been very innovative with the use of data, robots, supply chains, and the like. We have to separate principles from personalities. So Bezos doesn't fit the mold of a mercenary CEO. The difference is in people like Tim Cook and Steve Jobs. Tim Cook is a good student who is good at math, worked the elite school alumni connections and landed himself an incredibly good paying gig. He has control over hundreds of billions of dollars in financial capital. What innovations have occurred under his watch? Nothing. Mark Dice's commentary on that is pretty spot on. Apple under Tim Cook could purchase the bottom 80% of the S&P 500 companies with the cash he has on hand. That's how big and powerful Apple is. Yet, his innovations are nil, because he's not an engineer.
For edification, I'll repeat something our CEO said to an employee who asked why we don't plow all the cash we have on hand toward innovation. He said more or less, "If we hire people and invest in new technology, our costs go up. If our costs increase by just 5%, Wall Street will punish us and our stock will be down 20% overnight. We would be better off taking $500M in cash to the parking lot and setting it on fire." He's right. That's the problem we need to fix.
That's why I have said repeatedly that we need to increase gross investment. From a monetary policy perspective, that's what the central banks are trying to do by engineering 0% interest rates. Prick that he is, Bezos is investing in new technology; prick that he is, Tim Cook really isn't. I think what is needed is a combination of a corporate wealth tax that is offset by an investment tax credit. The corporate wealth tax would punish capital hording, but relieve it if some percentage of corporate capital is invested directly into R&D or indirectly (venture capital) to new companies. Even a knucklehead like Tim Cook could figure that out, and all CEOs could explain it to Wall Street analysts. Another way around the capital hording problem is to eliminate the double taxation of dividends. If companies pay out a dividend, they SHOULD NOT have to pay income tax on what they pay out.
On a much more serious note compared to Mark Dice, and for our poster not as familiar with the Bretton Woods system, I'd recommend this recent CaspianReport video (and I would recommend subscribing to Shirvan's channel).
Again, separating principles from personalities, this is why Trump is very relevant politically and attacks on his personality will not work. Trump's political mantra is that the post-WWII system designed to rebuild Europe and defeat the Soviet Union no longer makes political sense to Middle America. Like Marxism, Trump may not have the right answer, but he's spot on at analyzing some of America's structural problems.
JohnRawls wrote:As i mentioned, it doesn't solve anything. A tax cut is only that, a tax cut. The problem is not that middle class or upper classes are over taxed. The problem is that the wages of the middle class don't grow and a tax cut is at best a one of thing. It doesn't solve any systemic issues.
The middle class is definitely over taxed. The economic rationale of a tax cut is that it will increase aggregate demand. It also reduces some of the resentment that taxpayers have towards those who live off of government largess. AOC, as Trump's alter-ego, promotes guaranteed minimum income even for people who basically don't want to work. I've noted why that won't work: basically, among our poorest population, we have the concomitant problem of low-IQ, drug addiction and mental illness. Drug addicted people will just use a basic minimum income to buy more drugs. Already, we have governments that provide sterile needles to heroin junkies, who dispose of them on sidewalks and gutters, rather than garbage cans on the corners of city streets; and, provide them with methadone (invented by the Nazis, by the way) to increase the flow of funds to corporations and reduce the flow of funds to drug dealers.
The fact that the media does not cover the resentment of taxpayers of the foregoing issues doesn't mean that those sentiments don't exist. It is in fact why Trump--seemingly out of the blue, and to the utter disbelief of the chattering classes--defeated 17 mainstream Republicans and then defeated the exceptionally well-funded and politically connected Hillary Clinton (who sat on the board of WalMart).
JohnRawls wrote:They are both wrong and miss the point.
Are they wrong and miss the point, or is it more to the point of the article--they are very well compensated for defending the indefensible? Take Brexit for example. You may agree with it or disagree with it. Yet, the anti-Brexiteers/Remainers are actively working to undermine the will of the people. The EU has routinely used FUD campaigns to get what it wants. Remainer Tories and Labour waged a scorched Earth campaign indicating that Britain's economy would implode if they left the EU. Voters went for Brexit anyway. Like American politicians, British politicians are also trying to use the courts to thwart their political opponents in spite of the fact that Brexiteers are the political majority in the UK. Like I said, Tim Cook isn't an idiot, but he's not an engineer or product manager either. So Tim Cook is doing what's good for Tim Cook. Politicians are doing the same thing.
