by Doctor Science
A kleptocracy is when the government is run for the personal gain of the ruling class, without regard to what is good for the governed or the state as a whole. What do you call it when a business or other corporation is run for the personal gain of the high-level managers, without (much) regard for the stockholders or other owners, the employees, or the customers?
I’m asking because I think this is characteristic of large corporations (and often non-profits) these days, and I don’t know what to call it.
The Thief, by Jamie Wyeth.
From a purely legal point of view it is not the duty of a business to work for the benefit of employees or customers. Their duty is to do anything not illegal to benefit the owners/shareholders. If the guys running the outfit do it just for themselves I think it is called ‘bad stewardship’ and ‘breach of commitment’.
One could also call it SOB SOP or in one word ‘SOPoSOB’.
From a purely legal point of view it is not the duty of a business to work for the benefit of employees or customers. Their duty is to do anything not illegal to benefit the owners/shareholders. If the guys running the outfit do it just for themselves I think it is called ‘bad stewardship’ and ‘breach of commitment’.
One could also call it SOB SOP or in one word ‘SOPoSOB’.
Another example of public choice theory?
Legally, I think that’s “a breach of fiduciary duty”. But, yes, it is very common.
Another example of public choice theory?
Legally, I think that’s “a breach of fiduciary duty”. But, yes, it is very common.
suggestions:
a kleptoration
the Mob
suggestions:
a kleptoration
the Mob
Hey! Haven’t you heard? Greed is good. So instead of criminal theft, it’s just collateral damage.
Hey! Haven’t you heard? Greed is good. So instead of criminal theft, it’s just collateral damage.
@Hartmut: That’s the standard criticism of “corporate personhood”, that these entities are actually required to act in a profit-maximizing manner with no regard for good citizenship.
But I think this is a different criticism, that some modern corporations, and even non-profits, are actually set up to enrich high-level managers at the expense of the shareholders and everyone else. If they were actually the sociopathic profit-maximizing entities of the standard progressive critique, it would be an improvement.
A while back, Matthew Yglesias argued that you could make sense of some of this behavior in classic class-conflict terms. The Board of Directors of a big corporation consists of people of the same class as the high-level managers, whereas the small-potatoes nonvoting shareholders and the employees are of another class. Incompetent managers get huge compensation at the company’s expense because they’re all pals at the top. Letting the company fail is no big deal; it happens all the time. Everyone in the Board and everyone in upper management will be fine. Letting the company unionize, say, is a betrayal of the owner class, and is taken far more seriously.
@Hartmut: That’s the standard criticism of “corporate personhood”, that these entities are actually required to act in a profit-maximizing manner with no regard for good citizenship.
But I think this is a different criticism, that some modern corporations, and even non-profits, are actually set up to enrich high-level managers at the expense of the shareholders and everyone else. If they were actually the sociopathic profit-maximizing entities of the standard progressive critique, it would be an improvement.
A while back, Matthew Yglesias argued that you could make sense of some of this behavior in classic class-conflict terms. The Board of Directors of a big corporation consists of people of the same class as the high-level managers, whereas the small-potatoes nonvoting shareholders and the employees are of another class. Incompetent managers get huge compensation at the company’s expense because they’re all pals at the top. Letting the company fail is no big deal; it happens all the time. Everyone in the Board and everyone in upper management will be fine. Letting the company unionize, say, is a betrayal of the owner class, and is taken far more seriously.
I submit corporate bulimia.
Such managers are analogous to those with an eating disorder. At some level they are actually self-destructive, but they are driven to ingest far more than they really need. The behavior is parasitic, but to survive they must stop short of killing the host.
I submit corporate bulimia.
Such managers are analogous to those with an eating disorder. At some level they are actually self-destructive, but they are driven to ingest far more than they really need. The behavior is parasitic, but to survive they must stop short of killing the host.
Hedge fund managers call it a “20% incentive fee”, lopped off the top.
Dagny Taggart thought it to be “foreplay.” But she was a Randy one.
Rupert Murdoch calls it “reprehensible behavior by lower-level employees and those just above them whom they report to, but no one informed me about it, so how could I have told Maggie about it?”
Paul Ryan is getting ready to unveil his fresh, new term for such behavior — “Summa Theologica” — to which Dagny’s legs would clamp shut like a bear trap, but Paul is obviously seeing some sort of rational self-interest in being an incoherent d*ck.
Indulging shareholder interests is just another burdensome and misguided form of “Altruism” and “Collectivism”, so I’m all for coming up with a brand new word for the opposite of such behavior, since “Crime” has gone out of fashion.
But let’s stop and think for a moment. What precisely is a shareholder of a public corporation in 2012, when on most days split-second high frequency trading can amount to 70% of volume on the large worldwide exchanges?
Decent corporate officers with a long-term eye toward building a business that conforms to society’s rules (those last five words are always the ones the new crop of vicious ideological twits leave out of Milton Friedman’s otherwise strict formulation) who try and conform to shareholder interests might as well try and indulge a blood-sucking mosquito who lands on them 212 times a day.
Other new words required: What is it called when one Tea Party member with a sign reading “John 3.16” stands right next to another Tea Party member with a sign reading “Who is John Galt?”, both advocating identically radical public policies.
All I can come up with is: “Alien Marries Predator”, with the United States just being a breakaway set for them to trash, until someone has the fortitude to nuke from space.
“Kochleer Corporate Implant” ??
Too much of mouthful that would go in one ear and out the other.
Hedge fund managers call it a “20% incentive fee”, lopped off the top.
Dagny Taggart thought it to be “foreplay.” But she was a Randy one.
Rupert Murdoch calls it “reprehensible behavior by lower-level employees and those just above them whom they report to, but no one informed me about it, so how could I have told Maggie about it?”
Paul Ryan is getting ready to unveil his fresh, new term for such behavior — “Summa Theologica” — to which Dagny’s legs would clamp shut like a bear trap, but Paul is obviously seeing some sort of rational self-interest in being an incoherent d*ck.
Indulging shareholder interests is just another burdensome and misguided form of “Altruism” and “Collectivism”, so I’m all for coming up with a brand new word for the opposite of such behavior, since “Crime” has gone out of fashion.
But let’s stop and think for a moment. What precisely is a shareholder of a public corporation in 2012, when on most days split-second high frequency trading can amount to 70% of volume on the large worldwide exchanges?
Decent corporate officers with a long-term eye toward building a business that conforms to society’s rules (those last five words are always the ones the new crop of vicious ideological twits leave out of Milton Friedman’s otherwise strict formulation) who try and conform to shareholder interests might as well try and indulge a blood-sucking mosquito who lands on them 212 times a day.
Other new words required: What is it called when one Tea Party member with a sign reading “John 3.16” stands right next to another Tea Party member with a sign reading “Who is John Galt?”, both advocating identically radical public policies.
All I can come up with is: “Alien Marries Predator”, with the United States just being a breakaway set for them to trash, until someone has the fortitude to nuke from space.
“Kochleer Corporate Implant” ??
Too much of mouthful that would go in one ear and out the other.
Regarding the sign-wielding Tea Partiers above:
I think prostitutes, being pithier, would name them after Secret Service members (“secret service member” will never sound “not dirty” again):::::
Johns
Regarding the sign-wielding Tea Partiers above:
I think prostitutes, being pithier, would name them after Secret Service members (“secret service member” will never sound “not dirty” again):::::
Johns
These days, unfortunately, the most accurate description of the situation you describe seems to be “business as usual”. But you might also describe it as upper mismanagement or management hypertrophy.
These days, unfortunately, the most accurate description of the situation you describe seems to be “business as usual”. But you might also describe it as upper mismanagement or management hypertrophy.
You know, I think we already have a term for what Doctor Science is looking for:
The Prosperity Gospel
The acronym is PG (add the mathematical sign for infinity, which I can’t produce on my keyboard) …
Another candidate, which I believe the individuals Doctor Science is referring to use when referring to themselves, is simply …. ME.
MEISM
Of course, some of them, like Richard Nixon, refer to themselves in the third person, so, I don’t know.
The President is not in the giving vein today.
You know, I think we already have a term for what Doctor Science is looking for:
The Prosperity Gospel
The acronym is PG (add the mathematical sign for infinity, which I can’t produce on my keyboard) …
Another candidate, which I believe the individuals Doctor Science is referring to use when referring to themselves, is simply …. ME.
MEISM
Of course, some of them, like Richard Nixon, refer to themselves in the third person, so, I don’t know.
The President is not in the giving vein today.
The situation you describe is traditionally known as the Iron Law of Institutions:
“The people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself. Thus, they would rather the institution ‘fail’ while they remain in power within the institution than for the institution to ‘succeed’ if that requires them to lose power within the institution.”
The situation you describe is traditionally known as the Iron Law of Institutions:
“The people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself. Thus, they would rather the institution ‘fail’ while they remain in power within the institution than for the institution to ‘succeed’ if that requires them to lose power within the institution.”
But let’s stop and think for a moment. What precisely is a shareholder of a public corporation in 2012, when on most days split-second high frequency trading can amount to 70% of volume on the large worldwide exchanges?
fodder.
But let’s stop and think for a moment. What precisely is a shareholder of a public corporation in 2012, when on most days split-second high frequency trading can amount to 70% of volume on the large worldwide exchanges?
fodder.
Jay:
Source of quote, plz?
Jay:
Source of quote, plz?
“Source of quote, plz?”
Doc,
Google Jon Schwarz, A Tiny Revolution. That’s where I first encountered that pearl of wisdom. Worth a bookmark.
“Source of quote, plz?”
Doc,
Google Jon Schwarz, A Tiny Revolution. That’s where I first encountered that pearl of wisdom. Worth a bookmark.
And applicable to government bureaucracies, labor unions, and non-profits every bit as much as corporations. Which is why you don’t put your trust in any of them.
And applicable to government bureaucracies, labor unions, and non-profits every bit as much as corporations. Which is why you don’t put your trust in any of them.
“That’s the standard criticism of “corporate personhood”, that these entities are actually required to act in a profit-maximizing manner with no regard for good citizenship.”
To my admittedly limited knowledge, companies have no legal obligation to maximize profits. They have a fiduciary duty to shareholders, which means acting in the best interests of the shareholders, i.e. treating the shareholders’ interest as though it were their own. But the best interest is not legally defined as profit-maximizing. Honestly, even if it were, how on earth would you calculate that? Most profitable along what timeline?
It is the case that companies often defend themselves in public, or in the newspaper, by claiming a duty to profit-maximize, but they are are lying every time they say it. Notably, they do not make that claim in court, because it has no legal basis.
“That’s the standard criticism of “corporate personhood”, that these entities are actually required to act in a profit-maximizing manner with no regard for good citizenship.”
To my admittedly limited knowledge, companies have no legal obligation to maximize profits. They have a fiduciary duty to shareholders, which means acting in the best interests of the shareholders, i.e. treating the shareholders’ interest as though it were their own. But the best interest is not legally defined as profit-maximizing. Honestly, even if it were, how on earth would you calculate that? Most profitable along what timeline?
It is the case that companies often defend themselves in public, or in the newspaper, by claiming a duty to profit-maximize, but they are are lying every time they say it. Notably, they do not make that claim in court, because it has no legal basis.
These two articles, here and here, seem to be related. The first is about how Apple avoids paying tax in the US thru a variety of methods, all of which are apparently legal. The second is a bit more personal, what I now have to wrestle with for my tax return. I tend to think that when the tax code creates a situation where you work to find loopholes and ways around being taxed, that spreads out and becomes the ethos of the company at large.
These two articles, here and here, seem to be related. The first is about how Apple avoids paying tax in the US thru a variety of methods, all of which are apparently legal. The second is a bit more personal, what I now have to wrestle with for my tax return. I tend to think that when the tax code creates a situation where you work to find loopholes and ways around being taxed, that spreads out and becomes the ethos of the company at large.
The reactions of C-suites and free-market mouthpieces everywhere on proposed “say on pay” rules for shareholders are instructive here: They’re almost universally against it.
The reactions of C-suites and free-market mouthpieces everywhere on proposed “say on pay” rules for shareholders are instructive here: They’re almost universally against it.
I have no links at hand but I remember occasions where the question of ‘best interest of shareholders’ came indeed down to a timeline question in the courts. Iirc the company leaderships in question committed the sin of long term planning at the expense of short term profits and got sued by shareholders who wanted money now and to hell with keeping the firms healthy.
In essence the rule is that one has to look at how long the typical shareholder keeps his shares and to not plan beyond that (at least not, if it costs money).
Calls for turning the goose laying golden eggs into dinner can be safely ignored but no eggs may be diverted for a breeding program.
I have no links at hand but I remember occasions where the question of ‘best interest of shareholders’ came indeed down to a timeline question in the courts. Iirc the company leaderships in question committed the sin of long term planning at the expense of short term profits and got sued by shareholders who wanted money now and to hell with keeping the firms healthy.
In essence the rule is that one has to look at how long the typical shareholder keeps his shares and to not plan beyond that (at least not, if it costs money).
Calls for turning the goose laying golden eggs into dinner can be safely ignored but no eggs may be diverted for a breeding program.
I think of this stuff as a kind of rent-seeking.
In large public corporations, ownership is very diffuse, and owners have little or no direct hands-on involvement with operating the business. Boards are supposed to provide oversight, but IMO there’s a social dynamic in play — more or less the equivalent of an ‘old boys club’ — that makes it less likely that bad, or at least self-interested, behavior on the part of management will be called to account.
So, in the absence of meaningful oversight, lots of upper level managers use their executive position to extract wealth from the enterprise and put it in their own pockets.
To qualify as rent-seeking, the wealth extracted would have to be greater than the wealth created by their efforts, which can often be hard to measure. In 2010, the top 500 executives in the US made $4.5B, so, $9M each. Maybe each of those folks did, in fact, personally create $9M in value through their own efforts and managerial goodness.
I’m not sure how you would tease apart all of the things that contribute to the value created by a very large enterprise to measure that accurately. But I’m willing to stipulate it as, at least, a possibility, in some cases.
The thing that folks seem to forget, however, when people start arguing about excessive executive compensation is that IT’S NOT THEIR MONEY. The value created by the enterprise does not belong to them, it belongs to the owners. That’s the capitalist model. I’m sure they like to think of the place they work as being “their company”, but it’s not theirs.
It’s not their money.
You personally were responsible for $9M of value creation through your management of an enterprise? Great! Good job. We’ll keep you on. Now hand over that money, because it’s not yours.
Or, you know, you can have some. If you want $9M in compensation, you need to, personally, generate (to pull a number out of my butt) $30M in value. You get some, we get most. Because we’re the owners, not you.
That’s how capitalism is supposed to work.
An interesting factoid from here:
Are CEOs personally responsible for creating ten times as much value now, than they were in 1996?
Do CEOs personally create 20 times more of the wealth represented by an enterprise than a rank and file worker does nowadays, compared to the amount they did in 1965?
I don’t know the answers to either of these questions. I will say that both assertions seem unlikely, to me.
I think of this stuff as a kind of rent-seeking.
In large public corporations, ownership is very diffuse, and owners have little or no direct hands-on involvement with operating the business. Boards are supposed to provide oversight, but IMO there’s a social dynamic in play — more or less the equivalent of an ‘old boys club’ — that makes it less likely that bad, or at least self-interested, behavior on the part of management will be called to account.
So, in the absence of meaningful oversight, lots of upper level managers use their executive position to extract wealth from the enterprise and put it in their own pockets.
To qualify as rent-seeking, the wealth extracted would have to be greater than the wealth created by their efforts, which can often be hard to measure. In 2010, the top 500 executives in the US made $4.5B, so, $9M each. Maybe each of those folks did, in fact, personally create $9M in value through their own efforts and managerial goodness.
I’m not sure how you would tease apart all of the things that contribute to the value created by a very large enterprise to measure that accurately. But I’m willing to stipulate it as, at least, a possibility, in some cases.
The thing that folks seem to forget, however, when people start arguing about excessive executive compensation is that IT’S NOT THEIR MONEY. The value created by the enterprise does not belong to them, it belongs to the owners. That’s the capitalist model. I’m sure they like to think of the place they work as being “their company”, but it’s not theirs.
It’s not their money.
You personally were responsible for $9M of value creation through your management of an enterprise? Great! Good job. We’ll keep you on. Now hand over that money, because it’s not yours.
Or, you know, you can have some. If you want $9M in compensation, you need to, personally, generate (to pull a number out of my butt) $30M in value. You get some, we get most. Because we’re the owners, not you.
That’s how capitalism is supposed to work.
An interesting factoid from here:
Are CEOs personally responsible for creating ten times as much value now, than they were in 1996?
Do CEOs personally create 20 times more of the wealth represented by an enterprise than a rank and file worker does nowadays, compared to the amount they did in 1965?
I don’t know the answers to either of these questions. I will say that both assertions seem unlikely, to me.
“In large public corporations, ownership is very diffuse, and owners have little or no direct hands-on involvement with operating the business.”
Substitute “government” for “business”, and “voters” for “owners”, and you’ve got public choice theory in a nutshell. People placed in positions of responsiblity have a tendency to act in their own interest, not in the interest of their fiduciaries, and the only real way around this is to yoke their interest to that of their fiduciaries. In democracy, voting out those who don’t act in the public’s behalf, in business, voting your shares to accomplish the same thing.
In both cases, those exercising the delegated power have a strong interest in confusing matters enough that their fiduciaries lack the confidence that they’re being screwed needed to act.
The best solution is minimizing delegation.
“In large public corporations, ownership is very diffuse, and owners have little or no direct hands-on involvement with operating the business.”
Substitute “government” for “business”, and “voters” for “owners”, and you’ve got public choice theory in a nutshell. People placed in positions of responsiblity have a tendency to act in their own interest, not in the interest of their fiduciaries, and the only real way around this is to yoke their interest to that of their fiduciaries. In democracy, voting out those who don’t act in the public’s behalf, in business, voting your shares to accomplish the same thing.
In both cases, those exercising the delegated power have a strong interest in confusing matters enough that their fiduciaries lack the confidence that they’re being screwed needed to act.
The best solution is minimizing delegation.
The best solution is minimizing delegation.
“Every man a king”
–Huey P. Long
The best solution is minimizing delegation.
“Every man a king”
–Huey P. Long
Latin words that might be used in such a word:
latro-
avaric-
How about:
“latrofuscation”: theft by making everything too confusing
“avaricibonism”: “the belief that greed is good”
avaricianism?
Or the simple “kleptarky”?
Latin words that might be used in such a word:
latro-
avaric-
How about:
“latrofuscation”: theft by making everything too confusing
“avaricibonism”: “the belief that greed is good”
avaricianism?
Or the simple “kleptarky”?
Brett:
I observe, though, that there are many more controls on how much money a person in a government bureaucracy can get out of the system, compared to someone in a comparably-sized private organization. True “rent-seeking” (as I understand the term) on the part of individuals in govt. usually involves kickbacks or corruption in some form, it’s not direct grabbing of the money as it goes by.
Brett:
I observe, though, that there are many more controls on how much money a person in a government bureaucracy can get out of the system, compared to someone in a comparably-sized private organization. True “rent-seeking” (as I understand the term) on the part of individuals in govt. usually involves kickbacks or corruption in some form, it’s not direct grabbing of the money as it goes by.
Doctor Science, there are an awful lot of ways besides money in which a person suitably inclined can take compensation. (Spending other people’s money on their own charitable causes, for instance, instead of pocketing it.) But even sticking to money, I’m sure you’re familiar with the almost eerie way people who get elected to public office become hugely better at picking stocks. How their family members start getting well compensated positions requiring minimal actual work. (Like the one that was created for Michele, and then abolished after she didn’t need it anymore.)
Laundering the public’s money through outside entities in this way can be vastly inefficient, (I’d doubt as much as 5% of the money given to Solyndra made it’s way back to Obama!) but when it’s other people’s money you’re laundering, who needs efficiency?
Congressmen still get wealthy wildly beyond their nominal pay.
Doctor Science, there are an awful lot of ways besides money in which a person suitably inclined can take compensation. (Spending other people’s money on their own charitable causes, for instance, instead of pocketing it.) But even sticking to money, I’m sure you’re familiar with the almost eerie way people who get elected to public office become hugely better at picking stocks. How their family members start getting well compensated positions requiring minimal actual work. (Like the one that was created for Michele, and then abolished after she didn’t need it anymore.)
Laundering the public’s money through outside entities in this way can be vastly inefficient, (I’d doubt as much as 5% of the money given to Solyndra made it’s way back to Obama!) but when it’s other people’s money you’re laundering, who needs efficiency?
Congressmen still get wealthy wildly beyond their nominal pay.
Come to think of it, the “spending other people’s money on your own charitable causes” form of embezzlement applies to business, too. Explains why some profitable companies spend their profits on charity rather than dividends to the stock owners.
Come to think of it, the “spending other people’s money on your own charitable causes” form of embezzlement applies to business, too. Explains why some profitable companies spend their profits on charity rather than dividends to the stock owners.
Another example of public choice theory?
To me, the chief failing of economics, or to any academic or theoretical inquiry into human activity really, is the assumption of a rational human actor, making decisions based on their own self-interest.
People are motivated by lots of things, including but far from limited to their own self interest.
Plus, people are really really really quirky. They do a lot of stuff that doesn’t make a whole lot of sense, even if they are motivated by what they perceive to be their own self-interest.
So, in real life, not purely self-interested, and not particularly rational.
Are there any economic / social / political models that are based on what real live people *actually do*, as opposed to what some ideal Rational Actor would do? I’m curious.
Not presenting this as an argument for or against anybody’s points here, it’s just an observation.
Another example of public choice theory?
To me, the chief failing of economics, or to any academic or theoretical inquiry into human activity really, is the assumption of a rational human actor, making decisions based on their own self-interest.
People are motivated by lots of things, including but far from limited to their own self interest.
Plus, people are really really really quirky. They do a lot of stuff that doesn’t make a whole lot of sense, even if they are motivated by what they perceive to be their own self-interest.
So, in real life, not purely self-interested, and not particularly rational.
Are there any economic / social / political models that are based on what real live people *actually do*, as opposed to what some ideal Rational Actor would do? I’m curious.
Not presenting this as an argument for or against anybody’s points here, it’s just an observation.
While I agree with russell’s general sentiment, here, the basic problem is it is their money. The basic problem that russell has with the situation is, as I see it: that people are being legally compensated in ways that are not really in the best interests of the shareholders as a group.
The disconnect between how things should work and how they actually do work isn’t something I can get myself terribly worked up over. But that doesn’t mean that change can’t happen, just that I’m averse to social-engineering approaches.
While I agree with russell’s general sentiment, here, the basic problem is it is their money. The basic problem that russell has with the situation is, as I see it: that people are being legally compensated in ways that are not really in the best interests of the shareholders as a group.
The disconnect between how things should work and how they actually do work isn’t something I can get myself terribly worked up over. But that doesn’t mean that change can’t happen, just that I’m averse to social-engineering approaches.
Corporate lobbies I am not too particularly fond of. I don’t even like employee PACs; those get $0 from me. I am not unsympathetic to the idea of legislation that keeps corporations from spending money to influence legislation without some level of shareholder approval.
