Quotation of the Day…

by Don Boudreaux on October 24, 2011

in Complexity & Emergence, Growth, Inequality

… is from page 4 of Alan Reynold’s 2006 book Income and Wealth (original emphasis):

The two young founders of Google, Larry Page and Sergey Brin, quickly made something like $12 billion each by greatly facilitating our information, education, and shopping efficiency.  Why should anyone care how much money the founders of Google, Apple, or Microsoft made?  Some might object that they earned a larger share of income, but in what sense can we regard their income as shared?  Google is something new – without Google there could be no income for Google.  The Google founders have their income and you have yours.  What they earn has nothing to do with how much or how little you can earn, except that their inventions may help you earn more (personally, I feel as though I owe them a really big check).

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{ 232 comments }

Bob Apjok October 24, 2011 at 9:07 am

Too many people think that there is a finite amount of wealth so that if you have more, I, by necessity, have less.

Don Boudreaux October 24, 2011 at 9:08 am

Yep. This belief does indeed seem to be widespread and an important reason why so many people worry about the “distribution” of income or wealth.

Fearsome Tycoon October 24, 2011 at 4:07 pm

If only Google gave us their product for free. Oh wait.

Rob October 24, 2011 at 12:49 pm

But I have to admit seeing a problem with the amount of money made by Wall Street types using their exotic financial instruments. I do have a problem with the amount of money they make especially when I am forced not only to pay for their losses but to suffer through the economic consequences which, it would seem, do in fact limit at least the ease with which I can accumulate wealth.

Greg Webb October 24, 2011 at 1:05 pm

Rob, the problem is not with the amount of money that Wall Street executives make. Rather, the problem is with government officials who bail out Wall Street firms that take too much risk at the wrong time. Would it not be better to let them fail for their folly?

Master of the Obvious October 24, 2011 at 3:40 pm

Greg,

If the Wall Street executives made less money, it would cost them more to pay politicians for bail-outs.

Dan H October 24, 2011 at 3:41 pm

Or we could not worry about what Wall Street execs get paid and just make sure the government doesn’t have the power to bail them out.

Greg Webb October 24, 2011 at 3:54 pm

Master of the Oblivious,

So, Wall Street executives properly risk manage their firms are to be equally punished along with those who don’t. That is not the kind of system anyone would want.

Once government can tell anyone how much money her or she can make, then their is no limit to its power. It is much better for individual liberty, and makes more economic sense, to require government to comply with its Constitutional limits by not bailing out anybody, including Wall Street firms that take too much risk.

Dan J October 25, 2011 at 8:49 am

Always looking to limit individuals rather than limiting govt as was intended by those who set up our govt. Successful Wall Street must be limited because the problem is those who seek advantages rather than those who are giving out the advantages?

LowcountryJoe October 24, 2011 at 5:54 pm

I’m afraid that far too many people wouldn’t be able to stomach the consequences of large bank failures. It, I believe, would turn into a political nightmare where a vast majority of people would clamor for government intervention.

Methinks1776 October 24, 2011 at 7:42 pm

LCJ,

It did turn into a political nightmare. There are ways to prevent bank failures and minimize the effects of the inevitable ones without government. The very reason banks get “too big to fail” is because of government. Government increases systemic risk as well.

I think at this point, the only chance we have out of this is total Greek-style collapse. Dismantling this deeply corrupt, distorted beyond repair monster otherwise is impossible, IMO.

Dan J October 26, 2011 at 2:10 am

Obama has been pushing for the collapse…… I fear, though, the marxists would win out as the new autocrats.

Pete October 24, 2011 at 1:47 pm

I constantly struggle to understand why people adore Steve Jobs, Brin & Page, and LeBron James but hate faceless “corporations”. I think a lot of it has to do with how visible the individual or corporation’s contribution is to an individual consumer. People get Apple, they buy the products and love using them. It’s very easy for people to see how Apple and Steve provided value. In fact, Apple probably has an easier job than Google. Since you shell out real dollars for Apple products, humans have an innate desire to rationalize that decision by convincing themselves their iPod is valuable.

People have less insight into how Goldman-Sachs adds value. GS is just some nebulous financial company with no consumer presence. Like the pointy-haired boss, since they don’t produce anything I personally need or understand, they must not be doing anything important. That makes it very easy to be outraged by bailouts without thinking that Apple couldn’t produce iPods without GS financing.

This is not to say bailing out GS isn’t outrageous, just that GS does add some value, somewhere. I hope. CDOs and credit default swaps might be fine ways to manage investment risk, if used in moderation. Hopefully that’s what all the eggheads GS hires are figuring out to earn their huge bonuses.

khodge October 24, 2011 at 6:53 pm

I agree: Killing the bankers/middlemen/money changers has a long, long history of destroying the economic system. I am not comfortable with politicians deciding who makes too much.

muirgeo October 24, 2011 at 4:37 pm

Too many people underplay the destructive nature of our banking and finance sector that allows crminals to become super wealthy while detracting NOT adding from the produtive economy. Their number are not few and the effect ocverwehlms the rest of the economy.

In OTHER words there IS a limited amount of productive wealth… the criminals who steal from it ARE hurting the true producers.

You guys worry over poor people and welfare but we’d have a lot fewer of them if we didn’t allow for the welfare going to the top. It’s a huge amount and it’s clearly very destructive.

Sam Grove October 24, 2011 at 5:03 pm

We all oppose welfare going to the top.

The problem with our banking and financial sectors is their cozy relationship with politicians. Regulation cements that bond by diminishing competition.

Lee Waaks October 24, 2011 at 5:33 pm

Sam has it right. But instead of “cozy” I would substitute incestuous. Muirgeo flings around words like “criminal” indiscriminately. Undoubtedly, there are criminals on Wallstreet, but I wonder how many Wallstreet tycoons thought to themselves, “I’ll get mine even if it means the whole system is brought to its knees”. I would wager none. But many exploited the system and regulation failed. Pierre Lemieux’s new book on the recession is titled: _Somebody in Charge_. Nobody can or should be in charge.

Dan J October 25, 2011 at 8:52 am

I’d bet the percentage of criminals on Wall Street is less than that of the percentage of ‘criminals’ on Capitol Hill.

Sam Grove October 25, 2011 at 2:39 pm

The median net worth for a current member of the U.S. House of Representatives was $725,000 in 2009, according to the Center’s research, and the media net worth of a U.S. Senator was $2.4 million.

http://www.opensecrets.org/news/2011/09/congressional-millionaires-buffett-rule.html

Dan J October 26, 2011 at 2:06 am

Indeed, the ‘criminals’ are a Capitol Hill. It seems to be a hard concept to grasp for many as they are blindly faithful to their preconceptions and envy. The problem exists with govt giving out the legislation rather than with those who come to seek it.

LowcountryJoe October 24, 2011 at 6:01 pm

You should become a banker; do things your way — the right way. And when you turn a profit for your efforts in coordinating lenders & borrowers and buyers & sellers you could see the great work you would do. Of course, people that think as you currently do will probably despise you because the won’t understand how that service is of any value.

brotio October 25, 2011 at 2:56 am

we’d have a lot fewer of them if we didn’t allow for the welfare going to the top. – Yasafi Muirduck

Again with the muirpocrisy.

Yasafi Muirduck is the only commenter at this Cafe who supports welfare going to the top. Yasafi supports corporate welfare for the poor, struggling, barely-making-$1-corporations ADM, Chrysler, GE, GM, and Solyndra.

Dan J October 26, 2011 at 2:07 am

Your so darn smart….. Run a bank or financial institution on your ideology. Let’s see what happens.

David October 24, 2011 at 9:18 am

Because it’s a lot easier to get somebody else to pay for the stuff that you are too lazy to work for.

vidyohs October 24, 2011 at 9:20 am

“Why should anyone care how much money the founders of Google, Apple, or Microsoft made? Some might object that they earned a larger share of income, but in what sense can we regard their income as shared?”

Those two sentences say it all in my view.

It is none of my business what the owners of Google made in the past or what they make today.

How can the founders of Google make a “share” of income when it is their own unique earnings? To the best of my knowledge their is no set standard, a quantifiable figure, no national income total set each year so that we can look at incomes and determine a share.

Even in retrospect it is impossible to determine how much 330 million people made in each year, so that we could look back and determine what a share would be, much less what it “should have” been.

Just like Bob Apjok said above, you make yours, and I make mine, and as long as dark alleys and weapons were not involved neither of us took from the other.

vidyohs October 24, 2011 at 9:21 am

Argggh, “……best of my knowledge there is no set……..”

Greg G October 24, 2011 at 9:32 am

I agree that Larry and Sergey are excellent examples of business people who earned their vast wealth by creating something that helps make the entire society more wealthy. Certainly there have been many that lost their jobs because their business plans were blown up in the creative destruction that Google made possible. But that has been the case with every great technological advance. Envy for Larry and Sergey is clearly misplaced.

One of the things I like about this blog, even though I often disagree with the political views expressed here, is that you do a good job of shining a light on rent seeking and over-entitlement in government. There is no such willingness here to look at the rampant rent seeking and sense of over-entilement in business.

Boards and management in most large public companies run the companies for their own benefit, not the benefit of their stockholders. Short term compensation for top management is so high they have every rational incentive to swing for the fences when betting with other peoples money. Look at the compensation that utterly failed failed executives get. They have little incentive to make their companies finances transparent and can use as much of their shareholders money as they like lobbying against shareholder interests.

Why is there so little interest here in any problems in the business world that cannot be attributed to government? I realize people will say that they can choose to avoid a given company but they can’t choose to avoid being subject to the government. But these problems are so rampant and transparency is so poor, that I believe it is not possible to avoid either.

Jon October 24, 2011 at 9:57 am

To answer your question, the argument is (at least, my argument is) companies that take excessive risks or provide a good/service that is not needed/desired will fail. Their only source of income is through the products they sell and/or shareholders. If you put out a terrible product, consumers will not buy it and shareholders will not put money into your company. It’s a voluntary exchange of goods and services.

From the governmental perspective, the government is encouraged to take risks for political gain. Rather than relying on the profit of the goods/services they provide (as a business does), they can gain income from taxation, which is completely devoid of the services they provide. When the government is not making enough money, they can just increase taxes (or print more money).

We believe that the Market provides enough of a limitation on business powers to be sufficient to avoid the misuse of resources. However, there is no such organic self-regulation in government. Therefore, we need laws, such as the Constitution, to limit government power to prevent the misapplication of resources as well as the destruction of liberty.

So, the TL;DR version is this: a free market has organic self-regulation abilities whereas government does not. I hope, even if you do not agree with this, at least you can understand where I am coming from?

Greg G October 24, 2011 at 4:34 pm

Jon

I do understand where you are coming from and I thank you for making a much more polite argument than most. And I agree that most businesses do a very good job of satisfying their customers or they fail.

There is an organic self regulation in a democracy – regular elections. As Winston Churchill said, it’s the worst form of government – except for all the others.

Corporations use the Soviet style of democracy, vote for or against one candidate. That is why management and shareholder interests are so often at odds.

Sam Grove October 24, 2011 at 5:06 pm

Just to remind you that corporations are structured by corporate law.

Jon October 24, 2011 at 5:15 pm

I’m glad I was able to help somewhat. And I do agree that the corporate style of governance does need to be reformed.

And you are correct that democracy does have regulation in elections, but even with that fail-safe, you can still get career politicians and political dynasties (for example, the Kennedys).

It’s too bad you and I aren’t friends, as this is one of those wonderful aspects of economics best discussed over a pitcher of beer, as an old professor used to say.

Methinks1776 October 24, 2011 at 10:03 am

There is no such willingness here to look at the rampant rent seeking and sense of over-entilement in business.

Disingenuous as you can get already this morning. You are lying to yourself again so that you can be more comfortable with your priors.

There is no such willingness here to look at the rampant rent seeking and sense of over-entilement in business.

These are private problems between shareholders and management and not the business of third parties.

But, of course, the real reason is that this is not what the blog owners are interested in posting about (clearly). You’re just full of complaints. First, you complain that the blog owners don’t fawn over Keynes’s ridiculous notion that during recessions government somehow becomes magically endowed with knowledge and abilty it doesn’t normally have. Now, you’re all upset that they don’t want to moan about things that are of great personal concern to you. If you want to focus on these “pressing issues”, start your own blog and talk about whatever you want.

What is it about you lefties and the desire to compel everyone to fit into your narrow frames?

Incidentally, if you think the transparency in public companies is awful, I won’t even tell my investors what I trade. There is zero transparency except the periodic statements they receive. That’s the deal each of them signed up for and they’re all extremely happy. At any moment, they can choose to leave, but all urged me not to redeem any portion of their investment recently when I tried. I guess you don’t speak for everyone, Greg.

Greg G October 24, 2011 at 10:43 am

Methinks

There are so many misrepresentations of what I have said in that post it is hard to know where to start. The “private problems” between business owners and management have many externalities that affect us all. But since I own shares in a number of index funds, I am not a third party to this problem.

