> We have become a rent-seeking society It just dawned on me while reading the article that this accurately describes the shift from licensed software to SaaS that has been happening in the past decade.
That's paying for a service, not rent-seeking.
America has a monopoly problem
71–80 of 199 posts
Re: America has a monopoly problem
#72Earlier quoted context omitted.
Yup. Amazon receiving 238 bids of localities falling over themselves to handover tax credits and other goodies is the example I've been thinking about recently. https://www.reuters.com/article/us-amazon-com-headquarters/a... How to fix it though?
The EU has a set of laws called State Aid, which disallows member states from subsidizing business to the detriment of their competitors (either other businesses or other states). Government can improve infrastructure, but cannot literally hand out cash to build a factory, or anything like that. This exists even though EU nation states have far more individual power than US states. https://en.wikipedia.org/wiki/State…
> Government can improve infrastructure, but cannot literally hand out cash to build a factory, or anything like that.
Yes, because such "subsidies" would create competition for companies from more developed EU countries, the same countries that drive the acceptance of new EU members. Removing these obstacles crushed local industry, which is why less developed countries ended up with close to zero industrial production after joining the EU (thus starting the social, employment and competitiveness problems most smaller EU nations are facing).
Nevertheless, EU nations keep subsidizing "selected" businesses, especially for big foreign companies outsourcing their operations, using tax benefits.
Re: America has a monopoly problem
#73Earlier quoted context omitted.
You’re not mentioning the outsize influence that corporations have on government which leads to them permitting these loopholes. It can be fixed by legislation. In 1952 corporate tax in the US was 33% of total revenue. Today it’s less than 9%.
Corporate taxes abroad were also often higher than the US rate at the time. Now they are much lower. If you sell X in, say, the UK -- as a company you often have the option: book the profit in the UK, or in the US. There's not much laws can do to change that, that is just the way having the flexibility to structure your business in whatever way you prefer works. If you were to reduce the US corporate tax rate to 10%,…
>If you were to reduce the US corporate tax rate to 10%, a lot more profit would be booked in the US again.
Until other countries lower theirs, then it's just a race to the bottom, no?
Re: America has a monopoly problem
#74Earlier quoted context omitted.
so if if someone takes performance enhancing drugs that has not yet been discovered isn't cheating, they are being innovative. treat it like the olympics. if an athlete that takes a performance enhancing drug that has yet to be prohibited, they still loose their medals and cannot compete.
Except this game isn't governed by just one body. It's a global economy, so even if your own country "strips your medals", you just move to the country that won't do that.
>you just move to the country that won't do that.
The US leverage is limiting access to US markets for companies that do that.
Re: America has a monopoly problem
#75Earlier quoted context omitted.
Corporate taxes abroad were also often higher than the US rate at the time. Now they are much lower. If you sell X in, say, the UK -- as a company you often have the option: book the profit in the UK, or in the US. There's not much laws can do to change that, that is just the way having the flexibility to structure your business in whatever way you prefer works. If you were to reduce the US corporate tax rate to 10%,…
>If you were to reduce the US corporate tax rate to 10%, a lot more profit would be booked in the US again. Until other countries lower theirs, then it's just a race to the bottom, no?
It's always a race to the bottom. Smaller countries (e.g. Ireland, Luxembourg, Malta, Cyprus) need a less broader tax base to cover their outgoings and thus will always be able to offer a low tax base. As a (larger) country, you can decide not to participate, but you'd be pricing yourself out of the market.
Imo, it's smarter to tax shareholders more, and corporations less. Corporations are generally productive and having the statutory seat of a multinational company in your country leads to an increase of tax revenue, because 1) people will have jobs, 2) those people will pay income tax, sales tax, will spend at (mainly local) businesses whose shareholders will be taxed, etc.
Dividend and capital gain taxes are generally also harder to avoid for the wealthy. At best you can defer them, so you'll always have to pay some tax if you want to spend $1-2-5m a year. Corporate taxes and income taxes are (very) easy to avoid.
I wonder how much it would cost to completely eliminate corporate taxes but increase dividend and capital gain taxes to say, 35-40%. Now, that said, I don't think this will ever happen. People in power love their tax breaks too much.
Re: America has a monopoly problem
#76Earlier quoted context omitted.
