A Little Ludwig Goes A Long Way

Mitt pays $3M+ in taxes a year — that is a s%^tload of money, whatever the rate. And people want another $3M a year out of him? When I see numbers this size, I wonder more about where it is all going — shouldn’t we spend more time on what the heck the government is doing with all this money? OK yes I am a big fan of fairness and I hate the shenanigans that have gone on at our largest financial institutions, but we ought to spend a lot more time looking at what we are getting for all our tax dollars. I get more outraged about handouts to big banks than I do about this tax rate issue.

SOPA and PIPA are beyond dangerous — the whole tech industry has been railing like crazy against these, it sure would be good if the industry would focus instead on how to help content creators protect their IP and get paid for their work. I’d like to see authors and singers and movie directors get paid a lot of money, I think they should be allowed to charge whatever they want for their products, I don’t think any of us have the right to copy their works willy nilly. These industries employ a lot of creative people in good jobs in the USA and I think we should encourage this. It is easy to sit back and pee all over the movie industry and the Senate and House, but we should spend time on more productive activities that help solve the problems.

Apple blows it out. Ok I lied, I am not feeling contrary about Apple at all. Blowing it out of the water, customers love them, competitors in disarray, upside internationally and in PCs, iPad 3 and iPhone 5 and Apple TV opportunities ahead of them. Apple has only their own egos to fear.

From today’s NYT article on Apple’s offshore manufacturing:

“We sell iPhones in over a hundred countries”, a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

I’m not completely angry about this view, this might be the correct and legitimate attitude for a multinational corporation. But it is clearly not the correct attitude for a US citizen and participant in the political process. Citizens do have an obligation to solve America’s problems.

So someone asked me “Hey, with your views on the Occupy movement, how do you feel about the fact that the top 10% pays 70% of federal income tax? Is that fair?”

First of all, this is NOT the Occupy issue that gets me most excited — I am much more interested in limiting corporate political contributions. But I do have a view.

I have no idea if these statistics are accurate, but I assume that the top 10% does pay a much larger share of the total income tax load. So is that fair? Well, I am guessing that the top 10% also own a huge of the Audis and BMWs in the country, eat a disproportionate share at the finest restaurants, take a huge of the vacation trips to Hawaii, have a disproportionate share of the nicest houses, etc etc. Gosh that doesn’t seem fair either.

The goal of our market system and society is not fairness in outcomes; there is always going to be variance in outcomes, sometimes due to skill, sometimes due to luck. Some people will earn a lot more, and will get a greater share of the positive benefits as well as costs. Rather, the goal is equality of opportunity — every citizen should have the opportunity to achieve their dreams, no doors should be closed at the start of their life/career.

Thus I don’t get cranked about higher tax burdens or higher tax rates for the wealthy. So someone who is extraordinarily successful has to carry a higher share of the cost of operating our society, well boo hoo. I do get more cranked about issues that affect equality of opportunity — lack of funding for public schools, lack of equal healthcare for all children, lack of access to other education for lower income students (and this is why we give a lot to scholarship programs at OSU, at UW, at the Point Foundation, etc).

Outcomes will never be equal and we shouldn’t try to level them out, the free market system is powerful and we need to nurture it. But we should try to ensure that everyone has an equal opportunity to pursue happiness — and to me that means everyone gets a fair starting point: a reasonable education, good health, and no crushing debt load to start out.

I’ve been fortunate. I had great access to education due to support from my parents, and I was lucky to be at Microsoft during a very heady period for the company. I am clearly a 1%er. And I understand that my good fortune is part luck, part due to the support of others, part due to the free market capitalistic structure that our society has created. A little bit of my fortune is due to my hard work but many people have worked hard and received less — I’ve been lucky.

I’ve been watching the #OccupyWallStreet activity with interest. In my heart, I have great empathy for the movement. Growing up in flyover country, I never felt very warm about the government and financial elite on the East Coast, I viewed them with suspicion. And then having spent most of my adult life on the West Coast, surrounded by entrepreneurial activities at work and liberal attitudes, I have not grown to feel any warmer about large corporations or government involvement.