Corporate lobbies I am not too particularly fond of. I don’t even like employee PACs; those get $0 from me. I am not unsympathetic to the idea of legislation that keeps corporations from spending money to influence legislation without some level of shareholder approval.
Russell asked:
“Are there any economic / social / political models that are based on what real live people *actually do*, as opposed to what some ideal Rational Actor would do? I’m curious.”
Not according to Alan Greenspan, who is still in shock that his quantitative forecasting models forgot to include the variable for human nature. As Walker Percy noted in another context, human beings can “know” and explain every thing in the universe except themselves.
Slart wrote: “just that I’m averse to social-engineering approaches.”
Are you sure? How about stock options tied to stock performance? Surely, compensation and reward as incentive or disincentive are forms of social engineering, whether its CEOs or dogs.
I would think packing the Board of Directors with pliable, like-minded folks and then structuring a richly-endowed golden parachute is social engineering.
Brett wrote: “charitable causes” form of embezzlement applies to business, too.”
Well, I’m sure there are abuses here, too, but as a blanket statement (yes, I know, you have your blankets and I have mine …;) but the only economist I’m aware of that used one word to mean another in that way was Lewis Carroll.
Russell asked:
“Are there any economic / social / political models that are based on what real live people *actually do*, as opposed to what some ideal Rational Actor would do? I’m curious.”
Not according to Alan Greenspan, who is still in shock that his quantitative forecasting models forgot to include the variable for human nature. As Walker Percy noted in another context, human beings can “know” and explain every thing in the universe except themselves.
Slart wrote: “just that I’m averse to social-engineering approaches.”
Are you sure? How about stock options tied to stock performance? Surely, compensation and reward as incentive or disincentive are forms of social engineering, whether its CEOs or dogs.
I would think packing the Board of Directors with pliable, like-minded folks and then structuring a richly-endowed golden parachute is social engineering.
Brett wrote: “charitable causes” form of embezzlement applies to business, too.”
Well, I’m sure there are abuses here, too, but as a blanket statement (yes, I know, you have your blankets and I have mine …;) but the only economist I’m aware of that used one word to mean another in that way was Lewis Carroll.
Also Slart:
“The disconnect between how things should work and how they actually do work isn’t something I can get myself terribly worked up over.”
Aren’t you in the engineering field? “:O
Remind to duck next time one of your missiles is launched.
Also Slart:
“The disconnect between how things should work and how they actually do work isn’t something I can get myself terribly worked up over.”
Aren’t you in the engineering field? “:O
Remind to duck next time one of your missiles is launched.
They’re there to attract skilled people to the jobs. That’s usually what I think of as “the market”.
Trust, but verify. Always. But my purpose there was not to say I am unaware of said disconnects. Having been witness to a truly staggering number of design errors, and having made a few myself, I am far from unmindful of aforementioned disconnects. I can do something about those, personally.
They’re there to attract skilled people to the jobs. That’s usually what I think of as “the market”.
Trust, but verify. Always. But my purpose there was not to say I am unaware of said disconnects. Having been witness to a truly staggering number of design errors, and having made a few myself, I am far from unmindful of aforementioned disconnects. I can do something about those, personally.
I would think packing the Board of Directors with pliable, like-minded folks and then structuring a richly-endowed golden parachute is social engineering.
If it is, it’s social engineering on a micro basis and it can be changed without, literally, an act of congress. More accurately, it’s just a contract between two parties, the senior executive and the company that wants to hire him/her.
There is a tendency to lump all publicly traded corporations into a single mass and to treat senior management similarly. It is a bit more complicated. Not just anyone has the ability to manage a huge enterprise. There are qualitative reasons why senior executives, especially those who run companies well, are paid handsomely, just as there are qualitative reasons why certain coaches and certain players are paid way above prevailing norms.
Different companies have different cultures, products, services, etc that drive management’s conduct and planning. There isn’t a ‘one size fits all’ set of rules that will effectively end abuses without also effectively hobbling creativity, growth, etc. If golden parachutes are bad, I suggest that golden handcuffs are worse. You can have senior management that is captive to a certain philosophy that they might disagree with and want to change, but the cost of doing so is their careers and they have no where else to go. Or, you can have senior management who can push back and the board has to ask itself, ‘is it worth cutting this person loose and writing a big check?’
I would think packing the Board of Directors with pliable, like-minded folks and then structuring a richly-endowed golden parachute is social engineering.
If it is, it’s social engineering on a micro basis and it can be changed without, literally, an act of congress. More accurately, it’s just a contract between two parties, the senior executive and the company that wants to hire him/her.
There is a tendency to lump all publicly traded corporations into a single mass and to treat senior management similarly. It is a bit more complicated. Not just anyone has the ability to manage a huge enterprise. There are qualitative reasons why senior executives, especially those who run companies well, are paid handsomely, just as there are qualitative reasons why certain coaches and certain players are paid way above prevailing norms.
Different companies have different cultures, products, services, etc that drive management’s conduct and planning. There isn’t a ‘one size fits all’ set of rules that will effectively end abuses without also effectively hobbling creativity, growth, etc. If golden parachutes are bad, I suggest that golden handcuffs are worse. You can have senior management that is captive to a certain philosophy that they might disagree with and want to change, but the cost of doing so is their careers and they have no where else to go. Or, you can have senior management who can push back and the board has to ask itself, ‘is it worth cutting this person loose and writing a big check?’
There isn’t a ‘one size fits all’ set of rules that will effectively end abuses without also effectively hobbling creativity, growth, etc.
Perhaps not, but no one has suggested that there’s one, at least not that I’ve noticed on this thread. Mostly, everyone is just describing a screwed up situation and pondering how it came to be.
The thing is, how much money does it take to get someone to be a good CEO? I disagree with russell’s definition of rent-seeking. It is my understanding that it’s not a matter of what the executive produces. It’s a matter of how much that executive is receiving in exchange for his/her (given the subject, almost always his) services relative to the least he would accept in exchange for those same services.
Of course, most people will accept more if they can get it. (I understand Mitt’s dad turned down some amount of compensation he didn’t feel was necessary, back in the day.) The question is whether or not the “more” is necessary to attract the needed talent.
Even the economics books don’t extend the supply and demand curves all the way from zero to infinity. They usually just stop before things get ridiculous.
Just because people are getting the money they are now getting doesn’t mean that it’s the only way for things to work, because it’s not that way everywhere in the world today, and it’s not the way it used to work in this country a number of decades ago – in very prosperous times.
There isn’t a ‘one size fits all’ set of rules that will effectively end abuses without also effectively hobbling creativity, growth, etc.
Perhaps not, but no one has suggested that there’s one, at least not that I’ve noticed on this thread. Mostly, everyone is just describing a screwed up situation and pondering how it came to be.
The thing is, how much money does it take to get someone to be a good CEO? I disagree with russell’s definition of rent-seeking. It is my understanding that it’s not a matter of what the executive produces. It’s a matter of how much that executive is receiving in exchange for his/her (given the subject, almost always his) services relative to the least he would accept in exchange for those same services.
Of course, most people will accept more if they can get it. (I understand Mitt’s dad turned down some amount of compensation he didn’t feel was necessary, back in the day.) The question is whether or not the “more” is necessary to attract the needed talent.
Even the economics books don’t extend the supply and demand curves all the way from zero to infinity. They usually just stop before things get ridiculous.
Just because people are getting the money they are now getting doesn’t mean that it’s the only way for things to work, because it’s not that way everywhere in the world today, and it’s not the way it used to work in this country a number of decades ago – in very prosperous times.
The question is whether or not the “more” is necessary to attract the needed talent.
This question cuts across every line of enterprise and undertaking imaginable at the margins. Is X athlete really worth what he/she is being paid? Would he/she still do the job for less? Ditto actors, musicians, Thomas Friedman, whoever.
Just because people are getting the money they are now getting doesn’t mean that it’s the only way for things to work, because it’s not that way everywhere in the world today
Where else in the world is sufficiently similar to the US to allow for a meaningful comparison? Size matters. So does diversity. So does average levels of education. Bigger means more unwieldy, less amenable to centrally planned/mandated control.
and it’s not the way it used to work in this country a number of decades ago – in very prosperous times.
This isn’t the first reference by a progressive at ObWi that there were better times in the past. I’d like to know when that was? More importantly, I’d like to know which progressives then thought that corporate governance, management, high level compensation etc were all just fine? I ask this because I don’t remember a time when the left–speaking generally here–thought our economy, or market capitalism then was just hunky dory. Just the opposite, in fact.
The question is whether or not the “more” is necessary to attract the needed talent.
This question cuts across every line of enterprise and undertaking imaginable at the margins. Is X athlete really worth what he/she is being paid? Would he/she still do the job for less? Ditto actors, musicians, Thomas Friedman, whoever.
Just because people are getting the money they are now getting doesn’t mean that it’s the only way for things to work, because it’s not that way everywhere in the world today
Where else in the world is sufficiently similar to the US to allow for a meaningful comparison? Size matters. So does diversity. So does average levels of education. Bigger means more unwieldy, less amenable to centrally planned/mandated control.
and it’s not the way it used to work in this country a number of decades ago – in very prosperous times.
This isn’t the first reference by a progressive at ObWi that there were better times in the past. I’d like to know when that was? More importantly, I’d like to know which progressives then thought that corporate governance, management, high level compensation etc were all just fine? I ask this because I don’t remember a time when the left–speaking generally here–thought our economy, or market capitalism then was just hunky dory. Just the opposite, in fact.
More importantly, I’d like to know which progressives then thought that corporate governance, management, high level compensation etc were all just fine?
How is that relevant? I can’t speak for progressives generally, particularly the ones who were around in, say, the 1950’s. And let’s not exlude the middle between “all just fine” and “totally fncked up.” Things could have been better without having been perfect.
Do you think things or just fine or hunky dory now? Do you see no problems with the levels of executive compensation, particularly in relation to performance in many cases? How much would a crappy CEO have to make for you to think there was something wrong? Or a even good CEO? Is there a theoretical limit short of all the money in the world?
More importantly, I’d like to know which progressives then thought that corporate governance, management, high level compensation etc were all just fine?
How is that relevant? I can’t speak for progressives generally, particularly the ones who were around in, say, the 1950’s. And let’s not exlude the middle between “all just fine” and “totally fncked up.” Things could have been better without having been perfect.
Do you think things or just fine or hunky dory now? Do you see no problems with the levels of executive compensation, particularly in relation to performance in many cases? How much would a crappy CEO have to make for you to think there was something wrong? Or a even good CEO? Is there a theoretical limit short of all the money in the world?
the basic problem is it is their money.
Well, yeah, once the contract is signed.
Not just anyone has the ability to manage a huge enterprise.
Yes, that’s true. Not just anyone has the ability to do anything you care to name.
But is C-level special sauce 166% more valuable than it was in 1996? Is it 20 times more valuable than worker-bee contributions, relative to that ratio in 1965?
At an intuitive level, it seems like there’s more involved here than a pure market reckoning of fair compensation.
It is my understanding that it’s not a matter of what the executive produces. It’s a matter of how much that executive is receiving in exchange for his/her (given the subject, almost always his) services relative to the least he would accept in exchange for those same services.
Yes, that’s pretty much the market-oriented analysis of how reasonable compensation should be arrived at.
Personally, I’d prefer a model that is aligned more with value creation, and less with market dynamics. I’m actually fine with extraordinarily productive people getting paid a lot of money, even if somebody else (or, for that matter, they themselves) would do the job for less.
I recognize that’s not what we have, and I don’t expect that to change. I’m just offering my point of view.
Where else in the world is sufficiently similar to the US to allow for a meaningful comparison?
Since corporations aren’t limited by national or geographic boundaries, the list is quite long. Off the top of my head, I’d say that Japan, the UK, and Germany all host corporations that are similiar in size and complexity to Fortune 500 corps here. The list is likely quite a bit longer.
Here’s an interesting discussion of C-level compensation across different countries.
the basic problem is it is their money.
Well, yeah, once the contract is signed.
Not just anyone has the ability to manage a huge enterprise.
Yes, that’s true. Not just anyone has the ability to do anything you care to name.
But is C-level special sauce 166% more valuable than it was in 1996? Is it 20 times more valuable than worker-bee contributions, relative to that ratio in 1965?
At an intuitive level, it seems like there’s more involved here than a pure market reckoning of fair compensation.
It is my understanding that it’s not a matter of what the executive produces. It’s a matter of how much that executive is receiving in exchange for his/her (given the subject, almost always his) services relative to the least he would accept in exchange for those same services.
Yes, that’s pretty much the market-oriented analysis of how reasonable compensation should be arrived at.
Personally, I’d prefer a model that is aligned more with value creation, and less with market dynamics. I’m actually fine with extraordinarily productive people getting paid a lot of money, even if somebody else (or, for that matter, they themselves) would do the job for less.
I recognize that’s not what we have, and I don’t expect that to change. I’m just offering my point of view.
Where else in the world is sufficiently similar to the US to allow for a meaningful comparison?
Since corporations aren’t limited by national or geographic boundaries, the list is quite long. Off the top of my head, I’d say that Japan, the UK, and Germany all host corporations that are similiar in size and complexity to Fortune 500 corps here. The list is likely quite a bit longer.
Here’s an interesting discussion of C-level compensation across different countries.
How is that relevant?
It’s relevant in many ways. I can’t think of a time in the past when there weren’t as many downsides as there were upsides. I also can’t think of a time in the past when the left wasn’t painting a picture of economic doom and gloom courtesy of corporate America.
Do you think things or just fine or hunky dory now?
No. I think we are over-regulated in areas where regulations simply are not necessary. The recent proposed rules for family farm labor are a good indication of how regulatory progressives think. And of how intrusive regulatory progressives are willing to be. Our city/state/federal debt load and size are huge and no one offers, other than cutting national defense, anything approaching a roll back. I think there is plenty wrong.
Do you see no problems with the levels of executive compensation, particularly in relation to performance in many cases?
If we had an across the board 50% reduction in executive compensation tomorrow, how would that make life any better for anyone? Worrying about executive compensation with 15 trillion in debt and no end in sight is, to borrow an over used expression, rearranging deck chairs on the Titanic.
How much would a crappy CEO have to make for you to think there was something wrong?
I am indifferent to executive compensation. It doesn’t affect me or anyone else. It is a miniscule slice of the economy. Microscopic if not subatomic. To me, the value of making an issue out of executive compensation is purely political. The purpose is to generate resentment and jealously and the implication is that government can and should fix the problem.
How is that relevant?
It’s relevant in many ways. I can’t think of a time in the past when there weren’t as many downsides as there were upsides. I also can’t think of a time in the past when the left wasn’t painting a picture of economic doom and gloom courtesy of corporate America.
Do you think things or just fine or hunky dory now?
No. I think we are over-regulated in areas where regulations simply are not necessary. The recent proposed rules for family farm labor are a good indication of how regulatory progressives think. And of how intrusive regulatory progressives are willing to be. Our city/state/federal debt load and size are huge and no one offers, other than cutting national defense, anything approaching a roll back. I think there is plenty wrong.
Do you see no problems with the levels of executive compensation, particularly in relation to performance in many cases?
If we had an across the board 50% reduction in executive compensation tomorrow, how would that make life any better for anyone? Worrying about executive compensation with 15 trillion in debt and no end in sight is, to borrow an over used expression, rearranging deck chairs on the Titanic.
How much would a crappy CEO have to make for you to think there was something wrong?
I am indifferent to executive compensation. It doesn’t affect me or anyone else. It is a miniscule slice of the economy. Microscopic if not subatomic. To me, the value of making an issue out of executive compensation is purely political. The purpose is to generate resentment and jealously and the implication is that government can and should fix the problem.
I don’t think it is just progressives who harken to the past, I seem to remember some conservatives doing the same. So it’s not a matter of simply doing that, it is what they are identifying as being worth preserving.
I can’t speak for Russell, but it isn’t that if executive compensation is reduced, things go back to being hunky-dory. It is that executive compensation seems to be a symptom of a lack of connection between the process of value creation and the enterprises that are supposed to make that value. When the bigger system is out of whack, the smaller parts are going to exhibit some problems of their own.
Not trying to hit you where you live, but I think a similar example would be the problems in the Texas (and the US) legal systems, with things like Cameron Todd Willingham getting executed or this guy staying in prison for 25 years. Simply stopping all executions doesn’t really solve the problems, because these things are symptomatic of deeper problems, even if these cases are a microscopic slice of the justice system. But getting at the human actors related to the problem (as the suggestion of legal penalties for prosecutors who withhold exculpatory evidence) is perhaps the only way we have at dealing with the problem.
I don’t think it is just progressives who harken to the past, I seem to remember some conservatives doing the same. So it’s not a matter of simply doing that, it is what they are identifying as being worth preserving.
I can’t speak for Russell, but it isn’t that if executive compensation is reduced, things go back to being hunky-dory. It is that executive compensation seems to be a symptom of a lack of connection between the process of value creation and the enterprises that are supposed to make that value. When the bigger system is out of whack, the smaller parts are going to exhibit some problems of their own.
Not trying to hit you where you live, but I think a similar example would be the problems in the Texas (and the US) legal systems, with things like Cameron Todd Willingham getting executed or this guy staying in prison for 25 years. Simply stopping all executions doesn’t really solve the problems, because these things are symptomatic of deeper problems, even if these cases are a microscopic slice of the justice system. But getting at the human actors related to the problem (as the suggestion of legal penalties for prosecutors who withhold exculpatory evidence) is perhaps the only way we have at dealing with the problem.
According to the Center on Budget and Policy Priorities, CEO after-tax income in 1980, adjusted for inflation, was 42 times higher than the wage of the average production worker. In 1990, that number climbed to 107.
By, 2010, CEO pay was 343 times the wages earned by the average American worker.
Has the comparative “talent” of the corporate elite (I mean that word in the good, lost sense of the long ago and the far away) increased that exponentially over and above the “talent” of the average American worker?
A related question might be, to what quantifiable extent does CEO pay now reflect, in general, an incentive to keep the pay of the average American worker, and that of their counterparts in other countries, relatively stagnant, regardless of those worker’s talents?
MckT asks: “Would he/she still do the job for less?”
The metric used in reference to the average worker by the hard-as*es/hard knocks types I’ve known is “not only will they do the job for less, but they’ll be happy to have the work.”
Just as high marginal taxes well into the 1960s for all levels of income didn’t seem to stunt growth and productivity during what many feel was a golden age (fair-turnabout here; many conservatives believe the 1950s was somehow a sweet time for business and, entrepreneurship, and the country as well), I don’t think some reasonable limits on pay disparities will make a dent in the go-getter, highly motivated elite.
Unless something else is happening in the culture.
Now, you might well arsk WHO will decide and impose these reasonable limits.
Personally, I’d prefer the hyper-productive elite do it themselves, or in the case of corporate officers, that their boards exercise some restraint.
Or they could increase the remuneration of their average workers to close the gap.
Or maybe, for starters, just stop whining about the minimum wage and the lowest Federal taxes in 70 years.
Or maybe, at least, stop having pictures taken of yourselves with currency sticking out from your lapels and collars.
If it’s held that we can’t have some reasonable limits, then what’s the point in anything?
Look, Mickey Mantle and Willie Mays were underpaid for their production nearly all of their careers.
Mark Texieira and numerous others in baseball today are overpaid.
Progressives AND conservatives know it.
The market can bear it, apparently, but I don’t think we want to see what happens when society and the public good can no longer bear it.
According to the Center on Budget and Policy Priorities, CEO after-tax income in 1980, adjusted for inflation, was 42 times higher than the wage of the average production worker. In 1990, that number climbed to 107.
By, 2010, CEO pay was 343 times the wages earned by the average American worker.
Has the comparative “talent” of the corporate elite (I mean that word in the good, lost sense of the long ago and the far away) increased that exponentially over and above the “talent” of the average American worker?
A related question might be, to what quantifiable extent does CEO pay now reflect, in general, an incentive to keep the pay of the average American worker, and that of their counterparts in other countries, relatively stagnant, regardless of those worker’s talents?
MckT asks: “Would he/she still do the job for less?”
The metric used in reference to the average worker by the hard-as*es/hard knocks types I’ve known is “not only will they do the job for less, but they’ll be happy to have the work.”
Just as high marginal taxes well into the 1960s for all levels of income didn’t seem to stunt growth and productivity during what many feel was a golden age (fair-turnabout here; many conservatives believe the 1950s was somehow a sweet time for business and, entrepreneurship, and the country as well), I don’t think some reasonable limits on pay disparities will make a dent in the go-getter, highly motivated elite.
Unless something else is happening in the culture.
Now, you might well arsk WHO will decide and impose these reasonable limits.
Personally, I’d prefer the hyper-productive elite do it themselves, or in the case of corporate officers, that their boards exercise some restraint.
Or they could increase the remuneration of their average workers to close the gap.
Or maybe, for starters, just stop whining about the minimum wage and the lowest Federal taxes in 70 years.
Or maybe, at least, stop having pictures taken of yourselves with currency sticking out from your lapels and collars.
If it’s held that we can’t have some reasonable limits, then what’s the point in anything?
Look, Mickey Mantle and Willie Mays were underpaid for their production nearly all of their careers.
Mark Texieira and numerous others in baseball today are overpaid.
Progressives AND conservatives know it.
The market can bear it, apparently, but I don’t think we want to see what happens when society and the public good can no longer bear it.
I am indifferent to executive compensation. It doesn’t affect me or anyone else.
I disagree. I think the current paradigm increases moral hazard, resulting in poor corporate management and excessive short-term thinking. I think it hurts the economy, regardless of whether the compensation itself is a significant portion of our economy. Resources get allocated more poorly and less value is created, which hurts us all.
I think we are over-regulated in areas where regulations simply are not necessary.
Like Glass-Steagall?
Worrying about executive compensation with 15 trillion in debt and no end in sight is, to borrow an over used expression, rearranging deck chairs on the Titanic.
See above. Part of that debt bailed out poorly run investment banks whose executives were overpaid. And part of that debt is the result of lower tax revenues resulting from the damage those investment banks caused our economy. Another part is increased welfare payments resulting from the same.
The purpose is to generate resentment and jealously and the implication is that government can and should fix the problem.
See above again. That, and I don’t know what the solution is, or whether it should involve government. I’d think a shareholder and customer revolt of some sort might be better than legislation.
I am indifferent to executive compensation. It doesn’t affect me or anyone else.
I disagree. I think the current paradigm increases moral hazard, resulting in poor corporate management and excessive short-term thinking. I think it hurts the economy, regardless of whether the compensation itself is a significant portion of our economy. Resources get allocated more poorly and less value is created, which hurts us all.
I think we are over-regulated in areas where regulations simply are not necessary.
Like Glass-Steagall?
Worrying about executive compensation with 15 trillion in debt and no end in sight is, to borrow an over used expression, rearranging deck chairs on the Titanic.
See above. Part of that debt bailed out poorly run investment banks whose executives were overpaid. And part of that debt is the result of lower tax revenues resulting from the damage those investment banks caused our economy. Another part is increased welfare payments resulting from the same.
