Re: If you were mad scientist, how would you take over the world?
- From: Eric Ammadon <email_addr@xxxxxxxxxxx>
- Date: Tue, 07 Jul 2009 13:31:00 -0600
Ric Locke <warrick.locke@xxxxxxxxx> wrote:
On Tue, 07 Jul 2009 12:29:58 -0600, Eric Ammadon wrote:
Ric Locke <warrick.locke@xxxxxxxxx> wrote:
On Tue, 07 Jul 2009 09:52:46 -0700, David Friedman wrote:
In article <d9e655tmjvoqr1s0jtonm92s1lnme7p38u@xxxxxxx>,
Eric Ammadon <email_addr@xxxxxxxxxxx> wrote:
Investment is the capitalistic process that drives most of the extant
economic theories, as far as I know. Speculation is a form of
gambling, which has been provided with leveraging tools called
derivatives.
Speculation is a mechanism for giving people with better information
about the future an incentive to use that information in a way that
results in other people acting on it.
And, of course, there is no reason why people engaged in long term
investment have to buy their stock from the company that issues it. The
fact that you will eventually buy the stock from me is one reason why I
am willing to buy it from the company, even though the company has no
plans to buy it back.
One of the problems is mixing of roles.
Corporations or "anonymous societies" were originally invented as a
means for the Government to extend its taxing powers to people who
weren't its subjects. The King couldn't tax Russian peasants, but the
Company of Friends could sell them stuff, and the King could tax the
revenue.
It became immediately apparent that corporations were also ideal
vehicles for investment, allowing the amalgamation of relatively small
amounts of capital into the big piles of money necessary to finance the
Industrial Revolution. I at least partially agree with Eric: the "pure"
way for it to work would be for the profits of the company to be
returned to the shareholders, and the share price to be based on that.
Unfortunately the original purpose has never been renounced, and in fact
has been extended and reinforced. When California imposes its "unitary"
corporation tax on an oil company, a small part of what a Bengladeshi
peasant pays for lamp fuel goes to pay the salary&expenses of some
bureaucrat with a six-figure salary. The problem is exacerbated by
demagogues taking advantage of people whose understanding of the process
is "Oooh, I see money! Gimme, so I can Help the Unfortunate!" The result
is that profit divisions -- "dividends" -- are highly taxed, making the
"pure" process un- or less-profitable.
The following is subject to error given the nature of tax rates and
the unknown (to me) reliability of the source:
"The tax rate on qualified dividends is 5% or 15% (depending on the
individual's income tax rate)."
http://taxes.about.com/od/taxglossary/g/dividends.htm
"Capital gains are taxed differently depending on whether your
investment is considered a long-term or a short-term investment.
The short-term holding period is one year or less. Short-term capital
gains are taxed at ordinary income tax rates.
The long-term holding period is more than one year. Long-term capital
gains are taxed at discounted long-term capital gains rates. The
long-term tax rate will be either 5% or 15%, depending on your
marginal tax bracket. "
http://taxes.about.com/od/capitalgains/a/CapitalGainsTax_2.htm
The real problem with dividends seems (to me) not to be a high tax
rate on dividends, but the growing number of companies that have never
issued any and show no signs of ever issuing any. Corporate
executives don't reap incentive bonuses related to the size of the
dividends issued, but rather to profitability's meeting or exceeding
expectations, which happens to be a prime determinant of the stock
price at the time they cash in their options.
Companies don't issue dividends because there's no point, from the
capitalists' point of view -- you might as well send the money directly
to the IRS. Dividends aren't even a "cost" that reduces their income for
tax purposes, and to the ordinary individual investor they're income,
taxed at the maximum rate. Some other way had to be found to attract
capital investment, and that's the "speculation" you rue.
Let me see if I can clear this up. I don't "rue" speculation any more
than I "rue" any other form of gambling. A guy wants to gamble,
that's his business; I don't consider it some moral evil, I consider
it a form of entertainment (most enjoyable when the women are scantily
clad and the drinks are free imo). What I find distasteful is when
people start touting their gambles as "investments" as if they had
some magical crystal ball that locks in the future; it ain't that way,
and claiming it is to get people to buy your investment is lying, it's
a scam. That's what I "rue", I despise the mentality that profits
from sucking figurative widows-and-orphans into what amounts to a
con-game. You know a guy who is a damned good plumber but has no
money to start his own plumbing business, you have spare cash, you
invest in his business for a share of the profits, that's investment;
it's a matter of enabling him to do the work, not sucking in the
rubes.
[snip]
It always surprises me how quickly discussions of economics turn to
politics and then to religion, though it shouldn't surprise me at all.
It shouldn't surprise you.
's what I just said innit.
Politics /is/ economics, at its root, and
contrariwise.
Lookit me, I'm not commenting about the root of religion!
The sad fact is, resources are limited, and not everybody can have
everything they want. The procedure used to divide it up is "politics".
I disagree with part of that, but I'm jihaded-out for a while; what
I'll go as far as to say is that "politics" is only the name of *one*
of the procedures used for dividing things up into "mine" and "mine",
which anyone posting in a thread about "take over the world" oughta
know. <g>
--
http://fictionfromnobody.blogspot.com
.
- References:
- Re: If you were mad scientist, how would you take over the world?
- From: Eric Ammadon
- Re: If you were mad scientist, how would you take over the world?
- From: David Friedman
- Re: If you were mad scientist, how would you take over the world?
- From: Ric Locke
- Re: If you were mad scientist, how would you take over the world?
- From: Eric Ammadon
- Re: If you were mad scientist, how would you take over the world?
- From: Ric Locke
- Re: If you were mad scientist, how would you take over the world?
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