patrick.net

Consider a wealth tax instead of an income tax or sales taxes or pay caps. By wealth I mean all land, stocks, bonds, and everything else which is owned in the name of a particular person.

A 2% annual tax on all accumulated wealth, levied monthly as 0.17%, would be sufficient to replace all other taxes and would have these substantial benefits:

* The tax rate on your income would be zero, so working people could very rapidly accumulate assets.
* Vast wealth would also mean vast taxes paid every year, slowing down the formation of hereditary aristocracy.
* It is hard to hide vast wealth, especially land.
* The tax would never reduce anyone's wealth to zero. It would take about 35 years of sitting on uninvested assets for them to be reduced by half - but if your investment income were greater than 2%, you'd gain and never lose.
* It would dramatically reduce paperwork, since incomes and sales would not need to be tracked at all anymore, and land and other asset ownership is already tracked.

By wealth I mean all land, stocks, bonds, and everything else which is owned in the name of a particular person.

Let's focus on real properties. Once you start taxing abstract ownerships there will be all kinds of distortions.

This statement is completely idiotic.
The decisions made by the executive branch directly affect the viability of the company.
The decisions made by the workers may affect the quality of a small subset of product in the vast majority of cases.

Dan8267 says

The very idea that executives are some how more important than the people producing the goods or services is complete nonsense that is perpetuated solely because those at the top of the hierarchy are precisely the ones who get to spend the marketing dollars.

SoftShell says

The decisions made by the executive branch directly affect the viability of the company.

OK, so why not hire CEOs from India for less than a tenth of what US CEOs are being paid?

Lots of Indians are damn sharp at commerce and willing to work for less. Or the Persians. Also excellent CEO material. Thousands of years of accumulated cultural experience with commerce. Or the Armenians? Really smart and even worse paid in their home country.

Why are only the workers outsourced, and never the executives?

SoftShell says

This statement is completely idiotic.

The decisions made by the executive branch directly affect the viability of the company.

The decisions made by the workers may affect the quality of a small subset of product in the vast majority of cases.

If executives were truly responsible for the vast majority of wealth production, then they are also responsible for every recession, every downsizing, every diminished of the quality of life of Americans. Somehow, they never accept that end of responsibility.

Meanwhile, the per worker productivity of American workers has over doubled in the past two generations while the real wages of workers has barely increased over the same time. And those increases in worker productivity have nothing to do with executives. We engineers created that boost in productivity by developing software and hardware which made people able to produce far more.

You assertion that the executive is the most important person regarding wealth production is wholly false.

Why are only the workers outsourced, and never the executives?

Exactly. Executives are not paid a lot because they are so much smarter or more productive than everyone else. They are paid more because they are closer to the money pot. It's that simple.

Capitalism rewards bargaining power, not productivity. The more control you have over the distribution of money, the more bargaining power you have.

A better economic system would reward productivity and thus encourage more wealth generation rather than more wealth control. The pro-capitalist crowd loves to state the assertion that capitalism rewards productivity, but that is mostly a lie. The biggest financial incentives are for doing non-productive and often counter-productive work, destroying the infrastructure for one's own gain.

Good question....so what's different with Indian executives versus WASPS??
maybe because their cultural values are different? (see women being raped on buses with mass demonstrations ensuing...)

SoftShell says

The decisions made by the executive branch directly affect the viability of the company.

OK, so why not hire CEOs from India for less than a tenth of what US CEOs are being paid?

Lots of Indians are damn sharp at commerce and willing to work for less. Or the Persians. Also excellent CEO material. Thousands of years of accumulated cultural experience with commerce. Or the Armenians? Really smart and even worse paid in their home country.

Why are only the workers outsourced, and never the executives?

Agreed.
and that is the flaw in the system. Salaried executive pay should always be linked to company performance.
If the company performs, the exec gets the big bucks and the worker ants get bonuses...
If not, everyone should get screwed...

Dan8267 says

SoftShell says

This statement is completely idiotic.


