Political Cartoons

Only the shallowest analysis suggests that the short-term effects are poor. To explain it intuitively, if there's already a trend, and you make a policy change, you can't just look at the trend; you have to look at the change in the trend, and then compare it to the change in the trend in as many other places as possible. Then you use a technique called regression analysis to determine the relative weights of all the different possible causal factors you can think of. This is how we know, for example, that gun control has little or no effect on homicide rates, but stricter laws do decrease suicides while increasing other violent crimes. It's how we know that the biggest predictor of poverty in America is not race, but parents' income. It's how we know that the gender wage gap is around 2%, not 23% as the popular myth claims.

AFAIK, the claim that raising the minimum wage increases job growth has never been supported by this kind of analysis. If anyone has evidence to the contrary, they need to post a link.

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red-pill.livejournal.com

also, i suspect you mean "post hoc" not "ad hoc"

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telemann.livejournal.com

heh.

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Indeed. That's what I get for giving this post no more care than it deserves.

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malasadas.livejournal.com

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So do you think not raising the minimum wage and giving out billions in handouts is going to work for other states if it didn't here?

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I think raising the minimum wage has no significant effect anywhere.

Corporate subsidies and tax breaks are a whole other matter. Corporate subsidies should be handed out only in very limited circumstances and for a very limited time to effect specific economic policies, not as the effectively permanent entitlements they are now. And there should be no corporate tax breaks because corporations should not pay taxes — after we force them all to reorganize as non-profits.

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garote

How would a non-profit keep, for example, an R&D lab?

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How would it be any different?

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There are plenty of public, non-profit universities that maintain excellent R&D labs--especially among the universities of California, Berkeley in particular.

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garote

Yeah, but take the example of UC Berkeley. 80% of the money to fund their research comes directly from the federal and state government. As a consequence of this, most of the research that goes on there has to be approved by congressional committee.

This is a very different situation than a private enterprise attempting to re-invent a product or process that would give them a competitive edge: They basically need a bunch of discretionary money to spend on a pursuit that may or may not pay off. In other words, they need investors who are willing to take a risk. If those investors can't extract a return on investment, they won't participate.

In the meantime, any cutting-edge research chosen by the government is funded from taxes gathered from everyone, spreading the risk evenly. This means that there are no particular losers when the government makes a bad bet. Instead of a corporation getting funding because some people perceive a meaningful return, a corporation can win funding simply for being in the district of a powerful congressman or lobbying group. Congress does not strike me as the most intelligent, timely, or accountable group to be deciding the direction of technology or the economy; they barely understand either...

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So you're basically saying that both nonprofit and for-profit funds are fucked. You're also overlooking the fact that a private enterprise must base their funds on what will provide the greatest profitable return. They have to do so, because they're at the mercy of their stockholders. Which is why a cure for Ebola was never sought until it came to the USA. And why funds for new food sources for third world countries are basically overlooked by most American corporations.

With nonprofit research, you get a much more level playing field. With for-profit research, the very research itself is dictated by the stockholders in a way much broader than the funds provided by a Senate or House committee, which often go to research in general rather than to a specific research project.

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garote

I'm saying that non-profit and for-profit research is funded differently because it's goals are different. Declaring that all research investment be not-for-profit will only constrict the types of research that gets funded. How it that a good thing?

And about your example of Ebola: Do you honestly think that congress would have mandated that UC Berkeley find a cure for Ebola years ago, if only they'd had ... what, the funds? They can't even get their act together enough to send basic medical aid to West Africa right now, let alone preemptively finance research into a disease that has killed zero Americans, give or take a few.

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Declaring that all research investment be not-for-profit will only constrict the types of research that gets funded. How it that a good thing?
I never said all research should be nonprofit. I simply cited some excellent sources of nonprofit research.

And about your example of Ebola: Do you honestly think that congress would have mandated that UC Berkeley find a cure for Ebola years ago, if only they'd had ... what, the funds? They can't even get their act together enough to send basic medical aid to West Africa right now, let alone preemptively finance research into a disease that has killed zero Americans, give or take a few.
The only reason they haven't done it for Africa is that we have no financial stake in any of the countries affected, so we could care less what happens to their people. If there was an outbreak in the Middle East, you can bet we'd be in there trying to protect those countries in which we have financial stakes. Research on a cure or at least an effective treatment didn't begin until American citizens were affected.

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garote

Oh good, so you don't endorse madscience's strange declaration that we should re-organize all corporations into non-profits?