The purpose is to generate resentment and jealously and the implication is that government can and should fix the problem.
See above again. That, and I don’t know what the solution is, or whether it should involve government. I’d think a shareholder and customer revolt of some sort might be better than legislation.
McK, I suspect you are having a conversation with a man made of straw.
Who proposed regulation?
Who is looking for across the board rollbacks in CEO compensation?
What the heck does CEO compensation have to do with farm labor regulation, or with the federal debt?
For that matter, what does farm labor regulation have to do with the federal debt?
The reason people care about this stuff is because it runs counter to a basic and intuitive sense of fairness. C level salaries are much higher relative to overall compensation, and relative to corporate performance, than they were 15 or 20 or 40 years ago.
Why? What is the justification for that?
One possible reply is “they don’t need no stinking justification”, they made the best deal they could get, if you have an issue with that take it up with the board.
Another possible reply is that, if they’re getting that kind of money, it’s obvious through some kind of Panglossian magical market QED logic that they must deserve it. Otherwise the market would never award it to them, would it?
But one possible explanation is that the folks who determine executive compensation are quite often the same folks who receive it, or at least are social peers of the folks who receive it, and so executive compensation has grown out of proportion to the value they create.
It matters because what keeps the wheels on is a broad sense that our social, economic, and political institutions operate according to some approximation of fairness. If that goes, a lot of things go along with it.
The feds aren’t going to do anything about C-level compensation, and that’s fine with me. That has nothing to do with whether it’s fair, or justifiable, or good for either the corporations themselves or people in this country in general.
McK, I suspect you are having a conversation with a man made of straw.
Who proposed regulation?
Who is looking for across the board rollbacks in CEO compensation?
What the heck does CEO compensation have to do with farm labor regulation, or with the federal debt?
For that matter, what does farm labor regulation have to do with the federal debt?
The reason people care about this stuff is because it runs counter to a basic and intuitive sense of fairness. C level salaries are much higher relative to overall compensation, and relative to corporate performance, than they were 15 or 20 or 40 years ago.
Why? What is the justification for that?
One possible reply is “they don’t need no stinking justification”, they made the best deal they could get, if you have an issue with that take it up with the board.
Another possible reply is that, if they’re getting that kind of money, it’s obvious through some kind of Panglossian magical market QED logic that they must deserve it. Otherwise the market would never award it to them, would it?
But one possible explanation is that the folks who determine executive compensation are quite often the same folks who receive it, or at least are social peers of the folks who receive it, and so executive compensation has grown out of proportion to the value they create.
It matters because what keeps the wheels on is a broad sense that our social, economic, and political institutions operate according to some approximation of fairness. If that goes, a lot of things go along with it.
The feds aren’t going to do anything about C-level compensation, and that’s fine with me. That has nothing to do with whether it’s fair, or justifiable, or good for either the corporations themselves or people in this country in general.
Me: “I’d think a shareholder and customer revolt of some sort might be better than legislation.”
I should add employees to that revolt. (After all, the employees are revolting.)
Me: “I’d think a shareholder and customer revolt of some sort might be better than legislation.”
I should add employees to that revolt. (After all, the employees are revolting.)
The Titanic, from wikipedia:
“The ship was designed to be the last word in comfort and luxury, with an on-board gymnasium, swimming pool, libraries, high-class restaurants and opulent cabins. She also had a powerful wireless telegraph provided for the convenience of passengers as well as for operational use. Though she had advanced safety features such as watertight compartments and remotely activated watertight doors, she lacked enough lifeboats to accommodate all of those aboard. Due to outdated maritime safety regulations, she carried only enough lifeboats for 1,178 people – slightly more than half of the number traveling on the maiden voyage and one-third her total passenger and crew capacity.”
Kind of a floating Lehman Brothers.
Our analogies can serve all masters. 😉
Regarding our debt, some portion of that debt could have been avoided had taxes not been lowered so drastically, so many times.
The Titanic, from wikipedia:
“The ship was designed to be the last word in comfort and luxury, with an on-board gymnasium, swimming pool, libraries, high-class restaurants and opulent cabins. She also had a powerful wireless telegraph provided for the convenience of passengers as well as for operational use. Though she had advanced safety features such as watertight compartments and remotely activated watertight doors, she lacked enough lifeboats to accommodate all of those aboard. Due to outdated maritime safety regulations, she carried only enough lifeboats for 1,178 people – slightly more than half of the number traveling on the maiden voyage and one-third her total passenger and crew capacity.”
Kind of a floating Lehman Brothers.
Our analogies can serve all masters. 😉
Regarding our debt, some portion of that debt could have been avoided had taxes not been lowered so drastically, so many times.
The difference between the good old days and today is that Captain Smith went down with the Titanic, where as Captain Letsawavetomyfriends hopped off the Costa Concordia with one of the (again) too few lifeboats to supervise from high ground.
Yes, culture has changed.
The latter was acting in his rational self-interest.
The difference between the good old days and today is that Captain Smith went down with the Titanic, where as Captain Letsawavetomyfriends hopped off the Costa Concordia with one of the (again) too few lifeboats to supervise from high ground.
Yes, culture has changed.
The latter was acting in his rational self-interest.
By the way, the extravagantly compensated have returned a meager 4.5% annually, far below the percentage increase in their own returns, to shareholders over the past ten years, as measured by the Standard and Poor’s Index.
By the way, the extravagantly compensated have returned a meager 4.5% annually, far below the percentage increase in their own returns, to shareholders over the past ten years, as measured by the Standard and Poor’s Index.
I agree with hairshirthedonist about the moral hazard. Why would any executive look to the long-term health of a company when he can earn enough for a lifetime in one year? Employee compensation is such that most employees have an interest in keeping their jobs (therefore doing a good job), because they know they have to work in the future.
I agree with hairshirthedonist about the moral hazard. Why would any executive look to the long-term health of a company when he can earn enough for a lifetime in one year? Employee compensation is such that most employees have an interest in keeping their jobs (therefore doing a good job), because they know they have to work in the future.
The recent proposed rules for family farm labor are a good indication of how regulatory progressives think.
For those wondering, the “legislation” to which our esteemed colleague is probably referring was designed to prevent tragedies like high school students having their legs cut off in giant augers, and applied to “family farms” like . . . well, not at all. It didn’t apply to family farms at all.
These are large agribusinesses, if not ADM or Monsanto large, and the kids who work there are no different than the kids who work at Burger King, except they face a great deal more danger. I seriously doubt that, in the face of rules to protect teen employees from dangerous fryer accidents, one would refer to a franchised Burger King as a “family-owned restaurant.”
Oh, btw, the “legislation” in question was actually Dept. of Labor rulemaking. The legislation part came from conservatives doing what they always do – working the refs and changing the rules by introducing a bill to rescind the DoL’s ability to make such rules. That legislation was named the “Preserving America’s Family Farm Act,” in an effort to fool people like McK, and it apparently worked.
Because that’s how anti-regulatory conservatives think. If The Market wanted those kids to have legs, they would.
(The Obama administration, in case you’re interested, blinked in the face of the proposed legislation.)
The recent proposed rules for family farm labor are a good indication of how regulatory progressives think.
For those wondering, the “legislation” to which our esteemed colleague is probably referring was designed to prevent tragedies like high school students having their legs cut off in giant augers, and applied to “family farms” like . . . well, not at all. It didn’t apply to family farms at all.
These are large agribusinesses, if not ADM or Monsanto large, and the kids who work there are no different than the kids who work at Burger King, except they face a great deal more danger. I seriously doubt that, in the face of rules to protect teen employees from dangerous fryer accidents, one would refer to a franchised Burger King as a “family-owned restaurant.”
Oh, btw, the “legislation” in question was actually Dept. of Labor rulemaking. The legislation part came from conservatives doing what they always do – working the refs and changing the rules by introducing a bill to rescind the DoL’s ability to make such rules. That legislation was named the “Preserving America’s Family Farm Act,” in an effort to fool people like McK, and it apparently worked.
Because that’s how anti-regulatory conservatives think. If The Market wanted those kids to have legs, they would.
(The Obama administration, in case you’re interested, blinked in the face of the proposed legislation.)
The difference between the good old days and today is that Captain Smith went down with the Titanic
Naw, it’s better today. Today, cost control auditors would advise them to carry 0 lifeboats if they were so convinced that lifeboats weren’t needed.
The difference between the good old days and today is that Captain Smith went down with the Titanic
Naw, it’s better today. Today, cost control auditors would advise them to carry 0 lifeboats if they were so convinced that lifeboats weren’t needed.
Kids who work on real family farms aren’t paid unless you count their allowances.
Farms that can afford employees usually aren’t small family farms. Conservative legislators are lying, as usual.
BTW when I was in college I did farm work. I worked in fields owned by Iowa State University.
My ex-father-in-law had a small and unprofitable orchard. He hired seasonal labor–a family of illegal immigrants. The parents were illegals. The kids were born here. The only people who were paid were the parents, but the parents brought the kids along and the kids worked. It was safe work: summer, no school, just picking up apples and putting them into boxes. They were juice apples. It was piece work, if I remember correctly, which is why the parents brought the kids along.
The orchard never produced enough income to justify itself. The only money my ex-parents-in-law made was when they sold it to a subdivider.
Kids who work on real family farms aren’t paid unless you count their allowances.
Farms that can afford employees usually aren’t small family farms. Conservative legislators are lying, as usual.
BTW when I was in college I did farm work. I worked in fields owned by Iowa State University.
My ex-father-in-law had a small and unprofitable orchard. He hired seasonal labor–a family of illegal immigrants. The parents were illegals. The kids were born here. The only people who were paid were the parents, but the parents brought the kids along and the kids worked. It was safe work: summer, no school, just picking up apples and putting them into boxes. They were juice apples. It was piece work, if I remember correctly, which is why the parents brought the kids along.
The orchard never produced enough income to justify itself. The only money my ex-parents-in-law made was when they sold it to a subdivider.
This graph is all over the place — saw it again at Digby this morning.
Our Federal debt and from whence it derives:
http://digbysblog.blogspot.com/2012/04/whose-status-quo-are-they-protecting-on.html
This graph is all over the place — saw it again at Digby this morning.
Our Federal debt and from whence it derives:
http://digbysblog.blogspot.com/2012/04/whose-status-quo-are-they-protecting-on.html
Regarding taxes, things could get very scary.
Heeerrrree’s Johnny:
http://www.thedailybeast.com/articles/2012/04/30/stephen-king-tax-me-for-f-s-sake.html
Regarding taxes, things could get very scary.
Heeerrrree’s Johnny:
http://www.thedailybeast.com/articles/2012/04/30/stephen-king-tax-me-for-f-s-sake.html
” I think the current paradigm increases moral hazard, resulting in poor corporate management and excessive short-term thinking.”
I agree that the current paradigm for publicly traded corporations in the US creates some increased level of moral hazard. Quarterly reporting vs semiannual in Europe accentuates this.
As for pay, the comparison between rises in CEO vs worker pay is really not valuable.
First, the calculations of those numbers is never defined, pay now includes varieties of options and stocks that get priced at market, etc. How did they get calculated in 1990? Was that prior to Black-Shoals? are they adjusted?
More important though, there is no definition of how big (number of employees, plants) or complex or international a company the current CEO’s are managing in comparison to the CEO’s X years ago. Is the job they are doing the same? In large part the workers jobs are the same.
Also, what percent of overall profits (or revenue)is CEO compensation today vs then?
And, finally, how much do the Fortune 100, 500?, CEO’s skew that number? I know several CEO’s whose compensation would be closer to 3 or maybe 4 times average employee compensation, perhaps 8 if you counted all of their out of the money options that are worthless until they make them worth something.
The generality built into those completely contextless numbers makes the comparisons, in my mind, completely meaningless.
” I think the current paradigm increases moral hazard, resulting in poor corporate management and excessive short-term thinking.”
I agree that the current paradigm for publicly traded corporations in the US creates some increased level of moral hazard. Quarterly reporting vs semiannual in Europe accentuates this.
As for pay, the comparison between rises in CEO vs worker pay is really not valuable.
First, the calculations of those numbers is never defined, pay now includes varieties of options and stocks that get priced at market, etc. How did they get calculated in 1990? Was that prior to Black-Shoals? are they adjusted?
More important though, there is no definition of how big (number of employees, plants) or complex or international a company the current CEO’s are managing in comparison to the CEO’s X years ago. Is the job they are doing the same? In large part the workers jobs are the same.
Also, what percent of overall profits (or revenue)is CEO compensation today vs then?
And, finally, how much do the Fortune 100, 500?, CEO’s skew that number? I know several CEO’s whose compensation would be closer to 3 or maybe 4 times average employee compensation, perhaps 8 if you counted all of their out of the money options that are worthless until they make them worth something.
The generality built into those completely contextless numbers makes the comparisons, in my mind, completely meaningless.
First, the calculations of those numbers is never defined, pay now includes varieties of options and stocks that get priced at market, etc.
All true, but at some point it still turns into money in somebody’s pocket. I’m not sure you can make a 20x difference in compensation differential go away by citing accounting differences.
More important though, there is no definition of how big (number of employees, plants) or complex or international a company the current CEO’s are managing in comparison to the CEO’s X years ago.
The examples I cited compare current compensation to the 60’s (pretty long ago) and 1996 (less than 20 years).
In terms of the kinds of corporations we’re discussing – Fortune 100 / Fortune 500 – I’m not sure how different the scale and overall complexity is.
Top 5 in 1965: GM, Exxon, Ford, GE, Mobil.
Top 5 in 1995: GM, Ford, Exxon, Wal-Mart, AT&T.
Top 5 today: Wal-Mart, Exxon, Chevron, ConocoPhillips, Fannie Mae.
I’d also say that ‘workers jobs’ are, in many many cases, quite different now. Certainly compared to 45 years ago.
And, finally, how much do the Fortune 100, 500?, CEO’s skew that number?
IMO in this context we’re basically talking almost exclusively about Fortune 100 / 500 corps, and that includes a lot of the financial sector, where executive compensation is extraordinarily high.
My experience is also that CEOs are not, by far, earning 3-digit multiples of average compensation in their firms. Depending on size of firm / mix of job skills involved / how far along the business lifecycle they are, multiples likely range down to the numbers you cite.
To pick an “authority” out of the air, salary.com gives median executive salary at about $725K. They seem to be a little unclear on the distinction between “average” and “median”, and I don’t know if this is salary only or total comp, but I think it’s fair to say that most CEOs who are not also principal owners aren’t making multi-millions of dollars.
“Completely meaningless” is another question altogether.
First, the calculations of those numbers is never defined, pay now includes varieties of options and stocks that get priced at market, etc.
All true, but at some point it still turns into money in somebody’s pocket. I’m not sure you can make a 20x difference in compensation differential go away by citing accounting differences.
More important though, there is no definition of how big (number of employees, plants) or complex or international a company the current CEO’s are managing in comparison to the CEO’s X years ago.
The examples I cited compare current compensation to the 60’s (pretty long ago) and 1996 (less than 20 years).
In terms of the kinds of corporations we’re discussing – Fortune 100 / Fortune 500 – I’m not sure how different the scale and overall complexity is.
Top 5 in 1965: GM, Exxon, Ford, GE, Mobil.
Top 5 in 1995: GM, Ford, Exxon, Wal-Mart, AT&T.
Top 5 today: Wal-Mart, Exxon, Chevron, ConocoPhillips, Fannie Mae.
I’d also say that ‘workers jobs’ are, in many many cases, quite different now. Certainly compared to 45 years ago.
And, finally, how much do the Fortune 100, 500?, CEO’s skew that number?
IMO in this context we’re basically talking almost exclusively about Fortune 100 / 500 corps, and that includes a lot of the financial sector, where executive compensation is extraordinarily high.
My experience is also that CEOs are not, by far, earning 3-digit multiples of average compensation in their firms. Depending on size of firm / mix of job skills involved / how far along the business lifecycle they are, multiples likely range down to the numbers you cite.
To pick an “authority” out of the air, salary.com gives median executive salary at about $725K. They seem to be a little unclear on the distinction between “average” and “median”, and I don’t know if this is salary only or total comp, but I think it’s fair to say that most CEOs who are not also principal owners aren’t making multi-millions of dollars.
“Completely meaningless” is another question altogether.
You know, whenever this topic comes up, I always think of the scene in “Pretty Woman”, where Richard Gere and Ralph Bellamy send the suits out and talk turkey.
“Let’s build something” they say. Not cash out, not turn the accumulated human and investement capital represented by Bellamy’s factories into nice liquid money. Leave it in place as an ongoing concern. Take the long view.
That was only 20 years ago, but it seems laughably quaint now. Yeah, it’s only a stupid movie, but still. It actually makes me, truly and literally, sad.
I actually do know a fair number of people in the start-up world, in a number of industries. Work and worked for them, know them personally either just socially or through my wife’s professional contacts. I really don’t know all that many whose goal is to build anything really enduring.
Build it big enough to sell, and cash out. That’s the new American dream.
It’s not all like that. Sometimes things take on a life of their own. So, Wal-Mart, MS, Apple, Oracle, probably Google, they’ll keep chugging after the principals are gone.
But most folks are mostly looking for the big payday. I don’t think it was always like that.
You know, whenever this topic comes up, I always think of the scene in “Pretty Woman”, where Richard Gere and Ralph Bellamy send the suits out and talk turkey.
“Let’s build something” they say. Not cash out, not turn the accumulated human and investement capital represented by Bellamy’s factories into nice liquid money. Leave it in place as an ongoing concern. Take the long view.
That was only 20 years ago, but it seems laughably quaint now. Yeah, it’s only a stupid movie, but still. It actually makes me, truly and literally, sad.
I actually do know a fair number of people in the start-up world, in a number of industries. Work and worked for them, know them personally either just socially or through my wife’s professional contacts. I really don’t know all that many whose goal is to build anything really enduring.
Build it big enough to sell, and cash out. That’s the new American dream.
It’s not all like that. Sometimes things take on a life of their own. So, Wal-Mart, MS, Apple, Oracle, probably Google, they’ll keep chugging after the principals are gone.
But most folks are mostly looking for the big payday. I don’t think it was always like that.
“But most folks are mostly looking for the big payday. I don’t think it was always like that.”
It wasn’t. I couldn’t agree with this view more. It is a truth of our times that I am becoming an anachronism. I am really good at running a company so that it grows a little and survives the cycles of time. My last company survived the tech downturn of 2001 and then 2009, made about 15% a year in between and didn’t layoff anyone after 2001, right after I took over. Then the VC’s decided that wasn’t good enough and made us cash out.
Since then I have interviewed at very few companies where my first question, after a few minutes of discussion, wasn’t, “How long until the exit”? They don’t care how we ran a successful company for ten years, just how we got it ready to sell in one.
And I have lots of friends who pride themselves in being “serial entrepeneurs”. Failed or sold three years is all they want to put into a company, Failed, oh well, it’s someone elses money. Sold, great, what was my cut? And they almost always, with notable exceptions, leave the employees with almost worthless options.
They make the “CEO’s” we discuss look like Robin Hood.
end rant.
“But most folks are mostly looking for the big payday. I don’t think it was always like that.”
It wasn’t. I couldn’t agree with this view more. It is a truth of our times that I am becoming an anachronism. I am really good at running a company so that it grows a little and survives the cycles of time. My last company survived the tech downturn of 2001 and then 2009, made about 15% a year in between and didn’t layoff anyone after 2001, right after I took over. Then the VC’s decided that wasn’t good enough and made us cash out.
Since then I have interviewed at very few companies where my first question, after a few minutes of discussion, wasn’t, “How long until the exit”? They don’t care how we ran a successful company for ten years, just how we got it ready to sell in one.
And I have lots of friends who pride themselves in being “serial entrepeneurs”. Failed or sold three years is all they want to put into a company, Failed, oh well, it’s someone elses money. Sold, great, what was my cut? And they almost always, with notable exceptions, leave the employees with almost worthless options.
They make the “CEO’s” we discuss look like Robin Hood.
end rant.
I don’t think it was always like that.
Russell, you are really being unfair to the memory of Jay Gould.
I don’t think it was always like that.
Russell, you are really being unfair to the memory of Jay Gould.
Timely!
(NB: I believe all of these shareholder votes are nonbinding, even the institutional investor ones.)
Timely!
(NB: I believe all of these shareholder votes are nonbinding, even the institutional investor ones.)
One place to look for data is a comparison of compensation for executives of U.S. based companies vs. that of foreign based companies. My recollection of reading articles over the years is that US exec comp is outsized even compared to similarly situated foreign exec comp (e.g., we’re talking 5-10 times as much).
A book length critique of executive pay as practiced in the US (and maybe elsewhere) is here (note the review by Stephen Bainbridge of not-exactly-a-liberal-fame, who agrees with the critique, if not the solutions). Basically, the critique is that the Board is controlled by management and not the shareholders (among other things), which leads to obvious problems.
I also give you Treas. Reg. Sec. 1.132-5(m)(1), which provides in part that “if an employee travels on a personal trip in an employer-provided aircraft for bona fide business-oriented security concerns, the employee may exclude the excess, if any, of the val[u]e of the flight over the amount the employee would have paid for the same mode of transportation, but for the bona fide business-oriented security concerns.”
What does this mean? If an employee takes a vacation on the corporate jet he only has to include in his income the cost of a business class ticket for a similar flight (or some approximation thereof) and not the actual cost of flying the corporate jet, so long as it’s for business security concerns. Thus, even though it may cost a company $50,000 to fly the corporate jet round trip from NYC to Bermuda for an exec’s vacation, the exec only has to include the equivalent business class fair in income (and oh, BTW, the corporation can nevertheless deduct the full $50,000 cost).
Needless to say, it isn’t difficult to establish a “business-oriented security concern.”
This is, pure and simple, tax-free income to employees lucky enough to have access to corporate jets.
One place to look for data is a comparison of compensation for executives of U.S. based companies vs. that of foreign based companies. My recollection of reading articles over the years is that US exec comp is outsized even compared to similarly situated foreign exec comp (e.g., we’re talking 5-10 times as much).
A book length critique of executive pay as practiced in the US (and maybe elsewhere) is here (note the review by Stephen Bainbridge of not-exactly-a-liberal-fame, who agrees with the critique, if not the solutions). Basically, the critique is that the Board is controlled by management and not the shareholders (among other things), which leads to obvious problems.
I also give you Treas. Reg. Sec. 1.132-5(m)(1), which provides in part that “if an employee travels on a personal trip in an employer-provided aircraft for bona fide business-oriented security concerns, the employee may exclude the excess, if any, of the val[u]e of the flight over the amount the employee would have paid for the same mode of transportation, but for the bona fide business-oriented security concerns.”
What does this mean? If an employee takes a vacation on the corporate jet he only has to include in his income the cost of a business class ticket for a similar flight (or some approximation thereof) and not the actual cost of flying the corporate jet, so long as it’s for business security concerns. Thus, even though it may cost a company $50,000 to fly the corporate jet round trip from NYC to Bermuda for an exec’s vacation, the exec only has to include the equivalent business class fair in income (and oh, BTW, the corporation can nevertheless deduct the full $50,000 cost).