I think it goes a step deeper. Imho the issue starts with the fundamental distrust of government. Lacking the ability to see government as a valid leader, Americans turn to corporations and billionaires. They really do believe that Apple and Dow chemical can do a better job leading the country than any elected politician. They are not worried about the monopolies. They should be, any economist would agree that monopo…
This thread is confusing State granted monopoly with Market granted monopoly. Economists usually talks about the former.
> This thread is confusing State granted monopoly with Market granted monopoly. Economists usually talks about the former.
Can you really tease those apart in our mixed economy? Look at ISP monopolies, or the bizarre state of the "deregulated" electricity market and what remains of the long-distance telephone market. Or take pharma, where tremendous resources are needed to comply with regulation. Or the -- tremendous scare quotes required -- "marketplace" for health care. In a mixed economy, monopoly exists because of state and market.
Re: America has a monopoly problem
#77Earlier quoted context omitted.
I mean, in the narrow sense he's of course right -- if you're a business owner or investor the logical thing to do is to aim to create a monopoly. Where I depart is the claim that this is also good for society as a whole.
I agree - didn't feel it was worth mentioning considering the original and the criticism I linked to :) I like drawing parallels between economics and ecology... monopolies are farms, massive artificial monocultures that suppress natural competition and extract value for the profit of a few. They embody a cycle of growth and stagnation. A healthy economy is more like a jungle, innumerable smaller competitors with div…
>A healthy economy is more like a jungle, innumerable smaller competitors ... that leads to fascinating innovation.
I think you missed PT's point. The word "monopoly" has overshadowed his message. He wants people to pursue "blue ocean"[1] ideas to be innovative.
Instead of starting a company that makes another generic clone of aspirin, you pursue a drug that cures breast cancer. Or instead of building a business that broadcasts 150 characters (hey we offer you +10 more characters than Twitter), do something more innovative for society like building cheap flying cars.
I'd venture to guess that 99% actually agree with PT's underlying idea (innovation) but the distasteful word "monopoly" has completely drowned out the message. The term "blue ocean" is the same concept -- it just doesn't rile people up as much.
Re: America has a monopoly problem
#78Earlier quoted context omitted.
You’re not mentioning the outsize influence that corporations have on government which leads to them permitting these loopholes. It can be fixed by legislation. In 1952 corporate tax in the US was 33% of total revenue. Today it’s less than 9%.
Corporate taxes abroad were also often higher than the US rate at the time. Now they are much lower. If you sell X in, say, the UK -- as a company you often have the option: book the profit in the UK, or in the US. There's not much laws can do to change that, that is just the way having the flexibility to structure your business in whatever way you prefer works. If you were to reduce the US corporate tax rate to 10%,…
That’s all true, however corporations exist at the behest of the government. They could make laws against that, against taking money outside. For an extreme example, South Korea had the death penalty for capital flight. Quite extreme, I’m not advocating it but it did work.
Furthermore most major corporations have had government involvement to attain their status, whether in the forum of subsidy, bailout or military procurement. Unfortunately most people aren’t aware of this “corporate welfare”.
Basically corporations which are unaccountable concentrations of public power, should not be allowed to dictate to the government, which is at least in theory accountable to the public. Unfortunately the trend has been in the opposite direction.
Re: America has a monopoly problem
#79This is brilliant. I recently wrote in to my senator about net neutrality. His reply was a breathtakingly convoluted justification of not regulating companies like Comcast because antitrust laws would take care of it. I've never felt so insulted.
You felt insulted because he has a different opinion to you? Or did he write something insulting in his reply?
Re: America has a monopoly problem
#80America has a corruption problem. The ability for companies to vertically integrate and essentially make smaller businesses non-competitive can only occur when you don't have to pay the taxes your smaller competitors have to pay and don't have to obey the same laws your competitors have to obey. We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everyt…
I think it goes a step deeper. Imho the issue starts with the fundamental distrust of government. Lacking the ability to see government as a valid leader, Americans turn to corporations and billionaires. They really do believe that Apple and Dow chemical can do a better job leading the country than any elected politician. They are not worried about the monopolies. They should be, any economist would agree that monopo…
As an American who speaks to a lot of other Americans, this is definitely not the mentality that I'm seeing around me. Most people I know are becoming cynical about growing corporate control of our government and increasing income inequality. Pretty much everyone I know is worried about the monopolies.