The decisions made by the executive branch directly affect the viability of the company.


The decisions made by the workers may affect the quality of a small subset of product in the vast majority of cases.

If executives were truly responsible for the vast majority of wealth production, then they are also responsible for every recession, every downsizing, every diminished of the quality of life of Americans. Somehow, they never accept that end of responsibility.

nah....u wrong.
the top people generate the contracts that sustain the company and the worker ants.
their decisions and actions have far more reaching effect than the assembly line ant.
I'm only on my thrid merlot nad i'm already potperforming u....

Dan8267 says

You assertion that the executive is the most important person regarding wealth production is wholly false

Why are only the workers outsourced, and never the executives?

I'm surprised you've never heard of the golden rule. They have the gold, they make the rules.

Meccos says

They are responsible. If a company goes under, the executives get blamed, not the common worker.

They may get blamed but they make damn sure they get all the money possible out for themselves first.

Meccos says

Steve Jobs however could not be easily replaced

For every Steve Jobs or Jack Welsh that truly produce for the shareholders there are a thousand mediocrities running in place taking tons of money out of the company while the shareholders get squat.

There is no reason whatsoever that CEO's today earn 15 times what they earned in relation to the average worker in the 1970's. The dividends aren't 15 times higher, they aren't even 3 times higher. It's the result of crony capitalism plain and simple. They all sit on each others compensation committees and are frequently from interdependent companies. It's an insider's game.

CEO pay in other countries is dramatically less, for comparable companies. CEO JP Morgan 4th largest bank in the world 19.3 million, HSBC third largest bank in the world paid 2.8 million although that was 2009. Maybe it's improved.

bob2356 says

It's the result of crony capitalism plain and simple

Bob once you own these companies or have any significant skin in the game, then perhaps you can decide how much these guys should get paid. Until then you have no say.

HOwever if you want to talk about crony capitalism, lets talk about the billions of tax dollars being stolen by corporations like Solyndra and the numerous other companies who have bought our politicians. We could go on further and discuss Freddie and Fannie as well...

The corporation itself requires a government charter.

A perfect example of a CEO making decisions based on his own paycheck is Bank of America. Moynihan's bonus is tied to BAC having positive earnings.

In 2011, BAC sold off many highly performing assets to "raise capital." (China Construction Bank, Blackrock, Balboa, which combined paid annual dividends of over $1.5 billion to BAC) One would think that if raising capital was the primary goal, then non-performing assets would be sold first. But if you sell non-performing or poorly performing assets, there is either a loss or little gain.

Doing that wouldn't have given BAC positive earnings...no positive earnings...no bonuses for Moynihan and other top BAC executives. Since they all make a salary of $950k but bonuses many times that, the bonus is where the real compensation lies. (Moynihan's 2011 bonus was over $6M in stock awards)

Oh I suppose they could dilute shares to raise capital as well, but then, they would be hurting themselves too because a major portion of their personal wealth is in company stock. AND I would wager that most of those who sit on their compensation board are also major shareholders....so this is why you rarely see raising capital twith equity. Using debt is much more common...

http://www.forbes.com/profile/brian-moynihan/
http://www.charlotteobserver.com/2012/01/19/2938009/bofas-selling-of-assets-has-a.html

Bottom line, Moynihan is a scumbag. It's just one example, but if they are this brazen with what everyone can clearly see with the companies money, what do you think they are doing with what everyone cannot see?

I am sure Moynihan's expense reports would shock and anger every shareholder.

FWIW, I currently own some BAC.

bob2356 says

For every Steve Jobs or Jack Welsh that truly produce for the shareholders there are a thousand mediocrities running in place taking tons of money out of the company while the shareholders get squat.

True, although I don't give Steve Jobs credit for inventing anything. Steve Wozniak gets my respect, Jobs does not. Jobs stole every idea he had from someone else, and most of what he advocates is polishing turds to make them nice and shiny rather than doing something useful or inventive.

