Again showcasing that you cannot read or comprehend the link I posted. I know it's long, but do try to make it through before resorting to ignorant snark.
P.S. I was happy to drop it, but keep dredging it up if you want TW.
Income Inequality
- Thread starter CharminTide
- Start date
P.S. I was happy to drop it, but keep dredging it up if you want TW.
Current shareholder supremacy:
The consequence of shareholder supremecy:
Codetermination has been well-studied in the German economy:The shareholder value era has pretty clearly brought about an explosion in inequality in the United States. It succeeded, for starters, in greatly increasing the value of shares of stock in the English-speaking countries where Friedman’s doctrine has been most influential.
You can see this in the evolution of a ratio known as Tobin’s Q — the value of all the shares of stock outstanding divided by the book value of everything publicly traded companies own.
Historically, this ratio was well below 1, and it remains below 1 in Germany and Japan, where shareholder value does not reign supreme. But in the US, Britain, and Canada, the Q ratio has soared — meaning the financial value of corporate ownership has risen faster than the actual growth of the underlying enterprises — leading to huge increases in wealth for people who own shares of stock.
Since 80 percent of the value of the stock market is owned by about 10 percent of the population and half of Americans own no stock at all, this has been a huge triumph for the rich. Meanwhile, CEO pay has soared as executive compensation has been redesigned to incentivize shareholder gains, and the CEOs have delivered. Gains for shareholders and greater inequality in pay has led to a generation of median compensation lagging far behind economy-wide productivity, with higher pay mostly captured by a relatively small number of people rather than being broadly shared.
Investment, however, has not soared. In fact, it’s stagnated.
The heterodox economist William Lazonick of the University of Massachusetts puts the thesis very squarely, arguing that “from the end of World War II until the late 1970s, a retain-and-reinvest approach to resource allocation prevailed at major U.S. corporations.” But since the Reagan era, business has followed “a downsize-and-distribute regime of reducing costs and then distributing the freed-up cash to financial interests, particularly shareholders.”
LINK
Reading this I think about the casual factors beyond the ripping out of financial regulations beginning with the Reagan Administration. To say the least I have never had a positive impression of Alan Greenspan who presided over the Feds regime of dropping money from helicopters leading directly to the carry trade, the creation of financial instruments of mass destruction, the housing bust and the great recession.
In concert with this Clinton signed NAFTA and we supported entry of China into the WTO with effectively no controls on illegal/unfair trade practices.
Effectively our economic policy has incentivized corporations movement to a financial model for wealth creation basically by forcing them away from their previous model of wealth creation through manufacturing.
It is basically impossible for a US business to compete with Chinese manufacturers and their government subsidized illegal trade policies. US CEO's are paid based on their ability to re-engineer their businesses away from outdated/unworkable means of value creation to new service based/cash annuity business models.
US Corporations did not transition to this ultra short term stock manipulation business model in isolation. They were effectively driven to it by completely ineffective public policy.
From the article.
I'd have to see this developed because I do not believe that GM in 1955 had any ethic other than profit maximization. I suppose it's possible that GM sought social responsibility, but I would have to see this assertion proven.
On this Warren and I are in agreement. I have long held and stated on this board. If a CEO has a contract with a corporation whose stock is selling at $50/share, and if he gets that stock up to $100/share, the company will give him 100,000 shares, then that CEO will have a powerful incentive to hide liabilities and emphasize assets until the corporate profits statements look so good the stock rises to $100, so he can cash in. I believe this was part of what was going on at Enron. It is in the moral neighborhood of paying $1 million bonus to a building contractor if he can use substandard materials in building a high-rise and get the fraud past the inspectors. I dare say such a contract would be illegal in most states. Why we allow the financial equivalent to exist is beyond me.
Where does this money go now? Do the rich smoke it?
Since the bottom half of American society owns no stock, I expect the effect of this bill on domestic income inequality, should it come to pass, to be indirect and minimal. One can always hope, I guess.
And, the law of unintended consequences would lead one to believe that corporations might not react exactly the way governments want them to.
Given the Trump budget proposal and the two terms of Bush your reference to one party wanting to spend like drunken sailors must be in reference to the Republicans.
Fiscal responsibility is not a characteristic of any administration Democrat or Republican in my recollection.
I believe that we both would be very skeptical that any future administration would have the political will to turn back even a portion of the corporate tax cut just implemented.
Without pouring over thoughtful economic projections into the future I would envision a Greek type restructuring where our bond holders would force this type of belt tightening in return for refinancing our debt.
Not very long ago we had an opportunity to go way out on the maturity curve with our 30 yr. bonds with effectively zero interest which would have significantly reduced our debt payments. We didn't take advantage of that and now that time has passed.
We will have plenty of early warning when long term yields begin to climb. The bond vigilantes haven't made an appearance in several years but they are in the wings. There are some significant displacement in the markets ahead.
So in layman's terms, everyone who isn't in the super rich isn't getting their fair share and needs to be compensated more? Is this what the fundamental argument of this discussion is about? Because if I need to walk into my boss' office and demand a raise by goodness I will.
i think it is more that the system is continually getting rigged in favor of the super rich at the expense of everyone else.So in layman's terms, everyone who isn't in the super rich isn't getting their fair share and needs to be compensated more? Is this what the fundamental argument of this discussion is about? Because if I need to walk into my boss' office and demand a raise by goodness I will.
When you say "system" are you talking about Wall Street or something else, which also includes Wall Street? The reason I'm asking isn't to be facetious but to get some parameters to the discussion so people aren't discussing about two different things. When someone says "income inequality" it's like saying "social injustice". It's a big umbrella and a lot of things fall under it.
No, I was thinking about the party that proposed a health care law that was destined (or to listen to my Democrat lawyer buddy speak, perhaps designed) to fail thus forcing the adoption of a single-payer system, or the party talking about Medicare-for-all (costing an additional $3,260,000,000,000/year).
Not since Ike. And not really since Andy Jackson (president the last time the U.S. paid off the debt entirely).
And that is part of the problem.
Maybe but the US GDP is about 60 times that of Greece and Greece can remain attached to the EU/German teat, but the U.S. are on their own.
That is putting it mildly. Like the Germanic invasions of the Roman Empire were an "immigration problem."
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I don't want to take the time to debate health care here it would be somewhat of a waste of time for both of us. There are solutions out there if we considered the public interest that exist and not the special interest in control of Congress. Your comment on cost requires one to suspend reality for a moment to forget that health care spending in the US is already double per capita of that of other developed economies.
My Friend TW, I thought that the ACA decreased the budget deficit. My only comment on health care before this thread is hi jacked
Tide HSV excepted of course.
Listen to a lawyer??
Tide HSV excepted of course.
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Not sure that is true. Sounds like a separate debate. I think there is no question that universal single-payer health care will be add to the deficit.
He was my friend since 7th grade, before he became a lawyer.Listen to a lawyer??
For just $3,087,500,000 we can send every person in America these simple boot straps- https://www.amazon.com/Elastic-Moto...10924&sr=8-2-spons&keywords=boot+straps&psc=1
Boom, income inequality solved and pretty cheaply considering.
Boom, income inequality solved and pretty cheaply considering.
True, very interesting.
Much of the article makes sense to me with regard to how a company should conduct business but for the most part, I don't think it is the government's place to put in these rules and regulations.
More government regulation and another government office; I'm guessing the Libertarians on this board would have a big issue with this.
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