An op-ed from a successful capitalis

[LROBBINS]

https://www.nytimes.com/2017/10/09/opinion/corporate-tax-cuts-entrepreneur.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-right-region&region=opinion-c-col-right-region&WT.nav=opinion-c-col-right-region

[Burgerman]

While I value his opinion, and it may be true in his situation, I also disagree with it for a large number of reasons for thousands of smaller lower tech companies.

US corporation tax is 39.1%/. It has chased away inward investment from foreign countries, and also chased away their own businesses. Thats why everything gets outsourced to lower taxation countries. And why trump is trying to get it back!

For eg.
Irish tax rate on companies is 12.6%, the lowest in the G20 and has raked in so much money and hundreds of companies, inc overseas manufacturing and finace based business that they are going to reduce this yet again to just 6.25%. Why? Because it caused higher wages, lowest unemployment in the EU, greater manufacturing investment in Ireland, and a HUGE increase in GDP of around a third!
http://www.telegraph.co.uk/finance/budg ... catch.html
And https://home.kpmg.com/ie/en/home/insigh ... eland.html

For eg, google moved its EU finace and advertising business there. Thats where everyones cheques came from for adsense for a decade and a half. Then the UK gov offered them the same deal, lower corporation tax etc (planned to be 15% or lower), so they are currently building a bigger google headquarters in london. Same reason that the japanese chose to build car plants here in the UK.

So he is simply wrong! Tried and well and truly tested.

George Osborne Chancellor, announced plans to reduce the UK’s corporate tax rate to 15 per cent by 2020, down from 20 per cent now and 28 per cent when he became Chancellor in 2010. The UK’s rate is already the lowest in the G20.

Ireland has come under international pressure over its low tax rate, particularly from the US. Over 700 US companies are now officially based in Ireland, many having used so-called “inversion” deals.

In April, US pharmaceutical giant Pfizer backed down from a $160bn deal, which would have seen it technically purchased by smaller Dublin-based Allergan.

Had the deal gone through Pfizer would have been able to lower its tax bill by transferring billions in profits to the low-tax economy.

[LROBBINS]

The point you make is worth thinking about, but may I ask a question? What the move of Intel etc. to Ireland just a transfer of capital and some labor from one place to another, with a major effect on the financial bottom line, or a net increase in investment and jobs? I suspect that Intel's net global investment did not increase because they paid less in taxes. The last thing you quote actually makes the same point as in that op-ed:

In April, US pharmaceutical giant Pfizer backed down from a $160bn deal, which would have seen it technically purchased by smaller Dublin-based Allergan.

Had the deal gone through Pfizer would have been able to lower its tax bill by transferring billions in profits to the low-tax economy.

The reason behind the purchase of Pfizer by Allergan had nothing to do with investment, just with lowering its taxes. This tax-abatement game has been played for years between states in the U.S. and while a local economy may temporarily get a boost, the net effect is nil or worse. You might wonder a bit why major pieces of the real U.S. economy remains in high-tax states such as New York and Massachusetts and California, rather than moving to low tax/anti-union states like Louisiana or Alabama. Of course, many have their corporate headquarters in no-corporate-tax Delaware, but they don't make their investments there.

You might also ask yourself whether the historical record bears out the Laffer-curve assumptions. In the 1920's, under presidents Harding, Coolidge and Hoover there was an enormous cut of U.S. tax rates, a financial sector bubble and little net investment, and then the great depression. The next major tax cut was in the Reagan years, and was supposed to yield investment and growth that would more than compensate for the lowered rates. It didn't; the deficit took off, only to be cut when Clinton managed to get a partial restoration of the previous tax rates. The next one was with the 2nd George Bush; it too didn't work, the deficit grew exponentially (of course, aided by debt financing of two wars), a financial-sector bubble and then the great recession. Can you cite any empirical data that back up the attractive notion that "a rising tide raises all ships" - maybe that would convince the U.S. middle-class and lower-class that the decline in their real purchasing power in the last couple decades will someday pay off.

BTW, the effective U.S. corporate tax rate, after all the complex set of exemptions, deductions, allowances etc. that make the complexity of the DME industry seem puny, is closer to 20% than the nominal rate that seems so high.

