You can think of corporate taxation as a sort of long chess match: The government makes a move. Corporations move in response — sometimes literally, to another country where the tax burden is less onerous. This upsets the government greatly, and the Barack Obama administration in particular. Treasury Secretary Jack Lew has written a letter to Congress, urging it to make it stop by passing rules that make it harder to execute these “inversions.” I’ve got a better idea: What if we made our tax system so attractive to corporations that they would have no interest in moving themselves abroad?
- Megan McArdle.
I have actually read the letter sent by Lew to Congress, and right rollicking laugh it is too. It talks about a new sort of “economic patriotism” (which prompts me to think of Samuel Johnson’s famous line of patriotism being the last refuge of the scoundrel). Lew does actually admit in his letter that it would be preferable to go for root and branch reform and reduction of corporation tax. The US has one of the highest corp. tax rates in the industrialised world – 40 per cent – while the average for OECD members is in the mid-20s, and in the case of some countries such as Ireland, in the low teens. As a result of this system, US corporations have, according to figures I recently heard from JP Morgan, north of $700 billion held outside the US. The likes of Apple, Google and Pfizer, among others. This system is crazy; it is a sort of corporate twin of the equally mad US system of worldwide tax in which anyone born in the US, even if they have never set foot in Jefferson’s Republic in adulthood, have to file an IRS return. The situation in that respect has got worse with the enactment of the FATCA Act, a truly terrible piece of legislation.
If the Republicans want to seriously act as a party that represents business and holders of equities – such as those with 401(k) plans, a big cut to corp tax makes sense. Firms will bring their money back home, either returning it to shareholders, or investing it in the US, etc. Sure, some vested interests that benefit from the current state of affairs will bleat, but screw them. (This is the sort of reform – practical, worthwhile and beneficial, that should be a basic proposal on the GOP table.)
Today is the anniversary of the fall of the Bastille. It is easy – way too easy, in fact – for a Brit to make some sort of snide comment about the bloody awfulness (literally) of the events of that time, the Revolution, the terrible example of, well, the Terror, and so on. But, but trying to rise above all that obvious “god those Frenchies made a right pig of their revolution” sort of line, I am going to ask readers the following: What were, in your view, the good things that flowed from the Revolution?
Even if checking every passenger exhaustively was the right way to thwart terror, why would any serious government issue a press release about it, informing the terrorists that you were on their case and keeping them up to speed on the things you’re looking for? They didn’t do that with Bletchley Park and the Enigma codes. Leaving aside the possibility that our leaders are just plain dim, we must assume their statements are a clever decoy. In that case, everything that we must endure at Stansted and Heathrow is pure ‘security theatre’. This would not be unusual. Much of what passes for ‘security’ and its kissing cousin ‘safety’ is little more than an elaborate show.
- Michael Hanlon. He has a book out with a co-author about safety issues, which looks interesting.
Economic progress tends to increase insofar as the savings result in a larger supply of capital goods, which serves to increase production, including the further production of capital goods. The rate of return on capital tends to fall because the larger expenditure for capital goods (and labor) shows up both as larger accumulations of capital and as an increase in the aggregate amount of costs of production in the economic system, which serves to reduce the aggregate amount of profit. Our problems today result largely from government policies that serve to hold down saving and the demand for capital goods. Among these policies are the corporate and progressive personal income taxes, the estate tax, chronic budget deficits, the social security system, and inflation of the money supply. To the extent that these policies can be reduced, the demand for and production and supply of capital goods will increase, thereby restoring economic progress, and the aggregate amount and average rate of profit will fall.
- Reisman is dealing with Piketty and his assertion that because returns on capital can outpace economic growth in general, that this is some sort of bad thing, to be stopped, banned and generally supressed. Perry Metzger of this blog has already done a lot to demonstrate the economically insane nature of Piketty’s analysis.
In summation, if you want to increase incomes, then an essential step is to stop attacking capitalists (not to be confused with crony capitalists tapping the public sector for privileges, etc).
Reisman has another devastating take-down on Piketty and his ideas on capital, at the Ludwig Von Mises blog. (Thanks to Paul Marks, frequent Samizdata commenter, for the pointer.)
Why then are tens of thousands of Latin Americans willingly flooding into a supposedly racist country where cutthroat capitalism ignores the poor and the oppressed such as themselves? In most past polls of Mexican citizens, two general themes often show up: the majority of Mexican nationals believe that the American Southwest still should belong to Mexico, and a sizable minority would like to leave Mexico for the U.S. You figure out the mentality.
- Victor Davis Hanson (H/T, Instapundit.)
Travelling to a country, then despising it, does not strike me as a way to win friends and influence people. I don’t know how widespread this issue is in the US – I’d be interested in comments from US-based readers about the situation on the southern border of the US.