Needless to say, it isn’t difficult to establish a “business-oriented security concern.”
This is, pure and simple, tax-free income to employees lucky enough to have access to corporate jets.
“Tough for you guys, because I’m not tired of talking about it. I’ve known rich people, and why not, since I’m one of them? The majority would rather douse their dicks with lighter fluid, strike a match, and dance around singing “Disco Inferno” than pay one more cent in taxes to Uncle Sugar.”
Holy crap, who knew the Count was Stephen King?
“Tough for you guys, because I’m not tired of talking about it. I’ve known rich people, and why not, since I’m one of them? The majority would rather douse their dicks with lighter fluid, strike a match, and dance around singing “Disco Inferno” than pay one more cent in taxes to Uncle Sugar.”
Holy crap, who knew the Count was Stephen King?
As much as I like Stephen King, I think he’s misguided. Simply increasing the upper-bracket rate is not going to solve the problem. Taxing capital gains at 100% (and, as far as I have seen, increasing capital gains rate at all has not really been seriously proposed) is not going to solve the problem. What King is proposing is roughly equivalent to the fire department responding to a three-alarmer by unzipping and peeing on it.
As much as I like Stephen King, I think he’s misguided. Simply increasing the upper-bracket rate is not going to solve the problem. Taxing capital gains at 100% (and, as far as I have seen, increasing capital gains rate at all has not really been seriously proposed) is not going to solve the problem. What King is proposing is roughly equivalent to the fire department responding to a three-alarmer by unzipping and peeing on it.
“and, as far as I have seen, increasing capital gains rate at all has not really been seriously proposed”
Really?
“Simply increasing the upper-bracket rate is not going to solve the problem.”
Can you cite to a politician or administration official who claimed that raising the top marginal rate would be enough?
I don’t think anyone did. I believe the position is that it would help, so we should do it.
Now, if you think it would affirmatively hurt us, that’s a different argument.
“and, as far as I have seen, increasing capital gains rate at all has not really been seriously proposed”
Really?
“Simply increasing the upper-bracket rate is not going to solve the problem.”
Can you cite to a politician or administration official who claimed that raising the top marginal rate would be enough?
I don’t think anyone did. I believe the position is that it would help, so we should do it.
Now, if you think it would affirmatively hurt us, that’s a different argument.
Hadn’t seen that. It only took a few years of fair-share-rhetoric before something like that finally got proposed. Probably everyone was simply exhausted, after the battle over health care.
But the 40% proposal isn’t on capital-gains; it’s on dividends. And according to Wikipedia (not the final authority, granted) the dividend rate pops back up to 39.6% in 2013, regardless of what tax hocus-pocus that Obama has in mind.
But he’s talking about upping the capital-gains rate to 20%, so there’s that. It won’t really help much, but it will show that he’s doing something, or at least proposing something.
So.
That’s all anyone is talking about, as a solution, isn’t it? Or have I missed something else important?
Hadn’t seen that. It only took a few years of fair-share-rhetoric before something like that finally got proposed. Probably everyone was simply exhausted, after the battle over health care.
But the 40% proposal isn’t on capital-gains; it’s on dividends. And according to Wikipedia (not the final authority, granted) the dividend rate pops back up to 39.6% in 2013, regardless of what tax hocus-pocus that Obama has in mind.
But he’s talking about upping the capital-gains rate to 20%, so there’s that. It won’t really help much, but it will show that he’s doing something, or at least proposing something.
So.
That’s all anyone is talking about, as a solution, isn’t it? Or have I missed something else important?
Oh, and the capital gains rate? Unless Obama signs another extension of the capital gains rate cut, it goes back to 20% (LTCG; 18% on short term gains) next year automatically.
Oh, and the capital gains rate? Unless Obama signs another extension of the capital gains rate cut, it goes back to 20% (LTCG; 18% on short term gains) next year automatically.
That’s all anyone is talking about, as a solution, isn’t it?
Solution to what, exactly?
That’s all anyone is talking about, as a solution, isn’t it?
Solution to what, exactly?
Obama also proposed defense cuts.
And the ACA is projected to save money, too. The number I remember from a Washington Post editorial was sneeringly estimated at 47B over ten years. I don’t know what numbers the OMB gives.
I am pretty ignorant about entitlement reforms but I do think I’ve read that Obama has proposed many of them – I have indeed repeatedly read angry liberal bloggers complaining about him selling out on this front.
The administration has a lot of proposals. I don’t know which ones are the best. But to say that raising the top marginal rate is “all anyone is talking about, as a solution,” is false, unless you’re defining “anyone” to exclude Democratic politicians.
Raising top marginal rates is part of a panoply of solutions.
I don’t understand your point about the capital gains cut. It doesn’t count as a revenue raising measure because it would happen automatically, in a vacuum?
We don’t live in a vacuum. Our government will decide whether it goes up. I am confident Romney opposes it automatically going up. Do you think that if he is elected, it will go href=”http://www.forbes.com/sites/beltway/2012/01/24/capital-gains-taxes-are-going-up/”>up?
Obama also proposed defense cuts.
And the ACA is projected to save money, too. The number I remember from a Washington Post editorial was sneeringly estimated at 47B over ten years. I don’t know what numbers the OMB gives.
I am pretty ignorant about entitlement reforms but I do think I’ve read that Obama has proposed many of them – I have indeed repeatedly read angry liberal bloggers complaining about him selling out on this front.
The administration has a lot of proposals. I don’t know which ones are the best. But to say that raising the top marginal rate is “all anyone is talking about, as a solution,” is false, unless you’re defining “anyone” to exclude Democratic politicians.
Raising top marginal rates is part of a panoply of solutions.
I don’t understand your point about the capital gains cut. It doesn’t count as a revenue raising measure because it would happen automatically, in a vacuum?
We don’t live in a vacuum. Our government will decide whether it goes up. I am confident Romney opposes it automatically going up. Do you think that if he is elected, it will go href=”http://www.forbes.com/sites/beltway/2012/01/24/capital-gains-taxes-are-going-up/”>up?
At the risk of throwing gasoline on this local fire I started with the King link:
http://www.youtube.com/watch?v=Li-ycIvcJso&feature=related
I can’t decide whether Carrie is played by Grover Norquist or if the sinister plotters underneath the stage with the rope leading to the bucket of pig’s blood are played by Grover Norquist, but I suspect he’ll take whichever role gives him a shot at ruining whatever prom night the baby in the bath tub had planned.
At the risk of throwing gasoline on this local fire I started with the King link:
http://www.youtube.com/watch?v=Li-ycIvcJso&feature=related
I can’t decide whether Carrie is played by Grover Norquist or if the sinister plotters underneath the stage with the rope leading to the bucket of pig’s blood are played by Grover Norquist, but I suspect he’ll take whichever role gives him a shot at ruining whatever prom night the baby in the bath tub had planned.
“but I do think I’ve read that Obama has proposed many of them”
Yes, in speeches and vaguely through the media. At no point has a proposal from Obama that cuts ny spending reached either house of Congress, or pen and paper. The budgets he has submitted saved all spending and raised taxes.
And, to Slarts point, the campaign rhetorid is all about raising taxes on the rich leaving people to assume that would fix ourdeficit/debt problems.
In fact, raising capital gains would have the primary NOTICEABLE effect of reducing significantly the income of every senior citizen trying to live on their savings. Tripling the taxes on dividends would take away the last place a senior citizen can actually make more than the rate of inflation on their savings. Great reasonably risk free dividends run about 4%, less 39% instead of 15% and it hurts the very people we would like to be helping.
But we cant do that because one of those 10-30,000 rich guys might make some extra money.
“but I do think I’ve read that Obama has proposed many of them”
Yes, in speeches and vaguely through the media. At no point has a proposal from Obama that cuts ny spending reached either house of Congress, or pen and paper. The budgets he has submitted saved all spending and raised taxes.
And, to Slarts point, the campaign rhetorid is all about raising taxes on the rich leaving people to assume that would fix ourdeficit/debt problems.
In fact, raising capital gains would have the primary NOTICEABLE effect of reducing significantly the income of every senior citizen trying to live on their savings. Tripling the taxes on dividends would take away the last place a senior citizen can actually make more than the rate of inflation on their savings. Great reasonably risk free dividends run about 4%, less 39% instead of 15% and it hurts the very people we would like to be helping.
But we cant do that because one of those 10-30,000 rich guys might make some extra money.
Obama’s recent budget proposal.
Two quotes from it:
“Those cuts would include select farm subsidies and federal employee retirement and health benefits, for savings of $217 billion over a decade.”
“The budget would cut more than $360 billion from Medicare, Medicaid and other health programs over a decade.”
This is what you said:
“The budgets he has submitted saved all spending and raised taxes.”
I assume you intended only to exaggerate. I only bothered to look up news stories about Obama’s most recent budget proposals, so if you can point me to an Obama budget proposal that actually does what you’ve accused him of, I am happy to glance at it.
“But we cant do that because one of those 10-30,000 rich guys might make some extra money.”
Yes, that is correct. How much extra money they’d make is an issue, isn’t it? You call it “some extra money,” but it’s not “some extra money” to those old people, is it. You can’t have it both ways – it’s either money worth recouping or it isn’t.
If it is, then we have to decide whether it’s better to let the elderly and rich keep it, or if it’s better redistributed. That is, to my understanding, part of the point of taxation.
Lastly, I will note that it is odd that we fixate so intensely on assuring comfortable living for the elderly – what about people 18-40? No social programs for them?
Obama’s recent budget proposal.
Two quotes from it:
“Those cuts would include select farm subsidies and federal employee retirement and health benefits, for savings of $217 billion over a decade.”
“The budget would cut more than $360 billion from Medicare, Medicaid and other health programs over a decade.”
This is what you said:
“The budgets he has submitted saved all spending and raised taxes.”
I assume you intended only to exaggerate. I only bothered to look up news stories about Obama’s most recent budget proposals, so if you can point me to an Obama budget proposal that actually does what you’ve accused him of, I am happy to glance at it.
“But we cant do that because one of those 10-30,000 rich guys might make some extra money.”
Yes, that is correct. How much extra money they’d make is an issue, isn’t it? You call it “some extra money,” but it’s not “some extra money” to those old people, is it. You can’t have it both ways – it’s either money worth recouping or it isn’t.
If it is, then we have to decide whether it’s better to let the elderly and rich keep it, or if it’s better redistributed. That is, to my understanding, part of the point of taxation.
Lastly, I will note that it is odd that we fixate so intensely on assuring comfortable living for the elderly – what about people 18-40? No social programs for them?
“Lastly, I will note that it is odd that we fixate so intensely on assuring comfortable living for the elderly – what about people 18-40? No social programs for them?”
Really, you find that odd? I find it odd that we don’t fixate on it more, even at the expense of people 18-50.
It is money worth having for millions of senior citizens, and to fret about a few thousand rich people getting what would be an almost inconsequential amount to the redistribution process so we deny the income to millions is, well, unfair.
“Lastly, I will note that it is odd that we fixate so intensely on assuring comfortable living for the elderly – what about people 18-40? No social programs for them?”
Really, you find that odd? I find it odd that we don’t fixate on it more, even at the expense of people 18-50.
It is money worth having for millions of senior citizens, and to fret about a few thousand rich people getting what would be an almost inconsequential amount to the redistribution process so we deny the income to millions is, well, unfair.
If you don’t think continuation of trillion-dollar deficits might present a problem, then we have a disagreement that’s more along the lines of whether there’s a problem, instead of how to solve it.
Which is a different conversation, I imagine.
I would say there’s been heated discussion over whether, and over how much. To my eye, though, the perhaps $20B/year perturbation to the budget on either side of zero makes this relatively inconsequential.
No, our government will decide whether it continues being where it is. There’s a nontrivial difference in action, there.
Bluntly: no, it doesn’t count. It’s done. Obama’s 2013 budget didn’t change the law at all in that respect, and so that Reuters article is so much uncomposted fertilizer for a) representing the tax increases as part of some brave deficit-cutting measure, and b) not giving the barest mention to the fact that it was all going to happen anyway.
If you don’t think continuation of trillion-dollar deficits might present a problem, then we have a disagreement that’s more along the lines of whether there’s a problem, instead of how to solve it.
Which is a different conversation, I imagine.
I would say there’s been heated discussion over whether, and over how much. To my eye, though, the perhaps $20B/year perturbation to the budget on either side of zero makes this relatively inconsequential.
No, our government will decide whether it continues being where it is. There’s a nontrivial difference in action, there.
Bluntly: no, it doesn’t count. It’s done. Obama’s 2013 budget didn’t change the law at all in that respect, and so that Reuters article is so much uncomposted fertilizer for a) representing the tax increases as part of some brave deficit-cutting measure, and b) not giving the barest mention to the fact that it was all going to happen anyway.
I guess you could make me shorter by saying that Obama deserves some credit for not proposing that we again continue the ongoing “temporary” reduction in capital gains and dividends rates. But he doesn’t get credit for actually boosting those rates up, because that was already built into the law.
I guess you could make me shorter by saying that Obama deserves some credit for not proposing that we again continue the ongoing “temporary” reduction in capital gains and dividends rates. But he doesn’t get credit for actually boosting those rates up, because that was already built into the law.
If you don’t think continuation of trillion-dollar deficits might present a problem, then we have a disagreement that’s more along the lines of whether there’s a problem, instead of how to solve it.
The question isn’t simply whether or not our deficits are a problem. They may or may not be, depending on what you think makes something a problem. The question is about what (other) problems might be solved by raising capital gains rates, if any.
Maybe the problem you’re trying to solve is the distribution of taxation being too disruptive of aggregate demand. Maybe it’s to placate those people who assume taxation is truly revenue, in the same sense that obtaining dollars is to you and me, and who demand that some tax or another pay for what even they agree are worthwhile efforts for the federal government to undertake. Maybe you just think it’s a question of fairness, or that it just works better.
And, to Julian’s earlier point, maybe it simply helps to reduce future deficits, along with a bunch of other things that do the same. So, in all of the above, feel free to replace the word “solve” with the word “mitigate” (or whatever synonym you prefer).
If you don’t think continuation of trillion-dollar deficits might present a problem, then we have a disagreement that’s more along the lines of whether there’s a problem, instead of how to solve it.
The question isn’t simply whether or not our deficits are a problem. They may or may not be, depending on what you think makes something a problem. The question is about what (other) problems might be solved by raising capital gains rates, if any.
Maybe the problem you’re trying to solve is the distribution of taxation being too disruptive of aggregate demand. Maybe it’s to placate those people who assume taxation is truly revenue, in the same sense that obtaining dollars is to you and me, and who demand that some tax or another pay for what even they agree are worthwhile efforts for the federal government to undertake. Maybe you just think it’s a question of fairness, or that it just works better.
And, to Julian’s earlier point, maybe it simply helps to reduce future deficits, along with a bunch of other things that do the same. So, in all of the above, feel free to replace the word “solve” with the word “mitigate” (or whatever synonym you prefer).
In fact, raising capital gains would have the primary NOTICEABLE effect of reducing significantly the income of every senior citizen trying to live on their savings.
I have a hard time believing that this is remotely true. Do you have something to back this fact up, Marty?
(BTW, I recall someone making a stink over people referring to commenters by previous handles based on it being somehow disrespectful. I use Marty because I “knew” you when you went by Marty, and I see it as conveying familiarity and a longer-term on-line relationship. In short, I use it affectionately. If it bothers you, Marty, please say so, and I won’t use it any longer.)
In fact, raising capital gains would have the primary NOTICEABLE effect of reducing significantly the income of every senior citizen trying to live on their savings.
I have a hard time believing that this is remotely true. Do you have something to back this fact up, Marty?
(BTW, I recall someone making a stink over people referring to commenters by previous handles based on it being somehow disrespectful. I use Marty because I “knew” you when you went by Marty, and I see it as conveying familiarity and a longer-term on-line relationship. In short, I use it affectionately. If it bothers you, Marty, please say so, and I won’t use it any longer.)
Please mentally italicize that first paragraph in my last comment.
Please mentally italicize that first paragraph in my last comment.
Great reasonably risk free dividends run about 4%, less 39% instead of 15% and it hurts the very people we would like to be helping.
Sorry for the serial comments, but this one just hit me, and no one else has commented in a while.
Anyway, dividends will be subject to the ordinary tax rates, meaning that you’ll have to be pulling in close to $400k a year to hit the 39.6% tax rate. Let’s not paint this as taking food out of grandma’s mouth. (And my grandmother has been living primarily off of her savings for the last 30+ years. She hasn’t seen a dividend or a capital gain in her life.)
Great reasonably risk free dividends run about 4%, less 39% instead of 15% and it hurts the very people we would like to be helping.
Sorry for the serial comments, but this one just hit me, and no one else has commented in a while.
Anyway, dividends will be subject to the ordinary tax rates, meaning that you’ll have to be pulling in close to $400k a year to hit the 39.6% tax rate. Let’s not paint this as taking food out of grandma’s mouth. (And my grandmother has been living primarily off of her savings for the last 30+ years. She hasn’t seen a dividend or a capital gain in her life.)
CCDG – HSH is right, the fact that the cap gain rate on the highest income earners might go from 15% to 20% isn’t going to hurt grandma much, and it’s especially laughable to cite a dividend rate increase from 15% to 39.6% as hurting grandma since, as HSH notes, grandma will have had to earn close to $400k that year to hit that rate.
Indeed, grandma would have earn more than ~$35k (not bad for a retiree presumably living off a fixed income) before the increased dividend rate would even kick in at all.
And let’s not forget that the special dividend/cap gain rates do not even apply if grandma is withdrawing funds from an IRA, 401k, or defined benefit plan.
CCDG – HSH is right, the fact that the cap gain rate on the highest income earners might go from 15% to 20% isn’t going to hurt grandma much, and it’s especially laughable to cite a dividend rate increase from 15% to 39.6% as hurting grandma since, as HSH notes, grandma will have had to earn close to $400k that year to hit that rate.
Indeed, grandma would have earn more than ~$35k (not bad for a retiree presumably living off a fixed income) before the increased dividend rate would even kick in at all.
And let’s not forget that the special dividend/cap gain rates do not even apply if grandma is withdrawing funds from an IRA, 401k, or defined benefit plan.
hsh, the familiarity is great with me. I am happy to be called Marty, or AJ or Ray J, you doesn’t have to call me Johnson. 🙂
hsh, the familiarity is great with me. I am happy to be called Marty, or AJ or Ray J, you doesn’t have to call me Johnson. 🙂
And here is a chart(pretty far down) of seniors that claim dividends on their tax return.
And here is a chart(pretty far down) of seniors that claim dividends on their tax return.
But, Marty, you claimed that their incomes would be significantly lower. Just because people claim dividends doesn’t mean that a significant portion of their incomes come from dividends, let alone that the difference in the tax on those dividends will significantly affect their incomes.
Either way, the rates are progressive, meaning you have to be a high earner in the first place to pay the higher rates. If you are pulling down close to $400k on a 4% dividend as a senior, you don’t really have to worry about running out of money. How much fncking stock would have to own? By my math, $10,000,000 worth.
That grandma will be just fine.
But, Marty, you claimed that their incomes would be significantly lower. Just because people claim dividends doesn’t mean that a significant portion of their incomes come from dividends, let alone that the difference in the tax on those dividends will significantly affect their incomes.
Either way, the rates are progressive, meaning you have to be a high earner in the first place to pay the higher rates. If you are pulling down close to $400k on a 4% dividend as a senior, you don’t really have to worry about running out of money. How much fncking stock would have to own? By my math, $10,000,000 worth.
That grandma will be just fine.
CCDG – thanks for the link. As Eric Martin once put it, Heritage is on the “Clown Shoes” list.
And, wow, what a horribly misleading article. They’re not even comparing apples to oranges, more like apples to air craft carriers.
CCDG – thanks for the link. As Eric Martin once put it, Heritage is on the “Clown Shoes” list.
And, wow, what a horribly misleading article. They’re not even comparing apples to oranges, more like apples to air craft carriers.
hsh, I didn’t reference anything in the article except the table I was asked for that shows millions of seniors live at some level off dividends. In 2005, before dividend stocks for many replaced bonds as income vehicles, over 7 million seniors relyed on them for income. Half or more of those making under 200k.
I disagree that it is irrelevant to tax those fixed income folks more, anywhere from a little to a lot.
Ugh, I didn’t agree with Eric then or you now that there isn’t value in understanding Heritages position though.
hsh, I didn’t reference anything in the article except the table I was asked for that shows millions of seniors live at some level off dividends. In 2005, before dividend stocks for many replaced bonds as income vehicles, over 7 million seniors relyed on them for income. Half or more of those making under 200k.
I disagree that it is irrelevant to tax those fixed income folks more, anywhere from a little to a lot.
Ugh, I didn’t agree with Eric then or you now that there isn’t value in understanding Heritages position though.
I disagree that it is irrelevant to tax those fixed income folks more, anywhere from a little to a lot.
No one said it was irrelevant. You went from saying that “raising capital gains would have the primary NOTICEABLE effect of reducing significantly the income of every senior citizen trying to live on their savings” to disagreeing that it is irrelevant. What happened to “significantly” and “every”?
Now, we’ve shifted from capital gains to dividends, but there’s still the question of progressivity in either case. So how high can someone’s fixed income be while any increase in tax is unfair or wrong or harmful (if not “irrelevant”)?
Why does it matter that their incomes are fixed if those incomes are 1) high and 2) generated from enormous assets, particularly if the people we’re talking about are older, don’t have kids to raise and are much closer to the ends of their lives?
And what is so magical about our current levels of taxation? Or why is it only okay for them to go down, regardless of how much lower they are than they once were? Were there no rich old people before, when we had higher dividend and capital gain rates? Or were rich old people suffering then because of the previous rates?
I disagree that it is irrelevant to tax those fixed income folks more, anywhere from a little to a lot.
No one said it was irrelevant. You went from saying that “raising capital gains would have the primary NOTICEABLE effect of reducing significantly the income of every senior citizen trying to live on their savings” to disagreeing that it is irrelevant. What happened to “significantly” and “every”?
Now, we’ve shifted from capital gains to dividends, but there’s still the question of progressivity in either case. So how high can someone’s fixed income be while any increase in tax is unfair or wrong or harmful (if not “irrelevant”)?
Why does it matter that their incomes are fixed if those incomes are 1) high and 2) generated from enormous assets, particularly if the people we’re talking about are older, don’t have kids to raise and are much closer to the ends of their lives?
And what is so magical about our current levels of taxation? Or why is it only okay for them to go down, regardless of how much lower they are than they once were? Were there no rich old people before, when we had higher dividend and capital gain rates? Or were rich old people suffering then because of the previous rates?
The more I think about it, Marty, I realize that the argument you’re presenting boils down to this:
We cannot raise the tax rate by any amount on any given type of income at any level of income because someone on a fixed income might receive some part of that income as the type of income on which the tax rate would be raised.
