The Luck of the Irish Runs Out 809
theodp writes "Looks like threatening to take their ball and leave paid off for US tech firms. The Irish government announced plans this week to tap the welfare state and working class for much of the $20B in savings they've pledged to find over the next four years, but the austerity measures will not touch large businesses like Microsoft, Intel, Google, HP, Facebook, LinkedIn, and Pfizer, which created jobs and fueled exports in Ireland after being lured by low corporate tax rates. More than 100,000 Dubliners took to the streets to protest the bailout plan, calling for the Irish government to default on the country's debts, and demanding an immediate election. 'We should default,' said a retired union worker, 'the idea that the workers of this country should pay for the gambling of the billionaires is disgusting.'"
Defaulting is worse! (Score:3, Insightful)
Going default will be a short-lived remedy. The country will go back to 1990 in terms of market appeal and productivity. And yes, if the big tech companies leave, the hope of reacquiring a high-tech knowledge industry will go away as well.
This is why (Score:2, Insightful)
the mobility of capital is a good thing.
Denial... (Score:2, Insightful)
'We should default,' said a retired union worker, 'the idea that the workers of this country should pay for the gambling of the billionaires is disgusting.
Yes, the "billionaires" lead the whole pack, and all that. However - not many of the proles stop to look around and wonder what brings the semi-dream around them while it lasts - but they do enjoy it. And cherish promises.
That doesn't go only for the Irish of course.
People would protest against raising corp. tax (Score:5, Insightful)
Look, left-wing parties are likely to do well in our next election, but no-one sensible here, left or right, wants to raise the corporation tax rate. These companies provide our jobs.
If a raise would be announced, ordinary people here would really start to protest.
It's not the country's debts. (Score:5, Insightful)
It's the private bank's debts.
For some unknown reason the Irish government decided to guarantee all debts by banks in Ireland including banks that are owned and run by people who are not Irish or based in Ireland. These debts were not sovereign debts until the Irish government decided to unilaterally back them without any good cause. They did this back in 2008 [wsws.org] and it's only now that they massive amount that they've basically handed over to private investors is becoming apparent.
It's pretty nuts that private investors had hoped to make money by investing in Irish banks - but now that they're actually facing losses the people of Ireland are going to step up and cover all these debts. So for the private investors it's a case of head I win, tails you lose - where there is no risk of the private investors losing any money - and no chance for the public to get a share of the profits that banks were making in the good times.
Luck of the International Bankers continues (Score:5, Insightful)
Re:Default? Really? (Score:3, Insightful)
Government debt is also a useful tool (such as borrowing to buy infrastructure) but like any tool there are ways to abuse it. I wouldn't be so quick to throw it away.
As for making a balanced budget, that is the responsibility of the citizens to vote for reasonable candidates.
Re:People would protest against raising corp. tax (Score:5, Insightful)
These companies provide our jobs.
If all the jobs in your country, or even a significant majority of them, are provided by international megacorporations and conglomerates that can and will move them elsewhere if it benefits them, and use them as blackmail material to get the laws they want, then you've got bigger problems than whether to lower taxes or not.
Corporations are Assholes. (Score:5, Insightful)
As usual, many people are quick to defend these pricks, saying that if it weren't for them, everyone would be out of a job. Yes, the economy is in their power. Calling that a mutually beneficial relationship sounds like Stockholm syndrome.
If your very survival depends on receiving a living wage from a corporation that can simply choose to go away if it is asked to pay for the infrastructure it also uses, then you are not living a "dream" generously provided by altruistic corporations, but in slavery to organizations who can let you starve if they wanted to. Not only workers, even governments are forced to debase themselves before these corporations, lowering their living standard, their wage expectations, cutting their social system and their taxes bit by bit to compete with other countries that are forced to do the same.
Ireland, and the entire European Union at that, should make a stand against this and play hardball. The fact is that while corporations can move their production elsewhere, they do have to sell something eventually. A high-tech market requires a high-tech industry to flourish: If corporations leave the country, the economy goes to shit and nobody can afford the flashy gizmos these corporations are selling. Standardize the tax hike over all EU states, accompany it with an import tariff on technology not produced inside the country, and suddenly paying a little more corporate tax will seem like a much better alternative. The workers are not only their slaves, but also their customers.
Re:Defaulting is worse! (Score:1, Insightful)
And yes, if the big tech companies leave...
