Mr.Duck on 15/9/2011 at 09:03
Those must really be some strong drugs you're smoking up, boyo. Damn...
heywood on 15/9/2011 at 09:37
Quote Posted by Ghostly Apparition
First.. I wasn't saying to fuck the rich ..or saying we should go back to 90% tax rates on the rich. As RBJ so eloquently said..it does destroy the notion that raising the taxes on the wealthy is gonna destroy the economy. If having more money in the :job creators" pockets as the republicans call them is the driving force behind creating more jobs..then why haven't they created jobs? The Bush tax cut has been in effect since 2003..where are the jobs? The major corporations are sitting on trillions of dollars of wealth.. many corporations are not just paying low taxes..they are paying no taxes..GE, Bank of America and many others paid 0 taxes last year.
Sorry if I misinterpreted you. I mainly took two issues with your post.
The first was the 1950s analogy. A lot of people have either held up 1950s economic policies as a model for how we can restore middle class dominance or invoke the post-war boom as an example of future growth potential. The reality is that the conditions then were unique and not sustainable and the same policies today wouldn't achieve the same result. For example, the Bretton Woods system was already failing by the late 1960s.
The second issue was your statement that higher taxes will encourage companies to re-invest and expand because there is no advantage to invest & expand when taxes are low. Because you brought up the 90%, I wasn't sure whether you meant individual or corporate taxes. If you're talking about corporate tax rates, the principle is correct; there is a strong correlation between tax rate and re-invesment ((
http://http://www.cbo.gov/ftpdocs/69xx/doc6902/11-28-CorporateTax.pdf) see Figure 2-3 in this CBO report). However, according to OECD, US corporate tax rates are already (
http://alhambrainvestments.com/blog/2009/01/29/corporate-tax-rates-by-country-oecd/) second highest in the world largely because most other countries have cut theirs significantly over the last couple decades, and the US leads the world in corporate investments in fixed assets. So you're making an argument for the status quo.
In fact, I'm sure the combination of corporate tax rates around the world encourages global companies to structure their business such that the profits & losses made by its operating units minimizes their overall global tax burden. That would mean avoiding profits in US operations which could be accomplished in part through capital investment. For example, in 2009, GE's US operations lost $400M but they made about $11B in profits worldwide. They didn't pay 0 taxes, they paid 0 taxes to the *US*.
Another reason why GE doesn't pay any taxes in the US is that their financial services business, GE Capital, took huge losses from the financial crisis. So even though their US operations turned around and make a profit in 2010, it was offset by carry-over losses incurred in prior years. And GE is not sitting on a boatload of wealth. They are actually massively in debt. They are leveraged to the point where a lot of people were predicting bankruptcy a couple years ago. I don't know what BoA's situation is, but I suspect they also have huge carry over losses to offset any profit they might be making.
As for "where are the jobs" that supposedly come from cutting individual taxes, cutting taxes increases consumption and investment, and the proportion of C&I is income dependent. Cut taxes on lower & middle classes and you mainly affect C. Cut taxes on the very rich and you mainly affect I. One question that drives policy is whether the multiplicative effect is higher for $X utilized by the government vs. spent by individuals consuming vs. invested by individuals. Another is what's the right proportion of C vs. I in a healthy economy. But the most important thing right now is that tax revenues are overall too low and the rich are best prepared to take on a higher tax burden. And as RBJ alludes to, what's fair is for those who have benefitted the most from the "system" to contribute the most to its recovery.
Quote Posted by Pyrian
While I agree that mid 90's would be a better model than 50's (but BTW the nominal rate may have been 90 but nobody actually paid that, IIRC the effective rate was like 50, kind of like how now the nominal rate is like 35 and effective is like 21) I'm really kind of dubious about this whole "entrepreneurs and top talent" notion. IMO important top talents are almost entirely upper middle class professionals, and very rare among the ultra-rich magnates themselves. (In fact, they'd be wasted in such positions, and vice-versa.) If we want talent, we'd better get back to funding education.
I'm not talking about traditional professionals (medicine, law, etc.) but people like Sergey Brin and Larry Page, all the people founding internet & biotech startups, and so on.
And yes, improving education should be near the top of priority list.
Quote Posted by Rug Burn Junky
...
Excellent post.
Pyrian on 15/9/2011 at 18:11
Quote Posted by Tocky
What the fuck IS the ultrarich agenda? It can't be just money as the be all of existence I'm not happy till I have every dollar can it? There has to be SOME plan though maybe not collective right?
Hmm. I really don't think so. Habit, addiction, whatever. Most of the top 400, I suspect, couldn't stop trying to amass money if it was killing them and they knew it.