So, basically, we can never raise income tax rates, ever.
The more I think about it, Marty, I realize that the argument you’re presenting boils down to this:
We cannot raise the tax rate by any amount on any given type of income at any level of income because someone on a fixed income might receive some part of that income as the type of income on which the tax rate would be raised.
So, basically, we can never raise income tax rates, ever.
Slart, way up thread:
“What King is proposing is roughly equivalent to the fire department responding to a three-alarmer by unzipping and peeing on it.”
hairshirthedonist, just above:
“So, basically, we can never raise income tax rates, ever.”
(Add in here all of the other taxes as well, SS, Medicare, State and local; Norquist has been busy getting state and local Republican officeholders to sign the Pledge, too, so devolution and state and local solutions replacing federal power are out, too.)
When your house is on fire, one guy taking a piss is still better than an entire electorate stopping by with fake kidney stones, enlarged prostates, and willful urinary retention to warm their hands on the conflagration.
All of that tea being drunk and not a pot to pee in.
Then, of course, you have the flame-thrower brigade among them who refused to finance two wars by at least keeping taxes where they were in 2001, so we had to de-fund the fire department.
I could link to Bruce Bartlett, erstwhile conservative and Republican, regarding the situation, but what’s the point?
Just another guy pissing into the wind.
As we know, the Reagan-era tax increases and the Clinton-era tax increases caused two straight Depressions and horrific bear markets and untold suffering from which we’ve never recovered.
Slart, way up thread:
“What King is proposing is roughly equivalent to the fire department responding to a three-alarmer by unzipping and peeing on it.”
hairshirthedonist, just above:
“So, basically, we can never raise income tax rates, ever.”
(Add in here all of the other taxes as well, SS, Medicare, State and local; Norquist has been busy getting state and local Republican officeholders to sign the Pledge, too, so devolution and state and local solutions replacing federal power are out, too.)
When your house is on fire, one guy taking a piss is still better than an entire electorate stopping by with fake kidney stones, enlarged prostates, and willful urinary retention to warm their hands on the conflagration.
All of that tea being drunk and not a pot to pee in.
Then, of course, you have the flame-thrower brigade among them who refused to finance two wars by at least keeping taxes where they were in 2001, so we had to de-fund the fire department.
I could link to Bruce Bartlett, erstwhile conservative and Republican, regarding the situation, but what’s the point?
Just another guy pissing into the wind.
As we know, the Reagan-era tax increases and the Clinton-era tax increases caused two straight Depressions and horrific bear markets and untold suffering from which we’ve never recovered.
hsh, Actually my original statement is what I stand behind, the primary noticeable effect is a significant impact on senior citizens living on fixed incomes.
It is not so relevant that the tax is progressive, as it is relevant that at every level it increases the taxes. For those who aren’t paying 39.5, there is something between fifteen and 39 they have to pay.
At 22% it is an increase the equivalent of the payroll tax, except it wouldn’t bring enough into the tax system to matter, it would only be meaningful to the individuals effected.
That, of course, doesn’t apply to the payroll tax. Or the broadbase Bush tax cuts which account for 3 trillion over ten years.
But those people really need that 3-7%. So it isn’t me that objects to raising any taxes, I just object to targeting a class of people/income that won’t do a lot of good in reducing the debt issues and crying about fairness to get reelected.
hsh, Actually my original statement is what I stand behind, the primary noticeable effect is a significant impact on senior citizens living on fixed incomes.
It is not so relevant that the tax is progressive, as it is relevant that at every level it increases the taxes. For those who aren’t paying 39.5, there is something between fifteen and 39 they have to pay.
At 22% it is an increase the equivalent of the payroll tax, except it wouldn’t bring enough into the tax system to matter, it would only be meaningful to the individuals effected.
That, of course, doesn’t apply to the payroll tax. Or the broadbase Bush tax cuts which account for 3 trillion over ten years.
But those people really need that 3-7%. So it isn’t me that objects to raising any taxes, I just object to targeting a class of people/income that won’t do a lot of good in reducing the debt issues and crying about fairness to get reelected.
If you don’t think continuation of trillion-dollar deficits might present a problem, then we have a disagreement that’s more along the lines of whether there’s a problem
No. We have a very basic disagreement on what “the problem” is.
If you don’t think continuation of trillion-dollar deficits might present a problem, then we have a disagreement that’s more along the lines of whether there’s a problem
No. We have a very basic disagreement on what “the problem” is.
So, by treating all dividends as ordinary dividends, which were always treated as regular income, unlike qualified dividends, which have been taxed at capital gains rates since 2003, but which were taxed as regular income before that, we are now targeting a class of people – namely senior citizens, because … they are, as a class, especially dependent on qualified divideds for large percentages of their incomes? Is that it? And that’s the point of returning to the arcane tax rates from way back in the olden days of the year 2000?
In any case, if you narrow your analysis down to some minority of people paying tax on a particular type of income, you’ll always be able to say that any reasonable tax increase on that minority’s portion of income that is of that particular type won’t be enough to significantly reduce the debt.
And what class of income, in terms of tax treatment, exists that no senior on a fixed income earns?
We are back to: So, basically, we can never raise income tax rates, ever.
So, by treating all dividends as ordinary dividends, which were always treated as regular income, unlike qualified dividends, which have been taxed at capital gains rates since 2003, but which were taxed as regular income before that, we are now targeting a class of people – namely senior citizens, because … they are, as a class, especially dependent on qualified divideds for large percentages of their incomes? Is that it? And that’s the point of returning to the arcane tax rates from way back in the olden days of the year 2000?
In any case, if you narrow your analysis down to some minority of people paying tax on a particular type of income, you’ll always be able to say that any reasonable tax increase on that minority’s portion of income that is of that particular type won’t be enough to significantly reduce the debt.
And what class of income, in terms of tax treatment, exists that no senior on a fixed income earns?
We are back to: So, basically, we can never raise income tax rates, ever.
The tax thing always makes me shake my head.
Why do we, as a nation, owe a lot of money? Twelve years ago we were in the black. What happened?
We decided to fight two wars which we funded with “supplementals”. We created a brand spanking new, and very expensive, entitlement to provide pharma coverage via Medicare, and we did not fund it. We cut the tax rates, in the face of credible predictions that it would lead to massive deficits, and lo and behold it did. And we deregulated the financial sector, who never met a sweet con they could say no to, and they blew the f***ing economy up.
That’s my analysis.
And when I say “we”, I mean “we”. Not liberal free-spending Democrats, not specifically Republicans, although Republicans led the charge on much of the above. The people of the United States of America, through their elected representatives of all political stripes, sh*t the economic bed.
We pissed away our surplus, and now the bill is due. Raise the god-damned tax rates and pay it off. It is not going to happen in one year, but it might in ten or fifteen. And short of some kind of truly miraculous economic recovery, it’s not going to happen any other way.
Put the freaking tax rates back to what they were before the Bush cuts and raise the revenue.
This is not rocket science.
The problem is nobody wants to pony up. There is no other problem. It’s not an insuperable dilemna, the problem is that nobody is willing to step up and get it freaking done.
We spent the money, now the bill is due. We need to pay it. I don’t understand what else there is to it.
And no, “being realistic” about entitlements is not a good solution. You want to take it out of social security? The average social security benefit is about $1200 a month. CCDG’s worried about people having the dividends they live on be taxed at 39.6% instead of 35% if they get more than $400K in dividends. I’m worried about the folks trying to freaking live on $25K a year.
George freaking Will says just raise the retirement age to 74. US average life expectancy is 78.1 years. So yeah, no sh*t Sherlock, if we all waited until we were four years from death to retire, there would be no SS problem. What an asshole.
Leave the god-damned poor people alone and pay your damned bills. That is my recommendation.
And yeah, that includes me. My household income and net worth would mean that my taxes would go up. Raise my taxes, please, and let’s move the hell on.
The tax thing always makes me shake my head.
Why do we, as a nation, owe a lot of money? Twelve years ago we were in the black. What happened?
We decided to fight two wars which we funded with “supplementals”. We created a brand spanking new, and very expensive, entitlement to provide pharma coverage via Medicare, and we did not fund it. We cut the tax rates, in the face of credible predictions that it would lead to massive deficits, and lo and behold it did. And we deregulated the financial sector, who never met a sweet con they could say no to, and they blew the f***ing economy up.
That’s my analysis.
And when I say “we”, I mean “we”. Not liberal free-spending Democrats, not specifically Republicans, although Republicans led the charge on much of the above. The people of the United States of America, through their elected representatives of all political stripes, sh*t the economic bed.
We pissed away our surplus, and now the bill is due. Raise the god-damned tax rates and pay it off. It is not going to happen in one year, but it might in ten or fifteen. And short of some kind of truly miraculous economic recovery, it’s not going to happen any other way.
Put the freaking tax rates back to what they were before the Bush cuts and raise the revenue.
This is not rocket science.
The problem is nobody wants to pony up. There is no other problem. It’s not an insuperable dilemna, the problem is that nobody is willing to step up and get it freaking done.
We spent the money, now the bill is due. We need to pay it. I don’t understand what else there is to it.
And no, “being realistic” about entitlements is not a good solution. You want to take it out of social security? The average social security benefit is about $1200 a month. CCDG’s worried about people having the dividends they live on be taxed at 39.6% instead of 35% if they get more than $400K in dividends. I’m worried about the folks trying to freaking live on $25K a year.
George freaking Will says just raise the retirement age to 74. US average life expectancy is 78.1 years. So yeah, no sh*t Sherlock, if we all waited until we were four years from death to retire, there would be no SS problem. What an asshole.
Leave the god-damned poor people alone and pay your damned bills. That is my recommendation.
And yeah, that includes me. My household income and net worth would mean that my taxes would go up. Raise my taxes, please, and let’s move the hell on.
The other thing that always makes me shake my head when I think about it, is that we always argue about income tax rates.
We didn’t always run the country on income taxes. For a considerable amount of our national history, there was no income tax. And yeah, the government was smaller, but so was the country.
Back in the day, the primary sources of federal revenue were luxury taxes and tariffs. I say bring them back. No mortgage deduction for anything other than primary residence, and than only for mortgages up to the median home price in your zip code. That number is not hard to find, if Zillow can figure it out, so can teh feds.
Great big whopping federal excise on any consumer purchase over, say, $250K. So, yachts, art work, serious bling, private aircraft, you pay big dollars to Uncle.
That, and anything made or grown outside of the US gets a surcharge.
Check out the luxury goods and luxury second home markets, and our balance of trade, and tell me there’s not some serious low-hanging fruit to be found there.
Plus, it’s what the founders did. Just a thought.
The other thing that always makes me shake my head when I think about it, is that we always argue about income tax rates.
We didn’t always run the country on income taxes. For a considerable amount of our national history, there was no income tax. And yeah, the government was smaller, but so was the country.
Back in the day, the primary sources of federal revenue were luxury taxes and tariffs. I say bring them back. No mortgage deduction for anything other than primary residence, and than only for mortgages up to the median home price in your zip code. That number is not hard to find, if Zillow can figure it out, so can teh feds.
Great big whopping federal excise on any consumer purchase over, say, $250K. So, yachts, art work, serious bling, private aircraft, you pay big dollars to Uncle.
That, and anything made or grown outside of the US gets a surcharge.
Check out the luxury goods and luxury second home markets, and our balance of trade, and tell me there’s not some serious low-hanging fruit to be found there.
Plus, it’s what the founders did. Just a thought.
“And what class of income, in terms of tax treatment, exists that no senior on a fixed income earns?”
The right question, IMHO, is “what type of income is the one received by the most people so that when we raise that tax we actually collect enough extra money to make a difference, and everybody helps pay?”
russell, as you may remember, I am for letting all of the tax cuts expire.
“And what class of income, in terms of tax treatment, exists that no senior on a fixed income earns?”
The right question, IMHO, is “what type of income is the one received by the most people so that when we raise that tax we actually collect enough extra money to make a difference, and everybody helps pay?”
russell, as you may remember, I am for letting all of the tax cuts expire.
George Will types out inane op-eds for a living. Let him wrestle a jackhammer for a couple of years and we’ll see if he can keep it up until he’s 74.
George Will types out inane op-eds for a living. Let him wrestle a jackhammer for a couple of years and we’ll see if he can keep it up until he’s 74.
russell, as you may remember, I am for letting all of the tax cuts expire.
That’s what we’ve been talking about this whole friggin’ time, dude!!!
russell, as you may remember, I am for letting all of the tax cuts expire.
That’s what we’ve been talking about this whole friggin’ time, dude!!!
“That’s what we’ve been talking about this whole friggin’ time, dude!!!”
No we’ve been talking about picking and choosing which pieces to expire while keeping the only ones that make any difference.
But, if we let them all expire, then we could talk about what to do with the money.
“That’s what we’ve been talking about this whole friggin’ time, dude!!!”
No we’ve been talking about picking and choosing which pieces to expire while keeping the only ones that make any difference.
But, if we let them all expire, then we could talk about what to do with the money.
We spent the money, now the bill is due. We need to pay it. I don’t understand what else there is to it.
So who, exactly, are we paying it to, and why is it so urgent to do so?[1]
You want to pay down the debt?[2] The best way to do that is a little inflation, some robust economic growth (i.e., jobs, jobs, jobs), and low real interest rates.[3]
Rather than argue about tax rates, I would think it more fruitful to discuss our current system and its “socialism for the rich” structure. Insofar as we have constructed a society that systematically shifts income upward, it strikes me as pointless to get all worked up about a few % of marginal tax at the highest level.
[1] See Dean Baker on the alleged “burden” the public debt places on our grandchildren.
[2]Andy Jackson paid the US debt off to the last penny. This was followed shortly thereafter by one of the worst panics and depressions of the 19th century. Is there some reason I am missing as to why we should repeat this?
[3]I have recommended JW Mason’s Slack Wire blog several times….please do check it out. Thanks.
We spent the money, now the bill is due. We need to pay it. I don’t understand what else there is to it.
So who, exactly, are we paying it to, and why is it so urgent to do so?[1]
You want to pay down the debt?[2] The best way to do that is a little inflation, some robust economic growth (i.e., jobs, jobs, jobs), and low real interest rates.[3]
Rather than argue about tax rates, I would think it more fruitful to discuss our current system and its “socialism for the rich” structure. Insofar as we have constructed a society that systematically shifts income upward, it strikes me as pointless to get all worked up about a few % of marginal tax at the highest level.
[1] See Dean Baker on the alleged “burden” the public debt places on our grandchildren.
[2]Andy Jackson paid the US debt off to the last penny. This was followed shortly thereafter by one of the worst panics and depressions of the 19th century. Is there some reason I am missing as to why we should repeat this?
[3]I have recommended JW Mason’s Slack Wire blog several times….please do check it out. Thanks.
Light the money on fire or shred it for confetti (pretending it’s paper cash). Would that matter? (A wink’s as good as a nod to a blind man, bobby p.)
Light the money on fire or shred it for confetti (pretending it’s paper cash). Would that matter? (A wink’s as good as a nod to a blind man, bobby p.)
Cross-posted. I was responding to Marty (CCDG), but only coincidentally addressed bobbyp in doing so.
Cross-posted. I was responding to Marty (CCDG), but only coincidentally addressed bobbyp in doing so.
Light it on fire…why not? Do some here really believe that “our money” as paid in taxes is secreted away in vaults in WA DC? Why bother? Money can be replaced at will…..but let a person go without a job, without an education, without a hope, ay, now you are really talking about crippling the future.
I am more worried about who departs American Idol next than I am about the level of the national debt.
Light it on fire…why not? Do some here really believe that “our money” as paid in taxes is secreted away in vaults in WA DC? Why bother? Money can be replaced at will…..but let a person go without a job, without an education, without a hope, ay, now you are really talking about crippling the future.
I am more worried about who departs American Idol next than I am about the level of the national debt.
I have said id repeatedly:
Grover Norquist has successfully persuaded enough people that he is the Bottle Imp and that by signing his pledge they have bought the bottle. The price is the tax rate and whoever comes to the end of his or her term and has not sold the item to the next fool by lowering the top rate again will burn forever in hell. It became even easier for him since the customers have all reached drunken sailor status.
I have said id repeatedly:
Grover Norquist has successfully persuaded enough people that he is the Bottle Imp and that by signing his pledge they have bought the bottle. The price is the tax rate and whoever comes to the end of his or her term and has not sold the item to the next fool by lowering the top rate again will burn forever in hell. It became even easier for him since the customers have all reached drunken sailor status.
I think you’ve made that very clear, but I doubt your confidence has magically rubbed off on the US voting public.
I think you’ve made that very clear, but I doubt your confidence has magically rubbed off on the US voting public.
As far as tax vs spend, I think that Republicans have been less than helpful. I can understand the sentiment, but a return to the tax rates of, say, 2000 doesn’t, to me, constitute a tax increase.
The whole Grover Norquist business continues to mystify me. I would personally prefer to ouster every member of Congress that has pledged allegiance to the guy, but when the replacement looks like Alan Grayson, that replacement also has to go. And has.
As far as tax vs spend, I think that Republicans have been less than helpful. I can understand the sentiment, but a return to the tax rates of, say, 2000 doesn’t, to me, constitute a tax increase.
The whole Grover Norquist business continues to mystify me. I would personally prefer to ouster every member of Congress that has pledged allegiance to the guy, but when the replacement looks like Alan Grayson, that replacement also has to go. And has.
Grover has somehow obtained the power to “primary” people should they violate his blood oath and also to pick a winner should one GOP candidate sign the pledge and the other not. All in the supposed service of St. Ronnie who never raised taxes, ever, not once (except when he did).
He really is a cancer on the body politic.
Grover has somehow obtained the power to “primary” people should they violate his blood oath and also to pick a winner should one GOP candidate sign the pledge and the other not. All in the supposed service of St. Ronnie who never raised taxes, ever, not once (except when he did).
He really is a cancer on the body politic.
CCDG: Ugh, I didn’t agree with Eric then or you now that there isn’t value in understanding Heritages position though.
To be sure there is value in understanding Heritage’s positions, propaganda needs to be rebutted, after all. Which if I have time today I’ll try (looking doubtful though).
CCDG: Ugh, I didn’t agree with Eric then or you now that there isn’t value in understanding Heritages position though.
To be sure there is value in understanding Heritage’s positions, propaganda needs to be rebutted, after all. Which if I have time today I’ll try (looking doubtful though).
Great big whopping federal excise on any consumer purchase over, say, $250K. So, yachts, art work, serious bling, private aircraft, you pay big dollars to Uncle.
Didn’t some state or maybe the Feds impose a tax on luxury yachts that just sent the money and the jobs building yachts somewhere else?
Someone builds those second homes and others build or make the components. All of that requires labor, transportation, etc. Burdening economic activity with more taxes may make you feel better. It won’t produce more economic activity.
Great big whopping federal excise on any consumer purchase over, say, $250K. So, yachts, art work, serious bling, private aircraft, you pay big dollars to Uncle.
Didn’t some state or maybe the Feds impose a tax on luxury yachts that just sent the money and the jobs building yachts somewhere else?
Someone builds those second homes and others build or make the components. All of that requires labor, transportation, etc. Burdening economic activity with more taxes may make you feel better. It won’t produce more economic activity.
I remember how John Kerry avoided taxes by docking his yacht in Rhode Island. Tax burden
avoidanceoptimization is built into the DNA, maybe.I remember how John Kerry avoided taxes by docking his yacht in Rhode Island. Tax burden
avoidanceoptimization is built into the DNA, maybe.Burdening economic activity with more taxes may make you feel better. It won’t produce more economic activity.
A tax could conceivably divert those very same resources to building a school where our children can learn and be better prepared to deal with their future. So which is the more desirable social outcome? That’s the politics of it.
Using the power of the state to line your pockets may make you feel better, but it won’t produce a more just society.
Burdening economic activity with more taxes may make you feel better. It won’t produce more economic activity.
A tax could conceivably divert those very same resources to building a school where our children can learn and be better prepared to deal with their future. So which is the more desirable social outcome? That’s the politics of it.
Using the power of the state to line your pockets may make you feel better, but it won’t produce a more just society.
“I remember how John Kerry….”
Meh. An entire political party has staked no little amount of political capital in its efforts to protect yacht owners, irrelvant Pew polls notwithstanding:
http://www.youtube.com/watch?v=cKfpHCqQxwk
http://www.youtube.com/watch?v=AISA-Rj2mzc
“I remember how John Kerry….”
Meh. An entire political party has staked no little amount of political capital in its efforts to protect yacht owners, irrelvant Pew polls notwithstanding:
http://www.youtube.com/watch?v=cKfpHCqQxwk
http://www.youtube.com/watch?v=AISA-Rj2mzc
My exchange with Marty has probably run its course, but I did want to add a general comment that some of what he wrote brought to mind.
Anyone who recalls the fairly recent post brought over from TIO/HOCB on on the potential fiscal/economic abyss we may be facing and the discussion in the comments about suggestions that any changes to the tax code be “revenue neutral” will likely have some idea of where I’m going with this.
So Marty and I were discussing tax rates on dividends, which are currently set to go up by differing measures, depending on whether you’re talking about qualified or ordinary dividends.
Ordinary dividends were always taxed as regular income, just like wages, but the rates on regular income are set to go up, so the rates on ordinary dividends are going up accordingly.
Qualified dividends have been taxed like capital gains, but the distinction between qualified and ordinary dividends is going away, so tax rates on qualified dividends are going up even more, from the current capital gains rates to the new (but previous) regular income rates.
Toward the end of our discussion, Marty comments that he’s in favor of tax rates reverting to what I’ll call “Clinton-era rates.” This took me back because he had been complaining about raising rates on capital gains and dividends, based on the effects on some number of seniors’ fixed incomes. But those rates are increasing as part of the reversion to the Clinton-era rates. Herein lies the rub.
Marty had a problem with the capital gains and dividend increases only in isolation. If all those other rates went back to where they were as well, then it was okay, even though the effects on fixed-income seniors would be the same as far as capital gains and dividends were concerned, not to mention that it would also affect their regular incomes adversely. So the whole package is actually worse, at least as it concerns seniors’ after-tax incomes, than rates on capital gains and dividends alone going up.
What this gets me to is the fetish from past policy. It’s the mindset that says changes to the tax code must be revenue neutral (if that’s even possible), as though there’s something special about current levels of revenue such that they should constrain policy makers in crafting the best tax policy. And it’s the mindset that says you have to go back to Clinton-era rates in an all-or-nothing fashion. Even if you have good reason to think it would be better to limit the effective increases that represents to higher earners or certain classes of income, you can’t do that.
Now, maybe it’s better to go back to Clinton-era rates than not changing rates at all. And maybe it isn’t. But the only reason that’s what’s on the table is the sunsetting of the Bush-era tax cuts. It can be done passively rather than actively. But that doesn’t mean it’s the best policy. The best policy might not include any particular rate from those under the Clinton-era rates.
So why should changing some particular rates be a problem in isolation, but be perfectly okay within a package as a reversion to previous rates? This sort of constraint strikes me as either arbitrary or dogmatic, or maybe both, if that’s possible.