So when I see people expressing their feelings of lack of justice, lack of representation, antipathy towards the entrenched financial and governmental powers, I tend to empathize with the people on the street. And I applaud heartily their active peaceful engagement in the political process — they have the right to take to the streets in peaceful fashion, they have the right to be heard, they are not doing anything to harm anyone. So without even really understanding the goals of the movement, I applaud and encourage the people involved. It is hugely positive to see people have this level of passion about the issues in our society, and to be fully engaging in participative democracy. Go go go!

A couple of smart and committed young people sent me this “Why Occupy Wall Street? 4 reasons” video as a way of explaining why they are participating in the demonstrations. It is a worthwhile watch. The video lays out 4 principles:

• Re-regulate the financial institutions by reinstating Glass-Steagall. I am not informed enough to know the exact form of banking regulation we should have, but the financial services industry has demonstrated that it is not effective in controlling its own risk profile, or limiting the impact of their risks on the rest of society. A discussion about regulation and risk limitation seems like a good thing.
• Audit the Fed. Certainly greater transparency around the Fed, and its relationship with major financial institutions, seems to be a good idea. The relationships between the Treasury, the Fed, and major financial institutions, based on people circulating between all three, need more openness and examination and perhaps regulation.
• Reverse #08-205 by amendment. I feel very strongly about this one. Corporations do not have the right to vote, they should not have the right to manipulate the political process, they should be barred from funding candidates and causes. I see nothing good from allowing corporations to spend money on politics, it is corrupting. Fully fully support!
• Overhaul 1%/Corp tax code. I am not sure exactly what this means, I can tell you I have paid a lot of taxes, a lot. I am not against paying a fair rate and I am not against a progressive tax. I’d be all for a simpler system because my tax return is a huge freaking disaster. I think there is a larger issue here though, I don’t think the problem is all on the revenue side, I think you have to look at the expense side too and rein in government spending. So — all in favor of fair taxes, but we need to look at the spending side too.

I know that not everyone in the #OccupyWallStreet demonstrations embraces these exact 4 principles, so I am not saying I approve 100% of the demonstrator’s goals — but these particular points seem like great discussions to have, and I fully support the efforts to confront us all with these issues.

One thing I am wondering now is this — what exactly do the 99% want those of us who are supportive to do? How can I be effective in advancing the discussions around these points? Demonizing the 1% is not an effective strategy, some of us embrace reform, and we need a way to engage on the issues in a productive manner. Don’t paint us all with the same brush. Help us to help you.

Having spent way too much time with healthcare providers, insurance companies, etc, in the last 4 years, I certainly support change. Almost any change, change for change’s sake, is worth trying, because the system is not very satisfying right now. We should clearly try to do something. So I am inclined towards supporting the new proposals in Congress. I need to get smarter about the details.

In general, shifting power away from the monied interests — insurance companies, pharma companies, large healthcare organizations — and towards the individuals — patients and doctors — is the right thing to do. Do the proposals achieve this? I don’t know. Certainly some insurance companies are pissed off which is probably a good sign, tho other pharma and insurance companies are funding support ads which is concerning — if they are so excited about the proposals, it probably means money in their pockets, and that money is coming from someone.

I kind of hate the fact that all these large organizations — pharma, insurance cos, the various NGOs — are even participating in the discussion. My view is that only voters/citizens should participate, it should be illegal for all these other entities to fund ads and lobbying efforts.

Journalists Rejoin Relieved Friends, Family in U.S. - washingtonpost.com — it is awesome that these folks have been freed, and it is generally a good thing that we have found a way to talk to North Korea and have a success at something, here’s hoping that this event will contribute to calmer relations with the country.

But as a country we have expended a lot of dollars and diplomatic chips to get these folks free. I hope that we present the folks with a big bill for services rendered — if you go poking around in dangerous places in the world (like these folks, who goes hiking in Iraq/Iran for gosh sakes, was that really the only place you could think of to go hiking??), you should not expect that all the other taxpayers in the country are going to carry the cost of rescuing you. Yes we will rescue you, but there will be a reckoning for services rendered.