You really think the European HQ of companies are getting moved to shangai... ? How many of those tech companies do it about the "high tech knowledge" in Ireland in the first place ?
Production is always cheaper in asia even with the lower taxes... . Ireland is just a way to have the cheapest presence in Europe and so to evade taxes. The "don't do evil" company uses Ireland to evade taxes to Bermuda (http://www.theregister.co.uk/2010/10/22/google_double_irish_tax_loophole/ ) 3.1 billion dollars a year, seems a big sum to do some pressure.
Re:People would protest against raising corp. tax (Score:4, Insightful)
Actually education is being given more preferential treatment in cuts being minimised compared to even healthcare.
It's likely to be relatively unaffected by the cuts in government spending. Admittedly that means kids still going to school in rotting >century old buildings and temporary pre-fabs, but the level of people's education is not likely to drop. Quite the reverse given the fear of joblessness.
If you really want to know, from The Economist (Score:5, Insightful)
http://www.economist.com/node/17577107 [economist.com]
I watched a German documentary this morning about how the Euro was bad (German is not my mother tongue, but I am fluent and could understand everything). Some of the stuff in that was political dynamite: I don't think that politicians in Europe understand the powder keg that they are sitting on.
From the The Economist article,
The most concerned onlooker is Germany, which sees its credit lying behind the entire euro area. As ever, Europe’s biggest tabloid, Bild, captured the mood this week, asking “First the Greeks, then the Irish, thenwill we end up having to pay for everyone in Europe?
Oh, let's piss off the Germans . . .grand idea . . . in Europe, that always ends in tears.
Why are they broke in the first place? (Score:1, Insightful)
Why are they broke in the first place? Isn't it the welfare state's massive spending? Doesn't sound like billionaires gambling to me.
Re:This is why (Score:5, Insightful)
According to whom?
Surely it's not the workers, because when Big'n'Big Co pulls up their tent pegs and moves shop, all the workers are suddenly unemployed.
It's probably not the consumer, because when Big'n'Big Co finds a way to half their cost of production, it's not guaranteed to drive prices down. Why bother cutting prices and taking a bigger market share when you can just shovel up a pile of cash big enough to buy your competitors (or a controlling interest in their stock)? Hell, why not just collude with your competitors to keep prices artificially inflated - then everyone's happy!
Surely then, it is the desperate - those poor starving people in $Third_World_Nation who desperately need employment of any sort. Except that, after their standard of living starts to rise, Big'n'Big Co just moves on to the next shithole and leaves the desperate unemployed too.
Well fuck, if it's not the middle class or the lower class, who the hell is left? :P
Oh, right, the bourgeois. Well, as long as they're doing all right, everything is just peachy! Hurray for Capitalism!
Not so fast... (Score:3, Insightful)
Going default will be a short-lived remedy. The country will go back to 1990 in terms of market appeal and productivity. And yes, if the big tech companies leave, the hope of reacquiring a high-tech knowledge industry will go away as well.
The main problem is the fact that big companies now are so powerful that they can hold entire tax systems hostage... they can play countries out against each other.
But instead of having a single EU corporate tax system (which imho would make sense), we have all kinds of other silly EU rules... and corporate taxes keep dropping in a futile attempt to lure more big business.
Governments should realize that big companies won't leave overnight. It'll take a little while to move people and offices.
At the same time, a lot of countries are suffering from the crisis - so if the Irish increase their tax together with a number of other countries, to give a clear signal, then they might get away with it... Shareholders and investors in stock markets should pay a part of the crisis too - they are at the root of its cause.
Re:Why it won't affect the companies.. (Score:5, Insightful)
No one ever 'generates' a lot of money, certainly the government mints print it but for every one else making s lot of money is all about being greedy. Paying very little for something and then putting a huge markup on it and selling (importing cheap junk), employing people where you have to capital to buy equipment and they do no and basically selling they're labour for much more than you pay for it, inheriting large sums of money and buying up all the income produce property you can, gambling with other peoples money at financial institutions, oh wait, they is always prostitution they certainly do generate money with their assets but they are the only ones (Psychopath pimps still take the lions share, hmm, much like the rest of the economy).
Human society is a function of all humanity, those that profit most by it should pay the most for the benefit they gain, of course being greedy, they just want more. You neither read, write nor even speak without the support of the rest of humanity. It is time to put a stop upon preying upon the rest of human society and start working together for mutual benefit.