My exchange with Marty has probably run its course, but I did want to add a general comment that some of what he wrote brought to mind.
Anyone who recalls the fairly recent post brought over from TIO/HOCB on on the potential fiscal/economic abyss we may be facing and the discussion in the comments about suggestions that any changes to the tax code be “revenue neutral” will likely have some idea of where I’m going with this.
So Marty and I were discussing tax rates on dividends, which are currently set to go up by differing measures, depending on whether you’re talking about qualified or ordinary dividends.
Ordinary dividends were always taxed as regular income, just like wages, but the rates on regular income are set to go up, so the rates on ordinary dividends are going up accordingly.
Qualified dividends have been taxed like capital gains, but the distinction between qualified and ordinary dividends is going away, so tax rates on qualified dividends are going up even more, from the current capital gains rates to the new (but previous) regular income rates.
Toward the end of our discussion, Marty comments that he’s in favor of tax rates reverting to what I’ll call “Clinton-era rates.” This took me back because he had been complaining about raising rates on capital gains and dividends, based on the effects on some number of seniors’ fixed incomes. But those rates are increasing as part of the reversion to the Clinton-era rates. Herein lies the rub.
Marty had a problem with the capital gains and dividend increases only in isolation. If all those other rates went back to where they were as well, then it was okay, even though the effects on fixed-income seniors would be the same as far as capital gains and dividends were concerned, not to mention that it would also affect their regular incomes adversely. So the whole package is actually worse, at least as it concerns seniors’ after-tax incomes, than rates on capital gains and dividends alone going up.
What this gets me to is the fetish from past policy. It’s the mindset that says changes to the tax code must be revenue neutral (if that’s even possible), as though there’s something special about current levels of revenue such that they should constrain policy makers in crafting the best tax policy. And it’s the mindset that says you have to go back to Clinton-era rates in an all-or-nothing fashion. Even if you have good reason to think it would be better to limit the effective increases that represents to higher earners or certain classes of income, you can’t do that.
Now, maybe it’s better to go back to Clinton-era rates than not changing rates at all. And maybe it isn’t. But the only reason that’s what’s on the table is the sunsetting of the Bush-era tax cuts. It can be done passively rather than actively. But that doesn’t mean it’s the best policy. The best policy might not include any particular rate from those under the Clinton-era rates.
So why should changing some particular rates be a problem in isolation, but be perfectly okay within a package as a reversion to previous rates? This sort of constraint strikes me as either arbitrary or dogmatic, or maybe both, if that’s possible.
Didn’t some state or maybe the Feds impose a tax on luxury yachts that just sent the money and the jobs building yachts somewhere else?
See, this makes no sense. How does a tax on BUYING something effect where it is made?
Are you thinking that yachts will only be built in the US if they are purchased by Americans?
And yeah, somebody builds second homes. Somebody also builds first homes, for folks who can afford to buy them.
Guess which market is hurting more. Guess which one, when healthy, employs more people. And, benefits more people.
Burdening economic activity with more taxes may make you feel better. It won’t produce more economic activity.
None of this has anything to do with how it “makes me feel”. And how we allocate the overall federal tax burden does, in fact, have a way more than trivial effect on economic activity.
You want to lower the federal deficit? You have two non-mutually-exclusive choices:
1. Spend less
2. Raise more
Spend less is popular rhetorically, in real life not so much. And contrary to conservative dogma, one of the primary reasons for that is that government does useful stuff. And, it costs money.
If you really want to lower the federal budget, the things to focus on are:
1. Give up the dream of full spectrum dominance of the rest of the freaking world and dramatically cut the military budget.
2. Figure out how to control the increasing per capita cost of health care.
Those two things are where the money goes. Those, and SS, but SS is funded by a dedicated tax, and is not in particularly bad shape, so it doesn’t really need a lot of tweaking.
But hell yeah, given the choice between hitting a guy buying a f***ing yacht with an excise tax, or cutting the benefits of somebody who relies on programs like SS or Medicare to eat or not die, you can bet your @ss that I will go for the luxury excise tax option, in a heartbeat.
People on SS spend money too, dude. And they outnumber yacht buyers by orders of magnitude.
Plus, it’s what Adam Smith would do.
Didn’t some state or maybe the Feds impose a tax on luxury yachts that just sent the money and the jobs building yachts somewhere else?
See, this makes no sense. How does a tax on BUYING something effect where it is made?
Are you thinking that yachts will only be built in the US if they are purchased by Americans?
And yeah, somebody builds second homes. Somebody also builds first homes, for folks who can afford to buy them.
Guess which market is hurting more. Guess which one, when healthy, employs more people. And, benefits more people.
Burdening economic activity with more taxes may make you feel better. It won’t produce more economic activity.
None of this has anything to do with how it “makes me feel”. And how we allocate the overall federal tax burden does, in fact, have a way more than trivial effect on economic activity.
You want to lower the federal deficit? You have two non-mutually-exclusive choices:
1. Spend less
2. Raise more
Spend less is popular rhetorically, in real life not so much. And contrary to conservative dogma, one of the primary reasons for that is that government does useful stuff. And, it costs money.
If you really want to lower the federal budget, the things to focus on are:
1. Give up the dream of full spectrum dominance of the rest of the freaking world and dramatically cut the military budget.
2. Figure out how to control the increasing per capita cost of health care.
Those two things are where the money goes. Those, and SS, but SS is funded by a dedicated tax, and is not in particularly bad shape, so it doesn’t really need a lot of tweaking.
But hell yeah, given the choice between hitting a guy buying a f***ing yacht with an excise tax, or cutting the benefits of somebody who relies on programs like SS or Medicare to eat or not die, you can bet your @ss that I will go for the luxury excise tax option, in a heartbeat.
People on SS spend money too, dude. And they outnumber yacht buyers by orders of magnitude.
Plus, it’s what Adam Smith would do.
value in understanding Heritages position
From Heritage’s analysis of the Bush tax cuts, ca 2001:
FAIL.
Bolds mine.
I remember how John Kerry avoided taxes by docking his yacht in Rhode Island.
I’m trying to figure out the relevance of this.
value in understanding Heritages position
From Heritage’s analysis of the Bush tax cuts, ca 2001:
FAIL.
Bolds mine.
I remember how John Kerry avoided taxes by docking his yacht in Rhode Island.
I’m trying to figure out the relevance of this.
I’m trying to figure out the relevance of this.
It’s probably not relevant to the current discussion, but it does illustrate a dynamic of the race to the bottom that is state tax policy. And there’s an analog to that regarding local tax policy.
Let’s fight over the manufacturing plants and the Walmarts (or yachts), until we’ve gutted our revenue streams, except for income and sales taxes. Then we can start a race to the bottom on those.
On an international scale, one way we can reduce our deficts would be to become a net exporter. Every country should do it!
(Remember when Homer designed that car for his rich, long-lost half-brother? He put the tennis ball on the antenna, so he could find it in the mall parking lot, and suggested that every car should have one.)
I’m trying to figure out the relevance of this.
It’s probably not relevant to the current discussion, but it does illustrate a dynamic of the race to the bottom that is state tax policy. And there’s an analog to that regarding local tax policy.
Let’s fight over the manufacturing plants and the Walmarts (or yachts), until we’ve gutted our revenue streams, except for income and sales taxes. Then we can start a race to the bottom on those.
On an international scale, one way we can reduce our deficts would be to become a net exporter. Every country should do it!
(Remember when Homer designed that car for his rich, long-lost half-brother? He put the tennis ball on the antenna, so he could find it in the mall parking lot, and suggested that every car should have one.)
But hell yeah, given the choice between hitting a guy buying a f***ing yacht with an excise tax, or cutting the benefits of somebody who relies on programs like SS or Medicare to eat or not die, you can bet your @ss that I will go for the luxury excise tax option, in a heartbeat.
This is the choice? A luxury tax, or raising taxes on people making more than 250K, won’t noticeably dent the deficit. It’s ‘feel good’ tax policy–dinging people with money or even a lot of money–to virtually no good end and without any real thought to the negative impact that taxing economic activity has.
Whether cutting spending is popular or not, it is going to happen, the only question being ‘when?’. We can mitigate the impact of cost cutting by being proactive or have it jammed down our throats when we run out of wealth to tax. It is happening in Europe. Too much spending, more than the economy can sustain.
I agree that taxes will have to go up, but until I see real, structural changes to mitigate spending, more tax revenue is just more money down the black hole.
But hell yeah, given the choice between hitting a guy buying a f***ing yacht with an excise tax, or cutting the benefits of somebody who relies on programs like SS or Medicare to eat or not die, you can bet your @ss that I will go for the luxury excise tax option, in a heartbeat.
This is the choice? A luxury tax, or raising taxes on people making more than 250K, won’t noticeably dent the deficit. It’s ‘feel good’ tax policy–dinging people with money or even a lot of money–to virtually no good end and without any real thought to the negative impact that taxing economic activity has.
Whether cutting spending is popular or not, it is going to happen, the only question being ‘when?’. We can mitigate the impact of cost cutting by being proactive or have it jammed down our throats when we run out of wealth to tax. It is happening in Europe. Too much spending, more than the economy can sustain.
I agree that taxes will have to go up, but until I see real, structural changes to mitigate spending, more tax revenue is just more money down the black hole.
It is happening in Europe. Too much spending, more than the economy can sustain.
Euro-using countries don’t have their own currencies or central banks, making their deficits far more costly. Their budgets are constrained in the way US state budgets are.
“Too much spending” depends on the availability of real resources (and political will, in practice) here in the US, not money, when it comes to the federal government.
It is happening in Europe. Too much spending, more than the economy can sustain.
Euro-using countries don’t have their own currencies or central banks, making their deficits far more costly. Their budgets are constrained in the way US state budgets are.
“Too much spending” depends on the availability of real resources (and political will, in practice) here in the US, not money, when it comes to the federal government.
Individual tendency to change personal, fiscal policy in response to changing tax policy is irrelevant to a discussion of what to tax?
Ok.
Individual tendency to change personal, fiscal policy in response to changing tax policy is irrelevant to a discussion of what to tax?
Ok.
We were specifically discussing federal taxes. I don’t think moving a yacht to Rhode Island would have an effect on the applicable federal taxes.
That’s all that meant.
We were specifically discussing federal taxes. I don’t think moving a yacht to Rhode Island would have an effect on the applicable federal taxes.
That’s all that meant.
I was referring to a general tax avoidance impulse, hsh. Obviously your scheme to place an excise tax on luxury goods such as yachts would involve a quite different tax-avoidance strategy.
Like, possibly: having an offshore company purchase the vessel, and then leasing it. I’m just spitballing, here, but the fact remains that people will minimize their tax burden. Warren Buffett could pay more taxes, as could Stephen King and (yes) John Kerry. And those are people who think they should be paying more.
I was referring to a general tax avoidance impulse, hsh. Obviously your scheme to place an excise tax on luxury goods such as yachts would involve a quite different tax-avoidance strategy.
Like, possibly: having an offshore company purchase the vessel, and then leasing it. I’m just spitballing, here, but the fact remains that people will minimize their tax burden. Warren Buffett could pay more taxes, as could Stephen King and (yes) John Kerry. And those are people who think they should be paying more.
Obviously your scheme to place an excise tax on luxury goods such as yachts would involve a quite different tax-avoidance strategy.
I think you need to discuss that with russell, not that I’m necessarily opposed it. But I never mentioned anything about such a tax.
Anyway, I don’t think it’s a big secret that people will try to avoid taxes.
Obviously your scheme to place an excise tax on luxury goods such as yachts would involve a quite different tax-avoidance strategy.
I think you need to discuss that with russell, not that I’m necessarily opposed it. But I never mentioned anything about such a tax.
Anyway, I don’t think it’s a big secret that people will try to avoid taxes.
And those are people who think they should be paying more.
As a matter of law – applied to everyone, of course. I wouldn’t mind playing a little softball this weekend, but I’m sure as hell not going to do it alone, since that would be pointless.
And those are people who think they should be paying more.
As a matter of law – applied to everyone, of course. I wouldn’t mind playing a little softball this weekend, but I’m sure as hell not going to do it alone, since that would be pointless.
This was your statement, correct?
I’m confident that enough people who think they are underpaying their taxes could be found to form several softball teams. And, as someone pointed out earlier in the thread:
Every little bit helps!
This was your statement, correct?
I’m confident that enough people who think they are underpaying their taxes could be found to form several softball teams. And, as someone pointed out earlier in the thread:
Every little bit helps!
Russell proposed a number of federal taxes as alternatives to income tax, based on how revenue used to be raised in this country. One of them was the luxury tax you mention. Russell also wrote that he didn’t understand how your John Kerry example was relevant, to which I replied that it probably wasn’t – at least not as far as the specifics of the then-current discussion were concerned. (Obviously, I thought it was relevant to something, since I expanded on it as it related to state taxes.)
My only point was that moving a yacht from one US state to another wouldn’t have any bearing on federal taxes. I don’t know how that makes the luxury tax my scheme.
Meta, meta, meta…
Russell proposed a number of federal taxes as alternatives to income tax, based on how revenue used to be raised in this country. One of them was the luxury tax you mention. Russell also wrote that he didn’t understand how your John Kerry example was relevant, to which I replied that it probably wasn’t – at least not as far as the specifics of the then-current discussion were concerned. (Obviously, I thought it was relevant to something, since I expanded on it as it related to state taxes.)
My only point was that moving a yacht from one US state to another wouldn’t have any bearing on federal taxes. I don’t know how that makes the luxury tax my scheme.
Meta, meta, meta…
I was referring to a general tax avoidance impulse
OK, I see your point now. Thanks for explaining.
your scheme to place an excise tax on luxury goods such as yachts
No, that was my scheme.
Everybody complains about income taxes, so I thought I’d offer a proposal for an alternative. Prior to the income tax, federal revenues raised from individuals were largely via sin and luxury taxes. Revenues overall were a combination of those, plus tariffs, plus sales of federally held land.
So, I just thought I’d throw it out there to see what folks thought.
And, unsurprisingly, nobody likes that idea, either.
Folks that want to significantly lower federal spending need to look at the budget and see where the money goes, then figure out what among those things are excessive luxuries and what are productive uses of the money.
If you’re looking for *significant* reduction in spending, I believe you will find opportunities in:
1. defense
2. cost of health care
And that’s about it. The rest is either not going to get you much, or is going to simply shift the cost of providing useful goods and services onto some other payer.
Or, the useful goods and services will simply go away.
Q: why do great nations go down the tubes?
A: they go bankrupt trying to maintain their empires.
I was referring to a general tax avoidance impulse
OK, I see your point now. Thanks for explaining.
your scheme to place an excise tax on luxury goods such as yachts
No, that was my scheme.
Everybody complains about income taxes, so I thought I’d offer a proposal for an alternative. Prior to the income tax, federal revenues raised from individuals were largely via sin and luxury taxes. Revenues overall were a combination of those, plus tariffs, plus sales of federally held land.
So, I just thought I’d throw it out there to see what folks thought.
And, unsurprisingly, nobody likes that idea, either.
Folks that want to significantly lower federal spending need to look at the budget and see where the money goes, then figure out what among those things are excessive luxuries and what are productive uses of the money.
If you’re looking for *significant* reduction in spending, I believe you will find opportunities in:
1. defense
2. cost of health care
And that’s about it. The rest is either not going to get you much, or is going to simply shift the cost of providing useful goods and services onto some other payer.
Or, the useful goods and services will simply go away.
Q: why do great nations go down the tubes?
A: they go bankrupt trying to maintain their empires.
1. defense
2. cost of health care
We can means test SS. You can force down or cap healthcare costs, but then no one will want to provide them.
Q: why do great nations go down the tubes?
A: they go bankrupt trying to maintain their empires.
Empire? Which colonies?
Most great nations that have gone down the tubes were defeated militarily by other nations/tribes, including Rome. It wasn’t the cost of maintaining an adequate defense, it was failing to maintain a defense adequate to the task of prevailing militarily and being either overpowered or effectively neutralized by countries with larger, stronger armies and navies. The UK and France nominally won WWI, but the cost of winning was so high, they were bankrupted, not to mention decimated.
Protracted wars of attrition against superior or roughly equal force structures are ruinous. So are short wars in which one side loses quickly and decisively, but the ruin is unilateral.
Russell, do you think we’ve seen the last of wars not of our choosing?
In 2011, we spent:
2.009 trillion on SS, Medicare, Medicaid, Unemployment and Welfare
664 Billion on national defense
714 Billion on everything else
The deficit was 1.17 trillion. Back out defense spending entirely, and even if you didn’t add back in the resulting unemployment, the deficit would be 506 Billion.
If we go broke, it won’t be on defense.
Again, looking at the European countries in greatest distress, it isn’t because of defense spending. It’s just spending. Way too much of it.
1. defense
2. cost of health care
We can means test SS. You can force down or cap healthcare costs, but then no one will want to provide them.
Q: why do great nations go down the tubes?
A: they go bankrupt trying to maintain their empires.
Empire? Which colonies?
Most great nations that have gone down the tubes were defeated militarily by other nations/tribes, including Rome. It wasn’t the cost of maintaining an adequate defense, it was failing to maintain a defense adequate to the task of prevailing militarily and being either overpowered or effectively neutralized by countries with larger, stronger armies and navies. The UK and France nominally won WWI, but the cost of winning was so high, they were bankrupted, not to mention decimated.
Protracted wars of attrition against superior or roughly equal force structures are ruinous. So are short wars in which one side loses quickly and decisively, but the ruin is unilateral.
Russell, do you think we’ve seen the last of wars not of our choosing?
In 2011, we spent:
2.009 trillion on SS, Medicare, Medicaid, Unemployment and Welfare
664 Billion on national defense
714 Billion on everything else
The deficit was 1.17 trillion. Back out defense spending entirely, and even if you didn’t add back in the resulting unemployment, the deficit would be 506 Billion.
If we go broke, it won’t be on defense.
Again, looking at the European countries in greatest distress, it isn’t because of defense spending. It’s just spending. Way too much of it.
You can force down or cap healthcare costs, but then no one will want to provide them.
And if you don’t, they will increasingly crowd out every other sector of the economy.
Not to mention, fewer and fewer people will be able to have them.
Most great nations that have gone down the tubes were defeated militarily by other nations/tribes, including Rome.
The UK and France nominally won WWI, but the cost of winning was so high, they were bankrupted
So, which is it?
2.009 trillion on SS, Medicare, Medicaid, Unemployment and Welfare
664 Billion on national defense
714 Billion on everything else
First, “SS, Medicare, Medicaid, Unemployment and Welfare” is five different things. Or, if you wish to consider Medicaid and Medicare together as “federal health care spending”, four different things.
Second, with Iraq and Afghanistan included, I believe total DOD was closer to $700B in 2011.
My point about defense and ’empires’ is that we support military commitments that go well beyond what are needed for the actual defense of the US.
The US spends a little more than 40% of all of the money spent on national defense, *in the entire freaking world*. The world.
Some of this is a legacy of defense partnerships dating back to WWII or earlier. Some of it is a legacy of decades of a foreign policy based on, explicitly, establishing and maintaining full spectrum dominance over every other nation in the world, friend or foe.
Net/net, all of that costs a hell of a lot of money.
I actually don’t think the US is “going broke”, and the robust market for US debt indicates to me that nobody else does, either. Life would just be better, short and long term, if we stopped accumulating more and more debt.
SS is not a program that is in anything like a dire financial position. It doesn’t need fixing.
Health care costs are a problem, whether the feds pay for it, or whether folks pay their doctors with chickens. The costs are simply going up, at a rate greater than the economy as a whole, and have been for a while, and show no sign of not doing so. If we can’t find a way to manage that, they are going to starve out other sectors of the economy, *no matter who pays for them, and how*.
If you want to make a really significant change in the US bottom line from the spending side, the places you will find the greatest opportunities for saving *without eliminating useful goods and services to American people* are through managing health care costs, and reducing the overwhelmingly large amount of money that we spend, historically, relative to GDP, or to the rest of world, on the military.
You can force down or cap healthcare costs, but then no one will want to provide them.
And if you don’t, they will increasingly crowd out every other sector of the economy.
Not to mention, fewer and fewer people will be able to have them.
Most great nations that have gone down the tubes were defeated militarily by other nations/tribes, including Rome.
The UK and France nominally won WWI, but the cost of winning was so high, they were bankrupted
So, which is it?
2.009 trillion on SS, Medicare, Medicaid, Unemployment and Welfare
664 Billion on national defense
714 Billion on everything else
First, “SS, Medicare, Medicaid, Unemployment and Welfare” is five different things. Or, if you wish to consider Medicaid and Medicare together as “federal health care spending”, four different things.
Second, with Iraq and Afghanistan included, I believe total DOD was closer to $700B in 2011.
My point about defense and ’empires’ is that we support military commitments that go well beyond what are needed for the actual defense of the US.
The US spends a little more than 40% of all of the money spent on national defense, *in the entire freaking world*. The world.
Some of this is a legacy of defense partnerships dating back to WWII or earlier. Some of it is a legacy of decades of a foreign policy based on, explicitly, establishing and maintaining full spectrum dominance over every other nation in the world, friend or foe.
Net/net, all of that costs a hell of a lot of money.
I actually don’t think the US is “going broke”, and the robust market for US debt indicates to me that nobody else does, either. Life would just be better, short and long term, if we stopped accumulating more and more debt.
SS is not a program that is in anything like a dire financial position. It doesn’t need fixing.
Health care costs are a problem, whether the feds pay for it, or whether folks pay their doctors with chickens. The costs are simply going up, at a rate greater than the economy as a whole, and have been for a while, and show no sign of not doing so. If we can’t find a way to manage that, they are going to starve out other sectors of the economy, *no matter who pays for them, and how*.
If you want to make a really significant change in the US bottom line from the spending side, the places you will find the greatest opportunities for saving *without eliminating useful goods and services to American people* are through managing health care costs, and reducing the overwhelmingly large amount of money that we spend, historically, relative to GDP, or to the rest of world, on the military.
I wouldn’t say that; I am much more ok with excise tax just because we need the money than I am with e.g. taxing to bludgeon people into behaviors that the taxing authority approves of.
Hardly anyone wants to talk about structural changes in SS such as what McKTX suggested, so some of that reticence to change things is of the shared variety.
I was really more elaborating on McKinneyTX’s suggestion that it would have some nontrivial economic effect. But since tax avoidance is not a new idea, I’ll stop the dead horse beatings, now.
I wouldn’t say that; I am much more ok with excise tax just because we need the money than I am with e.g. taxing to bludgeon people into behaviors that the taxing authority approves of.
Hardly anyone wants to talk about structural changes in SS such as what McKTX suggested, so some of that reticence to change things is of the shared variety.
I was really more elaborating on McKinneyTX’s suggestion that it would have some nontrivial economic effect. But since tax avoidance is not a new idea, I’ll stop the dead horse beatings, now.
Rereading, that should have been liberally sprinkled with wryly smiling emoticons. After the fact, well: read me as being less nasty and more playfully jabbing. With socker-boppers on.