JohnRawls wrote:It does not mean that they are taxed too much in reality if you look at the data.
The "data" is just an enigma used to justify the current system. I live in California. At $330k last year, I'm middle class. Maybe on the upper end of it, but I'm not considered rich by California standards. I paid over $80k in taxes last year. I do not subscribe to Marxism, so "fairness" does not appeal to my sensibilities. If I'm paying taxes at those rates, why aren't the roads paved as smooth as a baby's butt? My money is going somewhere, but it sure as hell isn't going to the basic services the government is supposed to be providing. I participate on boards like PoFo, because we are "observed" as it were by the establishment. For example, I railed on about it taking 20+ years to replace half the span of the Oakland-San Francisco Bay Bridge when it only took 4 years to build it both spans. Obama himself picked up on that criticism and commented on it. People with 8th grade educations were more productive in the 1930s than college-educated government bureaucrats in the 2000s. A lot of the steel for that bridge came from China, too. Did outsourcing the steel save taxpayers money? Yes, probably. However, government spending on foreign steel DID NOT stimulate aggregate demand in the United States. Even Shirvan doesn't cover that in the foregoing and well articulated video above. I agree with people who say, "You can have global trade or a welfare state, but not both." More pointedly, I say--even though it is still taught as gospel in business schools and economics departments--that in a global free trade system, Keynesianism DOESN'T WORK. Stimulating aggregate demand for steel in China doesn't increase US GDP. It lowers it. Nobody in power seems to have picked up on my point there yet; however, during the Ferguson riots, I wrote to anyone who would listen that the places where all this alleged police brutality was occurring was in places where political control was the exclusive power of the Democratic party for over 50 years. Finally, that criticism is common in the lexicon of FoxNews contributors--particularly Tucker Carlson, although it was Bill O'Reilly who first picked up on my commentary.
Back to more polemical style, but worth noting, Paul Joseph Watson comments on "Pod people"--people who rent bunks in a collective living situation. It's interesting, because he batts back counter-arguments that "this is capitalism", as though capitalism makes everything right.
Populism and nationalism are very real political forces now, and they are not going away.
BigSteve wrote:Did you watch last night's debate?
Trump's about as far away from being in trouble as a guy can get...
Trump's 2016 win was an inside straight. He has to duplicate that, which means he does have to do well in the states he improbably won in 2016--Wisconsin, Michigan, Pennsylvania. Wall Street billionaires, and their good friend jimjam, don't like Trump's trade war with China. A stock market crash could hurt Trump's chances in 2020, which is why the left is rooting for that to happen.
Presvias wrote:What a shame that such a comprehensive post gets a 1-2 line reply.
The problem with JohnRawls' post is that the figures are deeply misleading. In the past, you could write off all kinds of things that you cannot write off today. For example, before the 1986 tax reform act, you could write of the interest you paid on your credit cards. No more. There were so many tax shelters before that don't exist now. Lots of people used to have a "cabin" in the mountains somewhere, because they could write it off. You can't do that stuff anymore. Oil and gas drilling, and on and on. So nobody paid those high rates of tax with the lack of exemptions that are the case today. In fact, one effect of Trump's tax plan is that you are limited in the amount of state and local tax (SALT) you can deduct on your federal return now. So while the tax cut is beneficial to the lower middle class and the working class, it has a nasty bite in it for people who live in blue states. I paid a lower rate of tax with Trump's reforms, but I paid more taxes because of the SALT limits. The economic theory behind limiting the deductions is that the deductions create economic distortions.
"This is no time for Donald Trump’s record of hysteria and xenophobia – hysterical xenophobia – and fearmongering to lead the way instead of science."
-- Joe Biden on banning travel from China during the coronavirus outbreak