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04 February 2020

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james

Pat,
i am sorry about the typepad issues and hope it resolves soon. of course my ideas can be shot thru with holes, but yes - private ownership of property needs to be limited.. in the 60's there was no limit on how a corporation could pollute.. they introduced limits to that and he was a smart move.. remember acid rain? putting limits on anything is a good idea.. the speculation on real estate is something that is fully supported by the present banking system because the banking system profits off it.. meanwhile more and more people are living on the street.. this is not just a coincidence.. there does need to be limits on speculation.. either that or you get another 2008 and the little guy is always the one getting hurt while the banking system gets a bail out.. i'll stop here...

English Outsider

But of course ownership of private property should be limited, Colonel, strictly limited!

Except for me and my family.  And except for my friends and their families.

And except for the rich bastards.  Because if gubmint goes for their property it'll surely go for mine.

And breaking up trusts that were legal at the time they were set up would create a bad precedent.  We have quite enough bad precedent in Law already, and a heap of bad practice too.

Still, the income gap is now so great that there has to be some mechanism for reducing it.  Income tax at the level of the Eisenhower years with no loopholes?  If you can't take it out and spend it on the yacht then you might as well invest it at home and create jobs, was the thinking then, and some say that worked.

There's always the question of the Cronies squirreling money away abroad, as we've seen the Russian Oligarchs do.  But as far as the US goes I think the IRS is already working on that one.  They don't seem that impressed with the Laffer curve.

But all this is just playing round the edges unless there's a sound economy.  Which brings the question round to that of outsourcing.  Which explains the enthusiasm of this distant pilgrim for Trump 2016.  An enthusiasm sadly dimmed by recent events, but still there, in essence.

Eric Newhill

EO,
I don't understand the angst over the "income gap". How does it hurt me if the CEO of the company makes 30 or 40 times what I do? I'm still doing pretty well by western society standards and infinitely better than third world standards or even historic western civ standards. It's not like there is a set amount of money and if someone has a lot that means less for everyone else.

I get that if the CEO is making $100 million a year and the workers are only making $10K/yr, then the workers can't really support a family and rely on public assistance, etc. and that is a problem, but I don't see that in skilled labor or white collar employment situations. Law of supply and demand seems to find a good equilibrium.

With regards to poor, unskilled low pay workers, who are these people? Why aren't they skilled? Why does the company I work for hire hundreds (maybe more) of IT workers in the US on work visas or legal immigrants who are working on citizenship or recently obtained it at six figures? It's the same at companies that rely on information all over the country. Nothing wrong with these people. I like most of them and they do a good job, but why did we need to import them to fill these positions? Again, who are the Americans left behind? Why are they left behind? What could be done about it? Who, if anyone, failed them?

Why should I work hard to have nothing because I had to give it *all* to these people? If not all and "moderation" is applied to the redistribution, who draws the lines? Are the lines not drawn well today? How much farther do we push them in favor of those left behind? At what point do I decide to stop working and being a giver and resort to being a receiver? Some people act like this is all a simple formula that any hack in Washington (or his mother's basement) could calculate in a day or two.

I guess to the extent that money = political power, there is the issue of the wealthy controlling the government, but I'm not even seeing that being as big a problem in real life as it could be theoretically. I still have a voice and a vote.

As far as I can see, the majority of the angst is based on jealousy, some vague notions of fairness and a misunderstanding of how economics and society work. Maybe someone will show up to explain to me why I'm misguided.

HK Leo Strauss

People seem to conflate stock ownership with income. It’s not income until it’s sold (or the dividends).

If we subtract MSFT + the “FAANG” stocks, that’s probably about $5T worth of wealth or property. Without all that, the market would be pretty flat for the last decade. Perhaps someone smarter than me can calculate what the income disparity index would be without that bubble(I dont actually think it’s a bubble, it’s where money goes because there’s no other place to put it).

That is $15k/capita - I’m sure everyone would like part of that pie, but what would be best for the economy? Everyone owning part of a piece of the pie that is already way over-weighted? They’re probably just going to buy more tech or virtual products, they’re not going to buy US made products anymore than normal. They’re not going to pay more for US grown oranges or apples.

