Back at the beginning of the 60's, "When America was Great", there was the recognition that laissez-faire capitalism required regulation to avoid its seamier side.
And the top marginal tax rate was over ninety percent.
I am so glad that I was able to read the entire third piece about the censorship and eventual demise of the Aspen Times. It casts a very frightening light on what is happening to printed journalism today. Will we ever have unbiased reporting again, available for everyone? It certainly doesn’t seem so.
JVL, strong start to the work week. Gonna be tough to top today’s Triad.
re #3: alternative single sentence teaser “One afternoon, a white guy with dreads to his waist was racking a mountain bike on his Jeep when he spotted me, raised a fist, and said, “First Amendment, bro. Thank you.””
All the capital gleaned from widening the productivity vs. wage gap had to go somewhere. Pity they can't find something responsible or productive to do with it.
Wait, which side of this makes capitalism look bad again?
Agree that this is a systems problem in which too often the system is being gamed whether it's politics (e.g., Trump) or business (e.g. Neumann). For every good leader who cares about building enduring communities of significance, it seems like that there are 1,000 "Professor Harold Hill" types eager to convince people that they have an original and simple answer for all of life's challenges.
The WeWork and Flow saga illustrates what has been the case for almost two decades: the investment banks, venture capital funds and private equity firms are awash in capital, and they are desperate to find productive uses that money. Of course, the Larry Kudlows of the world will rant and rave that any move to raise capital gains or marginal tax rates, or institute a tiny tax on share buybacks (corporate treasuries are also bulging with cash) will result in the destruction of capital formation.
I tend not to think of it as capitalism. Boondoggles are parts of all systems. People stink and no system of economics can fix that. At best, it channels it productively. The mystery is people rushing to give him money again. But some people never learn.
I always heard the line as "don't piss down my back and tell me it's raining". Maybe it's a regional difference, or a class joke in the Midwestern version.
Yup, that’s what I grew up hearing. And I was born and raised in Texas. Somehow, boots make more sense. Backs and eyes are difficult targets, or at least they would be for me.
Plus, just like with WeWork, there's nothing actually disruptive about the Flow business model. It was at least 20 years ago that I heard the CEO of one of the largest apartment REITs describe his business as "owning cubes full of consumers."
We have created structures and institutions that allow the various abuses, scams, and outright frauds that give capitalism a bad name. I don't think we are actually any worse now than we once were, it is just more visible now. There were a LOT of shenanigans involved in the building of the transcontinental RR, for example.
The big problem is that we have a culture that often lionizes and celebrates these behaviors that can often be summed in the phrase... it isn't personal, it's just business. As though business should be free of the moral strictures that we apply to the rest of life.
And that's the rub--we do have the attitude that the moral aspect of business (and of businessmen) is rightly different--if not in word, at least in deed (meaning we will say things are wrong or bad, but do mothing substantive).
We do the same thing for politics.
I learned my first political lesson in middle school, running for student government. That lesson was to lie and tell people that you were going to do things that had zero percent chance of happening, to tell people what they wanted to hear, no matter how unrealistic or dishonest. I did not do that (being naive and honest) and went down to resounding defeat.
Dishonesty wins votes (so long as you appear sincere).. and the same type of dishonesty seems to garner investors, so long as your slide deck looks good.
We condemn dishonesty and corruption and yet vote for it--as though it was necessary, as though we had no choice. We abandon agency that we need not abandon.
Jeff Pfeiffer at Stanford's Graduate School of Business studied C-Suite executives and found that, on average, they rank higher on psychological testing instruments that measure sociopathic traits. As you say, the business press tends to treat this as a feature, rather than a bug.
American culture tends to treat it as a feature and not a bug--indeed, most capitalist societies do this.
It is interesting to note how attitudes towards "business" changed between 1300 and the present. Usury used to be a sin, for example.
There were obvious problems with the previous attitudes, but we seem to have gone overboard in the other direction. No moderate middle approach (in practice).
Real-estate and hucksters? Really? Who would have thunk it.
Add to that I've always been amazed at bankers who will keep giving money to idiots with a good story.
