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Crony capitalism may be cannibalizing productive capitalism in the U.S.

bloomberg.com

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Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#241

Post by specialist »

sfifs wrote: post #53
pm90 wrote: post #45

Earlier quoted context omitted.

And yet, people swear by them as though they have the same validity as physics. I never really understood that mentality.

That's because they're what people _believe_ - their politics - an act of faith not dissimilar from religion. The set of econ axioms people espouse demonstrates their own world view - what they stand for. In a previous age, these would be moral principles and social norms - now it's political beliefs.

Beliefs ~= identity. Cite "Democracy for Realists".

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#242

Post by marcosdumay »

mrchucklepants wrote: post #149
marcosdumay wrote: post #119

Earlier quoted context omitted.

It's useful to stop and ask yourself what exactly do central banks do that is so harmful. The US situation of those bailouts and "too big to fail" is certainly problematic, but most people pushing that line are really against fractional reserves, but those don't really seem to have the effects people attribute to them. (And if they do have that effect, it's the central bank that sets their fraction, so it's entirely…

Most of the damage the Fed causes is due to artificial manipulation of interest rates, disrupting the time coordinating function they would serve when driven by natural market forces. This time discoordination is the source of the boom-bust cycle.

The Fed doesn't have the power of setting any useful interest rate, and even the one they do set they seem to follow the market instead of setting it. (What seems to repeat on every country, because the market has more money than the central bank, and the later must avoid bankruptcy.)

Central banks do have the power of controlling the amount of money in circulation on most countries, what does indirectly impact important interest rates. But the US is an exception here, as the Fed decided long ago to let fractional reserves run as low as the banks are deciding the fractions on practice, thus abiding from any control.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#243

Post by refurb »

baursak wrote: post #232
refurb wrote: post #231

Earlier quoted context omitted.

It was a fraction of what it is today before WW2. I don't see any trend downward over time. https://fred.stlouisfed.org/series/FYFRGDA188S Let's see your data?

Your own link disproves your claim that it's now higher than ever before. It was much higher than now up until Reagan neoliberal era that we're still in now.

See the left part of the graph? In the 1940's? It's lower than now and pretty dam close to the peak.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#244

Post by opo »

harryh wrote: post #191
Retric wrote: post #187

Earlier quoted context omitted.

2) He was not talking about total recites. And the top tax rates are a very different story: https://www.cch.com/WBOT2013/029IncomeTaxRates.asp PS: IMO, a ~1 to 2% AMT on all wealth per year would be incredibly beneficial. But, there is currently about zero chances of that ever happening.

My understanding is that those top marginal rates didn't matter as much as you might think because they mostly shifted forms of compensation. The data we'd really want to investigate this question is what % of taxes were paid by various income groups (top .1%, 1%, 5%, 10%) over time. See how much that share has changed with various policy changes. I can't seem to find a relevant graph on fred.stlouisfed.org though. :…

ntu.org has some recent data. In general, federal income tax has gotten more progressive since the 50s. For example, the top 10% paid 49% of taxes in 1980 and paid 70% in 2014. http://www.ntu.org/foundation/page/who-pays-income-taxes

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#245

Post by jb613 »

digi_owl wrote: post #105
a3n wrote: post #90

> Sometimes the government allows companies to get a certain amount of rent -- for example, the royalties from patents, which we protect in an attempt to encourage innovation. This is the classic, maybe the reason given to justify patents. The implication being that no one would bother innovating if patents didn't grant them rent for a time. But I wonder if the reality is merely that different people, and different k…

The problem is not the concept, but the current application. And that is not even a construct of the law as written, but the courts application of said law. Patents started out as a 20 year protection on mechanical mechanisms or chemical processes as long as what was protected was publicly documented in full. Thus once the patent had run out, anyone could replicate it from the patent document. But then the chemical p…

> Patents started out as a 20 year protection on mechanical mechanisms or chemical processes as long as what was protected was publicly documented in full.

1) Patents are not an American invention. England had them before, and the Romans before that.

2) I'll assume you implied U.S. patents. The Founders regarded patents so highly that they wrote them into the U.S. Constitution. It was written generically and not limited or fixed to only "mechanical or chemical" but rather "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries".

