Seth wrote:The billionaires and megacorporations aren't a problem because they're preternaturally greedy, any more than people on welfare are preternaturally greedy. They're only a problem because the government has set things up to encourage excessive concentration of money.
How so?
High corporate tax rates in the U.S. encourage even U.S. based multinationals to keep profits overseas so they can't be returned to stockholders. Double taxation of dividends discourages corporations from returning profits to individual stockholders. Both of these encourage - nearly force - large corporations to retain their profits, increasing the concentration of wealth, even where it would make more objective sense, absent perverse tax incentives, to be paying dividends and thus relieving concentrations of wealth.
Interesting assertion. However HuffPo writer
Bernard Condon points out that while corporations are alleged to be sitting on 3 trillion in cash, they are also buried in debt.
Who said anything about cash? I'm talking about profits and equity - which is the amount by which assets exceed liabilities, like debt. Debt has already been accounted for here.
Here's an example. Citigroup's equity is currently more than twice its market capitalization. If it could liquidate - which it can't because of regulatory rules - the stockholders would realize an immediate profit of over 100%. That kind of indicates that the money would be more productive in the hands of individual stockholders than it is in Citigroup's coffers. Unfortunately, due to the factors mentioned above, it's very difficult for Citigroup to return even a portion of that equity to stockholders.
Other examples of companies that have lots more equity than they can invest productively are Apple, Google, and Microsoft. Apple actually has zero debt.
And seriously, Huffington Post? They're practically a mouthpiece for Soros. No wonder they're obfuscating this issue in favor of billionaires.
The way to get them to spend this cash and employ people is to lower their tax burden and give them regulatory certainty for at least three to five years so that they know they won't be blindsided by politically-motivated tax increases and crippling (particularly environmental) regulations that will suddenly and unpredictably increase the cost of doing business...like Obamacare.
I certainly agree with regulatory stability and getting rid of Obamacare, but those don't have a lot to do with concentration of wealth: they're needed to help small businesses employ more people just as much as they're needed to help huge businesses employ more people.
My concerns on this topic are the huge businesses that have already passed through most of their growth curves. At some point large, stable corporations need a efficient mechanism to return capital to the investors so it can be reinvested in new growth areas. That's what we're currently missing.
The solutions are pretty simple, too. For example, make dividends tax deductible for the corporations that pay them and taxable as ordinary income for the recipients. That way corporations can repatriate overseas profits without a tax penalty, so long as they are paying them out to stockholders. The stockholders can then spend or reinvest the money, either of which helps create jobs.
The only problem is the big billionaire stockholders who are more interested in power and control than in money.
Seth wrote:The problem is, first, oil subsidies are a small fraction of entitlement spending, and cutting them won't have much of an effect on solving the budget deficit, and second, doing so raises the price of energy and fuel far beyond the cost of the subsidies and tax breaks, which costs consumers even more on a daily basis.
I agree with the first critique. Placard slogans don't qualify as solutions if they make no sense when you do the arithmetic.
I don't agree with the second. Anything that requires government subsidies to make business sense almost by definition makes no economic sense.
Me, I'd be happy to cut both oil subsidies and social spending.