BTW2, many of the corporate moves to Ireland took place before the last economic crisis. My recollection is that with the arrival of the crisis Ireland found itself in about the same straits as Portugal and needed a bail-out, or at least protective measures, from the EU.

[Burgerman]

Thats all true. But many of these big companies also employ local staff, and other companies, equipment, computers etc such as google. However the majority are actually investing and buildinf factoriues and employing people and improving GDP too.

And to ecorage more of this, rather than the intel example you quote, they stipulate a few rules to qualify for the 6% tax rate...

http://www.telegraph.co.uk/finance/budg ... catch.html

So that this prevents exactly what you highlighted.

However you are also only looking at inwards investments. Much of the GDP increase came from many smaller companies expanding with better more efficient factories and equipment or methods. And greater employment. Remember that theres also no the lowest employment in the G20 with wages at a higher level driven by the full employment. Want an employee? You need to pay well to compete.

[LROBBINS]

they stipulate a few rules to qualify for the 6% tax rate...

That looks quite sensible. The question remains, however, whether companies that take advantage of this make a NET increase in their GLOBAL investment in innovation and/or production, or are merely shifting things from one place to another.

[Burgerman]

maybe that would convince the U.S. middle-class and lower-class that the decline in their real purchasing power in the last couple decades will someday pay off.

Its not that it will pay off, but that they are already doing as well as they can expect to. And better than anuy other part of the western world. They are already suffering from the exact opposite problem. The very thing that chased all their jobs overseas. They cannot compete in a world market because they are overpaid for their cost/production value. In other words they have so many worker protections, and garanteed holidays, medical cover, sick pay, and garantees not to be fired, and redundancy pay, etc that they priuced themselves out of the market in a global world. The world is one big market.

The typical american factory worker is overpaid in a free world market. So cheaper workers get the basic labour jobs in other less developed countries. It will get worse. The rise of the web, and robotics, and so on means even small labour intensive jobs are now farmed out to cheaper overseas workers, or replaced by machiunery/robotics. If the middle class really want to maintaiun their lifestyle/jobs, they better get into high tech stuff that the masses of indian, african, chinese labour cannot compete with, that a robot cant produce. Because things haved changed. They need to be building space rockets, robots for production, etc. Not production line basic stuff because thats all vanishiong in rich countries.

Frree trade and low taxation which is as close as you can get to capitalism, has been singularly responsible for making desperate poor countries rich every time its ever been tried. But it takes 50 years.

Likewie, the opposite extreme is the socialist model, which also has shown to create misery, poverty, starvation, and in the end bancrupt economies every time it was tried. And its been tried a lot. Again it takes 50 years to bankrupt an economy. Ie, peurto rico, venuzuala, columbia, and a few others, all thats left. And all suffering.

Now no country is totally socialist or capitalist, but the further each way they swing, the further the economy swings too.

[LROBBINS]

As is usual in these conversations, instead of providing DATA you are changing the argument.

So, I'll leave this thread with just two parting remarks.

(1) You say

so many worker protections, and garanteed holidays, medical cover, sick pay, and guarantees not to be fired, and redundancy pay, etc

Compared to ANY western European country, that is just plain NOT true. Very few guaranteed holidays, medical cover (pre the Affordable Care Act in the process of being gutted) only for the solidly middle and upper-middle class with responsible employers, sick pay in most cases limited to no more than a few days a year, firing without cause except in unionized shops (though if without cause, you do get unemployment compensation - already paid for by a worker + employer tax; if with cause you don't get squat), redundancy pay - that's what's called unemployment compensation in the U.S. Now add to that: (again, except for the minority of outfits with union contracts and some enlightened employers) no maternity leave, no family leave, no guarantee of being able to return to your job if you do leave for something like the birth of a child or illness, no disability payments for children, in many cases no employer pension contributions, etc., etc. - all things that exist at least here in Italy.

(2) The people who have seen their real dollar earning power drastically decline are in many cases employed in jobs that can not be "outsourced" - in restaurants, hotels, social services - in other words, the entire lower echelon of the service sector. So their jobs are certainly not going abroad, it's their real dollar wages that have gone down.

A well-regulated capitalism, with a reasonable social safety net, has a lot to recommend it. Robber-baron capitalism does not. Rampant socialism is a disaster, local and/or limited socialism has in some cases worked well. The opposite, what in Italian is called "clientalismo" - government support to your friends to do a job badly that either an honest public sector or a real free market could do well - may be worse than either.

