Business & Markets

From Larry Page Lays Out His Plan for Your Future | Wired Business | Wired.com

Running through [Larry] Page’s plans for Google was theme picked up on by Rose: a faith that business is the best way to build his version of a better future. Rose asked him about a sentiment that Page had apparently voiced before that rather than leave his fortune to a cause, that he might just give it to Elon Musk [founder of Tesla, SpaceX and Solar City]. Page agreed, calling Musk’s aspiration to send humans to Mars “to back up humanity” a worthy goal. “That’s a company, and that’s philanthropical,” he said.

James Piereson: The Truth About the ‘One Percent’ – WSJ.com:

This crusade is based on three questionable claims. One is that the wealthy are mostly Wall Street bankers benefitting from rising stock and real estate prices, or executives who pay themselves extravagant salaries. Another claim is that such people unfairly benefit from a system that taxes capital gains at half the highest marginal rate paid by those who earn salaries and wages. Then there is the assertion that the “super rich” have abundant funds that can be taxed to improve the living standards of everyone else.

All of these claims are false.

[…]

Emanuel Saez of the University of California ( Berkeley ) has shown in a series of papers that, as he writes, “The top income earners today are not ‘rentiers’ deriving their incomes from past wealth but rather are the ‘working rich,’ highly paid employees or new entrepreneurs who have not yet accumulated fortunes comparable to those accumulated during the Gilded Age.”

The typical “rich” person today is someone who works for a salary and accumulates stocks and bonds through savings, retirement plans and (for business executives) stock options.

From 1980 to 2010, as the top 1% increased their share of total before-tax income to 15% from 9%, their share of the individual income tax soared to 39% of the total paid, up from 17%. Most were paying federal taxes at the highest marginal rate: In 1980 that rate was 70% and in 2010 it was 35.5%—but it has now climbed back to 39.6%. The share of federal taxes paid climbed dramatically in those 30 years even as marginal rates were cut almost in half.

According to the White House budget office, in 2010 the federal government raised approximately $900 billion from the individual income tax, of which about $350 billion (39%) was paid by the top 1% of income earners. The remainder of total federal tax collections (nearly $2.2 trillion in total) was paid through corporate, payroll, estate and excise taxes.

Those who want to “tax the rich” to redistribute income to the poor and middle class usually propose to raise the marginal rates on incomes or the capital-gains rate, or both. Yet as Scott Hodge recently documented in these pages ^[4], it will not be easy to raise vast sums this way.

The individual income tax accounts for slightly less than half of federal revenue and the top 1% already pays a substantial share of that total. Most of the wealth owned by the top 1%, and especially by the “super rich” in the top 0.1%, is also held in stocks, bonds and real estate that are not subject to income taxes until sold. It is a fool’s errand to try to raise the living standards of the bottom 60% through higher income taxes on the top 1% or 0.1%.

The Kansas legislature has just passed a law that protects private businesses and individuals from having to provide service to same sex couples if provision such service would violate the religious beliefs of the private business/individual. Thus, the wedding cake and wedding photography cases would not happen in Kansas.

So far, so good.

But Republicans also insisted that the law allow government officials to use the same religious objection to refuse to provide government …services to same sex couples.

News flash to Republicans: justice must be blind, government must not discriminate, and government workers are not entitled to their jobs if their religious beliefs are offended by any part of “equal justice under law.”

If your religious beliefs are opposed to same sex marriage, that’s your right – but then you don’t have a *right* to a job in the city clerk’s office. — Ed Mazlish

Amazon Workers Reject Union

Amazon reacted with satisfaction. Mary Osako, an Amazon spokesperson, said, “With today’s vote against third-party representation, our employees have made it clear that they prefer a direct connection with Amazon. This direct connection is the most effective way to understand and respond to the wants and needs of our employees. Amazon’s culture and business model are based on rapid innovation, flexibility, and open lines of direct communication between managers and associates.”

Private sector union representation has dropped precipitously in the United States, and now stands at just 6.6 percent.

Amazon.com’s Delaware union vote expected Wednesday | Reuters

Amazon has consistently argued against any sort of union representation for employees.

 

“We respect the individual rights of our associates and have an open-door policy that allows and encourages associates to bring their comments, questions and concerns directly to their management teams,” said Mary Osako, an Amazon spokeswoman, in an emailed statement.

 

“We firmly believe this direct connection is the most effective way to understand and respond to the needs of our workforce and do not believe there is a need for third-party representation.”