And as to complaints, gee I never see complaints around here. I am not telling the blog owners that they have to do anything at all. I have commented, and may continue to comment, until the blog owners ask me to stop. Others have asked me to stop, but short of the blog owners asking that I will continue to comment until I get bored. The good news for you is you are making some progress on that front. My comment was more about other commenters than the blog owners.

The comment about Keynes that has you so obsessed was in the nature of pointing out that the way Keynes is caricatured on this blog has everything to do with why your ideas are not taken more seriously when you get outside of this echo chamber. But I am fine with that. Just thought it was an interesting thing to comment on. If you disagree feel free to ignore my posts as you once threatened to do.

Methinks1776 October 24, 2011 at 11:02 am

Oh, please. You can’t even understand what people are saying to you. I never “threatened” to ignore your posts. I asked if you’d like them ignored. The fact that you don’t understand the difference makes me question your intelligence.

List the misrepresentations for me since they are so numerous in that post. I wouldn’t want to misrepresent you, my dear. Also these heinous externalities that you’re so worried about. This should be good. So far all I see is whining and pouting whenever you are corrected. There is a world of difference between whining and making your case. You do the former. Step it up.

Greg G October 24, 2011 at 3:54 pm

Methinks,

Yes, you asked if I would prefer if you ignored my posts. The answer is yes, by the way. That is what I was referring to. I did not quote you as having using the word “threatened.”

I am not seeking to “compel” (your word) anyone to conform with any “narrow frames” as you claimed. I am far more comfortable than you are with people expressing a wide variety of views. The fact that I criticize your views does not mean I think you should be compelled to change them.

Another misrepresentation of yours is the fact that (a few days ago) you claimed that I “think it is wicked” to advocate the political views that you hold. I think nothing of the sort. I expect that you and most of the other commenters here have the best intentions and sincerely believe that the policies you advocate would be best for everyone in the long run. Of course, human nature being what it is, most people sincerely believe that the policies that would benefit them would benefit everyone the most.

I have friends, relatives and acquaintances with a quite spectacular variety of political and economic views. I have never seen any consistent correlation between those views and a persons virtue or character.

Just because a disagreement remains after you have “corrected” me, and I say so, does not make that any more of a whine or complaint than any other comment about a disagreement. You are the one so determined to stamp out heresy on this site.

Another misrepresentation would be when you claimed that I “find a lot of dignity in slave ownership.” I have no idea where that particularly vivid hallucination came from.

As for corporate externalities, the things that AIG did with Credit Default Swaps caused massive externalities for many innocent people and would have whether or not they were bailed out.

You are quite right in guessing that I don’t speak for everyone. I never claimed to.

Methinks1776 October 24, 2011 at 6:23 pm

Greg G,

Do you not read your own posts? Who accused you of me ever using the word “threaten”? There’s no misrepresentation on my part, just your confused mind.

I am not seeking to “compel” (your word) anyone to conform with any “narrow frames” as you claimed. I am far more comfortable than you are with people expressing a wide variety of views

You don’t know what that means, do you? I’ll try again – I meant you have trouble the moment people you’ve pigeon-holed don’t behave in a way that you expect them to. Thus, you build giant straw man armies. Anything you read that doesn’t conform to your priors about libertarians goes in one eyeball and out the other and you persist in accusing people of holding positions they don’t hold. I thought that was obvious, but I guess not to you. I suggest you actually process what is written on this site rather than supplant it with what you think should be written based on your prejudices.

Another misrepresentation of yours is the fact that (a few days ago) you claimed that I “think it is wicked” to advocate the political views that you hold.

All the way back to a few days ago? I thought there were countless misrepresentations in this post. So far, there are none. You can’t even correctly remember this heinous misrepresentation of mine. I responded to your claim that it is pernicious for some of the commenters here to disrespect free loaders by asking you why you thought it was wicked to disrespect people who wished to use government to compel other people to provide for them instead of taking on that responsibility for themselves (paraphrasing, obviously). Where’s the misrepresentation? Actually, where’s the answer?

I have friends, relatives and acquaintances with a quite spectacular variety of political and economic views.,/i>

I know, dear. Some of my best friends are black too.

Just because a disagreement remains after you have “corrected” me, and I say so, does not make that any more of a whine or complaint than any other comment about a disagreement.

Well, that’s fine. One can point out to you that 2 + 2 does not equal 22 but 4 and you are free to disagree. Reality is not optional, but ultimately, I can’t do anything about your ability to grasp it. Again, you seem to lack the part of the brain that allows you to process the written word. I don’t give a damn if you don’t agree with me or anyone else. You complain about the blog and what the blog owners choose to write about. You can’t possibly be complaining about what the commenters are commenting about because you are an adult man and you are expected to understand that commentary is lead by the blog hosts’ posts. Whenever you’ve provided thoughtful commentary, you’ve been thoughtfully engaged – even if it’s not exactly on topic. Thus, You can’t possibly be complaining about the commenters failure to engage you in things you want to discuss. So, it must be the blog hosts you’re complaining about. I don’t see another option.

You are the one so determined to stamp out heresy on this site.

That’s quaint. I’m not the one chiding the blog hosts for writing about the wrong things, telling them that this is why they aren’t “taken seriously”. Which begs the question, why come here and read what these chumps say?

Another misrepresentation would be when you claimed that I “find a lot of dignity in slave ownership.” I have no idea where that particularly vivid hallucination came from

You. Are you really such an idiot that you didn’t understand this was the logical extension of your argument that people who wish to use other men for their own purposes should be respected and that I was asking you a question? Or is this just you being your old disingenuous self. My money’s on disingenuous. You don’t seem terribly stupid. Although, I have been known to be wrong MANY times about a great many things.

As for corporate externalities, the things that AIG did with Credit Default Swaps caused massive externalities for many innocent people and would have whether or not they were bailed out.,/i>

Do tell. Explain those externalities and how they hurt innocent people. Also, since this is an econ blog and all, you may want to go into the costs and benefits of bailing out AIG vs. not bailing out AIG (and you may want to write something convincing that indicates you understand it wasn’t AIG bailed out, it was its counterparties which allowed the Fed to do something it doesn’t have the authority to do. I’ll leave it to you to explain what since you’re the one making the claim.). You may have noticed that you can say whatever you like here, but you will always be asked to back up your claims. While you’re at it, perhaps you can explain what a CDS is, how it works and what the risks are. This is integral to your claim. I suspect you once again don’t know what you’re talking about, but I’m very willing to be proven wrong.

You are quite right in guessing that I don’t speak for everyone. I never claimed to.

No, but you’re certainly willing to by meddling in the private affairs of companies you have nothing to do with on a pretext of some amorphous “externalities”.

Economiser October 24, 2011 at 11:55 am

> The “private problems” between business owners and management have many externalities that affect us all.

Such as? As you said, anyone can avoid transacting with a company should they want to. Where’s the externality?

> But since I own shares in a number of index funds, I am not a third party to this problem.

By buying index funds, you are accepting that you won’t be able to vote even though you have an economic interest in the company. If the management/shareholder issues are important to you, buy common stock directly, show up at annual meetings, propose shareholder resolutions. The process for change is right there waiting for you. Activist money managers do it all the time.

Greg G October 24, 2011 at 6:38 pm

Methinks,

You offered to ignore my posts. I accepted that offer. Surely you don’t lack for other heretics to combat in between doing your many millions of trades and calculating how much of each result was due to skill or luck.

Methinks1776 October 24, 2011 at 7:24 pm

I asked if you would prefer it. I never made you an offer. Your reading comprehension is so poor, I’m starting to wonder for whom English is a second language. Whether I choose to ignore your nuggets or not will be at my whim.

I don’t think you know what the word “heretic” means, despite your overuse of it. You’re not a heretic. You’re something else entirely. Care to guess what?

Anotherphil October 24, 2011 at 10:21 am

Politicians and regulators in most governments run the government for their own benefit, not the benefit of their public. Short term compensation for elected officials is so high they have every rational incentive to swing for the fences when betting with other peoples money. Look at the votes that utterly failed failed politicians get. They have little incentive to make their government’s finances transparent and can use as much of their taxpayor money as they like currying constituent interests.

Greg G October 24, 2011 at 4:52 pm

Anotherphil

Failed politicians get removed by voters a whole hell of a lot more often than failed board members and CEO’s get voted out by shareholders.

Anotherphil October 24, 2011 at 4:59 pm

So you don’t know that for Congressional elections (other than 2010) the incumbency rate is 90+%?

On the other hand, the list of CEO’s that get tossed is endless.

Ken October 24, 2011 at 5:07 pm

Anotherphil,

Reelection rates in 2010 were still nearly 90%,in the mid to high 80′s, which, of course, only bolsters your point.

Regards,
Ken

Greg G October 24, 2011 at 5:10 pm

How often do you see board members voted out? They are the ones that hire the failed CEO’s.

Methinks1776 October 24, 2011 at 6:25 pm

Greg G,

Aren’t you a board member? Shouldn’t you be riling up the investors in the S&L for which you are an outside director and creating a revolution the rest will follow? I mean, what are they paying you for?!

If you have the answers, lead the way. Lead by example.

lamp3 October 24, 2011 at 11:13 am

“Boards and management in most large public companies run the companies for their own benefit”

This is absolutely true, but it is also known that in public organizations such as government or nonprofit organizations, the staff there also behave as private individuals seeking to maximize their own revenue. The prime difference is that with profit-seeking companies, it only stays afloat through satisfying consumers. As was previously mentioned, this is absent from government.

Transparency, if it were desirable with the regulatory environment we have now, would exist only if there was some demand for it. How much reduced return are you willing to accept for transparency with any/all of your investments?

“There is no such willingness here to look at the rampant rent seeking and sense of over-entilement in business. ”
What do you mean? Solyndra comes up as a major answer to your statement, appeals by companies for trade adjustment assistance and protectionist policies to insulate them from competition. Rent seeking is examined quite a bit.

Individuals in any organization always try to maximize their revenue. This is common to private/public institutions. The difference is that in private sector, market discipline exists to harness this towards creating value, which isn’t found in the public sector.

Ken October 24, 2011 at 12:07 pm

Greg G,

There is no such willingness here to look at the rampant rent seeking and sense of over-entilement in business.

Right, because no one here talks about Walmart, Goldman Sachs, Warren Buffet and the like, amaright? Confirmation bias much? Do you just simply ignore the comments you don’t like, so you can act like they don’t exist?

But even more important is that rent-seeking and entitlement seeking involves government. Rent seeking cannot occur if there aren’t crooked politicians and bureaucrats ready to bend the rules for crooked businessmen.

Regards,
Ken

Greg G October 24, 2011 at 5:57 pm

lamp3 & Ken

Reread my comment. I did not claim there was a shortage here of discussion of businesses involved in rent seeking and over entitlement as they interact with government. What I did claim was that people here seem to lose all interest in that when it when it does not involve connections with government. And there is plenty of it that happens within publicly held corporations even apart from their government connections.

Ken October 24, 2011 at 7:18 pm

Greg G,

All right, let’s have that discussion. Explain how you seek rents and from whom without government involvement. Explain what entitlements you are talking about if you are not talking about entitlements doled out by governments.

It doesn’t seem like rent seeking nor entitlement seeking can occur without government, but I’m eager to hear what examples you have.

Regards,
Ken

Greg G October 24, 2011 at 7:47 pm

Ken

Most new corporate directors in public companies are selected by the existing board and management because they are already their cronies and can be expected to go along. The highest paid outside director is normally put in charge of the compensation committee. Boards are paid very lavishly for very little work and then feel obligated to return the favor by compensating management very well – especially because they often would have no clue how to run the company without the CEO.

CEO’s who perform poorly may eventually be removed but will still be very highly compensated and often paid a lot more to go away. It is very rare for corporate board members to be removed for any reason short of a bankruptcy.

When results are good, board and management take all the credit. As soon as results turn bad, external reasons are found. Compensation normally goes quickly up either way regardless of the pain suffered by shareholders. And most feel absolutely untitled that it be this way.

Ken October 24, 2011 at 8:22 pm

Greg G,

First, you are aware that what you’ve described is not rent seeking, nor entitlement seeking aren’t you?

Second, if you are a share holder in whatever company, step up and do your part. If you aren’t, it’s none of your business. Really. How other people choose to spend their money is absolutely, without a doubt none of your business. Public companies are run by shareholders and it’s up to shareholders to keep their CEO’s honest. Privately held companies are privately held and subject to be run however the owners see fit.

Of course if executives of these firms commit fraud or otherwise break the law, then prosecute them. If the shareholders decide not to, it’s no different than me deciding not to press charges against someone who stole my grill from my deck.

If you’re talking about laws protecting CEO’s and boards of directors, then you’re talking about government. If you’re talking about fraud being committed by executives, there are all ready laws for that. If you are talking about executives using political clout to avoid being prosecuted for breaking these laws, then you are talking about government.