Quote Posted by Tocky
I mean christ they bought a whole political party fucksakes.
They bought both of them, as far as I can tell.
I looked at your link. Who the hell cites the top-line rate which nobody pays (although other citings of OECD claim they put the U.S.
below the median
effective corporate tax rate, which suggests the bias is in the author)? Except, of course, someone with a deception to make? 5 seconds on google will get you any number of better treatments on the subject than that paper-thin stream of propaganda. You've been had.
Quote Posted by heywood
In fact, I'm sure the combination of corporate tax rates around the world encourages global companies to structure their business such that the profits & losses made by its operating units minimizes their overall global tax burden.
I've read that the especially complex U.S. tax structure makes this sort of thing relatively easier.
Quote Posted by heywood
I'm not talking about traditional professionals (medicine, law, etc.) but people like Sergey Brin and Larry Page, all the people founding internet & biotech startups, and so on.
And how many of those are there, and how many do you think are
both super-rich
and super-talented? I'm pretty sure they're a very small proportion of either population. The very rich are very keen to try and tell everybody that they got that way by adding even
more wealth to the economy than they took out of it (and typically do so by citing people other than themselves), but I don't think that's even remotely
possible, nevermind plausible or supported by facts. Development and innovation mostly comes from teams of peons who will never get a significant slice of their contribution.
heywood on 15/9/2011 at 23:27
Quote Posted by Pyrian
I looked at your link. Who the hell cites the top-line rate which nobody pays (although other citings of OECD claim they put the U.S.
below the median
effective corporate tax rate, which suggests the bias is in the author)? Except, of course, someone with a deception to make? 5 seconds on google will get you any number of better treatments on the subject than that paper-thin stream of propaganda. You've been had.
The 39.2 figure for the US comes straight from the OECD data and is a combination of the federal rate + weighted average of state rates. (
http://www.oecd.org/dataoecd/26/56/33717459.xls) Get it here (Excel file). At the federal level, the corporate tax is a flat 35% rate for any company with a taxable income over $18,333,333 and all personal service corporations. For small businesses making less than $18M which aren't personal services corps, the tax is progressive. And the states all have either flat rates, or if they have brackets the top starts at $1M or less. So don't bitch to me about "top-line rates" when the rate applicable to any company of moderate size is flat.
You'll have to be more specific about the "citings of OECD claim they put the U.S. below the median effective corporate tax rate". I suspect you're thinking about taxes on corporate income as a % of GDP, and not effective corporate tax rate. The % GDP statistic is the one I see quoted frequently to show that US companies don't pay enough tax. You can also see (
http://www.oecd-ilibrary.org/taxation/taxes-on-corporate-income_20758510-table5) a table for that statistic from OECD here (online, not Excel). The US corporate tax revenue was 2.1% of GDP in 2009, which is below the median of the countries listed. If you look at an average over time, Germany, Iceland, and Turkey trend at the low end of the scale, while Norway, Luxembourg, and Australia trend at the high end, and the US is 2nd quartile about the same as France and Austria.
So does that mean the corporate tax burden in the US is lower than the median? Not necessarily, no. If you look at stats from OECD, CBO, and BEA, you'll see that corporate tax revenue as a percentage of GDP is not well correlated with corporate tax rates. In fact, as EU countries lowered their corporate tax rates, the effective tax burden went down but their revenue as a percentage of GDP went up, a result explored in (
http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_12_en.pdf) this European Commission paper. You can read the explanation in the paper.
Anyway, back to the point I think you're missing. The point that Ghostly Apparition made on p4 is that increasing the tax rate encourages companies to avoid taxable income by re-investing rather than taking profit. And that's exactly what the statistics in the CBO report show is happening in the US (#2 highest tax rate, #1 highest rate of investment). I added that it also encourages global companies to structure operations to take a larger share of their profits in low tax countries.
So if you increase the corporate tax burden in the US by increasing rates and/or reducing deductions, you're not guaranteed to get more revenue but are guaranteed to see changes made to reduce profits taken in the US. One effect will be to encourage investments (good), another will be to encourage further restructuring to shift profits outside of the US (bad), and a third will be a reduction in cash reserves making it more difficult for companies to weather recessions (bad). What the US should be trying to do is keep its corporate tax policies in line with other post-industrial economies. The US is not a fucking economic island.
nbohr1more on 16/9/2011 at 03:45
While RBJ's summary of our current economy looks well rationed and accurate, I think that the Paul goldbugger camp is a natural result of societies' urge to cut away market abstractions to see the underlying mechanisms.