“So why is it, then, that when it seems obvious that to understand finance you need to understand human behaviour, Finance World continues to insist that finance is `all about numbers’ and can be fully understood using mathematics? Partly, perhaps, because so many of them are mathematicians to start with and they find it difficult to see things other than within a numerical framework. Partly, perhaps also, because many have Type-A personalities and they find it difficult to deal with uncertainty. Yet surely also because so many are reluctant to admit that they may have been wasting their time all these years basing their work on the Markowitz worldview, just as so many unrepentant socialists found it difficult to admit they had been used as Stalin’s `useful idiots’ when the Soviet Union’ collapsed.”
- Guy Fraser-Sampson, The Pillars of Finance: The Misalignment Theory and Investment Practice, page 187. The book is about how, under the influence of mathematics specialists such as Markowitz, a lot of investment decisions got dangerously out of whack with reality, as we saw in 2008. Despite some pushback, a lot of the investment industry on which our pensions and savings depend are in thrall to risk and market ideas that are seriously mistaken. Throw in the joys of central bank fiat money and the rest, you have a problem. I should add that Fraser-Sampson, who is a professional investment figure as well as academic, is a big fan of the Austrian school (von Mises, etc). Even better, Douglas Adams, the 30 Year’s War and The Goon Show make an appearance. What more can one ask for in a book about finance?
I suppose some people who loathe rock festivals and want to pretend how much they enjoy playing the “working class hero” line might sympathise with Bruce Dickinson, who is the front-man for group Iron Maiden, in refusing to play at Glastonbury for it being “middle class”. (He was privately educated, which is ironic.) I normally really like Dickinson (if not his music, at all) due to his being a qualified pilot and having fairly pro-free market, no bullshit, views. And he cannot stand Coldplay and all that dreary stuff, so he must be a good egg overall. But something about all this makes me think, “Fcrissakes, can we just take class out of it and enjoy the music on its merits? Does it always have to have some frickin’ socio-economic agenda?”
Here is the item:
Bruce Dickinson, who attended the private Sharrow Vale boarding school in Sheffield, said the band had no interest in playing there. He said: “In the days when Glasto was an alternative festival it was quite interesting. “Now it’s the most bourgeois thing on the planet. Anywhere Gwyneth Paltrow [the actress] goes and you can live in an air-conditioned yurt is not for me.”
Dickinson, who is also a qualified commercial pilot, said he was glad he was instead playing at hard rock festival, Sonisphere, at Knebworth Park in Hertfordshire in July. “We’ll leave the middle classes to do Glastonbury and the rest of the great unwashed will decamp to Knebworth and drink lot of beer and have fun,” he said in an interview. Fellow heavy metal band Metallica are headliner’s at this year’s Glastonbury Festival, which starts next week and is attended by more 100,000 people. Tickets for the event, which sells out in minutes, are £210.
I can see his point about having a raving good time with cheap beer etc. Heck, I went to Le Mans last weekend to watch the 24-hour endurance motor race, which is the petrol-head equivalent of a rock festival with very, very fast cars blasting around a track in central France. There are lots of overweight middle-aged, lower-middle class guys (few women) who attend it, as well as the odd toff, group of rowdy youngsters and so on. I suspect even a few leftie-liberals go, in a guilty-pleasure sort of way. Think of Essex man and his European/North American versions all having a great time away from the other half and the kids. My wife stays at home with her friends and would not go there for love or money. And of course it is gloriously loud, vulgar, a hymn to non-PCness. But I don’t worry about the class backgrounds of those who go and would be a pretty sad individual if that sort of issue coloured my enjoyment. This weekend, I am in the Royal Enclosure at Ascot to watch the horses, and it doesn’t get more “upper class” in a cliched way than that.
Can we please, just for once, take the class obsession out of every such event? Please. Pass the champagne.
This is now several weeks’ old and I fear that coverage of this issue could fade in the usual 24/7 news cycle, but it deserves to be kept in public view, hopefully continuing to raise a stink. I am talking about a recent European Court of Justice ruling regarding whether a person/institution can demand that an online outfit such as Google can be made to remove material about said person/institution that is damaging, sensitive or highly personal. People are talking about the “right to be forgotten”. Note that the information doesn’t need to be libellous. Even if it is embarrassing but clearly true, a website can be required to remove it. This means that certain organisations and people – and you can think of the sort I mean – have an open opportunity to remove items about themselves that they dislike. It is a monstrous interference with freedom of speech and demonstrates just how badly Europe misses any sort of First Amendment protection of free speech (although as I pointed out the other day, even the US these days has defaulted).