Something else. As a neighborhood activist and a small time landlord, I've noticed a big change in the rental industry. A number of wallstreet types have been buying into the single family rental market. This used to be a mom and pop type market. Now a lot of the housing is being managed by a Management company with the ownership being corporate and out of state and mostly untouchable when it comes to forcing them to adhere to basic zoning and codes regulations.
So that a huckster would go into residential real-estate, that is not surprising. There is a lot of them out there. especially ight now.
If the Saudis and the Gulf States want to give a crazy person like Masa $100B, he's going to go around giving other crazy people like Adam Neumann $10B for their overvalued startups, and that's going to make crazy stuff happen in the economy.
Should we pass a law to prevent crazy foreign investors from throwing huge amounts of dumb money at unprofitable American companies? I don't know.
We SHOULD be raising interest rates and ending QE (which we are, in fact, doing, as JVL pointed out) because that will reduce the amount of domestic dumb money sloshing around. Andreessen Horowitz (henceforth abbreviated a16z) raised its fund during the boom, so what's happening today doesn't affect the money they've already raised, but it could affect the future.
[Side note - I heard from a founder / CEO of a crypto company that some VCs won't invest in crypto startups unless a16z is also investing. Andreessen has like a $4.5B web3 fund or something like that, which is perhaps an outright majority of all VC funding available to crypto startups. The concern is that if a16z likes your product but doesn't like you, they can give someone else $100m build the same thing and destroy you quite easily.]
" that will reduce the amount of domestic dumb money sloshing around"
I have long supported higher income taxes on high earning individuals, and recent events have caused me to re-evaluate my opposition to the wealth taxes like those that Sanders and Warren have proposed. The federal government can spend the money better (I know, heresy on a site started by conservatives, whom I respect) by building infrastructure than the uber wealthy can spend it on investments like these.
Nelson Rockefeller died with an estate of about $200 million -- worth about $1 billion today. He was considered one of the richest people in the world back in the 1970s. And 2/3 of his estate was in trusts for his family and half the remainder was an art collection that he mostly donated to museums. Rockefellers are not throwing money around today in this kind of wasteful manner. But income and estatre taxres were a lot higher back then.
I think that wealth taxes are too hard to implement to be practically worth doing.
To know what wealth tax bracket someone would be in, the federal government would have to know how much their assets are worth. Valuation of liquid, publicly-traded assets like securities and even cryptocurrencies is relatively straightforward (at least for a given, backward-looking point in time), but valuation of private assets is quite difficult.
If we implemented a wealth tax, you'd see wealthy people shift their investments into privately traded assets like real estate. This would drive up housing costs for most Americans even more while driving down the values of their retirement portfolios and pension plans, which invest mostly in publicly-traded securities. Meanwhile, the rich people would employ legions of lawyers and accountants to make their privately held assets look less valuable to the government.
I think we should do more targeted taxes like land value taxes, yacht / jet taxes, etc.
Hard disagree. There are solutions as @Elliot Pierce states above. It is simply that these solutions are currently not possible in the current political environment because, as @R Mercer says above, “we abandon agency that we need not abandon”.
Solutions are there though. And even if they are imperfect, they would be less imperfect that the problems they would solve.
A high-marginal tax rate, shutdown of deferred "compensation" plans, and alteration of rules governing option and stock grants to executives might help.
Another side note - if a16z's web3 fund has a typical 2 and 20 structure (2% management fees and 20% of excess returns above a certain point), they're making $90m PER YEAR just in management fees from this fund.
This doesn't include any of their other funds as well.
Charlie Hall comments here that "It is people like Adam Neumann who create Communists." Gotta' love that. Props.
Might we generally add to that people like Martin Shkreli (aka Pharma Bro) and include the generic label 'extremists'?
Apples and oranges in a way. But when you have an arrogant and literally criminally greedy hedge fund manager raising by hook and crook the price of a cheap lifesaving drug by 5K+% and attempting to completely block any generic competition, the folks directly affected by that - and no doubt no small number who weren't but were aware of it - just might start to get the idea that capitalism just ain't working for them all that well, never mind the fact that, unlike Neumann, there was actually some comeuppance for that little shit in the end.
Perception of how a social / economic system is working goes right along with how it actually is working. Pharma Bro was a relatively 'small' failure in the system that ultimately was 'corrected', at least to some degree. But the media amplified it, as the media is wont to do, and it is the failure that is remembered, not the correction. Which does nothing to burnish the upside of capitalism.