We want to "know" what market movers are doing and how their operations have concrete effects on wealth distribution. If we must live with layers of complex market abstractions we cannot see the validity of any proposed political or socioeconomic change. The urge to see the gears of the economy at their most raw state is a natural outgrowth of the information age and it new-found powers of transparency.
All the liquidity and interconnected market examples in the world cannot compel me to believe anything other than the bare fact that Capitalism's bedrock of "supply vs demand" requires nothing more complex than a simple pyramid scheme.
Consumers must pay in en masse more than producers and markets must continue to grow to spread the products to more and more consumers. When birth-rates fall, you stagnate. When foreign markets stop growing, you stagnate.
We have devised some deus ex machina of market regulation to keep eyeballs off the ebb and flow of these concepts and their natural conclusion (which is: "some of the folks at the top will inevitably "cash their chips in" when they feel they have spread too far into risky artifice and will leave their subordinates or society to absorb the losses... the fall of the pyramid... the patsy...").
If the Federal Reserve and market regulation were truly acting in the interest of the average US citizen, we would see, prosecutions of the upper management of Financial institutions, more tariffs to prevent out-sourcing, more anti-trust regulation, more small business stimulus, and more tax breaks for employing US citizens. Instead we see an institution that aids and abets the many Banks and Industries that caused the collapse(s) (S&L scandal, etc) and gladly increases trade deficit to countries like China at the expense of the US economy.
As a commercial institution it is appalling to see such pseudo-government powers be left to the Federal Reserve. We cannot "vote it out of office". With the many byzantine layers of operation that it negotiates only (possibly) the like of RBJ can grasp the after effects of it's works. The voter is helpless to know why adjustments to interest rates (etc) are supposed to be beneficial. Then, when all the careful planning goes bust, we are left with an explanation that "derivatives markets" are too complex to have foreseen the collapse... Only later to be shown that the big institution knew their would be some kind of collapse... just not as big as the current version. A complex situation is really just bald greed and corruption.
After all that there is a yearn, maybe misguided, to see on simple terms what the economy is doing. Having the simple delimiter of a Gold standard means that a measuring stick can be held up to every abstraction and yield "what is the risk? what is this in gold units?" It doesn't have to gold at all. It could be any item of value or even Fiat Currency where "by law" the value does not fluctuate. Yes, the lack of ability to inflate would have the effect of funds conservation but Government control over inflation for RBJ's proposed "solution" to stagnant hoarding is nothing more than an abstraction of the Government taxing away funds anyway.
Government has x in valuables, it issues x times y in currency then it says "now y is equal to less x". In that scenario, the Government has increased it's wealth in x at the expense of the holder of y. It's just a tricky form of taxation. Why not have taxation be pure and transparent to the populace instead?
(I'm sure RBJ will whip out some thousand variable equation to beat me into submission :laff: )
BEAR on 16/9/2011 at 04:18
Quote Posted by nbohr1more
While RBJ's summary of our current economy looks well rationed and accurate, I think that the Paul goldbugger camp is a natural result of societies' urge to cut away market abstractions to see the underlying mechanisms.
We want to "know" what market movers are doing and how their operations have concrete effects on wealth distribution. If we must live with layers of complex market abstractions we cannot see the validity of any proposed political or socioeconomic change. The urge to see the gears of the economy at their most raw state is a natural outgrowth of the information age and it new-found powers of transparency.
You can already do that. Its called education. You cant demand that we change the way computers work because you don't understand electronics. If electronics were fucking everyone over, you could make the point that it should change, but that requires that you actually understand how it works in the first place, then you can suggest ways to change things. What you seem to be saying is that economics is BIG AND SCARY AND WE DONT GET IT, TEAR IT DOWN TO SOMETHING WE CAN UNDERSTAND EVEN IF IT CRASHES AND BURNS.
Quote Posted by nbohr1more
All the liquidity and interconnected market examples in the world cannot compel me to believe anything other than the bare fact that Capitalism's bedrock of "supply vs demand" requires nothing more complex than a simple pyramid scheme.
This brings up a issue I see all the time. The suggestion that systems were implemented as a whole and did not evolve into what they are. It reminds me how some act as if the government was simply called into existence as it is, and if you got rid of it, you wouldn't just end up with the same basic thing eventually. Systems evolve to fill requirements. It doesn't always have to make sense at the end. Its not necessarily evolving towards an end. There is a better way to put that I know.
Quote Posted by nbohr1more
Consumers must pay in en masse more than producers and markets must continue to grow to spread the products to more and more consumers. When birth-rates fall, you stagnate. When foreign markets stop growing, you stagnate.