The heart of the matter is simply that other people use their money, including how businesses (private entities that don’t, nor should they be made to, answer to you) is not your business. If a company doesn’t meet your requirements of due diligence, transparency or whatever requirement you have for ownership, don’t buy stock in that company. It really is that simple.

I, and I suspect others here, don’t get exercised over other people’s poor choices they make with their own money. It’s their business and their mistake to make. In fact, I find it irksome that you find it necessary to interject yourself into people’s private affairs as to how they spend their money.

Regards,
Ken

Methinks1776 October 24, 2011 at 9:30 pm

Ken,

I don’t think Greg understands the difference between an agency problem and rent seeking. Bless his heart.

Seth October 24, 2011 at 1:33 pm

Start a blog and write about those issues.

Greg G October 24, 2011 at 4:44 pm

To all those urging me to start my own blog I say: Start your own blog. Then you will be able to ban whoever you choose.

Or, failing that, convince Russ and Don, the actual owners of this blog to ask me to leave. If they do, I will.

Ken October 24, 2011 at 4:53 pm

Greg G,

Who said to ban you? Project much?

The commenters were simply saying that if you don’t like the topics discussed here, start your own and focus on them. My comment, of course, simply states that you are wrong.

Regards,
Ken

Greg G October 24, 2011 at 5:31 pm

Ken

I do like the topics here. And I like being able to comment on them in any way I see fit which, if I understand you correctly, you should be OK with.

Ken October 24, 2011 at 5:39 pm

Greg G,

I am perfectly fine with some of your comments. I am not fine with you projecting onto Seth that he somehow implied you should be banned. Your comment started fine with To all those urging me to start my own blog I say: Start your own blog., but went terribly wrong with Then you will be able to ban whoever you choose…. Or, failing that, convince Russ and Don, the actual owners of this blog to ask me to leave.

Your initial (but wrong) comment was that you thought certain topics weren’t blogged about, then others suggested that if you want to discuss those topics, start your own. I’m not seeing anyone suggesting you be banned, nor making an appeal to Don or Russ to that affect.

You can comment in any way you see fit. However, if you are wrong or disingenuously put words into others’ mouths, and I care enough, I will point that out as I see fit.

Regards,
Ken

Greg G October 24, 2011 at 6:03 pm

Ken and Seth

Yeah, I guess I read too much into Seth’s comment. Sorry about that. I took it to mean he would prefer that I didn’t come back and overreacted to that interpretation.

Methinks1776 October 24, 2011 at 6:33 pm

Greg G,

The blog owners will ban whomever they want whenever they want. We all comment here at their pleasure. So, my opinion isn’t worth diddlysquat.

That said, I appreciate the hosts’ no ban policy. I’ve never been in favour of banning anyone. I ignore or read whatever strikes my fancy that day and we’re all free to do that.

However, that doesn’t mean that every word that drops from your fingertips onto your keyboard will be treated like fragile golden eggs filled with wisdom no matter how much you consider them so. None of us are immune to challenge.

Seth October 25, 2011 at 12:35 am

Ken – Thanks.

Greg G – I have my own blog (click my name). My suggestion wasn’t tongue-in-cheek. I’ve found it serves several purposes, one being that I can write about what interests me.

I agree that the private sector is rife with cronyism. I’ve seen it in publicly traded companies, small private companies, professional sports organizations, non-profits, the PTA and even blogging. I think we would all be better off with less of it.

But, I also agree with Ken.

If it were a big deal in the private sector, there are mechanisms that takes care of it — choice and competition.

In politics, it seems to be what people want. Who even needs lobbyists when voters vote for the people they vote for?

Greg G October 24, 2011 at 8:52 pm

Ken

What I am describing is a principal agent problem where the principals get and feel entitled to a lot of compensation for which they have added little or no value. There is a lot of room for bad behavior short of criminality.

One of the great ironies on this site is that the same people who have no faith at all in a political democracy have such an idealized view of the corporate version of democracy with one set of candidates.

I am a shareholder in many companies so I do have an interest in this. But you only find out later which companies were really transparent. How many years in a row was Enron Fortune Magazine’s most admired company in America before it was suddenly revealed to be not nearly as transparent as anyone thought?

Greg G October 24, 2011 at 9:08 pm

I meant the agents there where I said principals.

Ken October 24, 2011 at 9:18 pm

Greg G,

I understand what you are saying, but, again, the government had a pretty large roll in Enron. The accounting scandal, from what I understand, wasn’t illegal. Enron used aggressive accounting rules written by the government that regulators and accountants knew could be used to completely hide a dying company. Since this was the roaring 90′s, no one wanted to throw cold water on the accounting industry as the economy grew pretty quickly. When the economy went south, the facade could no longer be maintained and it was then okay to start looking for problems. Additionally, Enron executives went to jail and investors who decided not to do due diligence on Enron lost money, as it should be. Profits and losses.

Additionally, the atmosphere here isn’t unfavorable to pointing out market failures, which Enron may or may not be, depending on who you ask. The atmosphere here is unfavorable to government fixes for market failures, which are typically knee-jerk reactions. Those who advocate for government intervention in the face of market failure blithely ignore governments’ interventions which have caused most of the worst economic crises in history. The assumption many pro-regulators and big government types have is that the gov can fix the problem.

Pro-free market types ask the question, if people who stand to lose money (people with real skin in the game) if they get things wrong, how can the government, staffed with people who are guaranteed a paycheck whether or not they get things wrong, get things right? Free markets are a profit and loss system, where profits are earned by figuring out the right things to do and losses occur when they are not. Government is a tax system where taxes are levied when they get things right and when they get things wrong. If those who have a huge incentive to get things right can’t figure it out, how will people with little to no incentive to get things right figure it out?

I think maybe you see anti-government intervention here as anti-willing to discuss market failure. In the face of market failure, many assume government won’t fail, so call for more government, which of course is treated hostilely here, and rightly so.

Regards,
Ken

House of Cards October 24, 2011 at 9:31 pm

Enron? Enron? Rings a bell . . . let me see . . .

Ah, yes. Wasn’t it that company for which Paul Krugman acted as consultant?

Methinks1776 October 24, 2011 at 9:37 pm

Krugman? Did the Kochs give him a dime? No? Well, then he’s ideologically pure. You can’t criticize anything he does. Next!

House of Cards October 24, 2011 at 9:52 pm

You can’t criticize anything he does. Next!

LOL!

That’s right! Nothing to see here, folks! Just move on along . . . just keep moving . . .

Greg G October 25, 2011 at 7:17 am

Ken

I was using the term rent seeking in the general sense of trying to secure an unearned income stream. I realize that, for some among the cafe jargon police, the term is only permitted when government is involved. The same with entitlement. There is also a move afoot here by some to redefine, out of existence, the terms market failure and crony capitalism. Like you, I care less about the jargon than the policies.

Sam pointed out above that corporate governance is structured by corporate law. Don’t you think it would be possible and desirable to require more transparency and more of a say for shareholders on things like executive compensation?

I do find it ironic that the people who have the most cynical views about democracy in the political system are often the ones with the most idealized view of democracy in the corporate world.

Methinks1776 October 25, 2011 at 7:24 am

Oh, look. Greg G has just built another straw man army. You’re too old for this, Greg. Go look up the term “straw man” and try to refrain from arguing entirely from fallacy. It’s hard to take seriously arguments this childish.

Greg G October 25, 2011 at 7:50 am

Methinks,

On 10/18 you wrote, “If you would prefer I could ignore your posts.’

No you couldn’t. What you describe as a whim is more like a totally uncontrollable compulsion. In any event, I later decided I would prefer that you do ignore my posts (not that I expect that will have any effect). Your insults were more interesting the first few times I heard them.

Why not only engage the arguments you think are more worthy? Because you really can’t stop can you?

Methinks1776 October 25, 2011 at 7:52 am

BTW, Greg G, you might want to look into “rent” more closely to avoid making a fool of yourself the way you did blaming all and sundry on “shadow banking” system you couldn’t identify.

“Rent” is “alpha” – that is, excess return, not “unearned income”. There is nothing wrong with rent.

“Rent seeking” is a term which specifically refers to seeking excess return through government subsidy.

There is no “using the term rent seeking in the general sense of trying to secure an unearned income stream”. The term is only “permitted” when it is used correctly. You just don’t happen to know what the correct meaning is and that isn’t the fault of the Cafe patrons you whine about. At your age, you are responsible for what you say. Since words have meaning, if you want to be understood, you have to use them correctly. If you can’t use them correctly, then you will not be understood and it becomes clear you don’t understand what you’re talking about.

Your complaint then, is that you think executives are overpaid, not that they are rent seeking. Whether executives are overpaid or not is a question for the shareholders and, as you yourself sort of understand, shareholders have options that taxpayers do not.

What you describe is an agency problem. A long time ago I worked with some top-notch compensation analysts who couldn’t figure out how to completely solve that problem. If you can solve it, great. Go forth and do so at the company for which you are outside director. If you’re not willing to do the work and offer specifics that don’t involve you dictating how somebody else must conduct private business, then you’re unlikely to find much sympathy for your views here.

Before you grouse about “heresy” again (whithout understand what it is, of course), I will just tell you that I don’t give a fig whether a punter like you agrees or disagrees with me or anyone else here. You’re in a reasonably free country and you’re free to think what you want, no matter how stupid it is. However, when you smear one foolish thing after another in the comment section you begin to sound very much like a fool. I love heretics, but I don’t suffer fools lightly.

Greg G October 25, 2011 at 8:00 am

Methinks,

I can’t help but feel strangely flattered at your desperate attempts to revive our correspondence but I still would prefer that you ignore my comments as you once rashly claimed to be able to do.

Methinks1776 October 25, 2011 at 8:00 am

Greg G,

I see you found something else to whine about. Whining like a four year old seems to be very popular among leftists.

You don’t really have a grasp on the word “could” either. Shocking. I will respond to whatever I want whenever I want unless it no longer pleases the blog owners. I retain the option. Do you know what the word “option” means?

I know that you don’t understand language well, but correcting your inanity is not an “insult”. Your unfounded accusations that libertarians are uncaring hypocrites are insults. It’ll be interesting to see if you comprehend that. My guess is “no”.

Methinks1776 October 25, 2011 at 8:05 am

I can’t help but feel strangely flattered at your desperate attempts to revive our correspondence

Psst…You do realize this is a public board – in the sense that it’s not private correspondence.

Aren’t you adorable? Yet another thing you can wail uncontrollably about. Did it ever occur to you that I might not be writing for your benefit and you can ignore my responses if they vex you so (which they obviously do)?

Greg G October 25, 2011 at 8:08 am

Methinks

Why are you whining about me calling Libertarians uncaring hypocrites? I never said that.

Glad you could find the time to squeeze that one in between your lectures on straw men. It is like you are trying out for the Irony Olympics here.

Methinks1776 October 25, 2011 at 8:13 am

Greg G,

I can’t help that you don’t understand the English language well enough to understand what you’re saying. Or maybe you’re just stupid. I don’t know and I don’t want to guess. I’ll let you keep providing more evidence first.

Nikolai Luzhin, Eastern Promises October 24, 2011 at 9:32 am

Why should anyone care how much money the founders of Google, Apple, or Microsoft made?

Well, apparently ATT, which is trying to steal all that income for itself by charging for our use of Google or Apple ITunes

IOW if you are on the side of the Gods, Larry Page and Sergey Brin, you have to be for GOVERNMENT REGULATION OF THE NET TO ASSURE NET NEUTRALITY

Hasdrubal October 24, 2011 at 9:48 am

Or, just not buy an ATT data plan.

Amazed October 24, 2011 at 10:02 am

Exactly, Hasdrubal. That’s been my plan for years! Amazingly, we didn’t need government to give us that solution like Nik.

Observer October 24, 2011 at 11:27 am

why should I pay ATT for Google or Itunes?

I will pay a fair amount for the pipe. US treasuries yield 2% now +/- –ATT should be able to get by on a fair return of 2.10% (ten basis points), as long as the public service commission that sets the rate is elected solely by Google customers like myself

Observer October 24, 2011 at 12:12 pm

Save the country the unnecessary costs of setting up a public service commission. Just don’t buy the ATT data plan. Then, as ATT loses customers, it will changes its policies so that it no longer charges for Google. By using a PSC approach, you risk regulatory capture and then everyone will have to pay for using google no matter what data plan you use.

Observer October 24, 2011 at 1:54 pm

not an option when ATT is your only broadband ISP

Observer October 24, 2011 at 1:56 pm

Verizon is everywhere.

PrometheeFeu October 24, 2011 at 10:36 am

And the government will regulate net-neutrality how? How do you even define net-neutrality? For instance, if you have a phone and internet from Comcast, they run on the same network, but the phone packets get priority. That’s how they get you such a nice phone service. Is that really a bad thing? I love net neutrality, but getting the government involved will only screw things up.

Observer October 24, 2011 at 11:30 am

net neutral is very easy to define. I don’t want ATT or Comcast or Charter providing any content, none whatsoever. That way they have no reason to discriminate to their own favor. I want them limited to providing the “pipe” so to speak, only.