I agree, you're right, congress hasn't sent enough aid to Africa because there hasn't been a geopolitical motivation for them to do so. And the WHO didn't prepare for an Ebola outbreak adequately, and has only recently contracted GlaxoSmithKline to develop and mass-produce a vaccine for the disease.

So why do you blame the lack of a readily available Ebola vaccine on private enterprise being "at the mercy of their stockholders"? Doesn't seem to have anything to do with it.

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Oh good, so you don't endorse madscience's strange declaration that we should re-organize all corporations into non-profits?

madscience has many strange declarations, 99.9% with which I disagree, including this one.

So why do you blame the lack of a readily available Ebola vaccine on private enterprise being "at the mercy of their stockholders"? Doesn't seem to have anything to do with it.

To the contrary. If there is no geopolitical motive for American government to produce an ebola vaccine for poor African nations there is even less motivation for a private corporation; their stockholders would definitely kick up a fuss if such a project were even suggested.

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garote

Yes, but a private company loves one thing for sure: Money.

I didn't just bring up the WHO's relationship with GlaxoSmithKline for no reason. That corporation owns and operates a vast and extremely expensive R&D facility - for private profit. Ambitious (i.e. greedy) investors took the risk of building one for themselves. If private enterprise didn't, and the World Health Organization or some other meta-government agency wanted to manufacture an Ebola vaccine, it would have to build and operate a similar facility, at hideous taxpayer expense.

In other words, private enterprise actually made the eventual generation of a vaccine much more affordable, by incentivizing the creation of very useful infrastructure.

Compare this to the alternative, which is ... what, exactly? I haven't yet seen you or anyone else offer up an alternative model that would actually do a better job, or even do the job at all. Maybe if Europeans hadn't massively cut the funding to the WHO some years ago they wouldn't be running around playing catch-up now, with a death toll in the 4000's and West Africa's economy and facilities almost completely crushed.

But here we are. And blaming private enterprise for not flying in on angel wings and spending other people's money doesn't make sense.

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No one has "blamed" private enterprise for not coming to the rescue. Look what they've done to the prison system; it's worse than it's ever been. No one wants a profit-based enterprise to come in and find some way to make money off of human tragedy.

At the same time, You seem to believe that the answer to everything is private enterprise, which is solely profit-based, which is why privately-run prisons are falling apart--to show a profit they've got to keep cutting corners here and there, until they've become broad swaths, simply because you cannot make a genuine profit by running a prison. To even keep going they're dependent upon heavy sentencing for minor drug crimes, which keeps their prisons stuffed full. Thank goodness California and other states are looking at changing the sentencing for minor drug offenses like possession.

Do you truly believe that GlaxoSmithKline is in a relationship with WHO out of the goodness of their little capitalist hearts? Of course not. They know that should some plague (like Ebola) take over the planet they would reap tremendous financial rewards for developing the only known vaccine/treatment. Profits are what it's all about to private enterprise, and they have no other motive for doing anything.

There are plenty of outstanding R&D departments in both private and public educational facilities that could do exactly the same. That they haven't yet has more to do with the fact that, once again, America has no financial stake in any of the countries currently affected. Do you truly believe that, if America was swamped with Ebola, congress would actually cut funds to a nonprofit R&D facility with a very promising treatment/cure? You hate government that much?

What I've never been able to understand is how people like you, who have themselves been screwed at some point by private industry, still feel that it is somehow our saviour, and that government is our enemy simply because you have to pay taxes to keep the country running (and pay for entitlements which you will fight like hell to keep for yourself when the time comes.) Keep in mind that the entitlements (social security and medicare) make up the largest part of the budget with defense, leaving a small chunk for unemployment and welfare.

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garote

At the same time, You seem to believe that the answer to everything is private enterprise,

Never said it, nor do I believe it.

Do you truly believe that GlaxoSmithKline is in a relationship with WHO out of the goodness of their little capitalist hearts? Of course not.

Never said it, and I obviously don't believe it. I specifically pointed out that they're in it for the money. I also pointed out that they're a useful resource. A resource that was created by private investors.

Do you truly believe that, if America was swamped with Ebola, congress would actually cut funds to a nonprofit R&D facility with a very promising treatment/cure? You hate government that much?

Don't believe it, never said it. Why would I hate the government?

What I've never been able to understand is how people like you, ...

"You people?" I'm going to ignore the rest of that.

My question is still left unanswered: I haven't yet seen you or anyone else offer up an alternative model that would actually do a better job, or even do the job at all.