More Guns, Less Crime? – Capitalism Magazine

One highly visible scholar in the media debate is economist and social scientist, John Lott, Jr., the John M. Olin Visiting Law and Economics Fellow at the University of Chicago. The title of his 1998 book, MORE GUNS, LESS CRIME, may at first strike the reader as provocatively counterintuitive. Lott argues that states’ issuance of permits allowing private citizens to carry concealed handguns has NOT caused crime to rise, but has in fact dramatically REDUCED violent crimes. That’s one fact you won’t here on Rosie O’Donell.

From Strassel: The IRS Scandal Started at the Top – WSJ.com (Kimberly Strassel):

President Obama and Co. are in full deniability mode, noting that the IRS is an “independent” agency and that they knew nothing about its abuse. The media and Congress are sleuthing for some hint that Mr. Obama picked up the phone and sicced the tax dogs on his enemies.

But that’s not how things work in post-Watergate Washington. Mr. Obama didn’t need to pick up the phone. All he needed to do was exactly what he did do, in full view, for three years: Publicly suggest that conservative political groups were engaged in nefarious deeds; publicly call out by name political opponents whom he’d like to see harassed; and publicly have his party pressure the IRS to take action.

Mr. Obama now professes shock and outrage that bureaucrats at the IRS did exactly what the president of the United States said was the right and honorable thing to do. “He put a target on our backs, and he’s now going to blame the people who are shooting at us?” asks Idaho businessman and longtime Republican donor Frank VanderSloot.

Continues Strassel:

The president derided “tea baggers.” Vice President Joe Biden compared them to “terrorists.” In more than a dozen speeches Mr. Obama raised the specter that these groups represented nefarious interests that were perverting elections. “Nobody knows who’s paying for these ads,” he warned. “We don’t know where this money is coming from,” he intoned.

In case the IRS missed his point, he raised the threat of illegality: “All around this country there are groups with harmless-sounding names like Americans for Prosperity, who are running millions of dollars of ads against Democratic candidates . . . And they don’t have to say who exactly the Americans for Prosperity are. You don’t know if it’s a foreign-controlled corporation.”

Short of directly asking federal agencies to investigate these groups, this is as close as it gets. Especially as top congressional Democrats were putting in their own versions of phone calls, sending letters to the IRS that accused it of having “failed to address” the “problem” of groups that were “improperly engaged” in campaigns. Because guess who controls that “independent” agency’s budget?

The IRS is easy to demonize, but it doesn’t exist in a vacuum. It got its heading from a president, and his party, who did in fact send it orders—openly, for the world to see.

by Brian Phillips

We regularly hear about the corrupting influence of money on the political process. Politicians of both parties eagerly endorse, and pass, campaign finance “reform” to limit donations, and then are equally eager to find ways to skirt the law to finance their next election. But this doesn’t stop statists of every variety for calling for more “reforms.”

Writes Ian Birrell over at The Independent:

Above all, we see it with talk  – and not just on the left – of capitalism being in crisis and the need for fierce new regulation.

This is wrong. It is capitalism, after all, that is spreading prosperity and well-being around the world – and with such stunning effect across Asia, Latin America and Africa. I am always struck by anti-capitalist rants I see hammered out on the latest tablet. The problem is crony capitalism.

“Crony capitalism” is a euphemism for an especially perverse form of government intervention — an unholy marriage between government elites and businessmen with political pull that characterizes a “mixed economy.” Yet it is Capitalism that gets the blame.

It is this form of it – sneered at in developing nations – which has taken a grip in the West as the power of corporate giants has grown. As Freeland says, super-elites are often the product of a strong market economy, but as their influence grows, they can stifle it.

But they can only do so with the government interventions such as “protectionism” and “Too Big To Fail” laws.

Capitalism remains a uniquely vigorous force. Just look at the pace of change in the unfettered technology industry. But ask why those banks that wrecked the economy – and, in the case of the retail ones, are often loathed by their customers – have not been replaced by more dynamic entrants instead of being salvaged by the state. […]

What we need to do is unleash capitalism in this country rather than restrain it. Politicians should focus not on headline-grabbing stunts like the mansion tax but on ensuring that the big players in complacent industries such as banking, energy, retailing and, yes, outsourcing, are less entrenched, less protected by their friends in Whitehall. [i.e., government] Transparency, technology and consumer anger can drive change.

To do this, we do not need more regulation, we need better regulation – […]. Above all, we need politicians who have learned the key lesson of recent years: that there is a huge difference between being pro-business and pro-market. [“From Banks to the ‘big six’ energy companies – more capitalism, not less of it, is the answer – Comment – Voices – The Independent”]

Or rather, to be pro-market is to treat all businesses equally, under a rule of law guided by the principle of individual rights, as opposed to granting favors to some while punishing others in the name of an ever fluid “public interest.”