Re:People would protest against raising corp. tax (Score:5, Insightful)
Re:Default? Really? (Score:3, Insightful)
Who would ever lend Ireland money ever again?
Who would ever lend insolvent banks money again? It's not Ireland that went bust, it's Irelands banks. The Irish government just got suckered into backing them.
The answer is, of course, the next sucker. Which we have a financial system full of, as if anyone loses their money lending to bums, the taxpayers will get to pay for it...
But really, would you feel safer lending money to someone who will probably default in the near future as they carry unmaintainable debt than you would lending money to someone who'd restructured their debt to manageable levels? Neither would be very palatable in a sane system, but that's not what we have, and you as a taxpayer will not get a say in whether to lend or not.
Re: Luck of the International Bankers continues (Score:4, Insightful)
Should be the more appropriate headline here.
Yeah, in the USA we bailed out the banks. Could have bailed out the homeowners and thereby saved both them *and* the banks, But no, we only look after the big boys here.
Comment removed (Score:5, Insightful)
Re:Defaulting is worse! (Score:2, Insightful)
Just for comparison http://www.nationmaster.com/graph/eco_deb_ext_percap-economy-debt-external-per-capita [nationmaster.com]
It does seem Ireland is in a bit of a bind. It *is* the case, however that Irish people massively benefitted from growing this debt. The sad fact of the matter is that most countries are in worse shape than the U.S. Yes, even post-Obama (the US could probably get away with financing it's social security obligations 4-5 years on borrowed money, even if there'd be hell to pay after those years). Of course, the US cannot borrow as much per-capita as other countries, due to being the main lender of last resort for other countries. One might think this was appreciated, but far from it. The sad fact is that if you bankroll other countries, you might think they'd be grateful. That doesn't seem to be true, you'll be universally despised. Why ? Because first, giving all this money gives you power, making you a scapegoat for all sorts of problems ("why can't you just give us more money"), and ... of course, one day you'll stop (or being forced to stop) doing that, meaning that "due to America" massive cuts are necessary. This has happened in many countries.
Of course, historically, all bankers have always been near-universally despised. From the Persian empire, over Venice in the middle ages, to today. Also true, of course, is that bankers were the source of the wealth these countries had during their relative peaks, or at least you could say they were absolutely necessary.
A parable on taxing the rich (Score:0, Insightful)
A parable on taxing the rich: http://gregmankiw.blogspot.com/2007/03/barstool-tax-policy.html
Re:Why it won't affect the companies.. (Score:3, Insightful)
To be honest, during the golden 60ies in the U.S. the top tax rate was 91%, and the country was wealthy and strong.
To be able to earn such a big income means that there are lots of external factors you can make use of, as in a stable society, a well maintained infrastructure, a strong military and low crime. And the more money you make, the more you use this infrastructure. People at the top easily forgot how much the country is supporting them, they live under the surreal impression that somehow they pay for everthing themselves.
Re:Why it won't affect the companies.. (Score:5, Insightful)
Most of that money comes from countries where income tax is well above 50% (or even 72% in Denmark).
Yes even the Danes that don't use the Euro have pledged a substantial guarantee.
In the mean time two of the countries with the highest taxes, Denmark and The Netherlands, have the lowest unemployment of the Union, around or even below 5%.
The implied claim high taxes destroy the economy is yet to be proven.
Re:It's not the country's debts. (Score:3, Insightful)
"Unknown reason"? It's called FMI and EU pressure.
Re:Defaulting is worse! (Score:5, Insightful)
That is why I figure the USA will default in 5 years, 10 tops. The only thing really keeping us afloat is the Fed printing money as fast as the presses will run and using it to buy our debt, basically making the money worthless. Then figure in the retiring boomers, huge masses of working poor that are only kept afloat by social programs, and the cost of two endless wars? Yeah I give it a decade tops. Enjoy it while you can folks, because from the looks of it another worldwide great depression will soon be upon us. The only question is whether we will learn from our mistakes and put heavy regulations on the banks like we did during the last one, or if those that believe in the free market fairy will win out. Without control free markets quickly end up corrupted when too much ends up in the hands of too few, just as we have now.
So what part of that list of woes is due to "free markets"? The Fed printing money? Retiring baby boomers? Social programs? Two "endless" wars (one which is in the process of ending, I might add)? None of those items are due to free markets. Four words describe globally the bank/real estate problem: "private profit, public risk". It's not a free market when you can pass on risk of your investments to the public.