Meccos says

Bob once you own these companies or have any significant skin in the game, then perhaps you can decide how much these guys should get paid. Until then you have no say.

The stockholders are the owners, I'm surprised you don't know that. The compensation committees set pay, not the stockholders. Most corporations don't give the stockholders any avenue to have a say in executive pay.

Pretty presumptuous assuming I don't own stock

Trifle says

Why don't we take this one step further? Why stop with the US? Do you realize that as American wage earners most of us make more than 90% of the rest of the world? Is this really fair? Did we really EARN this money? Wouldn't it make more sense to just transfer most of our wages to the rest of the world so we can all live on world average salaries. Most of the world hates us, not because of our rich, but because of our rich wage earners. Think of the goodwill wage redistribution will bring our country. not to mention the peace, freedom, and opportunity across the globe. We've got to stop being selfish and start thinking about other people.

Are you joking or is your naivete really at this level?

Dan8267 says

The only non-violent solution I can think of is for all the pissed off people to
start a new political party, to get that party elected in local government, and
work up the chain of power to the senate and house

We are far away from mass "violence." There are still tons of people at shopping malls and restaurants which indicates that they have the means to ability to borrow to sustain the system and hence likely have incentives to preserve it. And the rest of the masses are likely at home watching reality TV.

Dan8267 says

True, although I don't give Steve Jobs credit for inventing anything.

I'm not a Steve Jobs fan, just he was the example given. I think Jobs is one of the most overrated people in the world. His ego and arrogance far exceeded his accomplishments. I prefer people who just get the job done and let their accomplishments speak for themselves.

Job's first shot as CEO at Apple was terrible for the stockholders, other than ipo buyers and pre ipo vested stockholders. He was fixated on the idea of windows/mac and killed further development of the very profitable apple II. Apple actually did better under Sculley from a stockholder point of view.

People somehow forget that apple was very much a small niche player until the Ipod and Imac, mostly the Ipod. Macs only had something like 2% market share. Apple talks about the Imac being a smash hit, but it sold less than a million a year the first few years.

The ipod is the only Jobs product that was a big hit in his entire career. It wasn't that original. It was developed out of a platform called portalplayer that IBM was already selling as a mp3 player. The original part from apple was the interface, which was light years ahead of anything else at the time. The cash from the ipod finally let apple do some large scale engineering work on their computer lines and come up with good selling products to get some decent market share at long last.

bob2356 says

The stockholders are the owners, I'm surprised you don't know that. The compensation committees set pay, not the stockholders. Most corporations don't give the stockholders any avenue to have a say in executive pay.

Pretty presumptuous assuming I don't own stock

I never assumed you dont own stocks, but I do presume you do not own any significant amount of it, hence I wrote "until you have any significant skin in the game". The bottom line is, if you do not like executive pay in a company do not invest in it. Like I said,
Meccos says

Until then you have no say.

bob2356 says

The ipod is the only Jobs product that was a big hit in his entire career. It wasn't that original. It was developed out of a platform called portalplayer that IBM was already selling as a mp3 player.

Never heard of portalplayer. The first MP3 hardware player was the Diamond Rio which came out around 1999. Before that, IBM had a project codename Madison, official name EMMS that was an open system for purchasing and downloading music. Basically, it was ITunes way before ITunes.

Dan8267 says

bob2356 says

The ipod is the only Jobs product that was a big hit in his entire career. It wasn't that original. It was developed out of a platform called portalplayer that IBM was already selling as a mp3 player.

Never heard of portalplayer. The first MP3 hardware player was the Diamond Rio which came out around 1999. Before that, IBM had a project codename Madison, official name EMMS that was an open system for purchasing and downloading music. Basically, it was ITunes way before ITunes.

Apple took an existing, but unreleased, technology and put a very nice and unique interface on it. Here's a pretty interesting article from wired about the process.
http://www.wired.com/gadgets/mac/news/2004/07/64286?currentPage=all

Portalplayer was a chipset manufacturer. Ipods up until 2006 or so were Portalplayer chipsets. Looks like IBM never sold an MP3 player commercially. I just remember reading about some development work they were doing on products in trade magazines at the time. They looking for other uses for their microdrive.