Edited Date: 2014-10-25 12:56 am (UTC)

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My question is still left unanswered: I haven't yet seen you or anyone else offer up an alternative model that would actually do a better job, or even do the job at all.

I already gave you the alternative some time ago, which is nonprofit private and public institutions with R&D facilities. They are a completely viable and successful alternative to profit-based R&D, and have been all over the world, not just in the United States. Both the WHO and the CDC constitute a part of this nonprofit system, as well as universities. No for-profit industry has ever come up with anything on the level of both the WHO and the CDC.

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garote

The CDC is a federal agency, not a non-profit institution. The WHO is run and paid for by the UN, a federal agency writ large, and the US provides about a quarter of the UN's funding. "Non-profit" and "owned by the government" are not interchangeable terms. The WHO and the CDC contract for-profit and non-profit agencies to do their work as they see fit. That includes research and development. (Which isn't much - mostly they commission studies and standards documents.)

Industrial-scale vaccine research and production is something done almost exclusively by a handful of huge for-profit corporations. Not only do they do it industrial-scale, but they do it cheaply, because, as we both agree, they like money. There's a reason the WHO turned to GlaxoSmithKline, and not, say, UC Berkeley, to get this particular job done. I never said nonprofit R&D centers weren't viable in general, and I never said they couldn't be successful. What I am saying is that in the case of this ebola fiasco, they do not bring anything to the table, and are in fact outclassed by the resources made available by for-profit industry.

I have nothing against nonprofit R&D in general, but I definitely don't think it is an actual replacement for privately-funded for-profit research. The problem with nonprofit R&D (as I pointed out with the example of UC Berkeley) is that it's primarily funded by governments, whose purse strings are tied with geopolitical interests. Some research is appealing to investors, some is appealing to governments. (The backbone of the internet was a military R&D project, for example, but was turned into a world-changing phenomenon by private industry developing faster switches, better cabling, etc. If all that had been left to non-profit research centers we would probably still be "surfing the internet" with NCSA Mosaic at 9600 baud.)

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Sorry, but the CDC, as a federal institution, is decidedly nonprofit. As is the WHO, as part of the UN. Just because they're funded by the government doesn't make them for-profit. You don't seem to grasp that government entities are not for profit. Just because people must pay taxes to supply funds for them doesn't make them for-profit. After all, most nonprofits subsist on public and private donations.

The point is that there are entities that exist for other reasons than making a profit, and are very successful at what they do. Being government entities doesn't make them for profit.

No one said that nonprofit R&D is a replacement for profit-based R&D. You have consistently accused me of saying that nonprofit is somehow a replacement for profit-based institutions when I never said anything of the sort. I simply pointed out that there are nonprofit entities that do an excellent, and in some cases an irreplaceable job that for-profit institutions wouldn't even consider. These are the WHO and CDC.

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garote

Then in that case, we agree!

Except in your use of the term "non-profit".

The term is used to describe something very specific: The case where an organization generates an income from its work, but uses that income exclusively to further the work, rather than pay back or reward private investors.

Compare the Berkeley labs to the CDC. The Berkeley labs are non-profit. They do research for hire. Revenues from that research - licensing fees from patents for example - are folded back into the organization to do more work, as the lab is required to do by law.

The CDC, like the WHO, is an arm of government to which tax funds are allotted, for a specific purpose. There is not even a concept of profit involved here. They exist to dispense government money. There is in fact an organization called the "CDC Foundation" that was spun off from the CDC specifically to be a non-profit in the way the CDC is not.

You are simply using the term incorrectly.

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I may have used the term incorrectly, but the point I wanted to make is that both the WHO and CDC are entities that exist independently of for-profit enterprise, though they may at times partner with them. They are also entities that for-profit enterprise would not have even considered. That's why governments as well as nonprofits are necessary.

Where I disagree with you is that I wouldn't in a thousand years trust a for-profit enterprise more than I would trust a government or non-profit entity.

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garote

If the government manufactured and sold a smartphone, would you prefer it over an iPhone, whose company CEO recently declared that the NSA would have to "cart us out in boxes" if it wanted to access users' personal correspondence?

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That's not even a useful comparison. The government isn't in the business of manufacturing consumer products, and it's ridiculous to compare it as such. That's an area for private enterprise. However, I would certainly welcome some government intervention in the charges for cell phone usage.

