… so consultants Accenture have recommended that permits be withdrawn as needed to prevent prices from declining. (The stated purpose is that a higher price encourages investment in “decarbonization.”)
Category: corporate privilege
Lambert’s Law of Rent
“All rents tend toward fraud”
Lambert has proposed this as “Lambert’s Law,” but since there appears to already be a “Lambert’s Law” in the field of physics, we could name this one “Lambert’s Law of Rent.” Based on, tho not directly derived from, the Law of Rent.
Lambert goes on to assert that “a parasitic class of rent-seekers has paralyzed and hollowed out the economy,” which sounds correct to me. Lambert’s post (which actually is not about economic rent) is here.
The logical conclusion, of course, is that public policy should seek to collect for the benefit of the community those rents that cannot be eliminated.
Just because they’re “Nobel” prize winners doesn’t mean they’re wrong
Washington’s blog says:
Virtually all independent financial experts say the size of the big banks is hurting the economy
and fortunately George Washington been keeping (documented) count. It’s a total of 30 (mostly individuals but including a few coherent small groups), of which at least three have received the “Nobel” prize.
So why does “the market” cause such large banks to exist? Perhaps because correlates of bank size include political influence and chief executive salary.
Income tax rates don’t matter
Lots of discussion lately about income tax rates, pointing out that individuals reporting high incomes once were subject to marginal federal rates in excess of 90%, whereas today that rate never exceeds 35%. And corporate incomes face federal tax rates of 39.3%, higher than most other countries. Various ignorant or deceptive interests use these figures to make all kinds of arguments, such as that America’s rich are undertaxed, or American corporations are overtaxed.
But the secret, that all lobbyists know, is that income tax rates don’t much matter. When wealthy Americans were subject to 90% taxes, they didn’t really have to pay them. Instead, accountants and lawyers and various other shysters put together all kinds of partnerships, trusts, and other mostly imaginary constructs, which were used to legally hide or redefine income into something else. It was a bother and an expense, but way cheaper than paying taxes.
As for corporations, they have all kinds of manipulations available to reduce their taxes, as I discussed two months ago. (If individuals figured their taxable income the way that corporations do, we could deduct all our expenses for food, clothing, medical treatment, and practically everything else). If a few corporations appear to pay taxes in excess of the federal rate, it is due to state income taxes, local real estate taxes, other nonincome taxes, or special circumstances.
What brings all this to mind is this post, which provides two nice examples to illustrate my point. Read them if you have the patience, but the basic point is that corporations are able to entice many very intelligent, experienced people to devise ways to avoid taxes that legislators intend (or at least pretend to intend) to impose. They are opposed by many very intelligent, somewhat less experienced (and less well-compensated) people employed by IRS and other agencies, many of whom hope in the future to be employed by the corporations. The net result of taxing incomes, especially corporate incomes, is that many of the most intelligent and creative people, who might be providing goods or services that people need or want, are instead playing word-games with each other.
I would appreciate if someone would explain to me how a land value tax could possibly waste 1/10th of the brainpower absorbed by this useless, destructive system.
Car plague and bankster plague intersect
I have long tried to avoid any dealings with the various tentacles of Chase Morgan Stanley, figuring somehow or other I would be injured by them. Apparently, at least in Colorado, some (or all?) of their staff are exempt from prosecution for assault. Google finds only two reports, one from the UK Daily Mail , one from the Vail Daily, local to the event.
In case these links disappear, the first three sentences from the Daily Mail story give a pretty good summary.
A financial manager for wealthy clients will not face charges for a hit-and-run because it could jeopardise his job, it has been revealed. Martin Joel Erzinger, 52, was set to face felony charges for running over a doctor who he hit from behind in his 2010 Mercedes Benz, and then speeding off. But now he will simply face two misdemeanour traffic charges from the July 3 incident in Eagle, Colorado.
And from the Daily Vail:
Erzinger, an Arrowhead homeowner, is a director in private wealth management at Morgan Stanley Smith Barney in Denver. His biography on Worth.com states that Erzinger is “dedicated to ultra high net worth individuals, their families and foundations.”
Erzinger manages more than $1 billion in assets. He would have to publicly disclose any felony charge within 30 days, according to North American Securities Dealers regulations.
The decision to drop felony charges was made by the local prosecutor, over the victim’s objections. One infers from the articles that the Erzinger will pay some monetary restitution.