It’s not healthy that all growth is in a few stocks. We need to incentivize domestic investment, more competition. IDK how that is done, but perhaps setting a maximum allowed P/E ratio would constrain bubbles or monopolies better than mass redistrubution.

james

eric - you think the guy with millions of $ gets more of a say in the vote then the guy who doesn't, or do you continue to believe like most - 1 person, 1 vote? i am curious.. billionaire seth klarman is the backing behind iowas voting app that went wrong.. do you think people like adelson, mercer and etc are sitting around idly, content with this ''1 person, 1 vote'' meme that is used to convince everyone of the merits of democracy?? of course these folks couldn't possibly have an influence on usa foreign policy either according to some... the money is just sitting around collecting interest and not being put to any other uses, lol.../s

Eric Newhill

James,
First off, a confession, like Jefferson, I am a bit of an elitist. I tend to think that property owners should have more say in government than non-property owners; not all of the say, but things should be weighted a little more in their favor.

"The right of suffrage is a fundamental Article in Republican Constitutions. The regulation of it is, at the same time, a task of peculiar delicacy. Allow the right [to vote] exclusively to property [owners], and the rights of persons may be oppressed.... Extend it equally to all, and the rights of property [owners]...may be overruled by a majority without property...." Thomas Jefferson

Basically Jefferson was worried about Bernie Bros taking control and robbing those that have. This is a country where anyone who applies themselves can become fairly successful; at least comfortable. So, again, I have to ask, other than young people just starting out, who is it that is not achieving a level of comfort and why? I observe that Bernie Bros and socialists tend to be young people. They are supposed to be well off. They have work to do and they are too young to be wise.

I think the guy with $millions to burn gets more of say. Is that right? Is it wrong? I don't really know. It just is. In what world or system was this not so. Ok. I guess there have been systems where the guy with all the muscle and guns gets the say. You like that better?

And yet Trump seized office despite being opposed by all kinds of extremely wealthy interests. Bernie nearly did the same - and he's not a $billionaire. Anyone with gumption and savvy and appeal can crowd source funding to find a way into office. At the end of the day, people vote whether or not they own property. If the people don't bother to educate themselves and demand quality candidates, that's on them. So I really don't understand your gripe.

Do you feel powerless and condemned to poverty? Why? I don't.


james

eric,

let me respond to your last line first... no.. i don't feel powerless or condemned to poverty, although there are some valuable insights gained from poverty, in that people can get by on a lot less then they think they can..more is not always or necessarily better.. there are some real pitfalls to excess and we are seeing this on display in a significant way in today's world as i see it.. making this world a better place, starting with my own little world and working out from this is where i am at..

now to the rest of your post.. first off - i'm not an american.. i'm a canuck.. my usa history is not super strong, but i know who jefferson is and understand some of what you say here... i don't agree with the elitist view you articulate.. do you view women as property as well? i guess that would explain why women didn't get to vote historically for some time too.. i see it as an archaic viewpoint...

you say " This is a country where anyone who applies themselves can become fairly successful; at least comfortable." that is certainly not true for those with mental health issues, or serious health issues - giving just 2 examples...i will concede the myth of the self man made is quite attractive though.. however, not everyone is driven my money, which to my eyes has become the dominant religion in the west, in particular in the usa.. people can say whatever they want about their particular religion, but to my eyes today's main religion is money..

regard people with more money having a greater say - and as you note - those with more muscle and weapons having more say - yes, all true... but do we continue to live with this caveman perspective or are we capable of something greater? i think we are..

thanks for your comments here!

different clue

I read that the progressive income tax was instituted to help prevent the re-rise of a new oligarchy to replace the oligarchy which had depressionised itself and the country with various bad financial practices. My understanding is that income was considered as being measured off into rising layers ( "brackets"), and the tax on income within each next-higher bracket was at a higher percent than at the bracket just below.

The million-dollars-a-year bracket of income paid a 90 per cent tax. This did not mean that someone earning a million dollars a year paid $900,000 of it in income tax. It meant that any dollar at or above the millionth-and-counting dollar was taxed at 90%.

Corporate Boards tended to keep pay to their Corporate Executives just low enough that the Corporate Board did not end up paying a bunch of money "through" the executive to the government. This left the Corporations with a great deal of money to spend on various maintenance and improvement investments to the bussiness itself. Including to various flagship labs like Bell Labs, Western Electric, and others. Many serious scientific discoveries were made in these labs.

I have read that the average difference-multiple between the average worker and the average executive was about 40 times. Now it is something like 400 times. Various kinds of tax cuts have permitted the re-arisal of a new super-rich oligarchy who can exert massive political and economic power within the entire polity.