Ken October 24, 2011 at 12:10 pm

O,

So people shouldn’t be free to run their own business, but should be subject to your arbitrary preferences of the types of products they should sell?

Regards,
Ken

Captain Profit October 24, 2011 at 1:30 pm

In much the same way that Taco Bell is obligated by the social contract to provide me with a Filet-O-Fish…

Nikolai Luzhin, Eastern Promises October 24, 2011 at 9:36 am

as for the claim that this blog, does “a good job of shining a light on rent seeking and over-entitlement in government,” that is total BS.

The sole purpose of this blog is to provide intellectual “cover” for rent seeking and over-entitlement through the use of the euphemism “markets.”

If you want to throw light on “on rent seeking and over-entitlement in government,” then support ideas that increase gov’t transparency and making our government more democratic

Dan H October 24, 2011 at 10:43 am

“The sole purpose of this blog is to provide intellectual “cover” for rent seeking and over-entitlement through the use of the euphemism “markets.””

That’s false and you know it. But you don’t care.

Problem: The government is so powerful that greedy corporations engage in rent-seeking and buy off politicians to get favorable legislation passed.
Your solution: More costly regulations, and not to mention more power to the government, thus more incentive for greedy corporate types to engage in rent-seeking.
Our solution: Take away the governments power to do these things.

You want to get back at “greedy” corporations? Return to free-market principles. Big corporations HATE the free market, because it means they constantly have to compete and innovate. It’s much easier to seek special treatment from the government to maintain market share.

Methinks1776 October 24, 2011 at 10:45 am

No, he’s far too stupid to know anything. He’s been dropping evidence of that all over every thread. A mind can only be changed if it exists. Clearly, you have nothing to work with here.

Observer October 24, 2011 at 11:34 am

Dan the solution is to make government more democratic and transparent.

Beyond that, markets don’t work, even with transparency. Banking and deposit insurance is absolutely essential to modern business. We have no choice but to have banks and regulate them well. By providing cover you constantly thwart progress. Big Business sees you as a very helpful set of allies.

Dan H October 24, 2011 at 11:55 am

“Dan the solution is to make government more democratic and transparent.”

You speak in platitudes. It’s not worth my time to respond to you further.

Observer October 24, 2011 at 2:11 pm

here are a few steps to make us more democratic and transparent

1) direct election of the President–line item veto and swap (can either cut spending or swap to other uses). 4 year terms and no limit on number of terms. Elections with runoffs until winner receives 50% plus 1 vote. Prohibition on party nominating activities (conventions, causes, primaries) until 120 days before Nov. elections.

2) elimination of the Sherman compromise–no more 2 senators for each state–senators elected from equal population districts, comprised of 5 house districts.

3) reduction of house to 500 representatives; no more one representative from each state, with one always from Alaska and Hawaii (due to distance)

compensation to senate and house dependent upon increased standard of living of bottom 20% of our society

4) eliminate senate confirmation of appointments by president, but for judges

5) terms limits for judges: 9 years, staggered terms on Supreme Court and COAs

6) Taxpayer standing to challenge any gov’t action in court.

Observer October 24, 2011 at 2:18 pm

here are a few steps to make us more democratic and transparent

The best way would be to ship statists to North Korea…

Dan H October 24, 2011 at 3:14 pm

“1) direct election of the President–line item veto and swap (can either cut spending or swap to other uses).”

Swap for other uses? So we approve of spending money for one thing, and the president should be allowed to spend it on something entirely different? Wow. Wall Street, GE, et al, LOVE that idea. Instead of spending time lobbying hundreds of representatives and senators, they’ll just lobby one guy: the president.

GREAT IDEA! The way to stop crony capitalism is to give the president more pwoer!!!! (I would like they idea of a line item veto, but NOT the power to re-allocate spending. No frickin way)

Ken October 24, 2011 at 3:22 pm

O,

The bulk of your ideas don’t seem to be very well thought out.

1) line item veto and swap Consolidate even more power in the executive; not smart.
Prohibition on party nominating activities (conventions, causes, primaries) until 120 days before Nov. elections. Step on the first amendment; not smart.
2) So that a few states can dominate the rest; not smart.
3) Concentrate power into ever fewer hands; not smart.
4) Eliminate checks and balances on the executive; not smart.
5) Not sure how this really changes anything.
6) Can’t you do this now?

Regards,
Ken

Anotherphil October 24, 2011 at 3:26 pm

Dan, the solution is to make government more democratic and transparent.

Actually, the solution is to remove the ability of the government to institutionalize dependency (enslave) vast portions of the electorate.

Anotherphil October 24, 2011 at 3:40 pm

Errata:

Actually, the solution is to remove the ability of the government to institutionalize dependency among (enslave) vast portions of the electorate.

Randy October 24, 2011 at 10:59 am

NL,
I am all for transparency, and I think the best way to do that would be to have all services be fee based. The reason that political activity can be non-transparent is because the customers are forced to buy regardless of the value of the product. As for more “democracy”, that is the problem now, not the solution. Why vote about who has to pay for what when we can simply let people decide for themselves which services they want?

Observer October 24, 2011 at 11:37 am

Randy

How do you make bank regulation fee based?

Right now, the SEC is financed by fees. So your party, the House GOP, has cut the SEC’s budget by reducing the fees.

there is only one long term solution. Real democracy.

Jon October 24, 2011 at 11:55 am

When you say to make the government more democratic, are you talking about doing away with Congress or a direct democracy-style legislature?

Ken October 24, 2011 at 12:15 pm

O,

If anything the twentieth century has taught is that “real” democracy simply brings about the tyranny of the majority. Stoke resentment from one segment of society against another segment, then elect politicians to steal from that group you resent.

Limited government as defined in the constitution, which has been largely ignored for nearly 80 years has resulted in a bloated, corrupt government filled with such hubris as to think that not only should they, but can control an economy defined by hundreds of millions of people interacting with billions of others.

Regards,
Ken

Darren October 24, 2011 at 6:20 pm

I’m pretty sure from his references to Senators and such that by “democracy”, he meant republicanism.

Ken October 24, 2011 at 7:13 pm

It’s not clear that he meant limited government, though. Republicanism without limited powers on the government still leads to the tyranny of the majority.

Regards,
Ken

Randy October 24, 2011 at 1:44 pm

Observer,

I see no reason for political regulation of banks at all. Those that maintain a good reputation will have no problem getting business. Those that fail – should.

SEC – ditto.

Democracy, in my opinion, has no business with business. Business decisions are between the business owner and the customers. No one has a right to vote on what shall be bought or sold.

Methinks1776 October 24, 2011 at 4:18 pm

IMO, private certification is the way to go.

Certifiers will compete with each other and will be paid for (likely) by the businesses wishing to be certified. It’s true that there’s a risk of taking bribes in exchange for better ratings, but if the firm loses its reputation as fraud is uncovered (it always is), the certifier becomes useless to the customers and, thus, to the companies seeking to be certified.

In addition, private certifiers have every reason to make their process as transparent as possible – explaining to end users exactly how they arrive at their conclusion. Do you have any idea how the SEC works? Any idea what their rules are? I’ve been a regulated firm for years and I only know a fraction of the rules.

At worst, we’ll get no more fraud than is covered up by the SEC now and it’ll cost us less.

It’ll never happen, of course, but one can dream.

Randy October 24, 2011 at 4:56 pm

Agreed – with the concept and with the fact that its most likely just a dream.

Anotherphil October 24, 2011 at 3:42 pm

there is only one long term solution. Real democracy.

Yeah! Mob rule!!!!!!!!!!

Lee October 24, 2011 at 2:21 pm

“Democracy is two wolves and a sheep discussing what’s for lunch.”

katy lavallee October 24, 2011 at 9:52 am

I think the people who are up in arms (figuratively) about income inequality would say that it’s not people like the Google founders they are worried about, it’s the people who lie and cheat to get their “share”. I would say to them then that it’s not income inequality at all they are worried about, but something else entirely.

Also, they tend to want to cap CEO income at something like 30x the income of the lowest paid employee (or is at the average employee?). Where do they pull this arbitrary number from? What makes 30x “fair”?

Methinks1776 October 24, 2011 at 10:06 am

Where do they pull this arbitrary number from?

From the same place usually occupied by their head.

Anotherphil October 24, 2011 at 10:32 am

it’s the people who lie and cheat to get their “share”.

Who are they? How about Robert Rubin, who left government to get hundreds of millions of dollars of a big bank? The boards of Fannie and Freddie, who had an accounting scandal that makes Enron look like a misrecorded journal entry, but who had posh salaries and perks peddling an implicit put option?

Katy, the way you can tell “occupy” is largely a group manipulated individuals with inchoate and nebulous anger that’s being used as a a trojan horse is that there’s no “OCCUPY K Street”. I’ll bet most of the protesters don’t even know what “K Street” means.

PrometheeFeu October 24, 2011 at 10:13 am

Last I checked, Larry and Sergei made their money by making great products. That’s not a problem. But how many of the top wealth owners/income earners made their money by selling government subsidized bonds, then got bailed out with tax-payer money? How many make their money by selling crappy cars and then getting bailed out with taxpayer money? Sure, we can blame the politicians for that. But don’t you have a moral obligation to refuse stolen property when it is offered to you? If someone steals your neighbor’s car and offers the car to you, is it really ok to take it and when your neighbor complains to say: “That other guy down the street purchased his own car. Why would you begrudge me mine?”

Methinks1776 October 24, 2011 at 10:23 am

Nobody is compelling you to buy anything. Well….except Obama is now compelling you to buy health insurance and you’re compelled to buy insurance for your car and….actually, the only entity that compels you to buy anything is government.

I don’t know how a stolen car is analogous, but what you want to do about people acting in their own self-interest? As disgusting as you might find their methods, they are encouraged by government. Worse, acting in your best interest via honest methods is being regulated out of existence. So, you can bang on about the people who take advantage of government’s rent creation all you want. Until government stops interfering in the economy, choosing winners and losers in exchange for bribes, you’ll never get the satisfaction you’re looking for.

PrometheeFeu October 24, 2011 at 10:53 am

“Nobody is compelling you to buy anything. Well….except Obama is now compelling you to buy health insurance and you’re compelled to buy insurance for your car and….actually, the only entity that compels you to buy anything is government.”

What in my comments leads you to think I believe otherwise?

“I don’t know how a stolen car is analogous, but what you want to do about people acting in their own self-interest?”

Well, the government came and stole my money in the form of taxes, to give it to bankers in the form of a bailout. The answer is to change the incentives. If I act in a manner which is considered dishonest and disgusting, people will eventually call me out, shun me and attempt to shame me. That’s part of the reason why I try to not act in such ways. I don’t see why we shouldn’t try to shame bankers into not stealing taxpayer money via the government.

“As disgusting as you might find their methods, they are encouraged by government.”

And as disgusting as you may find Obama’s actions, his actions are encouraged by the electorate. Yet you don’t seem to give him a free-pass…

“Worse, acting in your best interest via honest methods is being regulated out of existence.”

Assuming you favor drug deregulation which I think is a pretty good assumption. When a drug dealer sticks up a pharmacy because he cannot legally purchase the materials he needs to make his product, should we give him a free-pass on stealing from the pharmacy because the government made it impossible for him to make his product without stealing?

“Until government stops interfering in the economy, choosing winners and losers in exchange for bribes, you’ll never get the satisfaction you’re looking for.”

I mostly agree. The government has limited powers and it may be possible to counteract they more nefarious effects through private action. Of course, lots of dead-weight loss will be incurred, but things could improve if executives know that taking a bailout means spending your life as a pariah.

lamp3 October 24, 2011 at 11:29 am

Deadweight loss generally arises out of public intervention into private transactions. DWL might occur in private transactions, but like anything else, freedom in the market would allow for the potential gains to be recouped temporally rather than lost forever by government fiat. It is very telling that you feel privatization yields deadweight loss that outweighs DWL from governmental intervention.

You do have a moral obligation to refuse stolen property. Those whose property rights have been infringed should have the ability to legally act because of it. This leads to the next point — with governmental market intervention today, you have no legal recourse with perceived infringements on your property rights. You can protest all you want, but you don’t have a case for suing, repossession or any other action.

Moral obligation is a very weak incentive. Otherwise, the tragedy of the commons would not exist, nor would protectionism or any myriad economic wrong. Don’t politicians have a moral obligation to not work in their self-interest as well? As you can see, “moral obligation” is better accomplished by removing the mechanism by which these negatives were created with. That leaves intervention by third parties into private exchange.

Spending your life as a pariah doesn’t have as much bite as the private alternative ending — being a pariah, with those who used to work around you knowing it was you that sent the company under. You might even be a poor pariah!

PrometheeFeu October 24, 2011 at 3:16 pm

“You do have a moral obligation to refuse stolen property. Those whose property rights have been infringed should have the ability to legally act because of it. This leads to the next point — with governmental market intervention today, you have no legal recourse with perceived infringements on your property rights. You can protest all you want, but you don’t have a case for suing, repossession or any other action.”