In addressing the ongoing debt and fiscal crises throughout the West, Nicole Gelinas writes in City Journal:

In the years leading up to 2007, the rules necessary to govern a flourishing market economy broke down, producing a financial and economic crisis. Rather than responding to the crisis by fixing those rules, the West aggressively repudiated market economics, and the repudiation continues to this day. Through their actions, which have lately involved everything from European debt to the American financial system to house prices in Britain, government officials around the world have revealed a disturbing assumption: that they can decide how to allocate resources better than markets can. No longer, it seems, do Western governments use investor signals as valuable feedback in devising effective policies; instead, they ignore those signals and plow ahead with their policymaking, leaving chaos in their wake. Often, in fact, public officials actively mute market signals in a vain but destructive attempt to impose their own will on struggling economies.

The piece covers a substantial amount of territory, but it effectively and concisely demonstrates how government intervention is to blame for the dire economic conditions across America and Europe.  To read in its entirety, click here.

The failure of the “Super Committee” to reach an agreement concerning spending reductions of at least $1.2 trillion over ten years seems to symbolize the growing philosophical divide in America.  Despite the “marriage” between Grover Norquist and the Republican party, the Democratic party remains more consistent in their beliefs of expanding the size and scope of government than their Republican counterparts are about diminishing it.  A recent Wall Street Journal editorial by the Committee’s co-chair, Representative Jeb Hensarling, reveals the mindset of his Democratic counterparts:

“President Obama summed up our debt crisis best when he told Republican members of the House in January 2010 that “The major driver of our long-term liabilities . . . is Medicare and Medicaid and our health-care spending.” A few months later, however, Mr. Obama and his party’s leaders in Congress added trillions of dollars in new health-care spending to the government’s balance sheet.”

“Democrats on the committee made it clear that the new spending called for in the president’s health law was off the table. Still, committee Republicans offered to negotiate a plan on the other two health-care entitlements—Medicare and Medicaid—based upon the reforms included in the budget the House passed earlier this year.”

“The Medicare reforms would make no changes for those in or near retirement. Beginning in 2022, beneficiaries would be guaranteed a choice of Medicare-approved private health coverage options and guaranteed a premium-support payment to help pay for the plan they choose.”

“Democrats rejected this approach but assured us on numerous occasions they would offer a “structural” or “architectural” Medicare reform plan of their own. While I do not question their good faith effort to do so, they never did.”

“Republicans on the committee also offered to negotiate a plan based on the bipartisan “Protect Medicare Act” authored by Alice Rivlin, one of President Bill Clinton’s budget directors, and Pete Domenici, a former Republican senator from New Mexico. Rivlin-Domenici offered financial support to seniors to purchase quality, affordable health coverage in Medicare-approved plans. These seniors would be able to choose from a list of Medicare-guaranteed coverage options, similar to the House budget’s approach—except that Rivlin-Domenici would continue to include a traditional Medicare fee-for-service plan among the options.”

“This approach was also rejected by committee Democrats.”

This article contains two unique components.  First, Democrats refuse to alter the manner in which their beloved programs operate–despite the looming fiscal peril.  Second, and likely in the hopes of sounding bipartisan, Mr. Hensarling does not challenge the merits of the entitlement state.  Essentially, Republicans agree that an individual’s rights end where someone else’s needs begins.  In attempting to promote the concept of the mixed economy, Mr. Hensarling continues:

“In the midst of persistent 9% unemployment, the committee could have enacted fundamental tax reform to simplify the tax code, help create jobs, and bring in over time the higher revenues that come with economic growth. Republicans put such a plan on the table…”

“Republicans were willing to agree to additional tax revenue, but only in the context of fundamental pro-growth tax reform that would broaden the base, lower rates, and maintain current levels of progressivity. This is the approach to tax reform used by recent bipartisan deficit reduction efforts such as the Bowles-Simpson fiscal commission and the Rivlin-Domenici plan.”

“The Democrats said no. They were unwilling to agree to anything less than $1 trillion in tax hikes—and unwilling to offer any structural reforms to put our health-care entitlements on a permanently sustainable basis.”

Republicans fail these debates because, fundamentally, they concur with their Democratic colleagues; the entitlement state is a moral priority.  The matter on which the two parties disagree is the method for funding the entitlement programs.  As Mr. Hensarling argues, lower tax rates help “broaden the base, create jobs, and bring higher revenues.”  He does not say that wealth is created and earned as a result of production.  He does not argue that, in a capitalist system, all wealth is earned.

Instead of defending the utility of liberal economics in terms of funding entitlements, the politicians who want to stand against the socialist/liberals need to address the immorality of redistributing other peoples’ money.