IBM developed the 1 inch microdrive as a high capacity storage for digital camera's in the late 90's, but they recognized it would be ideal for high capacity mp3 players. I know that as well as doing some work themselves they shopped the product around to use in an MP3 player to several companies, but not Apple. The original Ipod used a 1.8 inch toshiba drive, but the mini's used the IBM (sold to Hitachi by this time) microdrive up until switching over to solid state in 2005. For camera's microdrives were much faster at writing than flash memory of the time.

The status Quo will never change, the rich are psychopathic parasites.
They have no empathy nor humanity, just empty shells painted to look like humans.

Change will only come with the adoption of a new universal holiday called Bastille day. If those that steal millions of times their share were separated from their head, the world would go to bed warm and fed.

RealityBites says

just empty shells painted to look like humans.

As I like saying, this movie was a documentary.

bob2356 says

Apple took an existing, but unreleased, technology and put a very nice and unique interface on it.

The Diamond Rio was released. Even more importantly, the MPEG 2 Layer 3 Standard (MP3) was developed by a lot of really smart people, none of which worked at Apple.

Apple also didn't the solid state memory that made modern MP3 players, smart phones, and tablets possible. Nor did Apple invent the wireless ad hock network technology or the LCD displays or the rechargeable batteries or any other technology needed for today's devices.

But hey, you are right that Apple put a nice looking, polished logo on the product and that makes it so much prettier. Where would we be without Apple?

Dan8267 says

Where would we be without Apple?

You make it sound like Apple's innovation was easy.

If it were easy, other companies would have beat Apple to market with the long list of things they got right, first.

Steve made the first useful personal computer (as opposed to hobbyist computer). A large part of the Apple II's success was actually due to Markkula, who was an avid PC users and pushed the company to create the floppy disk drive at a more affordable price. At any rate the Apple II was the best PC of the 1970s.

Steve then shipped in 1984 the Mac, and after its rough edges and design mistakes were largely worked out over the next two years the 1986 Mac Plus was arguably the best PC of the 1980s, in terms of utility for the money.

It worked extremely well with Apple's LaserWriter, which revolutionized how we worked with paper. HP had released its LaserJet earlier in 1984, but it was just a glorified LPR until well after the desktop publishing revolution got going.

Then Steve got booted out of Apple and then shipped the NeXT machines. The color NeXT computers were beyond state of the art -- about 10 years ahead of the rest of the PC industry. Of course, they were priced well above what PCs cost in the early 1990s, so they were more like personal workstations.

But NeXT got a lot right with that and thus far Apple's purchase of NeXT can't be considered a mistake.

The iPod got big because it was the first PMP to be small enough to carry in a pocket but with enough storage to hold most peoples' entire libraries.

The iPhone was an incremental advance on what other companies were doing, but, again, Apple was first to actually execute on what needed to be done.

Foremost was lose the stylus. Secondly, Apple actually spent the effort and hard lifting to get a pretty good OS and graphics stack working under the pretty interface, and that pretty interface was so smooth because Apple worked to get it right first. Android only achieved parity with Apple in this area with "Project Butter".

Nokia actually shipped phones with OMAP (which had PowerVR) before Apple did, but DIDN'T HAVE THE DRIVERS WORKING for the Power VR renderer.

While Apple not only had OpenGL ES working for developers in 2008, they also had a super-slick image API (called CoreAnimation) that exposed this rendering capability for all app programmers, not just OpenGL-based games.

Remove the innovations that Apple shipped first from our current tech life, and we'd have pretty limited capabilities.

One thing Apple missed was the optical mouse. Microsoft got HP's invention here to market well before Apple. 3D accelerators -- SGI, 3Dfx, nVidia -- that too advanced w/o Apple's involvement in the 1980s and 90s.

But other than that, industry has always been slipstreaming behind Apple, for most of my life now.