That is unfortunately correct.

“Moral obligation is a very weak incentive.”

In and of itself, that is indeed correct. But when combined with social pressure, it is much stronger. Studies have shown time and time again that most people do care what others think about them.

“Otherwise, the tragedy of the commons would not exist, nor would protectionism or any myriad economic wrong.”

The tragedy of the commons is often resolved through informal norms where some sort of morality does play an important role. Protectionism is not caused by a failure in morality. It is caused by a failure in understanding. Most people want to impose tariffs because they see those as being self-defense against an economic attack.

“As you can see, “moral obligation” is better accomplished by removing the mechanism by which these negatives were created with.”

I agree. But unfortunately, I don’t libertarians gaining control of the government any time soon. So I would rather hedge my bets by trying to get improvements from multiple angles…

“Spending your life as a pariah doesn’t have as much bite as the private alternative ending — being a pariah, with those who used to work around you knowing it was you that sent the company under. You might even be a poor pariah!”

I’m not sure where you got the idea I was speaking of anything but private action.

Methinks1776 October 24, 2011 at 12:31 pm

What lamp3 said.

Also…

I don’t see why we shouldn’t try to shame bankers into not stealing taxpayer money via the government.

Shame away. I won’t join in because it’s fruitless. Unless you deregulate the banks and shut down the FDIC, they will always seek compensation from the government agency that seeks to impose costs on them for their own political gain. That’s not a free pass, that’s just facing reality.

….should we give him a free-pass on stealing from the pharmacy because the government made it impossible for him to make his product without stealing?

No, but I wouldn’t waste my time expecting drug dealers to behave differently (I think we’re really torturing a marginal analogy at this point, but there it is). Besides, it’s debatable who is robbing whom. Regulated firms (of which banks are merely one example) are burdened with the cost of regulation. Without associated benefits (always at the expense of customers and/or taxpayers), they won’t be in business at all. What’s the root cause of that problem?

The government has limited powers….

I haven’t noticed much limitation. Politician’s sole goal in life is to get around any limitations imposed on them by the constitution.

but things could improve if executives know that taking a bailout means spending your life as a pariah.

Unlikely.

PrometheeFeu October 24, 2011 at 3:24 pm

I think you are misunderstanding my meaning. I do not mean to imply that we should give politicians a free-pass and that we can shame cronies into refusing hand-outs. What I mean to say is that to maximize our chances of success, we need to attack cronyism from multiple angles and exploit every little crack in the armor. I see the anger at bankers and large corporations as a wave we can surf for a while and maybe score some points against the cronies and those who support them. Maybe if the “occupy wall-street” folks manage to cap things like executive pay, the people who are so keen to get government hand-outs when they can will start to wonder if maybe those handouts actually come with nasty strings attached. Ideal? No. But then again, if you have a plan to get Russ in the White House, why have you been hiding it from us?

Methinks1776 October 24, 2011 at 4:08 pm

I did get that, Prometheefeu. You made yourself clear.

However, resources are scarce. Attacking all possible angles rather than the most obvious angles with the highest probability of results is, IMO, wasteful.

I don’t know why it’s your business what executives get paid. If I hired you, would you want a third party to determine a cap on your pay or is that something you and I should negotiate between the two of us? You will never get the satisfaction you seek by central planning of compensation packages. And you don’t want to start down that road either.

Russ in the White House isn’t going to do it either. The whole system is corrupt.

PrometheeFeu October 24, 2011 at 4:27 pm

“However, resources are scarce. Attacking all possible angles rather than the most obvious angles with the highest probability of results is, IMO, wasteful.”

I think we might disagree on the probability distribution…

“I don’t know why it’s your business what executives get paid.”

It’s not. Unless I’m paying for it of course. So, yes, I find salary caps distasteful. But I also find bailouts distasteful. And if bailouts came with salary caps, maybe executives would also find bailouts distasteful.

Methinks1776 October 24, 2011 at 6:46 pm

I think we might disagree on the probability distribution…

Probably :) (couldn’t help myself)

The cronies have no power to raise taxes or redistribute stolen wealth. Thus, I don’t understand why you think there’s a higher probability of success in attacking the cronies. Being a very rich pariah isn’t all that bad, my friend. If you get rid of one set of cronies, another will arise. As long as politicians seek to monetize their growing power, we will be helpless to stop cronies buying it. Worse, politicians and their cronies find methods ever more poorly understood by the public to siphon your wealth. I find nothing respectable about the cronies, but, no, I don’t see why you would think there’s much value in appealing to cronies or maligning them. To kill a snake, you must cut off its head, not grab it by the tail.

So, yes, I find salary caps distasteful. But I also find bailouts distasteful. And if bailouts came with salary caps, maybe executives would also find bailouts distasteful.

I see the temptation, but the compensation will take other, less transparent forms. Never underestimate human ingenuity – particularly in the highly profitable activity of using government to rip off the inexpert public. Obviously, I share your feelings about all parties involved, but this is a Pandora’s box you do not want to open. The only caps you’ll find are the ones on your compensation. Never the politically connected cronies. I urge to not fall prey to the easy answers. They are invariably wrong.

Methinks1776 October 24, 2011 at 12:34 pm

Oh, to answer your first question:

That was in response to buying the stolen car. You don’t have to do business with an organization you don’t find honorable. Of course, that probably means you can’t have a bank account, a brokerage account, you can’t buy a house, etc.

Thanks to the Patriot Act, you can’t open an account with a foreign bank either. It just sucks all around. This is why I prefer to focus on the group with the power to steal from you and to give to cronies instead of shunning the cronies who don’t much care what you think and don’t have incentive to care.

Jon October 24, 2011 at 12:35 pm

Well, you can open accounts with foreign banks. They just need to have domestic branches. TD Bank, Sovereign, and Citizens Bank are all foreign banks (Canadian, Spanish, and Scottish, respectively).

Methinks1776 October 24, 2011 at 4:12 pm

Yes, Jon, but that doesn’t solve your crony problem. All banks have an explicit and an implicit taxpayer guarantee and the Fed will bail out those banks as well – just as it did foreign banks through AIG. Maybe that wasn’t such a good example on my part.

Observer October 24, 2011 at 2:13 pm

compelling you to buy health insurance, which is absolutely necessary to correct market failure

txslr October 24, 2011 at 3:02 pm

What market failure is that?

Anotherphil October 24, 2011 at 3:29 pm

The one that was created by, among other government interventions in healthcare-Section 106 of the Internal Revenue Code.

Greg Webb October 24, 2011 at 3:09 pm

What you propose is unconstitutional. Therefore, it cannot legally be done.

Health insurance is not a market failure. The health industry is heavily regulated, which is why the cost of health care and health insurance is so expensive.

PrometheeFeu October 24, 2011 at 3:28 pm

“Health insurance is not a market failure. The health industry is heavily regulated, which is why the cost of health care and health insurance is so expensive.”

You mean it has nothing to do with the patent system or the fact that the value of healthcare keeps growing?

txslr October 24, 2011 at 4:02 pm

As has been noted often before, for some “market failure” means “result other than that which I desire.”

Greg Webb October 24, 2011 at 4:23 pm

Excellent point, txslr! Some people just are too controlling and unable to relax with a simple live and let live approach to life.

PrometheeFeu October 24, 2011 at 3:26 pm

It is important to remember that once a market failure has been identified, the burden still rests on you to demonstrate your solution to not simply be an even bigger government failure. I am not one who wants to eliminate all government and I could buy into the idea that we need some sort of government intervention is healthcare, but just saying “market failure” does not justify government intervention.

Jon October 24, 2011 at 10:32 am

I find that, in this discussion (generally speaking, not just in this post), the question ultimately comes down to which is more important: equality (the distribution answer) or fairness (the “they earned it” answer)?

Invisible Backhand October 24, 2011 at 10:51 am

Why should anyone care how much money the founders of Google, Apple, or Microsoft made?

Because history shows over and over that it is a bad idea to let the rich and powerful get too rich and too powerful.

Randy October 24, 2011 at 11:02 am

Historically, the problem is the powerful, not the rich.

Jon October 24, 2011 at 11:04 am

Which is precisely why we advocate the separation of government from business.

By breaking the iron relationship between government and business, one can limit the influence of both.

Bruce October 24, 2011 at 11:48 am

Who is more rich than a government which controls 2.2 trillion in revenues and 3.6 trillion in outlays? Who is more powerful than a government which can deprive you of your property with the threat of force? I’m all for limiting the rich and powerful, I just see who the rich and powerful really are.

Methinks1776 October 24, 2011 at 12:12 pm

The Kochs, Kochs, Kochs , Kochs, Kochs, Kochs, Kochs, Kochs, Kochs , Kochs, Kochs, Kochs, Kochs, Kochs, Kochs , Kochs, Kochs, Kochs, Kochs, Kochs, Kochs , Kochs, Kochs, Kochs…..

‘Tis the loop that plays in their empty heads.

Greg Webb October 24, 2011 at 1:57 pm

But, they never seem to have a problem with Soros…

Methinks1776 October 24, 2011 at 4:12 pm

Well, of course not. He helped the Nazis!

Greg Webb October 24, 2011 at 4:20 pm

That makes sense…one socialist does not criticize a fellow socialist.

kyle8 October 24, 2011 at 1:56 pm

care to site any examples?

Every system in history has had some people with all the power and some who were powerless.

None of that has much bearing on anyone’s life compared to having a system of human rights, and the rule of law.

In other words, you can live in an agrarian society in which even the rich are not very rich, but with no civil rights or rule of law your life is horrible.

Or you can live in a society like ours where there are big differences in wealth, but everyone is relatively better off, even the poor, than in most other societies.

I have never seen any of you equality fetishists give me any information to the contrary.

Invisible Backhand October 24, 2011 at 3:19 pm
jjoxman October 24, 2011 at 6:59 pm

No it isn’t. In fact, it’s apt. Apt!

The tradeoff, observed in developed economies the world over, is between differences in wealth distribution and overall economic growth. The more government redistributes wealth, the more equal the wealth distribution, but also the poorer everyone is overall.

See “Two Cheers for Capitalism?” by Pete Leeson in Society (2010).

txslr October 24, 2011 at 3:12 pm

It seems to me that the more common arc is people gaining power and them making themselves rich through various forms of theft or rent extraction. Your typical third-world thug-president-for-life takes over his country because he’s got the only tank that works, and then plunders far and wide. This creates a vast wealth disparity. Of course, you see the same thing happen here. Think of all the life-long politicians who come to Washington with not much and get rich in mysterious ways. Think of the studies that show congressmen and their aides earning persistently above-market returns on their investments. Our President is a good example of that sort of phenomenon. He has no skills, no experience – nothing. Falls in with the right crowd in Chicago, gets into politics and now is worth millions.

The general problem is not so much the rich buying power as it is the powerful stealing to get rich.

Martin Brock October 24, 2011 at 10:58 am

As a marginalist rejecting the labor theory of value, I recognize that a person’s income is not simply the marginal value of his labor. Personal income is the marginal value of labor plus the marginal value of many other resources a person is entitled by forcible standards of propriety to govern.

We can argue endlessly about the utility of controversial proprieties, like software patents and Treasury securities, and we should, but we can attribute personal income to a person’s labor only by ignoring the marginal revolution.

In my classically liberal way of thinking, the argument for personal autonomy over the fruits of one’s labor and the argument autonomy over resources like a patent or even a parcel of land are fundamentally different. The former is a natural rights argument. The latter is a utilitarian argument based upon utility of a market organizing capital.

A forcible monopoly like a patent is, at best, a useful standard imposed by a monopoly of force, and entitlement to profit from the exchange of such a right for other rights is either useful or not similarly.

Limiting the entitlement of lords of forcible propriety to organize resources they govern to produce for their exclusive consumption, with a progressive consumption tax for example, does not violate a natural, individual, classically liberal right. It rather protects a natural, individual, classically liberal right. Classical liberals like Adam Smith advocated these limitations for this reason.

Nikolai Luzhin, Eastern Promises October 24, 2011 at 8:44 pm

Martin:

1) Grow up–that Adam Smith may have “advocated” something doesn’t mean that is what he thought. Great artists are often times great because they don’t tell us what they think. Do you think that the Sopranos was a show about Gangsters or was Tony a metaphor for real business owners? We have Smith’s book and know something of his times, but to say that we really know what he thought—never. We know what he wanted his contemporaries to think.

2) There is no God above or any rule by which the fair value of anything can ever be determined. If a sale of a commodity is only evidence of what the last sale was, not the value now. Value is no a priori; it is meaningless. What is meaninful is price. We can say that the process resulted in $xx.xx price. We know that by varying the process we can vary the price.

Since the process is controlled by government in any society of any signifance, all we can safely say is that the distribution of income is entirely and always a political question. The distinction you draw is meaningless. Patents are as much a result of labor as anything else. Look at the modern corporation, which did not really exist even 200 years ago. It is entirely utilitarian. Governments don’t have to grant charters or permit fusion of capital by shareholders (or retention of income).