Rereading, that should have been liberally sprinkled with wryly smiling emoticons. After the fact, well: read me as being less nasty and more playfully jabbing. With socker-boppers on.
And if you don’t, they will increasingly crowd out every other sector of the economy.
Not to mention, fewer and fewer people will be able to have them.
Yes, the market will have its way with these services just as it will with any other.
So, which is it?
It isn’t either/or. The majority of conflicts were won decisively and relatively quickly by one side overpowering the other. There are exceptions, and I mentioned WWI to recognize that fact. WWII was pretty much WWI redux for everyone except the US.
My point about defense and ’empires’ is that we support military commitments that go well beyond what are needed for the actual defense of the US.
Which begs the obvious question. A question Eric was going to answer way, way back when, but he is in full capitalist mode, making money hand over fist as a partner in his law firm. 🙂
The US spends a little more than 40% of all of the money spent on national defense, *in the entire freaking world*. The world.
This is as true as it is uninformative and as it is irrelevant. If we were to match the PRC in personnel and equipment, less naval strength, we would be bankrupt. The PRC is increasing its spending, mostly on force projection capability. If we spent as our NATO allies spend, we wouldn’t have the ability to deal with any potential overseas threat.
a foreign policy based on, explicitly, establishing and maintaining full spectrum dominance over every other nation in the world, friend or foe.
Russell, this is not even close to US defense policy at any time post WWII.
*without eliminating useful goods and services to American people*
Of our our major military conflicts after WWI, the following were precipitated by surprise attacks: WWI, Korea, Gulf War I and 9/11.
On December 8, 1941, the most useful goods and services the American people needed was a military that was not outdated, undersized, and under strength. I tried to find some stats on the number of US deaths alone that resulted from the early setbacks of WWII. It’s something on the order of 25,000 deaths, depending on which months your pick and whatnot.
So, what’s useful is entirely a matter of context.
And if you don’t, they will increasingly crowd out every other sector of the economy.
Not to mention, fewer and fewer people will be able to have them.
Yes, the market will have its way with these services just as it will with any other.
So, which is it?
It isn’t either/or. The majority of conflicts were won decisively and relatively quickly by one side overpowering the other. There are exceptions, and I mentioned WWI to recognize that fact. WWII was pretty much WWI redux for everyone except the US.
My point about defense and ’empires’ is that we support military commitments that go well beyond what are needed for the actual defense of the US.
Which begs the obvious question. A question Eric was going to answer way, way back when, but he is in full capitalist mode, making money hand over fist as a partner in his law firm. 🙂
The US spends a little more than 40% of all of the money spent on national defense, *in the entire freaking world*. The world.
This is as true as it is uninformative and as it is irrelevant. If we were to match the PRC in personnel and equipment, less naval strength, we would be bankrupt. The PRC is increasing its spending, mostly on force projection capability. If we spent as our NATO allies spend, we wouldn’t have the ability to deal with any potential overseas threat.
a foreign policy based on, explicitly, establishing and maintaining full spectrum dominance over every other nation in the world, friend or foe.
Russell, this is not even close to US defense policy at any time post WWII.
*without eliminating useful goods and services to American people*
Of our our major military conflicts after WWI, the following were precipitated by surprise attacks: WWI, Korea, Gulf War I and 9/11.
On December 8, 1941, the most useful goods and services the American people needed was a military that was not outdated, undersized, and under strength. I tried to find some stats on the number of US deaths alone that resulted from the early setbacks of WWII. It’s something on the order of 25,000 deaths, depending on which months your pick and whatnot.
So, what’s useful is entirely a matter of context.
Rome expanded until it reached an unstable equilibrium. Then it started to outsource its defense because the elites were unwilling to take a part in that defense personally and also tried to avoid paying for it. Additionally the empire had outgrown its means of communication and thus central control. Cutting the empire in two gave one half another several hundred years lease of life until it broke down less under external pressure but internal corruption of the elites.
Many empires did not disappear but just shrank back to a managable size. Britain, France, Holland, and Germany* still exist and the Russian colossus just changed management several times. Rome and Byzantium on the other hand disappeared without direct heirs (modern Italy is not a continuation of Rome; Constantinople changed side and is still under Turkish government).
Neither the US nor the Soviet Union had ‘colonies’. The terms ‘vassals’ and ‘puppets’ also get avoided in polite society. There were and are less controversial terms but the effects are essentially the same.
*Austria is a bit more complicated.
Rome expanded until it reached an unstable equilibrium. Then it started to outsource its defense because the elites were unwilling to take a part in that defense personally and also tried to avoid paying for it. Additionally the empire had outgrown its means of communication and thus central control. Cutting the empire in two gave one half another several hundred years lease of life until it broke down less under external pressure but internal corruption of the elites.
Many empires did not disappear but just shrank back to a managable size. Britain, France, Holland, and Germany* still exist and the Russian colossus just changed management several times. Rome and Byzantium on the other hand disappeared without direct heirs (modern Italy is not a continuation of Rome; Constantinople changed side and is still under Turkish government).
Neither the US nor the Soviet Union had ‘colonies’. The terms ‘vassals’ and ‘puppets’ also get avoided in polite society. There were and are less controversial terms but the effects are essentially the same.
*Austria is a bit more complicated.
On December 8, 1941, the most useful goods and services the American people needed ….were, beginning immediately, purchased by the U.S. Government from the private sector by the mechanism of government spending (yes, there was cajolery and price controls, too) and this led to monstrous deficits and, in a very few years, to a debt/GNP ratio of well over 100%.
Now were there hysterical cries that the U.S. was “spending itself into bankruptcy”? Why, goodness gracious, no….this does not appear to have been the case. Mercy me, how could that be?
The accounting logic with respect to our current situation today is exactly the same.
Somehow we got through it.
On December 8, 1941, the most useful goods and services the American people needed ….were, beginning immediately, purchased by the U.S. Government from the private sector by the mechanism of government spending (yes, there was cajolery and price controls, too) and this led to monstrous deficits and, in a very few years, to a debt/GNP ratio of well over 100%.
Now were there hysterical cries that the U.S. was “spending itself into bankruptcy”? Why, goodness gracious, no….this does not appear to have been the case. Mercy me, how could that be?
The accounting logic with respect to our current situation today is exactly the same.
Somehow we got through it.
McTx: If we spent as our NATO allies spend, we wouldn’t have the ability to deal with any potential overseas threat.
overseas threat to…what, exactly?
McTx: If we spent as our NATO allies spend, we wouldn’t have the ability to deal with any potential overseas threat.
overseas threat to…what, exactly?
Yes, the market will have its way with these services just as it will with any other.
I mean you, personally, no disrespect when I say this, but when it comes to basic access to health care, the market can kiss my @ss.
Some things ought not be available, or not available, based on what ‘the market’ wants. If for no other reason than the fact that ‘the market’ is a term of convenience for what a lot of people happen to do with money, goods, and services.
In other words, there is no entity called ‘the market’ that has any intent or agency, whatsoever. ‘The market’ is people buying and selling stuff, period. And if the consequence of people buying and selling stuff is that a lot of people get sick and/or die, needlessly, than public intervention seems, to me, more than reasonable.
YMMV.
This is as true as it is uninformative and as it is irrelevant.
Sez you.
this is not even close to US defense policy at any time post WWII.
The phrase “full spectrum dominance” is not something I made up. It’s a quote from the DoD’s Joint Vision 2020. And from the DoD’s Joint Vision 2010. And from any of a number of other DoD publications and policy papers.
It’s use is primarily in a battlefield context, but it extends to other aspects of military and foreign policy as well.
The idea that the US is, and should be, and should continue to be, an unquestionable and unchallengeable hegemon in military, economic, and political terms was an explicit component of the foreign policy advocated by principals in both the State and Defense departments under, at least, both Bushes and Reagan.
If this topic was of any interest to you at any time in the last, say, 30 years, none of this should be, remotely, news to you.
It costs a lot to be the global hegemon.
On December 8, 1941, the most useful goods and services the American people needed was a military that was not outdated, undersized, and under strength.
If we were in the same position today we were in on Dec 8 1941, I’d say you have a point.
We have about 5% of the world’s population, we are bounded by two oceans east and west, and two friendly nations north and south. The greatest threat to the security of Americans comes from religious fanatics with box cutters and underwear bombs.
China is likely to assert itself in the Pacific. Since that’s their neighborhood, I find that unsurprising. I don’t see China making anything like a military action targeting the US in North America. Do you?
China spends about 20% of what we spend in absolute dollars, and 40% as a percent of GDP. If they are overmatching us at that rate of expenditure, we’re doing something wrong.
I guess North Korea is always worth worrying about, because they are out of their minds.
Who else? Russia?
We spend 4 out of every 10 dollars spent on national defense, by any nation, anywhere, in the world. It doesn’t require 4 out of 10 dollars of all dollars spent, by anyone, anywhere, to obtain our own safety. Sez me.
Yes, the market will have its way with these services just as it will with any other.
I mean you, personally, no disrespect when I say this, but when it comes to basic access to health care, the market can kiss my @ss.
Some things ought not be available, or not available, based on what ‘the market’ wants. If for no other reason than the fact that ‘the market’ is a term of convenience for what a lot of people happen to do with money, goods, and services.
In other words, there is no entity called ‘the market’ that has any intent or agency, whatsoever. ‘The market’ is people buying and selling stuff, period. And if the consequence of people buying and selling stuff is that a lot of people get sick and/or die, needlessly, than public intervention seems, to me, more than reasonable.
YMMV.
This is as true as it is uninformative and as it is irrelevant.
Sez you.
this is not even close to US defense policy at any time post WWII.
The phrase “full spectrum dominance” is not something I made up. It’s a quote from the DoD’s Joint Vision 2020. And from the DoD’s Joint Vision 2010. And from any of a number of other DoD publications and policy papers.
It’s use is primarily in a battlefield context, but it extends to other aspects of military and foreign policy as well.
The idea that the US is, and should be, and should continue to be, an unquestionable and unchallengeable hegemon in military, economic, and political terms was an explicit component of the foreign policy advocated by principals in both the State and Defense departments under, at least, both Bushes and Reagan.
If this topic was of any interest to you at any time in the last, say, 30 years, none of this should be, remotely, news to you.
It costs a lot to be the global hegemon.
On December 8, 1941, the most useful goods and services the American people needed was a military that was not outdated, undersized, and under strength.
If we were in the same position today we were in on Dec 8 1941, I’d say you have a point.
We have about 5% of the world’s population, we are bounded by two oceans east and west, and two friendly nations north and south. The greatest threat to the security of Americans comes from religious fanatics with box cutters and underwear bombs.
China is likely to assert itself in the Pacific. Since that’s their neighborhood, I find that unsurprising. I don’t see China making anything like a military action targeting the US in North America. Do you?
China spends about 20% of what we spend in absolute dollars, and 40% as a percent of GDP. If they are overmatching us at that rate of expenditure, we’re doing something wrong.
I guess North Korea is always worth worrying about, because they are out of their minds.
Who else? Russia?
We spend 4 out of every 10 dollars spent on national defense, by any nation, anywhere, in the world. It doesn’t require 4 out of 10 dollars of all dollars spent, by anyone, anywhere, to obtain our own safety. Sez me.
Also, what Hartmut said is my understanding as well.
Also, what Hartmut said is my understanding as well.
I wouldn’t say that; I am much more ok with excise tax just because we need the money than I am with e.g. taxing to bludgeon people into behaviors that the taxing authority approves of.
And an excise tax does not “bludgeon people”? Hammers and nails, baby!
I wouldn’t say that; I am much more ok with excise tax just because we need the money than I am with e.g. taxing to bludgeon people into behaviors that the taxing authority approves of.
And an excise tax does not “bludgeon people”? Hammers and nails, baby!
I might also note that one reason why our NATO allies may spend so (comparatively) little on defense is that they’re free riding on the U.S.’s defense spending.
I might also note that one reason why our NATO allies may spend so (comparatively) little on defense is that they’re free riding on the U.S.’s defense spending.
I think that’s somewhat true of all of our allies, NATO or otherwise.
But we do make them pay in full for military hardware (NB: I don’t think this is necessarily a plus). I can’t say how much of that money is returned to any of these countries in the form of foreign aid, though.
I think that’s somewhat true of all of our allies, NATO or otherwise.
But we do make them pay in full for military hardware (NB: I don’t think this is necessarily a plus). I can’t say how much of that money is returned to any of these countries in the form of foreign aid, though.
But we do make them pay in full for military hardware (NB: I don’t think this is necessarily a plus). I can’t say how much of that money is returned to any of these countries in the form of foreign aid, though.
Returned by Lockheed Martin et. al.?
But we do make them pay in full for military hardware (NB: I don’t think this is necessarily a plus). I can’t say how much of that money is returned to any of these countries in the form of foreign aid, though.
Returned by Lockheed Martin et. al.?
No, that’s kind of what I was hinting at might be a problem. In effect, there may be some funnelling of tax dollars through foreign governments into LM. I don’t really understand FMS all that well, but I think the government gets to keep some of the revenue. Still, I am fairly certain that LM profits a lot more from FMS than it does from selling to the US military.
None of this comes from any special knowledge that I might have. I do not count the beans.
No, that’s kind of what I was hinting at might be a problem. In effect, there may be some funnelling of tax dollars through foreign governments into LM. I don’t really understand FMS all that well, but I think the government gets to keep some of the revenue. Still, I am fairly certain that LM profits a lot more from FMS than it does from selling to the US military.
None of this comes from any special knowledge that I might have. I do not count the beans.
Then it started to outsource its defense because the elites were unwilling to take a part in that defense personally and also tried to avoid paying for it.
Exactly.
Now were there hysterical cries that the U.S. was “spending itself into bankruptcy”? Why, goodness gracious, no….this does not appear to have been the case. Mercy me, how could that be?
Well, perhaps that was due to there being a war that was existential in nature. And while the defense industry was coming on line, those limited forces we had in the field were flying, inter alia, Brewster Buffalo fighters. Every Marine pilot who went up in a Brewster Buffalo at Midway was shot down, virtually defenseless. Our torpedoes didn’t work. We were way behind in many classes of military technology, the result being needless battlefield casualties.
overseas threat to…what, exactly?
There are three on the horizon presently.
First, N Korea. There are, to simplify the discussion, two sides to this: (1) they are a near term threat to S Korea and Japan and (2) long term, can that regime persist? I don’t think so.
But, near term, if the markets are roiling because Greece or Portugal or Ireland or Spain are facing financial crises, just what does anyone think world markets, jobs, trade, etc. would do if Seoul was taken by N Korea or if Tokyo was hit by a nuclear armed missile? The latter is farther out on the speculation rim, but it is there. Similarly–and this is threat number 2–if the PRC were to move on Taiwan, or Vietnam, and thus send a not so subtle message to other Pacific Rim countries about the need to truckle under, does anyone here think the PRC as the new, single hegemon wouldn’t be one hell of a lot worse than the US?
Item number three is Iran shutting the Straits of Hormuz, or invading Saudi Arabia or otherwise establishing regional hegemony. Again, if things are dicey today because of the PIGS, this is miniscule compared to the paradigm shift something of this nature would produce.
So, are their threats? Absolutely. Is there any other country with the resources to match and deter those threats? No, only us.
A very distant threat is Russia. For a variety of reasons, even a substantially reduced US force projection capability would be sufficient to deal with that issue, should it ever arise which it likely won’t.
but when it comes to basic access to health care, the market can kiss my @ss.
I don’t take anything you say personally. Whether you like the market or not, gov’t cannot compel pharma to develop, manufacture and market medicine at a loss. Gov’t cannot compel companies to build MRI machines, ambulances, and all of the high end surgical and patient care hardware and equipment at a loss. Most of all, gov’t cannot compel people to go into medicine, nursing, etc. (and what do you do when doctors, nurses, x-ray techs etc unionize and go on strike? How interesting will that be?)
For a time, we can tax ourselves to pay enough to make it worthwhile for the private sector and individual citizens to stay in healthcare. But, someday, when revenues fall short of costs–actually, that day is here on the gov’t insurance side–something will have to give. Further, well before we achieve maximum tax revenue, tax payers will revolt, hurricanes will strike and other unmet needs will go wanting. You can bend the market for a while, but you can’t break it.
China is likely to assert itself in the Pacific. Since that’s their neighborhood, I find that unsurprising. I don’t see China making anything like a military action targeting the US in North America. Do you?
I agree that China is likely to assert itself in the Pacific, particularly if we leave a void. Now, why would China do that? Altruism? Not hardly. The country you want, the country progressives want, is a country that can provide employment to virtually everyone, that has an economy whose tax revenues fund a broad range of social services and safety nets, that is environmentally conscious, etc. How in the hell anyone thinks a world dominated by a country who will threaten or attack other countries who pose no threat, who have gone out of their way to avoid confrontation, will allow the US or anyone else to enjoy a world class economy free and clear of that giant’s duress is beyond me.
As for a threat to the US–absolutely, if we disarm to the point where, in a short and violent clash, what remains of our defense capability is destroyed. We depend on open sea lanes and open skies. Put China in sole control of those and watch us sink into third world status or worse.
We have compelling economic evidence right before our eyes that what happens economically in other parts of the world affects us and affects us profoundly. Isolationists prior to WWII, with much better reason and much less history to guide them, turned a blind eye to militant and militarily resurgent dictatorships. The cost was world wide desolation and millions and millions dead. Since then, wars have been small, regional and relatively modest in terms of casualties. Please note I said “relatively”.
We also have clear evidence that China is arming well beyond any threat to its economy, its sovereignty or anything else. The only threat China faces is that of a counter weight to whatever military threats it might deem in its interests in the out years. To believe that this is not a very real threat is to deny history and logic.
The key difference between today and 1940-41 is that we have the infrastructure in place to deter China. Demographically, China has issues, as does Russia. Long term, its population will shrink and its internal problems will increase as income disparity between urban and rural populations becomes more stark. Eventually, China will have to look inward. If that happens, if no wealthy and potentially hostile regime is on the horizon, we can return to a minimal military. Now, though, we can’t. Not without inviting far worse than our current conditions.
Then it started to outsource its defense because the elites were unwilling to take a part in that defense personally and also tried to avoid paying for it.
Exactly.
Now were there hysterical cries that the U.S. was “spending itself into bankruptcy”? Why, goodness gracious, no….this does not appear to have been the case. Mercy me, how could that be?
Well, perhaps that was due to there being a war that was existential in nature. And while the defense industry was coming on line, those limited forces we had in the field were flying, inter alia, Brewster Buffalo fighters. Every Marine pilot who went up in a Brewster Buffalo at Midway was shot down, virtually defenseless. Our torpedoes didn’t work. We were way behind in many classes of military technology, the result being needless battlefield casualties.
overseas threat to…what, exactly?
There are three on the horizon presently.
First, N Korea. There are, to simplify the discussion, two sides to this: (1) they are a near term threat to S Korea and Japan and (2) long term, can that regime persist? I don’t think so.
But, near term, if the markets are roiling because Greece or Portugal or Ireland or Spain are facing financial crises, just what does anyone think world markets, jobs, trade, etc. would do if Seoul was taken by N Korea or if Tokyo was hit by a nuclear armed missile? The latter is farther out on the speculation rim, but it is there. Similarly–and this is threat number 2–if the PRC were to move on Taiwan, or Vietnam, and thus send a not so subtle message to other Pacific Rim countries about the need to truckle under, does anyone here think the PRC as the new, single hegemon wouldn’t be one hell of a lot worse than the US?
Item number three is Iran shutting the Straits of Hormuz, or invading Saudi Arabia or otherwise establishing regional hegemony. Again, if things are dicey today because of the PIGS, this is miniscule compared to the paradigm shift something of this nature would produce.
So, are their threats? Absolutely. Is there any other country with the resources to match and deter those threats? No, only us.
A very distant threat is Russia. For a variety of reasons, even a substantially reduced US force projection capability would be sufficient to deal with that issue, should it ever arise which it likely won’t.
but when it comes to basic access to health care, the market can kiss my @ss.
I don’t take anything you say personally. Whether you like the market or not, gov’t cannot compel pharma to develop, manufacture and market medicine at a loss. Gov’t cannot compel companies to build MRI machines, ambulances, and all of the high end surgical and patient care hardware and equipment at a loss. Most of all, gov’t cannot compel people to go into medicine, nursing, etc. (and what do you do when doctors, nurses, x-ray techs etc unionize and go on strike? How interesting will that be?)
For a time, we can tax ourselves to pay enough to make it worthwhile for the private sector and individual citizens to stay in healthcare. But, someday, when revenues fall short of costs–actually, that day is here on the gov’t insurance side–something will have to give. Further, well before we achieve maximum tax revenue, tax payers will revolt, hurricanes will strike and other unmet needs will go wanting. You can bend the market for a while, but you can’t break it.
China is likely to assert itself in the Pacific. Since that’s their neighborhood, I find that unsurprising. I don’t see China making anything like a military action targeting the US in North America. Do you?
I agree that China is likely to assert itself in the Pacific, particularly if we leave a void. Now, why would China do that? Altruism? Not hardly. The country you want, the country progressives want, is a country that can provide employment to virtually everyone, that has an economy whose tax revenues fund a broad range of social services and safety nets, that is environmentally conscious, etc. How in the hell anyone thinks a world dominated by a country who will threaten or attack other countries who pose no threat, who have gone out of their way to avoid confrontation, will allow the US or anyone else to enjoy a world class economy free and clear of that giant’s duress is beyond me.
As for a threat to the US–absolutely, if we disarm to the point where, in a short and violent clash, what remains of our defense capability is destroyed. We depend on open sea lanes and open skies. Put China in sole control of those and watch us sink into third world status or worse.
We have compelling economic evidence right before our eyes that what happens economically in other parts of the world affects us and affects us profoundly. Isolationists prior to WWII, with much better reason and much less history to guide them, turned a blind eye to militant and militarily resurgent dictatorships. The cost was world wide desolation and millions and millions dead. Since then, wars have been small, regional and relatively modest in terms of casualties. Please note I said “relatively”.
We also have clear evidence that China is arming well beyond any threat to its economy, its sovereignty or anything else. The only threat China faces is that of a counter weight to whatever military threats it might deem in its interests in the out years. To believe that this is not a very real threat is to deny history and logic.
The key difference between today and 1940-41 is that we have the infrastructure in place to deter China. Demographically, China has issues, as does Russia. Long term, its population will shrink and its internal problems will increase as income disparity between urban and rural populations becomes more stark. Eventually, China will have to look inward. If that happens, if no wealthy and potentially hostile regime is on the horizon, we can return to a minimal military. Now, though, we can’t. Not without inviting far worse than our current conditions.
So, are their threats? Absolutely. Is there any other country with the resources to match and deter those threats? No, only us.
I’m no military expert, but it seems to me that the types of threats you’re bringing up are low-probability (some very much so) and of the type that we could respond to by (forgive the technical jargon) blowing the living sh1t out of the offending country without offending our allies. And we can already do that with a fraction of what is currently at our disposal.
Nation-building and long-term occupations seem to be another matter. We need to cut that sh1t out. It’s expensive and it doesn’t work out so well.