I would like to see us go back to the tax structures existing during the Eisenhower period. For example, the restoration of the number of income brackets and rising per cent of tax at each bracket as in the Eisenhower time. The objection may be raised, and it is a fair one, that the dollar is worth several times less now than it was then. I don't know how much smaller today's dollar is. If today's dollar is ten times smaller than the dollar of Eisenhower's day, then the brackets should be stretched out ten times longer than the brackets of Eisenhower's day. So for example, the 90 per cent level of taxation would begin at the Ten Millionth Dollar, not the One Millionth Dollar.

And the estate tax rate or level of kick-in existing in Eisenhower's day should also be constant-dollar applied.

And so forth.

Mathias Alexander

how much private property could be accumulated without any form of corruption (legal or illegal)?

English Outsider


Eric - I think you are right and talk of "the income gap" is not the way to look at the problem. It does imply that the man with a bit of go in him is somehow in the wrong because he does better than the man who spends his time in the pub.

But here's the problem, as you state - "With regards to poor, unskilled low pay workers, who are these people? Why aren't they skilled?" Or could I alter that slightly to "Why aren't they in work?"

And you provide the answer, or at least a part of one of the answers. No matter what the the status quo economists insist, bringing in cheap labour necessarily knocks out those who would otherwise be in work.

A few years of that and large sections of the home workforce become incapable of the work and - what else to do? - spend their time in the pub.

Then they get told they are lazy and workshy and should pull themselves together and "learn to code". A few decades of that and they become an underclass and are so referred to, contemptuously, by those who haven't been subjected to the process. Yet.

Problem is, that those who believe we should structure our economy to function for all and not merely for the fortunate are automatically called "racist" by the open borders cultists.

Only one of the problems, importation of cheap labour, but until it's solved the pubs are going to do a lot of trade.

.

Good to hear from you. Are you, if battered and disillusioned, still a firm supporter of Trump 2016? Be interesting to know. I still believe that that 2016 programme, if it could somehow be got past the Beltway, offers the only solution to the precipitous decline of the West.

But to return to the question posed by our host, I don't think the answer lies in attacking property rights. The rich bastards we will have always with us, but the urgent concern is to ensure that the rest don't dip irretrievably below the breadline.

Eric Newhill

EO,
I am still a strong Trump supporter. I continue to see some problems with the man himself, his boorishness, etc., but I'm not having dinner with him any time soon and he doesn't drink. I do still strongly support his domestic policies and his common sense and America first attitude and I think it should be indisputable that they are paying off for all Americans.

As far as foreign policy goes, I believe that Trump wants to commit to policies that most here, including our distinguished host, would find acceptable (eg. Russia, Syria, Afghanistan). I do not blame Trump for being hamstrung by the FP establishment (AKA The Borg). He seems to be attempting to navigate that mine field and doing ok - not great, but ok. I fear what the other candidates would do in the same position. It would be far worse. He's trying to build "the wall" and has in some sectors, but the courts blocked him until recently. Now he's on his way. He has been similarly stymied in other aspects of controlling illegal immigration. Not his fault and the left is certainly for diametrically opposed policy.

I approve of the killing of Soleimani. IMO Iran will do nothing about it of any long-term consequence, mostly because they can't. Same with Kushner's peace plan, such that it is. The Palestinians can accept it or not, but Israel can still implement it and maybe over time the Palestinians find that it's not such a bad deal given that no one really has to do anything for them and they can be left to suffer. I'm not romantic about the Iranian and Palestinian causes as some here are; maybe I'm just an a-hole, but I can't see Palestine from my house and I accept that Israel is not going away. So none of that counts against Trump on my score card.

Eric Newhill

Different Clue,
Most of the reported gigantic CEO salaries are stocks and stock options; not cash. The stock is, of course, tied to the value being created by the company. There is supposed to an incentive to the CEO to maintain top performance, make smart decisions, etc.. It's not money out of the economy; nor out of the workers' pockets. It merely represents a dilution (usually slight) of the company's equities valuation when it prints more stock to reward the CEO. The Board of Directors decides what amount of stock to award the CEO and other Executives.

No one is literally getting a $5 million/month pay check.

Something that people forget is that the wealthy often give generously to charities. In fact, they often sit on the Boards of charities. IMO, the wealthy run these things and direct the programs much better than the government; especially when the government is Washington. The federal level is too far removed from the local.

English Outsider

Eric - yes, many Americans seem to find Trump not exactly old money. Nothing much compared to what you see on the European stage. Try this one -

https://www.youtube.com/watch?v=9tFDmw6BHuM

And we have more like that. Lots more. Angie herself is not always the Queen of Charm.

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