In sum, you are looking in all the wrong places. There is no holy grail that will fairly reveal “value.” Truth, like Art, will always be in the eye of the beholder.

The march of human progress has been democracy

Martin Brock October 25, 2011 at 8:56 am

Grow up–that Adam Smith may have “advocated” something doesn’t mean that is what he thought.

I state that Adam Smith advocated something, referring specifically to words he wrote in Wealth of Nations regarding taxation. I never claim any telepathic powers, so I don’t understand your reply.

There is no God above or any rule by which the fair value of anything can ever be determined.

Right. Like I said, I’m a marginalist, so I accept a subjective theory of value. Again, I don’t know who you’re addressing here, but you don’t seem to be addressing me.

If a sale of a commodity is only evidence of what the last sale was, not the value now.

Fortunately for people who must plan as best they can, subjective market prices often are sufficiently continuous over time for planning purposes.

Since the process is controlled by government in any society of any signifance, all we can safely say is that the distribution of income is entirely and always a political question.

I never say anything else.

Patents are as much a result of labor as anything else.

No. Patents are the result of statutory decree. A patent may or may not reflect someone’s labor, and even if a particular patent recognizes inventive labor, it simultaneously denies other labor leading to the same invention.

At best, patents serve to concentrate capital where capital would not otherwise concentrate, not to reward the labors of inventors. This principle is true as a matter of Constitutional law in the United States. A patent almost certainly denies many more inventors a right to sell their inventions.

God does not place new ideas in the heads of anointed individuals. When the time for an invention is ripe, it appears over and over again independently. If Newton and Leibniz can invent Differential Calculus independently, I’m sure we can expect clever men to invent One Click online ordering independently as well.

Look at the modern corporation, which did not really exist even 200 years ago. It is entirely utilitarian.

I don’t dispute this point and have never disputed it.

In sum, you are looking in all the wrong places. There is no holy grail that will fairly reveal “value.” Truth, like Art, will always be in the eye of the beholder.

I have no idea what you’re talking about. I have discussed only subjective market prices here. We could discusses my “values” in an ethical sense, but that’s a separate issue.

The march of human progress has been democracy.

Define “democracy”. The market is the most democratic system of human organization in my way of thinking. Majoritarian plebiscites electing totalitarian rulers are among the least democratic.

Martin Brock October 24, 2011 at 11:09 am

Google was not something new. I used Altavista years before I ever heard of Google. I switched only after Google won the mindshare contest. The world doesn’t need many generic web search engines, and the world is probably better off without too many of them, because the crawlers that keep search servers up to date consume bandwidth; however, winning this contest is not equivalent to invention, and even if Google had been the first web search site, this fact wouldn’t have warranted any monopoly rights, because someone else would have created a web search engine around the same time anyway. The time was ripe.

Jon October 24, 2011 at 11:16 am

What sets Google apart from it’s web search rivals are the other services it offered: enhanced results, Google Earth/Google Maps, gMail, etc. There is a reason no one uses Altavista or Ask.com anymore; they were late to see the potential of what they had. Google is a good example of the market process. Anyone with programming skills can build a web search tool. It’s not too difficult. But they offered so much more on top of that, and they improved what was out there. Because of this, they were rewarded.

However, they are sitting under a sword of Damocles. You bet that Larry and Sergey are constantly worried about the state of their technology. They know, to quote Billy Joel, “If I go cold, I won;t get sold and get put in the back in the discount rack like another can of peas.” If they want to maintain their market share, they need to keep their game.

After all, Microsoft was once a “monopoly” too

Martin Brock October 24, 2011 at 11:27 am

I switched from Altavista to Google before gmail and google maps existed. Altavista doesn’t invest in additional services, because it doesn’t have enough users, or expect enough users, to warrant the investment.

Google offers valuable services, and I routinely use them myself. I have no problem with Google.

Microsoft was never a monopoly. Microsoft is a corporation owning many monopoly rights, including many patents and copyrights. The scope of these monopolies has expanded dramatically in my short life time. When I was a computer science student in the early eighties, software parents didn’t exist at all, and most CS students learned this fact in school. If software patents had existed at the time, Microsoft likely would have lost lawsuits to Apple over the Windows operating system, and the PC world would look very different today.

Jon October 24, 2011 at 11:36 am

When I mentioned Microsoft, I was referring to the anti-trust case against it by the government. My point was essentially everyone had Windows OS. Macs were a small minority. And now Apple is a legitimate rival to Microsoft.

J. W. October 24, 2011 at 12:17 pm

“I switched from Altavista to Google before gmail and google maps existed. Altavista doesn’t invest in additional services, because it doesn’t have enough users, or expect enough users, to warrant the investment.”

Altavista offered a translation service (Babelfish) which I continued to use even after I switched to Google for web searching, which was its major strength before it added all that extra stuff. For maps I used Yahoo and Mapquest.

I think that Google did well because its search was better than Yahoo’s, Altavista’s, etc. That got people to the site. The additional services were made convenient by being on the same site, plus they’re pretty good in their own right.

Martin Brock October 24, 2011 at 1:21 pm

I also continue to use Babelfish occasionally. I used yahoo mail before switching to gmail, largely because google’s spam filter seemed superior. I never thought that google’s search results were better, but it doesn’t matter.

It’s a mistake to assume in retrospect that the winner of a race of this sort necessarily offered the better product. A single, dominant web search site was a safe bet from the outset. Some site had to occupy this spot. If all competitors had been identical except for a url, one of the urls would have won the competition.

If a dozen computers play Monopoly using exactly the same program, one of the computers always wins.

Jon October 24, 2011 at 1:28 pm

You make it seem, Martin, that competition leads to monopoly. One competitor must outperform all rivals and dominate the market. If all the competitors were completely equal, in quantity of services offered as well as quality, I’m not sure it’s a foregone conclusion one would ultimately dominate. I mean, what would be the incentive for a user to use one system over another?

Miles Stevenson October 24, 2011 at 4:41 pm

Martin Brock:
“It’s a mistake to assume in retrospect that the winner of a race of this sort necessarily offered the better product. A single, dominant web search site was a safe bet from the outset. Some site had to occupy this spot. If all competitors had been identical except for a url, one of the urls would have won the competition.”

You make a very important point. It’s a distinction that many who distrust markets fail to appreciate. Market processes (competition) does not reward the superior product/service, but the more desirable one.

My father is a musician and a liberal. He often laments the market rewards who go to individuals that he finds to be of low skill and produce low quality work (popular music), while experienced, trained, and highly skilled Jazz and Traditional/Classical musicians struggle to find work.

He views this as a market failure because in his view, markets should not reward people with inferior skills while punishing those with superior skills.

Never mind the inherent problems with determining what is the “superior” product. What I find interesting is how he can then later complain that markets are “rigged”, and that they tend to reward the advantaged at the expense of the disadvantaged.

I find these views to be somewhat conflicting. On the one hand, there is the complaint that the “better product” should win, yet on the other there is a lament that the “little guy” doesn’t get a chance.

Martin Brock October 24, 2011 at 5:18 pm

Jon, I’m not suggesting that competition invariably leads to monopoly, but a dominant provider will emerge in some markets. Entitlement to forcible propriety can become increasingly concentrated, as in a game of Monopoly, but statecraft is the cause of this concentration, not competition.

… what would be the incentive for a user to use one system over another?

This question has many answers, but economies of scale favor a single provider in the web search business and so does a mindshare capture dynamic. Economies of scale permit a dominant provider to provide more services and thus attract more users, but I expect a single provider to emerge even without this advantage, because there’s only one web and everyone has the same access to it.

Competing urls move from mind to mind. [They are memes.] A mind favors the url it encounters most frequently, and minds most frequently encounter urls that neighboring minds favor. The more alike the search services are, the more this mindshare dynamic dominates.

I’m not saying that simple diffusion accounts for Google’s dominance, but I am saying that simple diffusion is sufficient to account for the dominance of some search engine, so a single, dominant engine would emerge even if the only characteristic distinguishing one engine from another was a url.

The dominance of a single engine does not logically imply that the dominant engine is any better at search than its competitors. Maybe the dominant engine is better, but dominance itself is not evidence of this fact.

If search engines were highly specialized, appealing to very specialized search needs, I wouldn’t expect a single provider to emerge so readily, but for a generic search of the entire web, a simple diffusion process ultimately fills the available mindspace with a single, adequate option.

I’m not saying there’s anything wrong with Google’s dominance, but I don’t think Larry Page should be entitled to build himself a private castle or take a vacation to the Moon as a consequence. He should be entitled to reinvest the earnings of his organization of resources, to improve their service to markets. The progressive consumption tax model that I favor wouldn’t tax any income that he reinvests.

Miles Stevenson October 24, 2011 at 5:41 pm

Martin Brock

“I’m not saying there’s anything wrong with Google’s dominance, but I don’t think Larry Page should be entitled to build himself a private castle or take a vacation to the Moon as a consequence. He should be entitled to reinvest the earnings of his organization of resources, to improve their service to markets. The progressive consumption tax model that I favor wouldn’t tax any income that he reinvests.”

I find this a really strange statement. Basically, you are making the judgment that the jobs and resources created so that Larry Page could “build a castle” or “go to the moon” are less desirable than the jobs/capital created to “reinvest in his company.”

This is the fallacy of the modern Keynesian: to presume they know the correct way to allocate resources. I assume you do realize that when wealthy people want to spend their money on luxury, the subsequent demand creates jobs just as they it if they “reinvested into their own company”, as you presume to be better. The only difference is that you have decided that one is better than the other.

Martin Brock October 24, 2011 at 7:41 pm

I find this a really strange statement. Basically, you are making the judgment that the jobs and resources created so that Larry Page could “build a castle” or “go to the moon” are less desirable than the jobs/capital created to “reinvest in his company.”

Yes, I’m making this judgment and I find it really strange that you find it really strange.

This is the fallacy of the modern Keynesian: to presume they know the correct way to allocate resources.

I’m not a Keynesian of any description. I advocate what Adam Smith advocated, not what Keynes advocated. Keynes wanted a state spending large sums of money while selling entitlement to tax revenue to people like Keynes. I want a state spending very little while Larry Page and other wealthy people organize resources to add value for the benefit of free consumers.

I assume you do realize that when wealthy people want to spend their money on luxury, the subsequent demand creates jobs just as they it if they “reinvested into their own company”, as you presume to be better.

Now, that’s more like Lord Keynes’ thinking. Spending is spending, and a job’s a job.

The only difference is that you have decided that one is better than the other.

No. My decisions are inconsequential. The significant difference is that Page’s private castle organizes vast resources, including the labor of thousands of other people, to produce goods for Page’s exclusive consumption while Page’s investment of the same resources organizes these resources to add value for the benefit of many consumers exchanging their produce.

As long as a state threatens to harm people interfering with Page’s governance of vast resources, I don’t have a problem with this limitation of his discretion, and neither did Adam Smith. Keynes, by contrast, wanted to substitute state investment for Page’s investment. The distinction could hardly be more significant.

My position is classically liberal, Miles. Your thinking seems more classically conservative, the historical antithesis of classical liberalism.

Martin Brock October 24, 2011 at 8:04 pm

And The Road to Serfdom compares modern socialism to classical conservatism.

PrometheeFeu October 24, 2011 at 3:32 pm

First of all, page rank indeed was new. I’ve seen some of the early comparisons of page rank results with leading search engines of the time and page rank results were orders of magnitude better. Also, Google does not have a monopoly. There are 2 other major search engines and the only reason Google is still the leader is that they keep producing better search results.

Dallas Weaver October 24, 2011 at 11:55 am

As a semi-retired senior citizen, the value that I have obtained from the information access available via Google on devices that I can operate (apple hardware) without using my sons Ph.D. in computer science is greater than can be calculated. It is like having the world at my feet.

We have a very elderly friend which we setup with an i-pad and a mac mini that keeps her mind active and connected to the outside world when physical limitations of age are providing limits. What is the value of that?

Gil October 24, 2011 at 12:00 pm

So? Once they pay their taxes like their other bills they keep what’s left.

Miles Stevenson October 24, 2011 at 12:05 pm

This is very similar to Thomas Sowell’s point that income is not, and cannot be distributed by definition.

http://www.youtube.com/watch?v=crYH0brGye0

Martin Brock October 24, 2011 at 1:30 pm

We’ve been down this semantic street before. “Income distribution” describes a measurement in mathematical statistics. It is not a political term.

And in an entirely different sense of the word, income certainly is distributed and redistributed, channeled by countless forcible proprieties, all the time. Sowell may object to any of these statutory forces, but calling income channeled this way “not income” is just silly.

Jon October 24, 2011 at 1:35 pm

Distribution is a mathematical term. It becomes political when the question is asked “what do we do about it?”

Martin Brock October 24, 2011 at 5:30 pm

As long as people dominate resources by force, it remains a fair question, and we are very far from an anarchist utopia at this point.