We have devised some deus ex machina of market regulation to keep eyeballs off the ebb and flow of these concepts and their natural conclusion (which is: "some of the folks at the top will inevitably "cash their chips in" when they feel they have spread too far into risky artifice and will leave their subordinates or society to absorb the losses... the fall of the pyramid... the patsy...").
"I don't like how things are. Listen as I complain about it"? We don't have to like how the world works, but you can only put so much blame on people who play to win. Thats where the government plays a part - yeah you can work or sleaze your way to the top, but it can't result in the ruin of the whole society.
Quote Posted by nbohr1more
If the Federal Reserve and market regulation were truly acting in the interest of the average US citizen, we would see, prosecutions of the upper management of Financial institutions, more tariffs to prevent out-sourcing, more anti-trust regulation, more small business stimulus, and more tax breaks for employing US citizens. Instead we see an institution that aids and abets the many Banks and Industries that caused the collapse(s) (S&L scandal, etc) and gladly increases trade deficit to countries like China at the expense of the US economy.
(
http://www.youtube.com/watch?v=gAYL5H46QnQ) "Mannnnnn, I'm not part of this SYSTEM....."
Actually that started as a joke, but it seems a lot more fitting as I listen to it...
Seriously though, I don't think the Federal Reserve has much effect over most the things you mentioned in that paragraph...Some of that may be reasonable, but things are not as cut and dried as that, chances can be much more far-reaching than you seem to think. That being said, a lot of people IN government share your views. I'll post a link to RBJ's extensive posts on the economic collapse and reasons for at some point.
Quote Posted by nbohr1more
As a commercial institution it is appalling to see such pseudo-government powers be left to the Federal Reserve. We cannot "vote it out of office". With the many byzantine layers of operation that it negotiates only (possibly) the like of RBJ can grasp the after effects of it's works. The voter is helpless to know why adjustments to interest rates (etc) are supposed to be beneficial. Then, when all the careful planning goes bust, we are left with an explanation that "derivatives markets" are too complex to have foreseen the collapse... Only later to be shown that the big institution knew their would be some kind of collapse... just not as big as the current version. A complex situation is really just bald greed and corruption.
I don't have the energy right at the moment, but RBJ has done some pretty good, easy to understand descriptions of what exactly it is that the federal reserve does. There are lots of resources out there as well that explain it. Its not nearly as mysterious as it seems (I seriously doubt you've taken even 10 minutes to try to figure it out).
(
http://en.wikipedia.org/wiki/Federal_Reserve_System) As always, a good place to start. This isn't to say I fully understand its workings, but I also know better to act as if its some magical entity that
nobody understands.
Quote Posted by nbohr1more
After all that there is a yearn, maybe misguided, to see on simple terms what the economy is doing. Having the simple delimiter of a Gold standard means that a measuring stick can be held up to every abstraction and yield "what is the risk? what is this in gold units?" It doesn't have to gold at all. It could be any item of value or even Fiat Currency where "by law" the value does not fluctuate. Yes, the lack of ability to inflate would have the effect of funds conservation but Government control over inflation for RBJ's proposed "solution" to stagnant hoarding is nothing more than an abstraction of the Government taxing away funds anyway.
THE ECONOMY ISN'T SIMPLE. IF YOU COULD SEE IT IN SIMPLE TERMS THEN IT WOULD BE SIMPLE. JESUS.
Thats like saying "Yeah, you know what, physics is all well and good, but I want to see the math of how gravity works in simple terms! I don't care if it CANT be described simply!"
Did you actually read RBJ's post? A pretty big part of it was devoted to the theory of currency, you should probably read that part.
Quote Posted by nbohr1more
Government has x in valuables, it issues x times y in currency then it says "now y is equal to less x". In that scenario, the Government has increased it's wealth in x at the expense of the holder of y. It's just a tricky form of taxation. Why not have taxation be pure and transparent to the populace instead?
What the fuck? Clearly the government has assets, but I'm not sure (and RBJ can probably correct me) if you'd call it
wealth. The government is made up of people, nobody personally owns it. What isn't transparent about the tax code? Its once again whether you want to educate yourself enough to where you do understand it, instead of fucking complaining that you don't get anything. I don't understand taxes for shit really, but thats not my field. Plenty of people DO understand it though, and you could too if you wanted.
Quote Posted by nbohr1more
(I'm sure RBJ will whip out some thousand variable equation to beat me into submission :laff: )
That would be unnecessary and I hope he wouldn't waste his time.
