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I think this comment and the parent comment are key insights. My random thoughts and rant: The extract of money to the rich has created the wealth gap: CEO pay

by bfung 4y ago

I think this comment and the parent comment are key insights. My random thoughts and rant: The extract of money to the rich has created the wealth gap: CEO pay , investors with money to invest, all of got richer when the money supply was expanding while keeping worker (actual producers) pay raise at a far lower rate. Now that there are supply issues, due to different Covid rules across countries for global trade, and demand relatively high, the rich are looking for “growth” still. But with a cash tightening, they can’t borrow as much to produce goods at an accelerated pace. Hence “worker shortage”. If CEOs and companies are cutting staff, the board should consider readjusting executive pay as well to save money and reallocate the savings towards hiring! It’s time to adjust executive pay vs. worker pay and shrink the wealth gap a little. I don’t usually agree with Robert Reich as I’m more moderate than he is positions, but topic I’m in agreement: https://www.theguardian.com/commentisfree/2022/sep/25/inflation-price-controls-robert-reich https://www.theguardian.com/commentisfree/2022/sep/25/inflat...

faeriechangling 4y ago
Looking at that article, price controls are a broad topic (MSRPs are a price control, minimum wages are price controls, rent control is a price control, fixed prices for food are a price control), one that results in obvious economic deadweight (scalping, enforcement), and one which is generally pretty heterodox in economics. I'll give a real world example. In Canada, they privatised almost every public telecom in the country except Sasktel. Since Canada has lots of rural customers that would be unprofitable to service, connecting these customers is subsidised by the government, in return for the companies among other things accepting price controls on what they both charge companies and also charge 3rd party providers piggybacking off their infrastructure like MVNO's. Canada has some of the highest telecom prices in the entire world, so price controls at best were inadequate and at worst failed. Yet Saskatchewan notably pays less than the rest of the country, and that's because there's no incentive for them to collude with the big telecoms to raise prices, so they don't. He also mentions anti-trust, anti-trust is all well and good but historically only a very few companies get broken up and it tends to encumber than less than expected, Microsoft is doing OK. Taxing corporate profits more is almost totally hopeless, especially for something like Big Pharma which has countless means to shift around which country profit was realised in. Price controls for pharma make no sense, the government is artificially raising pharma prices through IP enforcement, just don't enforce their patents and you'll have lower drug spending and lower enforcement costs. Why do governments enforce patents for tax dodgers anyways? To me, I feel like Reich is dancing around the crux of the issue, talking about moderate approaches which mostly buy into the status quo, talking about things like price controls with a degree of embarrassment.

by bfung 4y ago

faeriechangling 4y ago

Looking at that article, price controls are a broad topic (MSRPs are a price control, minimum wages are price controls, rent control is a price control, fixed prices for food are a price control), one that results in obvious economic deadweight (scalping, enforcement), and one which is generally pretty heterodox in economics. I'll give a real world example. In Canada, they privatised almost every public telecom in the country except Sasktel. Since Canada has lots of rural customers that would be unprofitable to service, connecting these customers is subsidised by the government, in return for the companies among other things accepting price controls on what they both charge companies and also charge 3rd party providers piggybacking off their infrastructure like MVNO's. Canada has some of the highest telecom prices in the entire world, so price controls at best were inadequate and at worst failed. Yet Saskatchewan notably pays less than the rest of the country, and that's because there's no incentive for them to collude with the big telecoms to raise prices, so they don't. He also mentions anti-trust, anti-trust is all well and good but historically only a very few companies get broken up and it tends to encumber than less than expected, Microsoft is doing OK. Taxing corporate profits more is almost totally hopeless, especially for something like Big Pharma which has countless means to shift around which country profit was realised in. Price controls for pharma make no sense, the government is artificially raising pharma prices through IP enforcement, just don't enforce their patents and you'll have lower drug spending and lower enforcement costs. Why do governments enforce patents for tax dodgers anyways? To me, I feel like Reich is dancing around the crux of the issue, talking about moderate approaches which mostly buy into the status quo, talking about things like price controls with a degree of embarrassment.