There doesn’t appear to be a lot of anger about this from the media as a whole – there hasn’t been the kind of reaction that attended the Leveson Report, for example. It is easy for some faux civil libertarians to say, perhaps, that the ruling affects nasty, big – usually American – firms such as Google, but that supposition is foolish. Anyone with a website carrying information that someone might object to might face this problem. As for journalists trying to track down information about people and using online channels, this is a very damaging step. It stinks.
There are lots of reasons for objecting to how Europe is currently run and I want out of the EU, although unlike some of those who want to quit, want to do so for pro-freedom reasons, not due to nationalism or terror about immigrants. I have no illusions, of course, about national courts and parliaments in that they can be just as moronic in trying to oppress freedom of speech as a supranational one. We tend to forget that point. But national stupidity can be easier to circumvent than transnational stupidity. Anyone who takes civil liberties and freedom of speech issues seriously ought, in my judgement, to want to see the entire European superstate edifice crumble into dust. It won’t end assaults on freedom, but it will make such assaults less difficult to escape.
This item, out a few days ago, from one of my favourite bloggers, Tim Sandefur, ought to be part of a firestorm of debate out there over the contempt that the current occupant of the White House has shown for the First Amendment. The sad fact is, however, that a large chunk of allegedly “progressive” or “liberal” opinion (such a shame that fine word has been debauched) is unsteady on defending free speech (and quite a lot of “conservatives” are not much better).
Read the whole thing, as the saying goes. And wonder if you will why not more of a stink has been created about this. Almost a quarter of a century ago, when Salman Rushdie went into hiding in the UK after publication of his Satanic Verses book (I haven’t read it), we had an early taste from how some people were willing to make excuses for the murderous intent of fundamentalist Muslims. But to their credit, lefties such as Christopher Hitchens were willing to take a stand. In fact this was the sort of issue that I think turned Hitch away from some of his reflexive Leftism and into being a more free-ranging contrarian.
Has this sublime tradition, the tradition of Edward Coke and John Hampden, of James Harrington and Algernon Sidney, of John Milton and John Locke, of Pitt the Elder and Edmund Burke, of Earl Grey and Viscount Palmerston, of Richard Cobden and John Bright – and, yes, of Benjamin Franklin and Thomas Jefferson truly found its quietus in the person of Nick Clegg? The thought is almost unbearable.
- Dan Hannan
I thought Nigel Farage trounced Nick Clegg in the second of the two televised debates about Europe a few weeks ago. When he sticks to that subject, he’s an excellent proponent of the argument. But when he brings Romanians into it, when he smears an entire nation to make the case against immigration, he’s clearly doing the cause more harm than good. You can sense more moderate voters recoiling every time he strays into this territory. It’s as if the Ukip leader is confirming the caricature of Euroscepticism that the BBC, the FT, the Independent and the Guardian have been trying to paint for the past 30 years – the Eurosceptic as swivel-eyed loon, as Little Englander, as closet racist. People like me have always claimed that’s a straw man. But Nigel Farage is that straw man.
- Toby Young
There are other examples I can think of where a good argument – such as leaving a bureaucratic superstate – can be spoiled if those who argue for it seem to be, well, just not very pleasant people. Yes I know, one should not be distracted by that sort of shallow thing, etc, etc. The last few weeks I have heard a lot of stuff from UKIP fans about how, no matter how bloody ghastly many UKIP people are, and how crummy some of its views are, that it is still a force for good, pushing debate, etc. The trouble is that I think it does matter, a lot, if people form associations in their minds about a group and if that group helps to reinforce that association. In my view, Farage’s focus on what he claims are the negative effects of immigration, and his invocation of the idea that foreigners are taking “our” jobs etc (the lump of labour fallacy) has done damage. He should have been far more optimistic and positive about why leaving the EU is a good thing, rather than confirm the biases of those who all too easily dismiss the anti-EU case as being narrow and stupid. A shame.
Japan is currently in the process of monetising its vast debt (in plain English, printing money). To get some scale of the issue, check out this following news report from the Japan Times.
Japan’s national debt hit a record-high ¥1.025 quadrillion at the end of March, up ¥33 trillion from a year earlier, the Finance Ministry said on Friday. The central government debt, which increased ¥7 trillion from the end of December last year, kept rising mainly due to ballooning social security costs in line with the aging population. The balance of government bonds, financing bills and other borrowings crossed the ¥1 quadrillion mark for the first time ever at the end of June 2013.
Here is a definition of what is a Quadrillion. Even at the dollar-yen exchange rate of one dollar buying 101 yen, this is a scary, but also barely comprehensible, sum of money. That leads me to the view that the public no longer can really get to grips with how massive debt, both in funded and unfunded, forms is, and indeed with the very notion that a lot of this debt is not even “on the balance sheet”.