Category Archives: Business

1 Reason The State Department Turned On #RexTillerson: He Tried Trimming Budgets & Getting Rid Of Deadwood

Business, Economy, Federal Reserve Bank, Free Markets, Government, Political Economy, Taxation, The State

The Economist notes that Rex Tillerson was a poor secretary of state—but not for the reasons I would advance.

One reason for their opinion is that, “Disastrously for morale, he declined to defend his own department when the White House proposed cutting its budget by 25% or more … Mr Tillerson squandered goodwill with a corporate restructuring that felt to many staff like an invitation to resign. At one point, outside consultants sent round a questionnaire asking: “To optimally support the future mission of the Department, what one or two things should your work unit totally stop doing or providing?” (“Trump Unbound: In foreign affairs, America just moved closer to one-man rule,” March 17, 2018.)

TILLESRSON TRIED TO CUT GOVERNMENT! Defending your employees, The Economist here equates with increasing or maintaining the budget for the department, it diplomats, envoys and other career and or deadwood staff.

State institutions are self-reinforcing and not amenable to reform; they grow through failure.

So while it would be nice if state institutions were able to reform, because of the structure of incentives, the state cannot be corrected. The incentive structure underlying state institutions is antithetical to reform.

To correct processes that may be killing people—affirmative action, when the subject of special privileges isn’t qualified—you have to cut budgets in the billions. This likely will never happen, in state institutions, because they don’t abide by the profit motive. So to express belief in this is to express belief in the possibility of the state fixing itself.

The libertarian grasps that the state grows through inefficiency. The more it bungles—the greater its budget will be. Economically, the state’s incentives are inverted.  A private company, on the other hand, grows through economic and performative efficiencies; by singles the customer. The state is the opposite. As a monopoly, it need please nobody. For example, the education system is a giant failure.  Will it be scrapped? Of course not. The system will reward itself with MORE, not less, funds to fix the problem.

This is a structural fact of the state.

Why can the state grow and prosper through inefficiency? Because it has access to the funds of an indentured third party, taxpayers, and has the promiscuous use of the printing press.

A private institution can come back from the abyss, because, economically, it will go bust if it doesn’t start pleasing customers. However, if, like the Florida bridge collapse, a private enterprise is working in tandem with the state, then taxpayers bail it out.

Profit is privatized, loss is socialized.

Most people no longer read or understand the economics of the state. Ten years ago, I had readers who had at least read Hazlitt’s Economics in One Lesson.

 

Bill Gates Advocates Higher Taxes, While Famoulsy Using His Charitable Foundation As A Tax Haven Of Sorts

Business, Celebrity, Taxation, Technology

What a so-and-so! Bill Gates, like Messrs. Buffett, Zuckerberg and Musk, shovel their “fortunes into a charitable foundation,” which “has the happy side-effect of reducing tax bills, too—meaning that billionaires’ schemes can leave poorer taxpayers to fill in the gaps in public spending.”—The Economist, “Billionaires and the Falcon Heavy.”

“He’s learned the art of virtue-signaling hypocrisy from his bridge buddy,” mocks investor Clifford Asness.

Microsoft founder and billionaire … Gates says he should pay more in taxes and that the government should require other superwealthy people like him to contribute “significantly higher” amounts.
“I need to pay higher taxes,” Gates, who is worth over $90 billion, said in an interview with CNN’s Fareed Zakaria on Sunday.
“I’ve paid more taxes, over $10 billion, than anyone else, but the government should require the people in my position to pay significantly higher taxes,” he said.

“Billionaire Bill Gates says he should pay ‘significantly higher’ taxes.”

UPDATED (12/26): So You Know: Trump Tax Relief For Individual Workers Sunsets In 2025

Business, Donald Trump, Individualism Vs. Collectivism, Political Economy, Republicans, Taxation

“Really it was very nice to work as a collective towards a unified nation,” intoned Ivanka Trump, who lobbied hard—and successfully—for the Trump Tax Bill, passed.

Only a handful on the “Right” are daring to challenge the fairness of this Bill to individual taxpayers. Business is still über alles in Trump’s GOP.

Question (if one is allowed to question in strictly bi-partisan America): Under President Trump’s Tax Bill, ALL individual tax relief is said to sunset in 2025. Why? Why is Business above all?

The Economist (“Over the Hill: Tax reform has passed. What now?” 12/20):

Workers will benefit from across-the-board cuts in income taxes until 2025, after which, if Congress takes no further action, most levies for individuals will return to today’s levels or even rise.

AND: “Tax reform: How the Republican tax bill compares with previous reforms” 12/9:

… the Senate bill’s cuts to individual income taxes are to be phased out after 2025, to keep the costs down. What is initially a tax cut for most lower- and middle-earners will turn into a tax increase, because of changes to how tax brackets will be adjusted for inflation.

UPDATE (12/26):

Millionaires on average will get an extra $69,660 boost from Trump #TAXPLAN. Those with less than $10,000 will get an extra $10 to play with. … Things change however once 2025 rolls around. If no change is made, what were tax cuts will become tax hikes, even relative to current law. A majority of Americans in a decade’s time will then pay higher taxes, including 69.7% of the middle quintile.

MORE.

Bad Things Legitimized Under Trump, On The Welfare & Warfare Fronts

Business, Donald Trump, Foreign Policy, Homeland Security, Intelligence, Republicans, Taxation, War, Welfare

Has anyone notice that:

1. Transfer programs, welfare, have gained populist legitimacy under President Trump?

[Expanded] is the child tax credit … allowing families who owe no federal income taxes to still claim up to $1,400 of the $2,000 child tax credit, up from $1,100 in the original version.

2. The taxpayers most stiffed are now individuals, more often than not from humble beginnings, whose talents and hard work have netted them a high income. A glance at the Bell Curve explains why this cohort has no political clout: they’re a statistical minority.

Also legitimized under Trump is permanent warfare. You can say, “our forces in Africa,” and nobody, left or right, will question our sacred military’s right to be in over 100 countries conducting maneuvers. America’s borders remain porous.

3. “All of the individual tax breaks will expire at the end of 2025.” In other words, tax cuts for businesses are forever, tax cuts for individuals merely temporary.