Rinse, spin and repeat enough times, throw in a few larger 'system failures' of some kind, and more than just a bit of serious burnishing might be required.
I'm sure they do. And rightfully so. The 'one rotten apple' doesn't in fact spoil the whole barrel. But when it comes to the perception thing, in a lot of people's minds it does. And that's so unfair to others in the barrel.
But I would argue that sometimes one bad apple does spoil the whole barrel. Witness what the disgraced ex-president did to the entire Republican party.
I preceded "one rotten apple" with "The" thinking that would indicate my meaning of *in this case*, which, of course, I realize now that it doesn't. Should have added "in this case" to be clear. But that's ok, because it let you bring up a point that's well taken, and which I see Charlie speaks to below.
Whether the rot came from one putrid piece of fruit, or a whole host of them, the whole of the barrel is now a reeking mess and needs to be dumped out, steam cleaned, disinfected and refilled with a new batch.
I think you may have the causality mistaken. It was the degradation of the Republican Party (since Gingrich/Buchanan) that led to Trump. He is a symptom, not the cause.
Gringich, Limbaugh, et .al., tilled the soil, but it was the emergence of the disgraced ex-president, in my view, that caused the rot to spread throughout the entire party establishment with the notable exception of only two party members.
It's hard to see any of his competitors in the party doing what he has done.
Unbelievable
Back at the beginning of the 60's, "When America was Great", there was the recognition that laissez-faire capitalism required regulation to avoid its seamier side.
And the top marginal tax rate was over ninety percent.
I am so glad that I was able to read the entire third piece about the censorship and eventual demise of the Aspen Times. It casts a very frightening light on what is happening to printed journalism today. Will we ever have unbiased reporting again, available for everyone? It certainly doesn’t seem so.
The article is both frightening and heartbreaking. Independent local news, especially newspapers are so important for good governance.
JVL, strong start to the work week. Gonna be tough to top today’s Triad.
re #3: alternative single sentence teaser “One afternoon, a white guy with dreads to his waist was racking a mountain bike on his Jeep when he spotted me, raised a fist, and said, “First Amendment, bro. Thank you.””
Never count out sociopaths super-empowered by money. (Tom) Sawyernomics at work.
All the capital gleaned from widening the productivity vs. wage gap had to go somewhere. Pity they can't find something responsible or productive to do with it.
Wait, which side of this makes capitalism look bad again?
Agree that this is a systems problem in which too often the system is being gamed whether it's politics (e.g., Trump) or business (e.g. Neumann). For every good leader who cares about building enduring communities of significance, it seems like that there are 1,000 "Professor Harold Hill" types eager to convince people that they have an original and simple answer for all of life's challenges.
Oh we got trouble! Right here in Mar-a-Lago! With a capital T and that rhymes with V and that stands for votes!
The WeWork and Flow saga illustrates what has been the case for almost two decades: the investment banks, venture capital funds and private equity firms are awash in capital, and they are desperate to find productive uses that money. Of course, the Larry Kudlows of the world will rant and rave that any move to raise capital gains or marginal tax rates, or institute a tiny tax on share buybacks (corporate treasuries are also bulging with cash) will result in the destruction of capital formation.
I tend not to think of it as capitalism. Boondoggles are parts of all systems. People stink and no system of economics can fix that. At best, it channels it productively. The mystery is people rushing to give him money again. But some people never learn.
Yiddish proverb: If you have money, you are wise and good looking, and can sing well too.
When you're rich, they think you know - Tevye
I always heard the line as "don't piss down my back and tell me it's raining". Maybe it's a regional difference, or a class joke in the Midwestern version.
The way I always heard it was "don't piss on my head and tell me it's raining."
I think down Texas way it's 'Don't piss on my boots...' Never been to Texas. Base this on the fact that I heard Dan Rather say it that way. ;-)
Yup, that’s what I grew up hearing. And I was born and raised in Texas. Somehow, boots make more sense. Backs and eyes are difficult targets, or at least they would be for me.
Interesting. My dad used to say "don't piss in my eye and tell me that it's raining," for as long as I can remember.
Hmm that's certainly an eye-catching variant! May I ask what region he grew up in?