[Burgerman]

The first part I cannot comment on. Except for here. My dad decided not to take another shop in the next towm and to employ more staff, plumbers mostly, precisely because he dare not. If it didnt work out, then getting rid of employees would be too expensive/difficult. Their unu=ions managed to get them plenty of protection under the law here. But it cost expansion and so GDP, exports, employment etc.

(2) The people who have seen their real dollar earning power drastically decline are in many cases employed in jobs that can not be "outsourced" - in restaurants, hotels, social services - in other words, the entire lower echelon of the service sector. So their jobs are certainly not going abroad, it's their real dollar wages that have gone down.

What decides on rates of pay in a capitalist system is supply and demand. If theres fewer jobs, and more people chasing these jobs, no matter what industry the pay rates will fall. And this is the result of robotic production methods, companies building their widgets in china, ireland, and any place cheaper than the usa based on labour and taxation costs. So theres plenty ofpeople chasing these service industry jobs. Result wages decay, or dont need to increase as living costs rise. Likewise, if like ireland, they have full employment of all those that are basically employable the employer must pay more than the next employer, to expand... Or to staff his resturant. So making sure business grows, increases the pressure for higher wages.

Heres another reason the pressure on wages is low, unemployment high. He is from india, and charges peanuts. Your expensive US workers, and businesses must compete with this. Who will outsource your webdevelopment etc for very few rupees...
A mail I recieved among many similar ones daily for products and services from india, china, etc.

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A well-regulated capitalism, with a reasonable social safety net, has a lot to recommend it. Robber-baron capitalism does not. Rampant socialism is a disaster, local and/or limited socialism has in some cases worked well. The opposite, what in Italian is called "clientalismo" - government support to your friends to do a job badly that either an honest public sector or a real free market could do well - may be worse than either.

Depends on your definition on regulated. The pureest capitalism, causes the greatest growth, biggest rise of living standards etc. And by definition this would mean no government interference of markets by taxation. So while you must pay for a safety net somehow, that should not be by redistribution of wealth from the top to the bottom. Esp from small or large businesses. Thosde aare the things that supply all the jobs (and so upward wage pressure) and taxation, goods, and all the things society needs. To take from businesses is shooting yourself in the foot.

[Lord Chatterley]

https://www.nytimes.com/2017/10/09/opinion/corporate-tax-cuts-entrepreneur.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-right-region&region=opinion-c-col-right-region&WT.nav=opinion-c-col-right-region

That article is complete nonsense from start to finish.

Read this:

https://misesuk.org/2017/11/14/henry-hazlitt-economics-in-one-lesson/

LC

[Lord Chatterley]

Socialism v capitalism - which is the moral system?

https://www.youtube.com/watch?v=IYWQlwRuhO4&t=44s

LC

[Sully]

If either of our Nations/Countries had Total and unregulated Capitalism we would have all starved to death years ago. We do have somewhat of a social safety net, which if you do not live too high off the hog, or have somewhat of a supplement to it, a person or couple can live rather well.. It is my assumption that this is the kind of nation, and world, that our "dear" leader Trumplethinskin desires for the USA. His business actions of the past certainly suggest that.

[Burgerman]

If either of our Nations/Countries had Total and unregulated Capitalism we would have all starved to death years ago.

Quite the opposite. Socialism as in soviet republic, east germany etc, and as tried all over the world for 60 or 70 years is what causes hundreds of millions to starve to death. Well tested in hundreds of places. Capitalism is the very thing that creates the wealth needed to be able to feed the masses. You have it completely backwards.

Even the communist chinese have had to allow limited capitalism although they hate it, in order that people now live longer and have food, medical care, fuel, etc. It has improved everyones lives in every possible measurable metric.

If any country dare allow total free capitalism, and governments stuck to basic military, protecting public property, etc then they as a society would grow fabulously rich. Feeding a few disabled people would then become a trivial thing that was very easy to afford even at a tiny tax level.

[Lord Chatterley]

If either of our Nations/Countries had Total and unregulated Capitalism we would have all starved to death years ago. We do have somewhat of a social safety net, which if you do not live too high off the hog, or have somewhat of a supplement to it, a person or couple can live rather well.. It is my assumption that this is the kind of nation, and world, that our "dear" leader Trumplethinskin desires for the USA. His business actions of the past certainly suggest that.