Am I happy with my iPhone? Yes. Would I expect the government to manufacture one? Of course not. You still don't seem to get it. I happen to trust my government more than I would ever trust a private, for profit enterprise, and my opinion is not going to change. Will I still purchase consumer products? Of course, when I need them or want them for some reason.

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garote

I think it's an extremely useful comparison; I suspect you're simply rejecting it because the answer is obviously "no".

Yes, the iPhone is a consumer product. But that's clearly not the point of my question. So I'll restate it without invoking the consumer product.

The government provides electrical, water, and gas service. Would you trust it to provide internet or phone service?

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This is a much better comparison, since the government provides services, not products.

Actually, the government doesn't always provide utilities. Where I live all my utilities are paid to privately-owned companies. However, in the cases where municipalities do own and operate utilities, all studies show that rates tend to be significantly lower and service better and more reliable. This was particularly notable during the Enron energy crisis, which caused rolling blackouts and skyrocketing fees all over California. Guess which county was unaffected? Los Angeles, thanks to their publicly-owned Department of Water & Power: no increases in fees, no rolling blackouts.

So I would definitely trust the government to provide both Internet and phone service. The rates would be lower, and the service better and more reliable, just as cable-TV service was better when it was municipally owned.

Oh, and would I trust a government-built iPhone? I would indeed.

Edited Date: 2014-10-27 11:24 pm (UTC)

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garote

Wow! Well, uh, I guess that wraps this discussion up then!

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Thank you.

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So then you're just kneejerking disagreement because a liberal said a thing, even though you actually agree. Good to know.

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If by "know" you mean "make up in your head," sure.

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I don't. By know I mean find out from our interraction. "Good to know" means you just found out a piece of information that is good to know. It is western english slang or shorthand.

Edited Date: 2014-10-25 03:39 pm (UTC)

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At no point in this interaction have I expressed disagreement with something I "actually agree" with. Take your meds and go back in your hole.

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Perhaps you're confusing yourself, but you certainly seemed to state that you thought that massive corporate handouts were a bad idea.

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What's the point of forcing corporations to "reorganize" as non-profits?

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Because share ownership is exactly equivalent to a loan with an interest rate that varies in such a way that all payments go toward interest, never capital. It's a permanent debt, it's one of the handful of things that are fundamentally wrong with our economy, and it should be illegal.

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peristaltor.livejournal.com

Huh?

Shares were originally meant to be issued to expand a corporation. Bonds too. Yes, they have taken on a kinda life of their own; that may be that the economy has continually expanded, taking the corporations along with it, something which is new since the 1800s.

If you look today, you find that many of these corporations are doing what they should have been doing: buying back their own stocks. After all, most are finished expanding, so the "temporary" loan of stock did its job, and it's time to retire them.

Many people don't recognize this buy-back, though, because the temporary effect of the buy-back is to "artificially" stabilize, sometimes to increase, the stock's price. The market media mostly ignore the buy-back issue altogether, focusing instead on the stock's spot price as a vital sign that the economy is still expanding—exactly the wrong message to take from the example.

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I'm not sure what argument you're trying to make. When a corporation voluntarily buys back its stock, it does so because it recognizes the long-term advantage of eliminating what would otherwise be a permanent debt. And unless the corporation completely empties its pockets and is subsequently harmed by a shortage of capital, the elimination of that debt is always advantageous to its employees and customers in the long term, because it allows the corporation to reduce prices or increase value and thus become more competitive.

But it can only do this if its shareholders prefer a short-term payoff, which is usually not the case. My argument is that share ownership is so deleterious to the proper functioning of a market economy that it should be considered a criminal invention, and investors who participate in it should be punished by the stock market being frozen and their stocks being repurchased at a price determined algorithmically. I'm thinking something like the IPO price, plus interest at a rate similar to government bonds, minus all dividends ever paid, and all of it adjusted for inflation. Many stocks would be worth nothing, and that would not be unfair.

Edited Date: 2014-10-25 08:05 pm (UTC)

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peristaltor.livejournal.com

I'm not sure what argument you're trying to make. When a corporation voluntarily buys back its stock, it does so because it recognizes the long-term advantage of eliminating what would otherwise be a permanent debt.

These two sentences prove contradictory. This is exactly the argument I'm making, so it is clear you are sure. Continuing:

. . . the elimination of . . . debt is always advantageous to its employees and customers in the long term, because it allows the corporation to reduce prices or increase value and thus become more competitive.

No, not necessarily. For a corporation to expand, debt is sometimes required. This allows the corporation to expand when the conditions for expansion are present. To expand through non-debt means can sometimes mean that some other entity takes advantage, builds up, and out-competes the first entity. Hence stocks and bonds.