South Dakota...but he might have learned it in the Navy!
Missouri here. Come to think of it though, I heard it from a sailor too.
I only know the phrase as something Dragon says in Layercake.
Plus, just like with WeWork, there's nothing actually disruptive about the Flow business model. It was at least 20 years ago that I heard the CEO of one of the largest apartment REITs describe his business as "owning cubes full of consumers."
We have created structures and institutions that allow the various abuses, scams, and outright frauds that give capitalism a bad name. I don't think we are actually any worse now than we once were, it is just more visible now. There were a LOT of shenanigans involved in the building of the transcontinental RR, for example.
The big problem is that we have a culture that often lionizes and celebrates these behaviors that can often be summed in the phrase... it isn't personal, it's just business. As though business should be free of the moral strictures that we apply to the rest of life.
And that's the rub--we do have the attitude that the moral aspect of business (and of businessmen) is rightly different--if not in word, at least in deed (meaning we will say things are wrong or bad, but do mothing substantive).
We do the same thing for politics.
I learned my first political lesson in middle school, running for student government. That lesson was to lie and tell people that you were going to do things that had zero percent chance of happening, to tell people what they wanted to hear, no matter how unrealistic or dishonest. I did not do that (being naive and honest) and went down to resounding defeat.
Dishonesty wins votes (so long as you appear sincere).. and the same type of dishonesty seems to garner investors, so long as your slide deck looks good.
We condemn dishonesty and corruption and yet vote for it--as though it was necessary, as though we had no choice. We abandon agency that we need not abandon.
Jeff Pfeiffer at Stanford's Graduate School of Business studied C-Suite executives and found that, on average, they rank higher on psychological testing instruments that measure sociopathic traits. As you say, the business press tends to treat this as a feature, rather than a bug.
American culture tends to treat it as a feature and not a bug--indeed, most capitalist societies do this.
It is interesting to note how attitudes towards "business" changed between 1300 and the present. Usury used to be a sin, for example.
There were obvious problems with the previous attitudes, but we seem to have gone overboard in the other direction. No moderate middle approach (in practice).
'We abandon agency that we need not abandon.'
A very clear and succinct take on one of the most basic reasons for a lot of our problems. Props.
Real-estate and hucksters? Really? Who would have thunk it.
Add to that I've always been amazed at bankers who will keep giving money to idiots with a good story.
Something else. As a neighborhood activist and a small time landlord, I've noticed a big change in the rental industry. A number of wallstreet types have been buying into the single family rental market. This used to be a mom and pop type market. Now a lot of the housing is being managed by a Management company with the ownership being corporate and out of state and mostly untouchable when it comes to forcing them to adhere to basic zoning and codes regulations.
So that a huckster would go into residential real-estate, that is not surprising. There is a lot of them out there. especially ight now.
Jack
If the Saudis and the Gulf States want to give a crazy person like Masa $100B, he's going to go around giving other crazy people like Adam Neumann $10B for their overvalued startups, and that's going to make crazy stuff happen in the economy.
Should we pass a law to prevent crazy foreign investors from throwing huge amounts of dumb money at unprofitable American companies? I don't know.
We SHOULD be raising interest rates and ending QE (which we are, in fact, doing, as JVL pointed out) because that will reduce the amount of domestic dumb money sloshing around. Andreessen Horowitz (henceforth abbreviated a16z) raised its fund during the boom, so what's happening today doesn't affect the money they've already raised, but it could affect the future.
[Side note - I heard from a founder / CEO of a crypto company that some VCs won't invest in crypto startups unless a16z is also investing. Andreessen has like a $4.5B web3 fund or something like that, which is perhaps an outright majority of all VC funding available to crypto startups. The concern is that if a16z likes your product but doesn't like you, they can give someone else $100m build the same thing and destroy you quite easily.]
" that will reduce the amount of domestic dumb money sloshing around"
I have long supported higher income taxes on high earning individuals, and recent events have caused me to re-evaluate my opposition to the wealth taxes like those that Sanders and Warren have proposed. The federal government can spend the money better (I know, heresy on a site started by conservatives, whom I respect) by building infrastructure than the uber wealthy can spend it on investments like these.
