3 ms·

> That means that 1) wages are too low, and 2) taxes are too low. No, it does not. There is no correlation there at all. Not one person I know who has ever r

> That means that 1) wages are too low, and 2) taxes are too low. No, it does not. There is no correlation there at all. Not one person I know who has ever run a business would make that connection. Why? Because they understand business reality vs. the fantasies floating around out there. I'll give you just one easy-to-assimilate example: Economic collapse Q4 of 2008. I was able to keep about 20 people employed because we were profitable enough prior to this event to, as many like to say, hoard cash. I hoarded cash like there was no tomorrow. Why? Because I had played that game and learned a few valuable lessons. Without this war chest I would have been forced to lay off all twenty of them and probably even a few more people. Instead I made the decision to keep everyone employed and, yes, lose money for over a year (2009 and 2010 were horrible). We used that money to pay people's salaries and even more hoarded money to actually make the decisions to devote that time to develop new products. In fact, it got so bad that I actually paid a few salaries with credit card money for a few weeks. It was awful, but I was committed to keeping everyone working. We came out of the recession drained of cash but with new products and a team that was as loyal to the company and the mission as I was to them. Higher taxes or ridiculous wages (like $15/hr minimum wage) would have certainly put a bunch of people on the street despite my best intentions. My standard recommendation to anyone who thinks they understand the economy is to write down their ideas/ideology today. Then mortgage the house, take out a loan or do whatever you need to do to self-fund a business (no playing with other people's money here). Work your ass off to grow it to a non-trivial business. Check what you wrote every year for ten years. Somewhere between five and ten years you are almost guaranteed to ask "What the fuck was I thinking?". And that's when you'll understand. "A man holding a cat by the tail learns something he can learn in no other way" --Mark Twain

germinalphrase 9y ago
Would you care to share your ideas/ideology as informed by your experiences?
- rebootthesystem 9y ago
  These are long and complex topics hard to discuss on a platform like HN. In general terms though, this view that business is bad, evil and greedy and that it (as an amorphous mass) conspires to abuse workers, drive down wages and hoard cash is a fantasy of unknown sources. Not reality. Being in business is hard. Very hard. Nobody enjoys unlimited cash until you've achieved great success. Even then, one could argue there's never enough cash. Most businesses operate at the ragged edge of failure for N years (variable based on the nature of the business and the industry). I don't know many businesses that could survive a 6 month to 1 year negative event. We were fortunate because we had a number of really good years and, yes, hoarded cash because I've always been of the idea that preparing for that moment was important. Ask almost any business owner if they could survive if business fell by 50% to 75% overnight and most are likely to say "no". And so, a business HAS TO seek lowest costs and maximize revenue in order to remain healthy, grow, develop new products and survive glitches (be they due to the economy or business issues). Forcing randomly high minimum wage on businesses is locally destructive. A business, if it has the option and is forced to do so, will always find ways to control it's costs. In the case of skills and function that can be off-shored, well, a "we pulled it out of our collective asses" high minimum wage having no relationship whatsoever to local economic reality will result in those jobs being exported to the extent possible. So I'll say, based on my experience, artificially manipulating minimum wage isn't in the best interest of the local economy. You force businesses to act against the interest of the local population as they could very well be facing a choice between remaining a viable concern and exporting jobs in order to stay alive. Bad idea. Taxation is another interesting topic. We should all be for the absolute lowest taxes possible. Somehow we've migrated into this thinking that ever-higher taxes is a good thing. It isn't. And it isn't because of a number of reasons, both local and global. At the global level it is easy to see that an environment where, to exaggerate, a government charges businesses 0% taxes will be far more competitive in the short and long term than a location where government, let's say, punishes businesses with 100% taxation. In other words, we take all of your profits at the end of the year. It should be enough for you to survive and make zero profits. The asymmetry of these two scenarios should be obvious. Identifying where destruction will occur in the long run is easy. At the local level it should be equally easy to understand that we should pay just enough taxes to pay for what we need out of our society in order to have it function as desired. This has many convoluted facets. Health care is one of those. Can't get into all the details here. At a fundamental level taxation is a necessary part of a society. We need to pay for stuff. We need people to administer and run various things. And we all need to pay for that. At the same time, we need to also demand that the people and organizations we effectively fund and hire to perform those functions do so efficiently and without waste. We don't do that. We are all too busy to force optimization of this very important metric. And so, somewhere between 25% to 50% of our money is wasted. It's like giving your kids $1,000 a month for college and he proceeds to burn 80% of it. And, of course, the solution is to give them more money. No. Not at all. The solution is to use the available funds as efficiently as possible. More money makes the situation worst. Taxing corporations is a weird thing to me. A company with 1,000 employees has a thousand people paying taxes. Now we take their work product and tax it one more time. The people we hire to run the town, city, state are taking a dip into this economic activity twice. And then our money is taxed again at the gas pump, the supermarket, the grocery store, our property is taxed, utilities are taxed, our investment income is taxed. We have somehow created a system where nearly every single activity is taxed in some form. If this money were used effectively it'd be one thing. Yet, it isn't. Where I live (Los Angeles area) roads are in dire need of maintenance despite the fact that we've been pouring tax money into the very agencies that are supposed to be done this work. It's a mess. And so, focusing on punishing companies through higher taxation levels seems completely counter intuitive, it will make things worst, not better. Our focus ought to be in forcing a change where it matters most: The effective utilization of tax revenues. We ought to demand that they do more with less taxes. The surplus we would have by paying less taxes for the same services would then go into the economy and have positive effects. Got to stop there. Real work to be done.