More details from the Daily Vail:
Erzinger drove all the way through Avon, the town’s roundabouts, under I-70 and stopped in the Pizza Hut parking lot where he called the Mercedes auto assistance service to report damage to his vehicle, and asked that his car be towed, records show. He did not ask for law enforcement assistance, according to court records.
Erzinger told police he was unaware he had hit Milo, court documents say….
Meanwhile another motorist, Steven Lay of Eagle, stopped to help Milo and called 911.
It appears that neither the perpetrator nor the victim is British, so it’s kind of curious why the Daily Mail covered this. Or maybe more curious why only one paper in North America did.
Corporate income tax is evil
We know that because “Don’t be evil” Google pays almost no corporate income tax. This Bloomberg/Business Week article outlines how they do it. It involves Dutch, Irish, and Bermudan subsidiaries, and is apparently quite legal. In addition to playing international transfer-pricing games, of course, corporations can take advantage of various incentives and loopholes built into or discovered in the tax code.
Naturally, I am mentioning this to point out that a land value tax cannot be avoided, as long as land transaction, description, and payment records are public. (And, I might add, as long as there are some reasonably free news media, and some members of the public who pay at least a little bit of attention.) There is never any question as to which jursidiction land is in, and there is no need for incentives to attact land.
Dangerous checks, no balances
I always knew that those checks sent by the credit card companies were dangerous. You pay a cash advance fee, and interest; it’s extremely unlikely that you couldn’t get better rates elsewhere if you urgently need cash. Now I have received from Discover Card some unilateral revisions to the Cardmember “Agreement:”
We will charge you a Returned Discover Card Check Fee each time we decline to honor a Discover Card cash advance check, balance transfer check, promotional purchase check, or other promotional check. The amount of this fee is $25, except [if we have already done this to you within the past six months] it will be $35.
So, any time they want, if I try to use one of those checks, they can pick up an easy $25 or more. Probably put something nasty on my credit report, too.
Banksters as parasites
At the Monetary Reform Conference a couple weeks ago, Michael Hudson asserted that banksters, like biological parasites, change the way the host thinks, to better suit the parasite’s needs. I wouldn’t question this regarding banksters, but I doubted the biological fact. Then I encountered the October 9 episode of Radio National’s All in the Mind. Mice infected by toxoplasma lose their fear of cats. Fish infected by trematodes behave in ways to attract predator birds, etc.
The site includes a transcript, audio, and (scroll way down to) an extensive bibliography.
Ideas come from the community
In his 2003 book Copyrights and Copywrongs: The Rise of Intellectual Property and How it Threatens Creativity, Siva Vaidhyanathan notes that creative works always build on previous (often traditional and/or public domain) creative works, and that creativity will become nearly impossible if writers (or those who “own” their output) are permitted to exercise absolute monopolies over use of their products. Potential remedies include shorter and looser copyright terms, placing works into the public domain, licensing them as open source, or using another of the Creative Commons licenses.
Michele Baldrin and David K. Levine, in Against Intellectual Monopoly, provide numerous historical examples of patents retarding, rather than promoting innovation, and note the finding (p. 92, regarding the software industry) that patents were not an encouragement to research and development, but rather a substitute for them.
Now, in Where Ideas Come From (in Wired Oct ’10) Kevin Kelly and Steven Johnson sort of combine these two ideas by asserting that innovations are not the products of individuals, but of communities.
It’s amazing that the myth of the lone genius has persisted for so long, since simultaneous invention has always been the norm, not the exception … [T]here’s a related myth, that innovation comes primarily from the profit motive… If you look at history, it comes from creating environments where [people’s] ideas can connect.”
And they tie this into another kind of property rights:
One reason we have this great explosion of innovation in wireless right now is that the U S deregulated [allowed unlicensed use of parts of the] spectrum. Before that, spectrum was something too precious to be wasted…But when you deregulate– and say, OK, now waste it– you get Wi-Fi.
All in all, a very Georgist article, the authors of which have also written what I hope are very Georgist books (both coming out next month):
Steven Johnson, Where Good Ideas Come From
Kevin Kelly What Technology Wants
Getting it right on medical costs
Turns out that back in February, Kevin Carson wrote the article that needs to be written, analyzing how government regulation and protection makes medical services far more expensive (and less effective) than they could be. With a link to another article that more broadly exemplifies how government makes it impossible for the poor to support themselves.