That is exact point he refutes. According to Marx - capitalism causex huge wealth disparity and increasing poverty and immiseration of the working class.
But that's just not true.

LC

[Burgerman]

More capitalism = greater wealth disparity, possibly, but everyone rises, greater freedom, less poverty at the bottom.
More socialism = greater poverty at the bottom, more suffering, less overall wealth, less choice, less freedom.

Every time. Its all just a matter of how socialist or capitalist a country goes. Right now in the EU, UK, US we are all far too socialist and becoming more so. And so we are not getting as rich as we could!

[sacharlie]

More capitalism = greater wealth disparity, possibly, but everyone rises, greater freedom, less poverty at the bottom.
More socialism = greater poverty at the bottom, more suffering, less overall wealth, less choice, less freedom.

Every time. Its all just a matter of how socialist or capitalist a country goes. Right now in the EU, UK, US we are all far too socialist and becoming more so. And so we are not getting as rich as we could!

"More capitalism = greater wealth disparity"
That happens when a plutocracy is allowed to control the government.

"More socialism = greater poverty at the bottom"
Maybe not when compared to a plutocratic controlled government.

Capitalism with the best outcome is capitalism for the many not just the few.

https://www.youtube.com/watch?v=5PaLxOkjvJE

https://www.youtube.com/watch?v=Jk4VCT5fo7M

[Burgerman]

Capitalism has nothing to do with your "plutocracy". You are confusing a trade system system with a government controlling system that doesent exist in capitalism. In a pure capitalist system the government takes no part in trade or controlling anything at all. So its irrelivant what the "plutocracy" in your conspiracy theory schemes do. The governments entire job would be making sure its citizens are safe and that your property remains yours. And thats ALL it does. So your statement makes no sense. Or is nonsense if you prefer.

[Vitolds]

Socialism as in soviet republic, east germany etc, and as tried all over the world for 60 or 70 years is what causes hundreds of millions to starve to death.

where you read ?
talking about the Soviet Union, would be nice to ask those who lived there.

[Burgerman]

https://en.wikipedia.org/wiki/Holodomor

You or rather your people were fed on propaganda, and still are. The rest of the socialist/communist world was no different. While the western capitalist societies built nice houses with two cars and a swimming pools and the shops were full of food. Socialism = poverty and very low production.

Meanwhile... The socialist Soviet Republic:

By the end of 1933, millions of people had starved to death or had otherwise died unnaturally in Ukraine and the other Soviet republics. The total number of population losses (famine death and birth deficit) across the entire Soviet Union is estimated as 6–7 million.[63] The Soviet Union long denied that the famine had taken place. The NKVD (and later KGB) archives on the Holodomor period made records available very slowly. The exact number of the victims remains unknown and is probably impossible to estimate, even within a margin of error of a hundred thousand.[64] The media have reported estimates by historians of fatalities as high as seven to ten million.[65][66][67][68] Former Ukrainian president Yushchenko stated in a speech to the United States Congress that the Holodomor "took away 20 million lives of Ukrainians",[69] while former Canadian Prime Minister Stephen Harper issued a public statement giving the death toll at about 10 million

[Vitolds]

the Holodomor 1932–1933
Revolution of 1917 (the beginning of communism)
Burgerman, did you read the links that you spread?
in 1930, all the pools and two cars?
Before you write, read history.
in the Soviet Union did not build the house pool we have winter -30 - 50

[Burgerman]

Quite. The description wasnt meant literally. Ask how many in western europe or the US died of starvation in the 30s. It certainly wasnt 10 million! Yes I read the linked page.

Trust me, socialism/communism = suffering. Ask a chinese person if you dont believe your own history. Or someone from cambodia. Or anywhere that suffered the result of the socialist idealism.

[Vitolds]

you say "trust me"?
I remember the Soviet Union, I do not need to tell the tale.
All the time (the Soviet Union - Russia), the state was under sanctions. This is bad for the economy. this is one of the reasons for the collapse of the USSR.
But there were many reasons ....

