What an op-ed.
If this is really the "engine that drives him" - there is no doubt in my mind that he is wrong in everything economics to the core. He sounds like he's trying to create a "moral science".
The fact that someone, in any circumstance can "go Galt" is what's interesting, and how it doesn't quite work that way in politics - not wether somone did, or wether it ought be done.
"As in a kaleidoscope, the constellation of forces operating in the system as a whole is ever changing." - Ludwig Lachmann
"When A Man Dies A World Goes Out of Existence" - GLS Shackle
Now that the company has gone under, I don't understand why none of the employees or group of employees aren't just seizing the moment to pick up the pieces and run the company themselves.
/sarcasm
The argument that business owners exploit their workers and should pay more is such a joke. Should people with a lot of wealth be forced to run these companies? If not, then where do people get off trying to get an outside agent (The State) to point a gun to them to tell them what they should and should not be doing with THEIR wealth?
There are several reasons why the employees do not purchase the business, I think I have captured the most significant here:
1. The current owners, the creditors, will be willing to take between 10 and 40 cents on the dollar in a liquidation versus having to add more loans to restart this failed business.
2. There is no way that the current employees can muster together a large enough downpayment to loan that much money. You see employees like getting to eat the cake, get paid salaries, without having to bake it, invest time and money to get it running. And to make matters worse, the US Gov entices the employees to save their money in 401Ks that have large numbers of restrictions on what the owners of the money, the employees can do with it. These 401K piles of money are normally not allowed to be put back in the original business and if I was an employee I would not want it there either. But you can see the market distortion that if a group of employees want to use half their savings to restart the company they can not do so.
The current labor realationship only makes the people in 1 and 2 above less willing to put in more money.
3. The US Federal Gov in its infinite wisdom dictates that Hostess is not worth saving but large banks and automakers are.
I'm hoping Bob Murphy has a field day with this article.
What a joke, and the people who commented on the page as well.
Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.” Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today.
Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.”
Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today.
You could say that if the tax rates were lower, then the growth would have been even more spectacular. However, you cannot prove that. It's like saying, "Without the stimulus, it would have been much worse." Of course, we all know that it was worse with the stimulus and it would ahve been better without it. And obviously, there are more considerations to economic growth than just tax rates. It seems that more available capital to the private sector is the most fundamental aspect of it, though. I think Krugman's implication is that high taxes do not impede economic growth.
I just had a field day with this on that sexy new blog that just opened up
Awesome article, Neo. I'd love to contribute to that blog after I get some time to get back into the books.
That's the blog that everyone was talking about participating in, no? Very nice.