As long as the expansion proves more profitable than the payment on the debt, the issuing of debt proves profitable.

But it can only do this if its shareholders prefer a short-term payoff, which is usually not the case.

No, it is always the case, by law. You might want to look into Dodge v. Ford (http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company) for the definitive court decision on "enhancing shareholder value."

My argument is that share ownership is so deleterious to the proper functioning of a market economy that it should be considered a criminal invention, and investors who participate in it should be punished. . . .

Interesting. Completely without historical precedent, this opinion of yours, and completely unique; but somewhat interesting.

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garote

Stocks are a "permanent debt" only if they pay dividends. Not all stocks pay dividends. Hence your argument they they should be outlawed simply because they are debts is not universal, not by a long shot.

Hell, the company with the largest market cap in the world (Apple Inc) didn't stat paying dividends until only a few years ago, and has also started a buyback program for the very reasons peristaltor explained.

As for share ownership being "deleterious" to a market economy, you haven't really made your case. I see the stock market as a useful resource - like a parking lot - upon which various fatcats have built an enormous casino, complete with back-doors and profit-skimming, designed primarily to bilk smaller stock traders out of a fraction of their money. Certainly not a good thing, and if I was giving anyone stock investment advice - not that I'm qualified - I would tell them to personally research a single company from top to bottom by talking directly with its employees, then buy that stock if they have a gut feeling that the company will be doing better in 10 years.

Not a pretty picture, but the ugliness is in the stock traders and the institutions that serve them, not in the companies trying to rapidly drum up investment money for a big growth phase. I mean, what you're endorsing is tantamount to making it illegal to invest.

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My argument is that share ownership is so deleterious to the proper functioning of a market economy that it should be considered a criminal invention, and investors who participate in it should be punished by the stock market being frozen and their stocks being repurchased at a price determined algorithmically. I'm thinking something like the IPO price,...

I'm frankly not going to invest too much time in considering the worth of your claim that share ownership is "deleterious to the proper functioning of a market economy," because your proposed recommendation is so pie-in-the-sky that it's a little like debating the nuances of enforcing contracts or developing a theory of tort in anarchic regimes or asserting that some level of fiscal austerity beyond any ever attempted in the United States would result in beneficial long-term growth.

But I should point out that your reference to "IPO price" here kind of gives you away, since most corporations don't have "IPO prices" at all. In turn, just pulling this loose thread, one wonders what your proposed recommendation would do to any sophisticated corporate structure, what with its typical holding companies, operating and financing subsidiaries, and the like. Then one considers why those complicated structures exist in the first place, and the mind boggles! Because they exist for all kinds of reasons. Some exploitive - for instance, to take advantage of favorable tax laws, to limit liability connected with some aspects of the business, to hive away potential sources of liability (employees, pollution, etc.) - others more or less compelled by regulation (laws requiring locally-domiciled "persons" to be engaged in certain kinds of businesses, etc.) - others still to facilitate anticipated or potential sales of parts of the business (intellectual property-holding subsidiaries, real estate assets, lines of business, etc.).

Without "share ownership," none of this becomes feasible or possible; every corporation becomes its own, unitary entity, massive and exposed on all sides. Which, perhaps you would argue, is part of the point. But it just boggles the mind, in a discussion where we're trying to avoid the distorting effects of share ownership, to imagine - in addition to the massive debt restructuring that would be required in any world without share ownership - a massive re-alignment of potential liabilities and assets that would also have to follow. It would be far more destructive to implement your recommendation than it would be even to adopt a constitutional balanced-budget amendment.

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I see lots of corporate transactions, and it's hard for me to imagine how they would work without some concept of transferrable shares of equity. That's true even when it comes to huge, established, publicly-traded corporations, which may still from time to time issue shares in order to raise capital in connection with large transactions. The largest transaction I've recently worked on involved a large bank-agented credit facility, an issuance of debt to the public, and a stock exchange, all to finance and ultimately effect the transaction.

Even debt-financed expansions are hard to get a handle on without some kind of equity-like security. You can pledge a corporation's assets, or you could structure the debt as convertible or pledge stock. (I'm sure I don't need to tell you that this is one reason why corporations care so much about their stock price - it's tied directly to their ability to borrow.) Taking the equity ownership out of the picture would have implications for a corporation's entire capital structure.

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peristaltor.livejournal.com

Exactly.

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