Miles Stevenson October 24, 2011 at 3:31 pm

Martin,

You may disagree with Sowell’s definition of income, but whether correct or incorrect (I don’t believe language to be objective) I think it illustrates the divide between the constrained and the unconstrained.

I think the very fact that you see “income” simply as an inflow, regardless as to whether or not any actual wealth was produced and traded for the inflow, demonstrates how both sides of the argument can look at the same data and draw opposite conclusions.

If you believe that you obtain the things you need in life by having an income of money, and that it doesn’t matter so much whether or not you earned that income by producing wealth, then it makes sense why you would think that economic slumps can be fixed by spending your income.

But if you believe that it’s not real income when green pieces of paper are re-distributed to you, and that the question of whether or not producing goods and services to trade for that inflow is essential, then the idea that moving green pieces of paper throughout society will fix economic slumps is complete lunacy.

It all depends on your premises.

Martin Brock October 24, 2011 at 5:42 pm

Language is not objective. It is conventional. “Income” describes an inflow of entitlement to command resources, because people commonly use the word this way. When I declare my “income” on a 1040, that’s what I declare. Some income corresponds to wealth produced by the income recipient, and some doesn’t.

I know for a fact that I obtain the things I need in life by having an income of money, and I also know that it doesn’t matter so much whether I earn the income by producing wealth. When I arrive at Walmart with cash in hand, no one ever asks me how I obtained it. Some people get money by producing, and some people get money otherwise, and Walmart doesn’t care. That’s just a fact.

I’m telling you how life really is, not how I think it should be. I think markets should have a lot more to do with the distribution of wealth, but I live in a world in which direct state spending is forty percent of GDP, not to mention the muggers. I must describe the world I see, not the world I imagine.

Miles Stevenson October 24, 2011 at 6:07 pm

Language is not objective. It is conventional.
I’m glad you agree with me.

I know for a fact that I obtain the things I need in life by having an income of money, and I also know that it doesn’t matter so much whether I earn the income by producing wealth. When I arrive at Walmart with cash in hand, no one ever asks me how I obtained it. Some people get money by producing, and some people get money otherwise, and Walmart doesn’t care. That’s just a fact.

So what you are saying, is that you can take your personal, factual experience, and extrapolate that to work as a general principle for everyone?

Basically, you are saying that producing things to earn an income is irrelevant. Therefore, if nobody produced anything, and we all just had piles and piles of green paper, then everything would be great. Of course that is complete nonsense. Producing actual things IS immensely important. It DOES matter whether or not you have actually produced anything to earn your money. If it didn’t, nobody would produce anything, and we would have no food. Yes, some people can get by living at the expense of others. You can simply steal from me instead of producing and contributing. I don’t deny that. But to say that it is irrelevant, or that it is better to have a smaller pool of goods and services than a larger one, is a bizarre claim.

“I’m telling you how life really is, not how I think it should be….. I must describe the world I see, not the world I imagine.”

Do you not find an incredible amount of hubris in the belief that in all the world’s complexity, the way you see it is the way it really is? You haven’t missed anything? The massive complexity of an economy made up of billions of people interacting with each other every second of every day, and you have it all figured out?

Somehow I don’t find your claim that you see how life “really is” very persuasive or impressive. You are just another flawed human being like the rest of us, trying to make sense of an immense amount of complexity that your brain cannot possibly encapsulate, with your biases, preferences, and ideology along the way.

Martin Brock October 24, 2011 at 8:36 pm

So what you are saying, is that you can take your personal, factual experience, and extrapolate that to work as a general principle for everyone?

No, I take my personal, factual experience and describe it. I have few general principles useful to everyone.

Basically, you are saying that producing things to earn an income is irrelevant.

I never say that producing things to earn an income is generally irrelevant. I say it’s irrelevant when it comes to spending the income at Walmart, because it is as a matter of fact. A cashier at Walmart could ask me how I got the money. He could ask me if I obtained it through the market or through state employment or a Social Security check or a Treasury note or by robbing you in a dark alley. He just doesn’t ask as a matter of fact.

Therefore, if nobody produced anything, and we all just had piles and piles of green paper, then everything would be great. Of course that is complete nonsense.

Of course, it is. You’re constructing a straw man. Straw men always argue nonsensically.

Do you not find an incredible amount of hubris in the belief that in all the world’s complexity, the way you see it is the way it really is?

No. I measure “reality” by my observations, not by my theories. I need theories to organize my observations, but the observations are real, not the theories.

I also have ideals, but I don’t confuse my ideals with reality either. I wish to observe a reality more consistent with my ideals, but I will not deny the reality I observe.

You haven’t missed anything? The massive complexity of an economy made up of billions of people interacting with each other every second of every day, and you have it all figured out?

I’ve missed practically everything, precisely because the world is massively complex and remote, but my theory of reality incorporates an economy made up of billions of people interacting with each other every second of every day. That’s why I prefer decentralized, market authority to centralized state authority, ideally. I don’t observe this decentralized authority as much as I idealize it.

Somehow I don’t find your claim that you see how life “really is” very persuasive or impressive.

Well, I see what I see whether or not I persuade or impress you.

Miles Stevenson October 24, 2011 at 11:37 pm

Marting:

“I never say that producing things to earn an income is generally irrelevant. I say it’s irrelevant when it comes to spending the income at Walmart, because it is as a matter of fact.”

I’m having a hard time understanding your position. Does this mean that you agree with me that, as a general principal, it does matter very much whether or not money/income was obtained via productive activity?

If you do not agree with that statement, I don’t see how I was making a straw man argument. If you do agree with that statement, I don’t understand why you seemed to have a problem with it when I made the same claim earlier.

My earlier claim was that regardless of your semantic definition of income, Thomas Sowell was pointing out the importance of achieving your inflow of money through productive means as opposed to redistribution. You seemed to have a problem with this claim. But if you agree that as a general principle, it is important that income be achieved productively, I don’t understand what your problem is.

Can you please explain?

Martin Brock October 25, 2011 at 9:19 am

I’m having a hard time understanding your position.

That happens a lot, so it’s not just you.

Does this mean that you agree with me that, as a general principal, it does matter very much whether or not money/income was obtained via productive activity?

Yes, I agree. It matters a lot. It doesn’t matter when I arrive with cash in hand at Walmart, but it matters a lot otherwise.

If you do not agree with that statement, I don’t see how I was making a straw man argument.

You write, “… if nobody produced anything, and we all just had piles and piles of green paper, then everything would be great.” I never assert or imply such a thing. A “straw man” argument is one that you attribute to me only then to knock it down. I oppose fiat money. I also oppose a gold or silver standard, because I prefer other standards. My position is sometimes unconventional. Understanding me in detail takes time. I’m an old man, and my thinking has evolved far from some established conventions.

If you do agree with that statement, I don’t understand why you seemed to have a problem with it when I made the same claim earlier.

Apparently, you misunderstood me earlier.

My earlier claim was that regardless of your semantic definition of income, Thomas Sowell was pointing out the importance of achieving your inflow of money through productive means as opposed to redistribution.
My usage of “income” is common. Sowell’s is not. I was a state employee for years, and I routinely referred to my paycheck as “income”, even though no market ever blessed it. I’ve done my penance for the state employment, but I continue to use the word “income” this way, because most people around me use the word similarly. Words are conventions and that’s all they are. “Income” doesn’t imply productivity just because Thomas Sowell wishes that it did. I also wish that “income” implied more productivity and less entitlement, but words don’t mean what I wish them to mean either.

Greg Webb October 24, 2011 at 12:15 pm

A good quote! It is no one else’s business what they make. People who concern themselves with other people’s income do so because of jealousy and envy. But, they would probably make more themselves if they spent that time productively in figuring out other ways to serve the needs and wants of consumers.

Economic Freedom October 24, 2011 at 1:35 pm

There is no need for rich people. Milton Friedman knew this, but he wanted to have lots of money, so he pimped for the capitalist system. People are motivated to go to work to feed their family and themselves; they don’t need more of an incentive thatn that.

Jon October 24, 2011 at 1:39 pm

In some cases, this is true. But we also have other desires. Some of us like cars. Some of us like iPhones. Some of us like music. Some of us like big houses. Some of us like big yards. Some of us like fancy foods. So, yes, there is the incentive for our basic needs (food, shelter, clothing, etc.), there is also our wants. As well as our standard of living.

I’m a tad confused as to what you mean by “there is no need for rich people” though. Will you please elaborate?

Economic Freedom October 24, 2011 at 1:51 pm

There are lots of poor people who mistakenly, ignorantly think they are rich because they can pay their rent, and buy a few toys. But, they work. You just don’t know what rich is. I live in Beverly Hills, so I have an idea. Just write a 1 followed by lots of zeros. Don’t use short hand like 10^9 or 1 billion dollars. Write the number out: $1,000,000,000. Now, write a list of all the things that you want to buy- food, big houses, toys, cars, whatever. Let me know when you are satisfied. Soon you will see that possessing 1,000,000,000 dollars is sick. If you don’t see it, then you are the sickest one of all.

Jon October 24, 2011 at 2:03 pm

I still don’t understand by what you mean when you say there is no need for rich people. I’m just not sure what you mean. Are you saying they serve no purpose? That they simply should not exist?

kyle8 October 24, 2011 at 7:57 pm

What he means is that he has a flunky job somewhere in Beverly Hills, and he can’t get any producers to read his screenplay, and he feels that he is just soooooo much smarter than those rich people he has to cater to! It’s just not fair!

Envy, hatred, and class warfare disguised as sympathy for the poor. Rarely is it as obvious as with this guy. “The douche is strong in this one!”

Economic Freedom October 24, 2011 at 11:58 pm

Well, I’m far smarter than a nasty troll like you who lives to pimp for the rich. They won’t throw you a plumb nickel. They know that you’d prostitute yourself for free. Typical Teabagger who loves getting the shaft! Need some lube? Sorry, lube ain’t free. It’s gonna cost you.

Greg Webb October 24, 2011 at 2:13 pm

EF, I agree that real wealth means that you do not have to work to make your living. And, most people would be quite content with something less than the $1 billion that you mentioned. Others may like traveling and living a high life style, or building companies, or investing, etc. It is enviousness that causes anyone to covet what someone else has earned or been bequeathed. And, enviousness is a sickness.

Jon October 24, 2011 at 2:19 pm

There’s a difference between wealth and riches. I’d be willing to argue that, with my guitar, small apartment in NH, and gecko, I am wealthier than Bill Gates. But I sure as Hell ain’t richer than he.

I’ve no issue with begrudging some ultra-rich people like Paris Hilton or Lindsay Lohan who are just spoiled. But you get people like that in poor neighborhoods, too. I object to punishing people who use their riches to better society.

House of Cards October 24, 2011 at 9:39 pm

I can’t read what you wrote, because it is repetitive, Revolutionary Communist Party USA nonsense,regurgitated by Lisa Fithian and Debra Sweet from the last demonstration. I’d consider sending you money to get you to stop trolling and spewing left-wing inanities on this classical-liberal blog. Please tell me how much you’d want and where to send the check.

Greg Webb October 24, 2011 at 1:54 pm

EF, LOL! Milton Friedman was an excellent economist and a good, honest man. Defaming Milton Friedman says a lot about who you are.

Many really productive people, if limited by what they can make, would not do all that they do or take the risks that they do. Other societies that limited what the productive can make include North Korea and the Soviet Union. They are not nice places to live (or were for the Soviet Union), but you will be able to live in a society that espouses income and wealth equality, except for the political elite who will be living in opulence.

Economic Freedom October 24, 2011 at 2:00 pm

Milton Friedman was evil personified. I’m glad he is dead just like I’m glad Gadhafi is dead.

Greg Webb October 24, 2011 at 2:14 pm

And, that reveals your emotional illness…

Anotherphil October 24, 2011 at 3:35 pm

Sounds a lot like Muirbot’s “civil society”. I love it when the leftist trolls indulge anoesis and it reveals their misanthropy.

txslr October 24, 2011 at 3:22 pm

There may or may not be any need for the rich, but there certainly is no need for poor people. The create no value and they are causing an increasing disparity in wealth levels. We need to put pressure on them to get rich.

Economic Freedom October 24, 2011 at 4:28 pm

Poor people create no value? You certainly produce no value wasting your time trolling here.

House of Cards October 24, 2011 at 9:47 pm

Poor people create no value?

Of course they create value! But only when they’re on welfare. The more they get from the public dole, and the longer they’re on it, the more value they create.

The value they create is in the warm, sincere feelings of togetherness they cultivate in those of us who must work and pay and work and pay and work and pay and work and pay, as well as the feeling that one mustn’t complain about it. That might hurt someone’s sensitive dignitas.

Ken Royall October 24, 2011 at 4:43 pm

“People are motivated to go to work to feed their family and themselves; they don’t need more of an incentive than that.”

Wrong. Clearly people are motivated by things that go beyond their immediate needs. Otherwise, Bill Gates would have retired after making his first million or 2 because he would have been set for life.