Nelson Rockefeller died with an estate of about $200 million -- worth about $1 billion today. He was considered one of the richest people in the world back in the 1970s. And 2/3 of his estate was in trusts for his family and half the remainder was an art collection that he mostly donated to museums. Rockefellers are not throwing money around today in this kind of wasteful manner. But income and estatre taxres were a lot higher back then.
I think that wealth taxes are too hard to implement to be practically worth doing.
To know what wealth tax bracket someone would be in, the federal government would have to know how much their assets are worth. Valuation of liquid, publicly-traded assets like securities and even cryptocurrencies is relatively straightforward (at least for a given, backward-looking point in time), but valuation of private assets is quite difficult.
If we implemented a wealth tax, you'd see wealthy people shift their investments into privately traded assets like real estate. This would drive up housing costs for most Americans even more while driving down the values of their retirement portfolios and pension plans, which invest mostly in publicly-traded securities. Meanwhile, the rich people would employ legions of lawyers and accountants to make their privately held assets look less valuable to the government.
I think we should do more targeted taxes like land value taxes, yacht / jet taxes, etc.
Yeah, this is a problem with no solution.
Hard disagree. There are solutions as @Elliot Pierce states above. It is simply that these solutions are currently not possible in the current political environment because, as @R Mercer says above, “we abandon agency that we need not abandon”.
Solutions are there though. And even if they are imperfect, they would be less imperfect that the problems they would solve.
A high-marginal tax rate, shutdown of deferred "compensation" plans, and alteration of rules governing option and stock grants to executives might help.
Another side note - if a16z's web3 fund has a typical 2 and 20 structure (2% management fees and 20% of excess returns above a certain point), they're making $90m PER YEAR just in management fees from this fund.
This doesn't include any of their other funds as well.
That's the business we should all be in.
Yup, with carried interest. Thanks Senator Sinema!
Charlie Hall comments here that "It is people like Adam Neumann who create Communists." Gotta' love that. Props.
Might we generally add to that people like Martin Shkreli (aka Pharma Bro) and include the generic label 'extremists'?
Apples and oranges in a way. But when you have an arrogant and literally criminally greedy hedge fund manager raising by hook and crook the price of a cheap lifesaving drug by 5K+% and attempting to completely block any generic competition, the folks directly affected by that - and no doubt no small number who weren't but were aware of it - just might start to get the idea that capitalism just ain't working for them all that well, never mind the fact that, unlike Neumann, there was actually some comeuppance for that little shit in the end.
Perception of how a social / economic system is working goes right along with how it actually is working. Pharma Bro was a relatively 'small' failure in the system that ultimately was 'corrected', at least to some degree. But the media amplified it, as the media is wont to do, and it is the failure that is remembered, not the correction. Which does nothing to burnish the upside of capitalism.
Rinse, spin and repeat enough times, throw in a few larger 'system failures' of some kind, and more than just a bit of serious burnishing might be required.
I know people who work for real Pharma companies. The passionately despise Shkreli and his ilk.
BTW...I *really* liked that Neumann / Communists thing. I'm still chuckling about it. ;-))
I'm sure they do. And rightfully so. The 'one rotten apple' doesn't in fact spoil the whole barrel. But when it comes to the perception thing, in a lot of people's minds it does. And that's so unfair to others in the barrel.
But I would argue that sometimes one bad apple does spoil the whole barrel. Witness what the disgraced ex-president did to the entire Republican party.
I preceded "one rotten apple" with "The" thinking that would indicate my meaning of *in this case*, which, of course, I realize now that it doesn't. Should have added "in this case" to be clear. But that's ok, because it let you bring up a point that's well taken, and which I see Charlie speaks to below.
Whether the rot came from one putrid piece of fruit, or a whole host of them, the whole of the barrel is now a reeking mess and needs to be dumped out, steam cleaned, disinfected and refilled with a new batch.
I think you may have the causality mistaken. It was the degradation of the Republican Party (since Gingrich/Buchanan) that led to Trump. He is a symptom, not the cause.
Gringich, Limbaugh, et .al., tilled the soil, but it was the emergence of the disgraced ex-president, in my view, that caused the rot to spread throughout the entire party establishment with the notable exception of only two party members.
It's hard to see any of his competitors in the party doing what he has done.
Rich, greedy people always, always ruin it for the rest of us.