EDIT: After thinking about it, I guess there was decent point in your post somewhere, though I don't think you were actually trying to make it. There is a problem when systems are so complex that it takes at least some education to understand at all, and significant education to truly understand, and the average individual is required to make some sense of them enough to vote for people who will have an effect on those systems. In that I feel the same frustration that you do, but I also blame myself for my lack of understanding. Being able to recognize when you are ignorant of something is a great skill really (it just takes someone knowledgeable making a fool of you to eventually aquire it). It does feel a little like the fox is in charge of the henhouse sometimes. That being said, with the existence of the internet, there is ample information, time and effort become the main (if not only) constraints to figuring out these systems for yourself.
nbohr1more on 16/9/2011 at 04:58
The tax code is not terribly obscured but the actions of people like Alan Greenspan (etc) will not be obvious to the voting populace who are at risk for being exploited by financial maneuvers. While the Federal Reserve is not (by design) an unfathomable institution, the many connections to commercial interests outside the government means that the rules by which it operates are not bound by the strictures of it's design. Again, Government itself has this consistency flaw but we can vote Government officials out... What can we do to oust Federal Reserve employees?
Sure economic transactions can be complex but there are root axioms that define their basic result.
We have, in the past, outlawed certain transaction types where the probability of exploitation was too great for the the lesser stakeholder. I'm not advocating the outright removal of the "collection of interest" like some religious fundamentalists might but I can see the value of making sure that we have a risk cap and possibly a complexity cap for transactions. I can see a Gold Standard having something akin to that affect but we really must keep the goal in mind rather than the apparatus. We don't need to do anything other than keep clear tabs on healthy transactions verses exploitative ones and make sure our Corporations answer to the voice of the people (through tax or law) rather the Government answer to our Corporations.
Would it be great if some philanthropic economic engineers brainiacs designed a super system that ensured no exploitation and was compatible with our current markets and institutions? YES
What are the chances that any of the empowered financial interests would go for such a system? If things were simplified, ordinary folks could watch over these checks and balances between corporate power and government power and decide where to tip the scales. (Yes, they would probably be fooled in less than a decade to forfeit that privilege for God, Children, or Terrorism like they did with the Patriot Act but we can at least try...)
Edit:
Oh, BTW... DON'T vote for Rick Perry folks ... LOL
BEAR on 16/9/2011 at 05:31
I've had that thought as well. You can keep building on top of a system that was not designed to deal with the situations it encounters, but at some point you have to start over from scratch. I have no idea if this could be done in finance or governance, but it is an interesting concept. Its not like a website that you can just take offline while you upgrade.
I feel like you have to design it independent of any actual ideology though. It seems once you get into politics, even smart engineers start thinking some stupid stuff (I know several that are raging libertarians, really smart people but they tend to assume everyone is like them which is very much not the case).
On the gold standard, RBJ has posted a lot here and Paul Krugman has posted quite a few things on his blog as well that would be worth reading. I couldn't in a brief search find the ones I was looking for, but I doubt it would take too long.
Rug Burn Junky on 16/9/2011 at 12:54
BEAR's done an admirable job picking up the gauntlet, and I don't think you can get a more succinct distillation than this.
Quote Posted by BEAR
You can already do that. Its called education. You cant demand that we change the way computers work because you don't understand electronics. If electronics were fucking everyone over, you could make the point that it should change, but that requires that you actually understand how it works in the first place, then you can suggest ways to change things. What you seem to be saying is that economics is BIG AND SCARY AND WE DONT GET IT, TEAR IT DOWN TO SOMETHING WE CAN UNDERSTAND EVEN IF IT CRASHES AND BURNS.
One of my favorite ways to describe Paul, and I don't think that I've used it here, is that he's a guy who discovered that Santa Claus isn't real (Gold isn't money), and dedicates himself to bringing down the consumer industrial complex so that we can go back to the time when elves made everything.
The Gold standard doesn't do any of the things nbohr has described. The only thing it does is remove some of the ability that society has to influence the economy when necessary and and instead subjects it to random chance. It's not "safe" or "conservative," it's fatalistic. You're still subject to as much inflation, deflation, boom, bust. More so, because you can't ameliorate it through policy. It's like building a computer, and saying "OK, we don't want anyone to break it by tinkering with it, so we're going to embed it in concrete, that will keep it from breaking." Well, no, that just removes the ability to actively fuck it up yourself, but it's pretty much a given that it will 'break' at some point, so it's fucktarded to remove the ability to 'fix' it when that happens. And you probably accelerated its breakdown just by that act.
But removing that ability is precisely the point for them. It is a paranoid, distrustful mindset, one which assumes that anyone who can influence the economy is necessarily corrupt. It goes beyond healthy skepticism, deep into psychopathic suspicion.
Forever420 on 16/9/2011 at 13:01
But your country had gold standard in yesteryear's happenings, did it not work? Or did it cause the great American Depression(which canada didn't have).