Maslow’s Pyramid comes to mind. Gates and others had dreams of changing the world and enabling people to do things they never could before. Doing that usually requires great wealth. You invest your own wealth and the wealth of others to build an enterprise capable of bringing those dreams to reality.

These entrepreneurs and investors are well beyond worrying about their next meal at that point, they become obsessed with making their vision happen and will work tirelessly for it. You don’t understand human nature or the greatness of the free market one bit.

With your mentality mankind would still be in chains.

House of Cards October 24, 2011 at 9:40 pm

I can’t read what you wrote, because it is repetitive, Revolutionary Communist Party USA nonsense, pre-approved by Lisa Fithian and Debra Sweet. I might consider sending you money to get you to stop trolling and spewing left-wing inanities on this classical-liberal blog. Please tell me how much you might want and where to send the check.

Economic Freedom October 24, 2011 at 1:44 pm

“(personally, I feel as though I owe them a really big check).”

Anyone who writes nonsense like this shouldn’t have their book published. And, if his book is published all proceeds should go to founders of Google. What a bunch of tripe!

Jon October 24, 2011 at 1:46 pm

The point he was making was the value he gets from the use of Google far exceeds the costs (Google is free, after all). If we are going to talk about who owes whom what, it bares to keep in mind that our own profits are derived from others inventions. That’s all he’s saying.

Economic Freedom October 24, 2011 at 1:55 pm

What do you get for free? You are mistaken.

Jon October 24, 2011 at 1:59 pm

I am not charged when I use the search engine. Gmail basic is a free service. The translator is decent (not fantastic, but gets the job done). Sure, I have to look at advertisements and sponsored links, but that’s a small price to pay.

Economic Freedom October 24, 2011 at 2:05 pm

I turned off my TV partly because I refused to watch the commercials. You should treasure your time and your health. Excess money won’t help you. People who constantly count their money whether poor or rich are wasting their time. Accountants and others are hired to do that for you. Google doesn’t charge, yet they are making money hand over fist. That doesn’t compute. Please explain.

Jon October 24, 2011 at 2:12 pm

I agree wholeheartedly with that. Life is more than just money. There’s beauty that cannot be obtained with money: a sunset over the Presidential Range, a lone guitar singing in the cool autumn night. A nice evening with family and friends. Money does not equal happiness.

As far as Google, I believe they make most of their money off advertisements (fact check needed). Since they have high traffic, advertisers are willing to pay good money to advertise on Google and it’s partner sites. Shareholders are willing to pay into the company to get a share of that action. I think they also have a few subscription services, but someone would have to check me on that. Admittedly, tech companies aren’t my specialty.

Observer October 24, 2011 at 2:35 pm

EF, turn the TV back on! It is a better use for your time than enviously dwelling on what others have.

House of Cards October 24, 2011 at 7:37 pm

I turned off my TV partly because I refused to watch the commercials.

I like the commercials. They’re more entertaining than the regular programs, most of which are leftwing and anticapitalist. The only time I shut the TV off is when tax-payer funded public television happens to be on. Then I’m offended that someone I don’t know in Washington, DC forces me to pay for something I don’t want to watch.

You should treasure your time and your health.

You should mind your own business.

Excess money won’t help you.

Only a commie could conceive of an idiotic category such as excess money; i.e., money that’s “taking up too much room” in one’s wallet and that no one has any use for.

People who constantly count their money whether poor or rich are wasting their time.

Does that apply to government officials who count other people’s money in the form of tax revenues?

Accountants and others are hired to do that for you.

Love how you put that in the passive voice: “accountants are hired . . .” Really? By whom are they hired? Accountants cost money! Someone first has to count his own money to see if he has enough to hire one.

Google doesn’t charge, yet they are making money hand over fist. That doesn’t compute. Please explain.

Yes, Google does charge. Google is basically an advertising agency using the traditional television model for revenue: it charges for advertising, but instead of broadcasting free entertainment programs, it webcasts free user content.

If you don’t understand, read a book on the subject. NYPA!

Economic Freedom October 24, 2011 at 7:56 pm

I can’t read what you write, because it is repetitive, Teabagger nonsense. I’d send you money to get you stop trolling and spewing right-wing inanities on this liberal blog. Please tell me how much you want and where to sent the check.

House of Cards October 24, 2011 at 9:37 pm

I can’t read what you wrote, because it is repetitive, Revolutionary Communist Party USA nonsense, pre-approved by Lisa Fithian and Debra Sweet. I’d consider sending you money to get you to stop trolling and spewing left-wing inanities on this classical-liberal blog. Please tell me how much you’d want and where to send the check.

kyle8 October 24, 2011 at 1:50 pm

This really always comes down to a fundamentally moral argument, not merely an argument about utility. (although in this case they coincide)

The basic argument for liberty is that you own your own self, and you own the fruit of your own labor, anything else is a form of slavery.

Now, in as far that taxes must be paid, then taking taxes from the wealthy is not necessarily a violation of this basic liberty. Even the idea of progressive taxation is not a violation if you accept that wealthy people gain more from the benefits of a free society.

But OPPRESSIVE taxation is a violation. Now we argue about what constitutes oppressive levels of taxation. My own view is twofold, if your motivation for a tax is not to pay the bills, but to equalize outcomes, then that is oppressive by definition because it is punitive.

Secondly, if the increase in taxes lowers the growth rate of the economy then it is draconian.

And the final argument is that if it is political impossible to raise taxes, then using regulation to harm certain groups of people is just another unjustifiable attack on human freedom.

And just so that I am not accused of circular reasoning, I will place an upper limit on what I think is a justifiable rate of taxation of income (if you must have a tax on income) It is right about 21 or 22 %. I reason this by the graph which Don posted a few months ago that showed the total take from the government remained steady at around that percentage even when rates rose and fell. That seems to me to be the natural rate of taxation. Higher rates lead to lower growth and are as such indefensible.

Economic Freedom October 24, 2011 at 2:08 pm

I can’t read what you write, because it is repetitive Teabagger nonsense. I’d send you money to get you stop trolling this blog. Please tell me how much you want and where to sent the check.

Greg Webb October 24, 2011 at 2:15 pm

So says the mentally ill…

Jon October 24, 2011 at 2:21 pm

As an aside, I wonder if the Tea Party understood the context of the word “teabag” before they used it.

Ken October 24, 2011 at 2:32 pm

The Tea Party looked back to the Boston Tea Party. I don’t hold them responsible for the subsequent debasement of the culture; he who picks up that cudgel (“teabagger”) reveasl the content of his character in a way that is plain for all to see.

Observer October 24, 2011 at 2:34 pm

Non-statists understand the historical meaning of the term “Tea Party.” Statists understand the sexually deviant use of the term “teabag.” And, that says all you really need to know about both groups.

Jon October 24, 2011 at 2:39 pm

All I am saying is before you go on national TV labeling yourself, ask a teenager what the term means.

txslr October 24, 2011 at 3:19 pm

Of course you do understand that the Tea Party did not use that expression, right? It was coined by their critics.

Jon October 24, 2011 at 3:23 pm

No I know. Just, being a college student at the time, I was kind of dumbstruck when they were on TV going “yeah, we’re teabaggers.”

Greg Webb October 24, 2011 at 10:52 pm

Ask a teenager? LOL!

Anotherphil October 24, 2011 at 3:38 pm

Not everybody is stuck in an peurile developmental stage.

PrometheeFeu October 24, 2011 at 3:34 pm

I will happily take you up on that. For every $1000 you send me, I will not write another comment on this blog for a month. I’ll take PayPal as a payment system.

Methinks1776 October 24, 2011 at 6:52 pm

Please tell me how much you want and where to sent the check.

Don’t do it, EF. Those ladies aren’t going to be drawn to an impoverished Casanova.

PrometheeFeu October 24, 2011 at 7:47 pm

Don’t discourage him! I want an extra $1k a month!

Methinks1776 October 24, 2011 at 7:52 pm

Hey, at least it’s a voluntary transfer! :)

kyle8 October 24, 2011 at 7:51 pm

Doesn’t really matter you can’t understand any economics anyway.

House of Cards October 24, 2011 at 9:38 pm

I can’t read what you wrote, because it is repetitive, Revolutionary Communist Party USA nonsense, pre-approved by Lisa Fithian and Debra Sweet. I’d consider sending you money to get you to stop trolling and spewing left-wing inanities on this classical-liberal blog. Please tell me how much you’d want and where to send the check.

House_of_Cards October 25, 2011 at 12:12 am

There are no redneck, Cajun, teabagger trolls on the list of highest paid CEO’s. I wonder why that is? You get the shaft! Lube?

http://247wallst.com/2011/10/20/america%E2%80%99s-most-overpaid-ceos/2/

House of Cards October 25, 2011 at 8:36 pm

I can’t read what you wrote, because it is trite, repetitive, Revolutionary Communist Party USA nonsense, pre-approved by Lisa Fithian and Debra Sweet. I’d consider sending you money to get you to stop trolling and spewing left-wing inanities on this classical-liberal blog. Please tell me how much you’d want and where to send the check.

House_of_Cards October 25, 2011 at 8:37 pm

I can’t read what you wrote, because it is trite, silly, repetitive, Revolutionary Communist Party USA nonsense, pre-approved by Lisa Fithian and Debra Sweet. I’d consider sending you money to get you to stop trolling and spewing left-wing inanities on this classical-liberal blog. Please tell me how much you’d want and where to send the check.

Ken October 24, 2011 at 2:33 pm

My apologies: “reveals”

EG October 24, 2011 at 2:46 pm

Yeah, but…when is Sergey Brin gonna pay my tuition?

muirgeo October 24, 2011 at 4:33 pm

Stop using truly productive entrpreneurs like the one’s my home state of California’s Silicon Valley produces on a regular basis with the Thieves from banking and finance who use their access and government insurance to steal from the productive economy. There are trillions of unearned dollars that have nothing to do with value or real production.

Don’t confuse criminal wealth with productive wealth.

Ken October 24, 2011 at 4:46 pm

Because as we all know, California doesn’t have a financial or mortgage sector that fed off government subsidies, amaright? Nor is California sinking under the weight of the blue model for government, amaright?

Regards,
Ken

Anotherphil October 24, 2011 at 5:03 pm

Don’t confuse criminal wealth with productive wealth.

Something tels me you are projecting again.

So what is it that keeps you in diapers and ISP charges?

Jon October 24, 2011 at 5:11 pm

Well, the financial sector still does play a role. I mean, many of the Silicon Valley start-ups got the capital from somewhere. I doubt many were rich enough to begin with to start a company.

PrometheeFeu October 24, 2011 at 7:48 pm

Venture Capital firms don’t tend to get bailed out when they fail. Just sayin…

Methinks1776 October 25, 2011 at 8:55 pm

Neither do hedge funds or thousands of other small investment and trading companies. Yet, they are routinely maligned along with “Wall Street”.

Also, these tech firms employ the services of both regular banks (they need to write checks to pay their bills and they are rarely without some bank financing) and investment banks (hello, IPOs!). So, they are as independent of banks as they are of programmers and design engineers.

Although, I believe Google IPO’d itself in a dutch auction, to the dismay of fuming investment banks. Although, they probably would have gotten a better price for the IPO had they employed the I-banks, it was their choice and I really enjoyed the outrage at the snub.

kyle8 October 24, 2011 at 7:52 pm

Last one out of Silicon valley turn out the light.

Nikolai Luzhin, Eastern Promises October 24, 2011 at 9:18 pm

MALMO, Sweden — Denmark is to introduce one of the world’s first-ever “fat taxes,” in a pioneering move to slim the country’s waistlines and combat heart disease.

From this Saturday, the price of a pack of butter will soar by 50 cents, a bag of potato chips by 12 cents, and a pound of ground beef by 20 cents, as the government levies the new tax of 2.50 euros per kilogram ($1.60 per pound) of saturated fat.

“There’s never been a tax on fats like this,” said Dr. Jorgen Dejgard Jensen at Copenhagen University, whose institute proposed the tax. “We will gain some very useful insights during the next year or two about whether it is changing consumption patterns, and also regarding the feasibility of implementing such a tax.”

Danish retailers have already started hoarding fatty foods ahead of the start date on Oct. 1. Mogens Nielsen, chairman of Dragsaek Group, one of the country’s largest margarine producers, reporting 500 metric tons in extra orders this month.

Read more: Hungary for a fat tax

Denmark already taxes at 66 cents per kilogram the sugar that goes into its famed cinnamon pastries. It even has a tax on ice cream at 15 cents a liter.

But if the new tax succeeds in cutting the amount of saturated fats Danes consume by one-tenth, as is hoped, other countries are certain to take notice, not least the United States, where more than one in three adults is clinically obese.

Mike Rayner, Director of Oxford University’s Health Promotion Research Group, argues more food taxes are inevitable. He has long campaigned for taxes on unhealthy foods in the U.K., which has Europe’s highest obesity rates.

“I think we’re going to have them in Britain, because the obesity crisis in the U.K. is such that we need to take more action.”

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