[Vitolds]

happiness is not measured by the pools and cars.
in the Soviet Union was free
1. housing
2. kindergarten for children (from 6 months to 6 years)
3. school
4. The College
5. Higher education institution
6. Health
This is a person's need for a normal life.
now in Russia for free
Give free strollers Meyra, Otto Bock
Make free prostheses
The state pays for the birth of a child (for the first, for the second, for the third).
pregnant women are paid an annual salary and pay 50% of their salary for 1.5 years
apartments only do not give free ...
If you did not "impose" your democracy, it would be even better.

[Burgerman]

happiness is not measured by the pools and cars.

It wasnt meant as a measure of happiness but of spare wealth. The wealth that allows people to live healthy safe lives.

in the Soviet Union was free
1. housing

Seen it. You are welcome to it!

2. kindergarten for children (from 6 months to 6 years)
3. school
4. The College

Same.

5. Higher education institution

Same with free loans that you only repay when/if you earn large sums later in life.

6. Health

same.

[Lord Chatterley]

https://www.youtube.com/watch?v=5PaLxOkjvJE

This is where he goes wrong - at the very beginning when he says SPENDING is the source of wealth.

It obviously isn't. Production is.

Spending, in a civilized society, is not constituted by people bartering everyone else's stolen loot. Spending consists of trading your production with someone else's production.

Your capacity to demand the production supplied by others is constituted entirely by the production which you supply to the market.

This is Say's Law - and neither nor I nor Reich nor anyone else can change that.

LC

[Vitolds]

I do not understand you

[Lord Chatterley]

:lol:
you say "trust me"?
I remember the Soviet Union, I do not need to tell the tale.
All the time (the Soviet Union - Russia), the state was under sanctions. This is bad for the economy. this is one of the reasons for the collapse of the USSR.
But there were many reasons ....

Yes, like the fact it was a totalitarian state, with a command economy, no free press, no free elections, no trial by jury, no right of assembly, no habeas corpus, no presumption of innocence, endless political trials, asset forfeitures and 'plans, plans, plans,' no private property, no private ownership of producers' goods, no competitive bidding for the factors of production - just one vast slave state with no hope of escape.

But apart from that rather jolly - Corbyn's dream come true.

Here's a movie based on a novel by a woman who actually lived through the early days of the glorious Soviet experiment. I recommend to all:


youtu.be/YwWFsQOpGck

LC

[Vitolds]

I lived under socialism, now capitalism.
my family is Russians and Americans.
you see only one side.
I can differentiate amongst and one and another.
everywhere there are pros and cons.

[Burgerman]

Yes, like the fact it was a totalitarian state, with a command economy, no free press, no free elections, no trial by jury, no right of assembly, no habeas corpus, no presumption of innocence, endless political trials, asset forfeitures and 'plans, plans, plans,' no private property, no private ownership of producers' goods, no competitive bidding for the factors of production - just one vast slave state with no hope of escape.

And 10 million dead. Similar in china. What are the pro's? I dont see any.
And why has every socialist system on the planet collapsed in extreme poverty or hunger or worse or is in the process of doing so now?

And why is it that all the most civilised countries in the free world with greatest safety and greatest freedoms and the longest lifespans all happen to be better developed capitalist economies?

The experiment was run. In a third of the world or more. For 60 to 70 years. The results were extremely clear. Socialism always fails to provide and causes suffering, death, and no freedom. Capitalism always works everywhere its tried.

[Lord Chatterley]

There are no upsides to being a slave though 48% of people in the UK seem to think otherwise.

LC

[Burgerman]

Its because corbin/marxist/liberal leftist brainwashing is applied heavily in schools, colleges and universities by the elite and frankly stupid acedemics teaching these kids. For 10 years or so. So armies of morons armed with no experience or memory, zero history of the failings of communist/socialist death and starvation and poverty inflicted countries leave school and get a vote each year.

They all "know" that their conditioned ideals of multiculturalism, and worse moralistic attitude to equality means that they all hate capitalism with the same vengence as their socialist tutors. Even though they do not understand what capitalism actually is. And taking from the rich to hand to those that are not seems to fit! So they all vote for poverty, lack of freedom, starvation, and to make the poor even poorer or dead in the future. By voting for the EU socialist superstate.

So obviously to these idiots the non democratic, socialist superstate, that turns us all into the soviet republic of equality of poverty overun by muslims is a GREAT idea!