germinalphrase 9y ago

Would you care to share your ideas/ideology as informed by your experiences?

rebootthesystem 9y ago
These are long and complex topics hard to discuss on a platform like HN. In general terms though, this view that business is bad, evil and greedy and that it (as an amorphous mass) conspires to abuse workers, drive down wages and hoard cash is a fantasy of unknown sources. Not reality. Being in business is hard. Very hard. Nobody enjoys unlimited cash until you've achieved great success. Even then, one could argue there's never enough cash. Most businesses operate at the ragged edge of failure for N years (variable based on the nature of the business and the industry). I don't know many businesses that could survive a 6 month to 1 year negative event. We were fortunate because we had a number of really good years and, yes, hoarded cash because I've always been of the idea that preparing for that moment was important. Ask almost any business owner if they could survive if business fell by 50% to 75% overnight and most are likely to say "no". And so, a business HAS TO seek lowest costs and maximize revenue in order to remain healthy, grow, develop new products and survive glitches (be they due to the economy or business issues). Forcing randomly high minimum wage on businesses is locally destructive. A business, if it has the option and is forced to do so, will always find ways to control it's costs. In the case of skills and function that can be off-shored, well, a "we pulled it out of our collective asses" high minimum wage having no relationship whatsoever to local economic reality will result in those jobs being exported to the extent possible. So I'll say, based on my experience, artificially manipulating minimum wage isn't in the best interest of the local economy. You force businesses to act against the interest of the local population as they could very well be facing a choice between remaining a viable concern and exporting jobs in order to stay alive. Bad idea. Taxation is another interesting topic. We should all be for the absolute lowest taxes possible. Somehow we've migrated into this thinking that ever-higher taxes is a good thing. It isn't. And it isn't because of a number of reasons, both local and global. At the global level it is easy to see that an environment where, to exaggerate, a government charges businesses 0% taxes will be far more competitive in the short and long term than a location where government, let's say, punishes businesses with 100% taxation. In other words, we take all of your profits at the end of the year. It should be enough for you to survive and make zero profits. The asymmetry of these two scenarios should be obvious. Identifying where destruction will occur in the long run is easy. At the local level it should be equally easy to understand that we should pay just enough taxes to pay for what we need out of our society in order to have it function as desired. This has many convoluted facets. Health care is one of those. Can't get into all the details here. At a fundamental level taxation is a necessary part of a society. We need to pay for stuff. We need people to administer and run various things. And we all need to pay for that. At the same time, we need to also demand that the people and organizations we effectively fund and hire to perform those functions do so efficiently and without waste. We don't do that. We are all too busy to force optimization of this very important metric. And so, somewhere between 25% to 50% of our money is wasted. It's like giving your kids $1,000 a month for college and he proceeds to burn 80% of it. And, of course, the solution is to give them more money. No. Not at all. The solution is to use the available funds as efficiently as possible. More money makes the situation worst. Taxing corporations is a weird thing to me. A company with 1,000 employees has a thousand people paying taxes. Now we take their work product and tax it one more time. The people we hire to run the town, city, state are taking a dip into this economic activity twice. And then our money is taxed again at the gas pump, the supermarket, the grocery store, our property is taxed, utilities are taxed, our investment income is taxed. We have somehow created a system where nearly every single activity is taxed in some form. If this money were used effectively it'd be one thing. Yet, it isn't. Where I live (Los Angeles area) roads are in dire need of maintenance despite the fact that we've been pouring tax money into the very agencies that are supposed to be done this work. It's a mess. And so, focusing on punishing companies through higher taxation levels seems completely counter intuitive, it will make things worst, not better. Our focus ought to be in forcing a change where it matters most: The effective utilization of tax revenues. We ought to demand that they do more with less taxes. The surplus we would have by paying less taxes for the same services would then go into the economy and have positive effects. Got to stop there. Real work to be done.