• FT.com / Comment / Opinion – Ten principles for a Black Swan-proof world. Man some good common sense in here.
• Business plans a waste of time. Sounds like your typical entrepreneur would be far better off meeting people and networking than spending time on a plan.  There is probably some minimum level of plan worth getting to, and then after that it is not clear

Dave Chen pointed me towards The Big Takeover, a great telling of the AIG story.

People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’etat. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations. The crisis was the coup de grace: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — “our partners in the government,” as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington’s deregulation of the Wall Street casino. “It’s all about the regulatory environment,” says a government source involved with the AIG bailout. “These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that.”

The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.

“But wait a minute,” you say to them. “No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what’s left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?”

But before you even finish saying that, they’re rolling their eyes, because You Don’t Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they’re on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.

Who is getting the bank bailout money – CNNMoney.com. Wow, $10.5Trillion so far. $35,000 from each US citizen’s pocket. To pay for years of poor decision making, greedy decision making. F%^k.

“That would drive managers out of the United States.” via Treasury Maps New Era of Regulation – WSJ.com.

So just wondering, why would driving hedge funds out of business in this country be a bad thing? How many inventions have they funded, how many jobs created? What is the biggest success story for the country to come out of a hedge fund? I know that individuals have certainly had some huge positive economic outcomes, but what has been the big positive outcome for the country? I may be completely ignorant about the big positive success stories, I need to learn.

Ben was so right | The Big Picture. The backlash against AIG bonus backlash is in full swing. I for one am glad though that the bonus issue has exploded. While the dollars involved are not material to our country, the message and discussion about values is perhaps the most important issue to our country.

• “The prospect of hundreds of billions of newly minted dollars coursing through the global financial system caused currency traders to thrash the greenback by almost 3%.”
• ” The Fed is â��now bringing out all the ammo in its arsenalâ��, according to Rosenberg.”
• “And, for those who think the time is ripe for upping their equity allocations, Mr. Rosenberg would like to remind them of what happened to buyers of the Nikkei 225 after Quantitative Easing was tried in Japan. Longs were treated to a 20% rally that lasted six weeks before stocks set new lows just four months later. Ultimately, predicts Rosenberg, QE helps bond buyers more than stock buyers.”
• “But since I doubt dollar holders will sit idly by as the paper they hold shrinks in value, I see a quick and happy resolution as being a low probability event. Then again, other central banks (the BOE & SNB) are engaging in the same currency-busting policies, so itâ��s not altogether clear whether the worldâ��s fiat currency system can survive a war of attrition.”
• “Weâ��ve arrived at this unfortunate juncture in our nationâ��s financial history because of reckless behavior in both New York and Washington D.C.“
• “Let us all hope the U.S. experiment with pushing the button on Quantitative Easing is more successful for us than it was for the Japanese. But given all the behavior that brought us to this point, we will need to be both lucky and good from this point forward.”

“It’s time to let the sun shine in on this mess.” via Scott Loftesness: The AIG Firestorm Spreads.

Hear hear.

Quotation of the Day: “I’m Captain Asphalt.” TIMOTHY J. GILCHRIST, newly appointed stimulus czar for New York State.

via Today’s Paper – New York Times.

Love this. Is civil engineering going to become cool again?

Home | Recovery.gov. — should check this on at least a weekly basis.

Suit Names 2 Judges Accused in a Kickback Case – NYTimes.com. This case just stuns me. The plea agreement is way too lenient. And every kid who passed thru these judge’s courts should be freed immediately and have any judgement stricken from their record.

Warren Buffett: “We donâ��t know the perfect answers on it. What we do know is to stand by and do nothing is a terrible mistake…” via Marginal Revolution: The best argument I’ve read for the stimulus.

Force Structure FY09 Beyond. — the armed forces wrestling with massive budget cuts. And the global manufacturing collapse — not a pretty picture. It is hard to see how we are not going to have significant unemployment issues for years.

Marginal Revolution: GM fact of the day. Wow. Market cap 1/3 of bed bath and beyond. Worth 10% of apple’s cash. 96K employees but paying benefits for 1M people. Some of the numbers are a little misleading but still.

You disappoint me, America: $10,000 worth of iPhone farting apps sold (so far). We are off investing in high concept, deep science startups that have to do all kinds of heavy lifting to close sales. Sometimes I think we try too hard.