So, are their threats? Absolutely. Is there any other country with the resources to match and deter those threats? No, only us.
I’m no military expert, but it seems to me that the types of threats you’re bringing up are low-probability (some very much so) and of the type that we could respond to by (forgive the technical jargon) blowing the living sh1t out of the offending country without offending our allies. And we can already do that with a fraction of what is currently at our disposal.
Nation-building and long-term occupations seem to be another matter. We need to cut that sh1t out. It’s expensive and it doesn’t work out so well.
Regarding health care, I’d like to get the ObWi commentariat to consider a mental experiment involving real GDP per capita growing by, say, 50% over the next 30 years, all of which could be accounted for by health care. So we’d have all the crap we have now, plus a lot more health care.
Would we have the real resources to sustain such an economy? What would unemployment look like? Would people have challenging and rewarding work to do? What would be our standard of living, or, more importantly, our quality of life?
On another front, when russell says the market can kiss his a$$, I tend to think he means that the market cannot, without management or restraint, dictate who gets basic health care or what manner of health care should be provided. That is, the market, as in free-from-government-interference laissez-faire capitalism, isn’t good at determining the best system for keeping people healthy and preventing avoidable sufferring.
Capitalism is based on profit and selling as much of your product as you can. Health care is about (or should be) about selling as little of your product as necessary to keep people healthy by ensuring that they stay healthy and don’t need costly interventions. That’s why we don’t have enough primary care physicians. The money is in specialties.
Does this mean we completely eliminate market forces and profit motive from any and all aspects of the health-care sector, as broadly as that can be defined? No, of course not. But it does mean that we, through our government, should attempt to eliminate the perverse incentives that the free market creates in that sector.
Regarding health care, I’d like to get the ObWi commentariat to consider a mental experiment involving real GDP per capita growing by, say, 50% over the next 30 years, all of which could be accounted for by health care. So we’d have all the crap we have now, plus a lot more health care.
Would we have the real resources to sustain such an economy? What would unemployment look like? Would people have challenging and rewarding work to do? What would be our standard of living, or, more importantly, our quality of life?
On another front, when russell says the market can kiss his a$$, I tend to think he means that the market cannot, without management or restraint, dictate who gets basic health care or what manner of health care should be provided. That is, the market, as in free-from-government-interference laissez-faire capitalism, isn’t good at determining the best system for keeping people healthy and preventing avoidable sufferring.
Capitalism is based on profit and selling as much of your product as you can. Health care is about (or should be) about selling as little of your product as necessary to keep people healthy by ensuring that they stay healthy and don’t need costly interventions. That’s why we don’t have enough primary care physicians. The money is in specialties.
Does this mean we completely eliminate market forces and profit motive from any and all aspects of the health-care sector, as broadly as that can be defined? No, of course not. But it does mean that we, through our government, should attempt to eliminate the perverse incentives that the free market creates in that sector.
We’re covering a lot of ground here so I will try to bring my comments back on point.
Yes, there are a number of current and potential threats in the world, which behooves us to maintain a credible military presence. And yes, due to a variety of historical and policy-based factors, the US tends to carry more than what would otherwise be our fair share of water, militarily. And yes, we reap certain benefits from doing so.
All good.
My point is that doing all of that costs a hell of a lot of money, and there are likely large savings to be had by reviewing what we do, and evaluating whether we’re getting any real value from it.
So, China is making some fairly extravagant territorial claims in the South China Sea, and we are sending low numbers of thousands of folks to nearby places to, basically, be visible and make the point that (a) we notice, and (b) it’s not something will go without a response of some kind.
I see the point of that.
Do we really still need a permanent presence of 50,000+ in Germany, or 10,000+ in Italy, or almost 10,000 in the UK?
Or almost 70,000 between Japan and ROK?
I’m not sure.
We also spend Very Very Very large sums of money on military technology that does not always result in commensurate benefit.
I don’t always see the point of that.
There isn’t world enough or time, here, to get into the ways in which national policies unrelated to military threats per se – our national energy policy, for example – incur military obligations that would otherwise not exist, or be far smaller.
So I’m happy to leave the ’empire’ issue as a point on which we (I presume) simply disagree.
Last but not least on the military issue, reducing a $700B program by 10% will get you $70B, while reducing, say, TANF by 10% will get you less than $2B. And every buck you take out of TANF, again frex, literally takes food out of somebody’s mouth.
So, long story short, IMVHO if you want to actually reduce the federal deficit from the spending side, as opposed to on the revenue side, DoD is an opportunity-rich place to look.
My opinion, obviously.
HSH is dead on as regards the “market can kiss my @ss” thing.
People need to go to the doctor. Otherwise they get ill and maybe they die, when they didn’t need to.
If the market makes that happen, great. If it doesn’t, then we should step in as a public effort and make it happen.
We do this with lots of things that we deem to be essential. IMVHO access to basic health care ought to be among them.
We’re free people, we can choose what we do. If the market doesn’t achieve a result we want to achieve, then we are under no obligation to enslave ourselves to what ‘the market wants’.
Because ‘the market’ doesn’t ‘want’ anything, one way or the other. ‘The market’ is, basically, a description of a complex and naturally occurring set of human behaviors. Saying ‘the market wants X’ is like saying ‘fluid dynamics wants X’.
If what ‘fluid dynamics wants’ means a river would run through your living room, you build a dam. Or move your house. Or any of 1,000 other things.
You don’t sit there, watch the river run through your house, and say ‘oh well, it’s what fluid dynamics wanted’.
You follow my point, I’m sure.
Increases in health care costs are on track to starve out a broad range of other goods, services, and economic activities. It doesn’t matter if the feds are paying the bill, your insurance company is paying the bill, or if you are paying out of pocket.
The cost of health care is rising faster than the economy as a whole, which means more and more economic activity – i.e., wealth – is going to be consumed to pay for it.
So, to the degree that the federal budget funds health care – which it does, to the tune of a very large number – *if we want to rein in the debt from the spending side* we would do well to find a way to manage health care costs.
Enough from me.
We’re covering a lot of ground here so I will try to bring my comments back on point.
Yes, there are a number of current and potential threats in the world, which behooves us to maintain a credible military presence. And yes, due to a variety of historical and policy-based factors, the US tends to carry more than what would otherwise be our fair share of water, militarily. And yes, we reap certain benefits from doing so.
All good.
My point is that doing all of that costs a hell of a lot of money, and there are likely large savings to be had by reviewing what we do, and evaluating whether we’re getting any real value from it.
So, China is making some fairly extravagant territorial claims in the South China Sea, and we are sending low numbers of thousands of folks to nearby places to, basically, be visible and make the point that (a) we notice, and (b) it’s not something will go without a response of some kind.
I see the point of that.
Do we really still need a permanent presence of 50,000+ in Germany, or 10,000+ in Italy, or almost 10,000 in the UK?
Or almost 70,000 between Japan and ROK?
I’m not sure.
We also spend Very Very Very large sums of money on military technology that does not always result in commensurate benefit.
I don’t always see the point of that.
There isn’t world enough or time, here, to get into the ways in which national policies unrelated to military threats per se – our national energy policy, for example – incur military obligations that would otherwise not exist, or be far smaller.
So I’m happy to leave the ’empire’ issue as a point on which we (I presume) simply disagree.
Last but not least on the military issue, reducing a $700B program by 10% will get you $70B, while reducing, say, TANF by 10% will get you less than $2B. And every buck you take out of TANF, again frex, literally takes food out of somebody’s mouth.
So, long story short, IMVHO if you want to actually reduce the federal deficit from the spending side, as opposed to on the revenue side, DoD is an opportunity-rich place to look.
My opinion, obviously.
HSH is dead on as regards the “market can kiss my @ss” thing.
People need to go to the doctor. Otherwise they get ill and maybe they die, when they didn’t need to.
If the market makes that happen, great. If it doesn’t, then we should step in as a public effort and make it happen.
We do this with lots of things that we deem to be essential. IMVHO access to basic health care ought to be among them.
We’re free people, we can choose what we do. If the market doesn’t achieve a result we want to achieve, then we are under no obligation to enslave ourselves to what ‘the market wants’.
Because ‘the market’ doesn’t ‘want’ anything, one way or the other. ‘The market’ is, basically, a description of a complex and naturally occurring set of human behaviors. Saying ‘the market wants X’ is like saying ‘fluid dynamics wants X’.
If what ‘fluid dynamics wants’ means a river would run through your living room, you build a dam. Or move your house. Or any of 1,000 other things.
You don’t sit there, watch the river run through your house, and say ‘oh well, it’s what fluid dynamics wanted’.
You follow my point, I’m sure.
Increases in health care costs are on track to starve out a broad range of other goods, services, and economic activities. It doesn’t matter if the feds are paying the bill, your insurance company is paying the bill, or if you are paying out of pocket.
The cost of health care is rising faster than the economy as a whole, which means more and more economic activity – i.e., wealth – is going to be consumed to pay for it.
So, to the degree that the federal budget funds health care – which it does, to the tune of a very large number – *if we want to rein in the debt from the spending side* we would do well to find a way to manage health care costs.
Enough from me.
We also have clear evidence that China is arming well beyond any threat to its economy, its sovereignty or anything else.
We do? What evidence do we have that doesn’t apply even more to us?
I mean, China spends a smaller fraction of its GDP on the military than we do. So why exactly should we assume that China’s intentions are more nefarious than our own government’s?
We also have clear evidence that China is arming well beyond any threat to its economy, its sovereignty or anything else.
We do? What evidence do we have that doesn’t apply even more to us?
I mean, China spends a smaller fraction of its GDP on the military than we do. So why exactly should we assume that China’s intentions are more nefarious than our own government’s?
Do we really still need a permanent presence of 50,000+ in Germany, or 10,000+ in Italy, or almost 10,000 in the UK?
Or almost 70,000 between Japan and ROK?
Germany, no, much less.
Italy, somewhat less. It’s a naval situation.
UK, my guess: no.
Japan and S Korea, yes, at least until N Korea morphs into something less hostile.
So why exactly should we assume that China’s intentions are more nefarious than our own government’s?
Why? The Korean War, Tibet, the border conflict way back when with India, the PRC’s invasion of Vietnam, the border dust up with the Soviet Union way back when, the PRC’s constant siding with open and notorious tyrants, the fact that it’s a dictatorship and not a democracy and,to my knowledge, we aren’t threatening anyone with anything on the Pacific Rim, including the PRC. We are forty years past Vietnam and have downsized our military significantly since then. This is an objective, outward manifestation of intent to not have to go to war. The PRC has not been threatened or intimidated by the US one time, even at the height of US power. Now, with our defense spending on the decline, the PRC, already arming beyond its needs, increases the pace . . . and it is unreasonable to draw a negative and disturbing inference from this?
Do we really still need a permanent presence of 50,000+ in Germany, or 10,000+ in Italy, or almost 10,000 in the UK?
Or almost 70,000 between Japan and ROK?
Germany, no, much less.
Italy, somewhat less. It’s a naval situation.
UK, my guess: no.
Japan and S Korea, yes, at least until N Korea morphs into something less hostile.
So why exactly should we assume that China’s intentions are more nefarious than our own government’s?
Why? The Korean War, Tibet, the border conflict way back when with India, the PRC’s invasion of Vietnam, the border dust up with the Soviet Union way back when, the PRC’s constant siding with open and notorious tyrants, the fact that it’s a dictatorship and not a democracy and,to my knowledge, we aren’t threatening anyone with anything on the Pacific Rim, including the PRC. We are forty years past Vietnam and have downsized our military significantly since then. This is an objective, outward manifestation of intent to not have to go to war. The PRC has not been threatened or intimidated by the US one time, even at the height of US power. Now, with our defense spending on the decline, the PRC, already arming beyond its needs, increases the pace . . . and it is unreasonable to draw a negative and disturbing inference from this?
We are forty years past Vietnam and have downsized our military significantly since then.
That’s a little like saying I downsized from a musket to a MAC-10. Are you suggesting our total destructive capacity is less than at the end of the Vietnam War?
We are forty years past Vietnam and have downsized our military significantly since then.
That’s a little like saying I downsized from a musket to a MAC-10. Are you suggesting our total destructive capacity is less than at the end of the Vietnam War?
China –
Invasion of Tibet: 1950
Korean War: 1950-53
Sino-Indian War: 1962
Sino-Soviet border conflict: 1969
Sino-Vietnamese War: 1979
Siding with tyrants: ongoing
They’re fncking pikers when compared to the U.S., especially over the last 30 years (I guess they might edge us on the “siding with tyrants” front, but it’s at least close). Or maybe they’re just smarter.
China –
Invasion of Tibet: 1950
Korean War: 1950-53
Sino-Indian War: 1962
Sino-Soviet border conflict: 1969
Sino-Vietnamese War: 1979
Siding with tyrants: ongoing
They’re fncking pikers when compared to the U.S., especially over the last 30 years (I guess they might edge us on the “siding with tyrants” front, but it’s at least close). Or maybe they’re just smarter.
Oh, I don’t know. Sure, you said especially over the last 30 years, but Korea was basically a) mostly Mao’s doing, and b) a meat-grinder that ate up about 3 million lives.
And the whole point of it was, from what I’ve read, that Mao wanted to break the US military. And as a bonus, he got to rid himself of former Kuomintang and other undesirables.
Maybe that’s not 100% true, but a certain case has been made. Probably there are arguments that Vietnam was equally pointless, but more in a bug way than a feature way.
Maybe that’s not an important distinction, though.
Oh, I don’t know. Sure, you said especially over the last 30 years, but Korea was basically a) mostly Mao’s doing, and b) a meat-grinder that ate up about 3 million lives.
And the whole point of it was, from what I’ve read, that Mao wanted to break the US military. And as a bonus, he got to rid himself of former Kuomintang and other undesirables.
Maybe that’s not 100% true, but a certain case has been made. Probably there are arguments that Vietnam was equally pointless, but more in a bug way than a feature way.
Maybe that’s not an important distinction, though.
To be sure the Korean War sucked, all around. I guess I was just pointing out that pretty much all of McTx’s were extremely dated. Further, the last two military adventures are tied up to cold war issues that no longer seem applicable.
Thus, the last time China sent its military onto foreign soil was 33 years ago, whereas the U.S.?
I guess one question is (not for you specifically Slarti), does China have any overseas military bases?
To be sure the Korean War sucked, all around. I guess I was just pointing out that pretty much all of McTx’s were extremely dated. Further, the last two military adventures are tied up to cold war issues that no longer seem applicable.
Thus, the last time China sent its military onto foreign soil was 33 years ago, whereas the U.S.?
I guess one question is (not for you specifically Slarti), does China have any overseas military bases?
Overseas from here? Sure. ;/
Overseas from there? They’re starting to. But they don’t have a serious presence anywhere other than PRC.
Overseas from here? Sure. ;/
Overseas from there? They’re starting to. But they don’t have a serious presence anywhere other than PRC.
Thanks Slarti, I did a quick google but didn’t see anything on non-PRC located PRC military bases.
Thanks Slarti, I did a quick google but didn’t see anything on non-PRC located PRC military bases.
Although I like it that Germany has few military ambitions (apart from making money from arms sales and donating UBoats to Israel), I can undertstand US complaints that European states are free riders. If I were the US, I’d start a slow but constant reduction of ‘military services’ to those countries that could afford their own. This would be an openly declared policy. In the case of e.g. South Korea or Israel there would be additional declarations that this does not mean any withdrawal from promises of help in need.
I think this would not just save the US tons of money but would be a net saving, i.e. the extra money spent by the other states would be less than the amount the US had to pay previously.
As far as China is concerned, India and Russia can keep care of themselves. Economically China is too deeply connected with the world and too rational to go for military adventures. I see Taiwan as the only real possible exception (it’s their berserk button). But I think the status quo can still be kept for a while unless a total idiot takes over US foreign policy (which again would be a US not a Chinese problem).
Iran? When it was OUR (i.e.US) female dog male offspring the idea of Iranian hegemony or Iranian nuclear power was quite popular. Double standards again.
Although I like it that Germany has few military ambitions (apart from making money from arms sales and donating UBoats to Israel), I can undertstand US complaints that European states are free riders. If I were the US, I’d start a slow but constant reduction of ‘military services’ to those countries that could afford their own. This would be an openly declared policy. In the case of e.g. South Korea or Israel there would be additional declarations that this does not mean any withdrawal from promises of help in need.
I think this would not just save the US tons of money but would be a net saving, i.e. the extra money spent by the other states would be less than the amount the US had to pay previously.
As far as China is concerned, India and Russia can keep care of themselves. Economically China is too deeply connected with the world and too rational to go for military adventures. I see Taiwan as the only real possible exception (it’s their berserk button). But I think the status quo can still be kept for a while unless a total idiot takes over US foreign policy (which again would be a US not a Chinese problem).
Iran? When it was OUR (i.e.US) female dog male offspring the idea of Iranian hegemony or Iranian nuclear power was quite popular. Double standards again.
Just as the US promoted a new model, replacing the old standby ‘we’ll take over your country and make it a colony’, China seems to be promoting a newer model of base stationing, despite the fact that some of their partners are still stuck on the old one. (cf Gwadar and also here) Here is another link, and it is really difficult if China wants to ‘increase its strategic footprint’ as Slarti suggests or is the only person with money in town, and hence, everyone with something to sell knocks at their door.
Just as the US promoted a new model, replacing the old standby ‘we’ll take over your country and make it a colony’, China seems to be promoting a newer model of base stationing, despite the fact that some of their partners are still stuck on the old one. (cf Gwadar and also here) Here is another link, and it is really difficult if China wants to ‘increase its strategic footprint’ as Slarti suggests or is the only person with money in town, and hence, everyone with something to sell knocks at their door.
China seems to be promoting a newer model of base stationing…
If there is any grounds for concern here, I would posit (1.) it is highly overblown-I mean you can’t be serious comparing this to our widely dispersed bases and our history of foreign interventions; (2.) So only the US can do this? Yea, right…more fodder for Noam Chomsky, and (3.) it’s not, I repeat not, new–admiral Mahan which see.
The old model is indeed passe, replaced by economic and political dominance. Why have colonies, when it is so much easier to extract wealth from your satrapy’s without sending so much as one soldier or compradore overseas?
For example, the Germans seemed to have learned this lesson….why not us?
China seems to be promoting a newer model of base stationing…
If there is any grounds for concern here, I would posit (1.) it is highly overblown-I mean you can’t be serious comparing this to our widely dispersed bases and our history of foreign interventions; (2.) So only the US can do this? Yea, right…more fodder for Noam Chomsky, and (3.) it’s not, I repeat not, new–admiral Mahan which see.
The old model is indeed passe, replaced by economic and political dominance. Why have colonies, when it is so much easier to extract wealth from your satrapy’s without sending so much as one soldier or compradore overseas?
For example, the Germans seemed to have learned this lesson….why not us?
I’m not up on all the models and terms in foreign policy discussions, but my impression is that rather than deal with some relatively small power country (such as the Philippines or Bulgaria) or possessions of allies (such as Diego Garcia, which the British government essentially cleared off for us), without any economic sticks and carrots (here is a map of US bases around the world), the Chinese model is to pour in massive aid, and primarily make the links economic. This Guardian article is an example. You might say that this isn’t anything like the notion of leaning on countries to establish military bases and I’d say, yes, that’s because it is a different model. You might argue that the ‘government’ isn’t doing this, but I’d argue that there are a number of ways that the government is encouraging and channelling this.
I’m quite interested in the question because Guangzhou is now home to possible 100,000 Africans. I’m not how to define the new model, but it seems to be channelling business and exchange opportunities and leaving the military far in the background.
I’m not up on all the models and terms in foreign policy discussions, but my impression is that rather than deal with some relatively small power country (such as the Philippines or Bulgaria) or possessions of allies (such as Diego Garcia, which the British government essentially cleared off for us), without any economic sticks and carrots (here is a map of US bases around the world), the Chinese model is to pour in massive aid, and primarily make the links economic. This Guardian article is an example. You might say that this isn’t anything like the notion of leaning on countries to establish military bases and I’d say, yes, that’s because it is a different model. You might argue that the ‘government’ isn’t doing this, but I’d argue that there are a number of ways that the government is encouraging and channelling this.
I’m quite interested in the question because Guangzhou is now home to possible 100,000 Africans. I’m not how to define the new model, but it seems to be channelling business and exchange opportunities and leaving the military far in the background.
From the POV of many countries (their rulers to be precise) the Chinese way is especially attractive because it is economy only. No need to pretend any democratic values. And the commies that have become capitalists do not try to impose their decadent culture on the trading partners either.
From the POV of many countries (their rulers to be precise) the Chinese way is especially attractive because it is economy only. No need to pretend any democratic values. And the commies that have become capitalists do not try to impose their decadent culture on the trading partners either.
How in the hell anyone thinks a world dominated by a country who will threaten or attack other countries who pose no threat, who have gone out of their way to avoid confrontation, will allow the US or anyone else to enjoy a world class economy free and clear of that giant’s duress is beyond me.
Nobody noticed the irony here?
How in the hell anyone thinks a world dominated by a country who will threaten or attack other countries who pose no threat, who have gone out of their way to avoid confrontation, will allow the US or anyone else to enjoy a world class economy free and clear of that giant’s duress is beyond me.
Nobody noticed the irony here?
I should also note that I am not ‘concerned’ about it, just noting that it is a different way of doing business. Japan and Germany were the first examples of this, but we don’t think of them that way because they were proscribed from using their military, so the question of whether they chose this path is difficult to answer.
However, it does seem like the Chinese have ‘chosen’ this way of doing things. Another interesting thing they are doing (or ended up doing) is that the military has business interests. While there was supposed to be a divestiture in 1998, the PLA still has a huge number of business interests. I’m not suggesting, as this editorial is, that these are all stealth ways of entering foreign companies, and I’m pretty agnostic about the advantages and disadvantages of such a system are.
But it is not Mahaian (as defined as creating a huge blue water fleet and controlling the oceans) though the Chinese navy is fighting the Army for more budget. This article suggests that the Chinese are combining Mahan with Corbett, while this one notes that they may be taking a deeper understanding of Mahan than the usual invocation to support naval expenditures.
I should also note that I am not ‘concerned’ about it, just noting that it is a different way of doing business. Japan and Germany were the first examples of this, but we don’t think of them that way because they were proscribed from using their military, so the question of whether they chose this path is difficult to answer.
However, it does seem like the Chinese have ‘chosen’ this way of doing things. Another interesting thing they are doing (or ended up doing) is that the military has business interests. While there was supposed to be a divestiture in 1998, the PLA still has a huge number of business interests. I’m not suggesting, as this editorial is, that these are all stealth ways of entering foreign companies, and I’m pretty agnostic about the advantages and disadvantages of such a system are.
But it is not Mahaian (as defined as creating a huge blue water fleet and controlling the oceans) though the Chinese navy is fighting the Army for more budget. This article suggests that the Chinese are combining Mahan with Corbett, while this one notes that they may be taking a deeper understanding of Mahan than the usual invocation to support naval expenditures.