> Thing is though that 20 years is a very long time when we are talking software. By the time the RSA patent ran out, the algorithm described was largely obsolete.

RSA patent expired nearly 20 years ago yet RSA is still used today. For example, the public key used to secure https://news.ycombinator.com is RSA.

> Not that patents have not been a problem even before computers. Serious refinements of the steam engine for example didn't happen until after the initial patent ran out. > > Similarly Smith and Weston sat on their refinements for the Colt revolver until the patent ran out.

The myth is that patents block innovation. The reality is that blocking someone from doing something incentives them to find another way to do it. Afterall, if all you want to do is copy then how is that "blocking innovation"?

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#246

Post by Spooky23 »

harryh wrote: post #202
dv_dt wrote: post #180

Earlier quoted context omitted.

Tax receipts are largely on income flows, but capital (wealth) itself is much more imbalanced than even the gilded age. Economic inequality has collected a huge amount of capital into very few hands that ultimately don't seem to know how to apply it productively over the whole system.

While wealth is more concentrated in the US, access to capital is probably at an all time high. Interest rates on loans are tiny and equity markets have never been deeper.

That's not really true at all. Many companies, especially medium sized businesses are starved for capital as banks are consolidated and are largely out of many types of lending.

I had a friend who ran a successful manufacturing company who was forced to shut down production... not because of competition or cost but because of the inability to get working capital. As the regional banks in our region got swallowed up, the local bankers who understood cyclical businesses went away.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#247

Post by Spooky23 »

harryh wrote: post #212
dv_dt wrote: post #208

Earlier quoted context omitted.

And why isn't productivity increasing if capital required to develop enhancements is available? And a related question if capital and access to it is at an all time high, then why do we have stagnant economic growth?

That is definitely one of the big mysteries of the modern era. Personally I subscribe to the hypothesis that we're just running out of low-hanging fruit. As humans developed better knowledge of biology, chemistry & physics there were a whole host of relatively easy to invent items from the steam engine, to antibiotics to air travel to the transistor and modern electronics. These were world changing. But now we're mos…

My guess is that we're turning everything into little services and few people understand the big picture.

By squeezing pennies out of lots of things, we miss the dollars that could make positive change.

Look at corporate IT as The gold standard of fail. We design complex systems to allow them to be sourced out (is ITIL/ITSM), and then are surprised when we have built a monstrosity that doesn't really work.

You see this type of thinking everywhere. I had an ancient popcorn popper called the "Whirly Pop" that I got in the 90s, which was basically an aluminum pan with a wood handle and metal gear for swirling popcorn on the stove. It recently broke and I bought a replacement -- a product inferior in every way with a plastic handle that will burn your hand, a plastic gear that will melt, and a metal pan and cover so thin that bent it while cleaning with a sponge.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#248

Post by candiodari »

dv_dt wrote: post #228
harryh wrote: post #212

Earlier quoted context omitted.

That is definitely one of the big mysteries of the modern era. Personally I subscribe to the hypothesis that we're just running out of low-hanging fruit. As humans developed better knowledge of biology, chemistry & physics there were a whole host of relatively easy to invent items from the steam engine, to antibiotics to air travel to the transistor and modern electronics. These were world changing. But now we're mos…

Agreed, it's quite believable that the threshold of capital required to develop a given improvement is increasing. That's one reason that individual entrepreneurs are likely making fewer impacts on starting of new companies. Well that and there is a double whammy of labor being paid less of a margin of productivity so individuals and even small businesses are more squeezed of their own capital accumulation. In other…

The simple alternative explanation is that we're not supply-limited ... we're demand-limited. (Note that demand is what you want AND are willing to pay for, by it's economic definition)

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#249

Post by baursak »

refurb wrote: post #243
baursak wrote: post #232

Earlier quoted context omitted.

Your own link disproves your claim that it's now higher than ever before. It was much higher than now up until Reagan neoliberal era that we're still in now.

See the left part of the graph? In the 1940's? It's lower than now and pretty dam close to the peak.

Post WW2 the US took over from the UK as the world's empire and a muscle man. That has significant additional costs. If you're arguing that we should cut military spending by 90% to decrease the tax burden, I'm in agreement.
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