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I found this article poorly written and defended. I didn't find it HN worthy. It is basically an investment manager complaining that the wealthiest Americans a
by cjy 15y ago
I found this article poorly written and defended. I didn't find it HN worthy. It is basically an investment manager complaining that the wealthiest Americans are mostly in finance and don't pay enough taxes because most of their earnings are from capital gains. He makes a lot of presuppositions in his writing that he never defends. For example:
"I asked if her colleagues talked about or understood how much damage was created in the broader economy from their activities."
How does finance destroy the broader economy in general? Liquid functional capital markets are critical for a stable economy. Finance is only bad for the economy when incentives are structures so that government limits the downside.
"America's top corporations reported 31% profit growth and a 31% reduction in taxes, the latter due to profit outsourcing to low tax rate countries."
Outsourcing is not bad. He treats it like it is a dirty world. Companies should have work done where it is most efficient. Google comparative advantage.
"It wasn't the hard-working 99.5%"
Because the top .5% aren't hard working.
"In my view, the American dream of striking it rich is merely a well-marketed fantasy that keeps the bottom 99.5% hoping for better and prevents social and political instability. The odds of getting into that top 0.5% are very slim and the door is kept firmly shut by those within it."
By definition, the odds of getting into the top .5% have to be very slim because only .5% of the population can get in there.
Also, I should note that the lower 99.5% benefit from lower capital gains taxes when it comes to appreciation on their homes. Obviously, this hasn't been a benefit lately. But, this is important given that the home constitutes the biggest chunk of net worth for many families.
- rayiner 15y ago> How does finance destroy the broader economy in general? Liquid functional capital markets are critical for a stable economy. Finance is only bad for the economy when incentives are structures so that government limits the downside. False dichotomy. The article talks about the current financial system in the US hurting the economy. It's not suggesting dismantling the financial system in general. Step back for a moment. The financial industry is infrastructure. It's there to grease the wheels of productive industry. It facilitates growth, but cannot in itself create that growth. Now, last year the financial industry accounted for something like 1/3 of corporate profits. It's gotten absolutely immense. Do we need such massive institutions just to create "liquid functional capital markets?" Are these companies so profitable because they're really creating enormous amounts of value for the economy, or because being close to the money makes it easier to justify taking a percentage cut of the money flowing through the system? Now, I'm not attacking them just because they're profitable. But to an extent they're profitable because the benefit tremendously from government protection. When Apple innovates and sells iPhones, they pay 35% tax on those profits, but when a trader at Goldman moves money around to make profits, they pay less than half that in taxes. If we believe that tax rates create incentive structures, does it really make sense to incentivize the latter so much more heavily than the former?
- yummyfajitas 15y agoHuh? Short term capital gains rates are 35%. (I assume that's what you mean by "moves money around".) Long term cap gains rates are lower, but that compensates for the fact that the company you bought was also paying taxes in the meantime.
- MaysonL 15y agoI found this comment rather ignorant. If you can't see the damage that the finance industry has done to the economy over the past decade or so, then I would suggest you haven't been paying attention. I would suggest googling the following terms: "Angelo Mozilo", "control fraud", "William K. Black"
- rflrob 15y agoBy definition, the odds of getting into the top .5% have to be very slim because only .5% of the population can get in there. No, by definition, the odds of being in the top .5% at any given moment are very slim. In a system with a high degree of economic mobility, it's conceivable that people would enter (and leave) the top N% at a reasonably high rate. Whether or not such high mobility is a good thing is certainly an open question, although the author certainly seems to think it should be higher than it is now.