Having said that, I don't know if you're accurate in your prediction of default. The US is a big train and there's still a window for improvement of US government finances both in the next two years and in the presidential term after that. Still, if we get another G.W. Bush or Obama, I'd have to consider default in the next ten years a real possibility.
Re:Defaulting is worse! (Score:4, Insightful)
Re:Defaulting is worse! (Score:3, Insightful)
Re:Default? Really? (Score:5, Insightful)
Debt is not intrinsically bad. Anyone who believes this should spend some time playing Transport Tycoon - the best strategy in that game is to borrow right up to your limit, because a well run company will make much more profit from the capital investment than the cost of the interest. It's a very simplified economic model, but the point still stands. If a government borrows $n, has to repay $n+20%, and invests the money in infrastructure that generates $n+50% in tax revenues, this is a sensible and responsible thing for the government to do. This is why most companies have outstanding loans - they are making more money from the investment than they are losing from the interest payments, so repaying the loan would be a net loss.
The problem is not debt, but debt without a plan for repayment.
Re:Defaulting is worse! (Score:4, Insightful)
Four words describe globally the bank/real estate problem: "private profit, public risk". It's not a free market when you can pass on risk of your investments to the public.
Sounds like the only possible "free market" is in a classless Marxist utopia, then. Since in any society dependent on investments from rich capitalists, the latter will manage to make deals like in Ireland: No, either you pay, or I take my investment somewhere else. Which is, of course, the kind of market people usually refer to when talking about free markets.
Re:A parable on taxing the rich (Score:4, Insightful)
What it fails to mention is that most of the other 9 guys in the bar work for the 10th guy, and provided the labour that made him his riches. So he's magnanimous enough to pay about 60% of their bar bill, when all his riches came from the sweat on their backs?
The other guys should say "Hey, how come you can afford to pay more than half of our bar tab, when we are the guys doing all the work? Why the fuck are we lining your pockets when you work no harder than us?", and then kick him out of the bar and find another drinking buddy who will do the same job (managing their labour) for a fair wage, allowing them to split the $60 fairly between them, making them all significantly more wealthy.
Re:Defaulting is worse! (Score:5, Insightful)
http://upload.wikimedia.org/wikipedia/en/3/3e/Zimbabwe_%24100_trillion_2009_Obverse.jpg [wikimedia.org]
Re:Defaulting is worse! (Score:3, Insightful)
as Peter Schiff describes that currency war, it's the only war that is all about shooting at your own troops. After all every single holder of nation's currency is robbed off his purchasing power and becomes poorer.
Tell that to the Irish who will have to emigrate (Score:5, Insightful)
Tell that to the people who will have to emigrate from Ireland in search of work. A bit of a sore point I believe because of history.
100 years ago, they travelled to the USA. Now they'd probably not be allowed entry because the USA frowns upon economic migrants.
Re:Why it won't affect the companies.. (Score:3, Insightful)
You make compelling, but misguided statements regarding the view of the "business man". Certainly there is value in what you say about the inventor and scientist. I even agree that a businessman is important for the building of order from chaos in the beginning steps of a market. You I miss in your statement is that the society does not hate the business man for making money, he/she angers the populous when greed is applied to the model.
Most people would like to be rich, to have wealth. Many work such that they can provide a good life. When business leaders makes decisions that not only benefit the very few at the top of the wealth pyramid, but do so at the expense of the middle and lower foundations of wealth, they hurt all parties including themselves in the long term. For the USA, in the late 50 and 60s there was one of the highest tax rates on the rich, yet the country prospered. In times of lowered taxes in this country the only group that benefited were the top few percent leaving he rest with increased debt and redcued services. Raising taxes on the rich is not meant as a punishment, it is meant to stabilize their own growth, even as it helps stabilize a society.
Sadly, at this juncture in the world economy, I feel that most governments will or cannot effect change upon the rich as many of the leaders are either in the pocket of, or have an attitude and wealth account that drives them more towards greed, and less towards help the general society. To put it another way, a happy society is less likely to revolt. History has shown time and time again that when the gentry gains too much wealth they can wind up on the sharp end of a pike or guillotine and the society runs amok for a long time. Axa final thought, Warren Buffet himself says that he does not pay enough taxes, but that the system is rigged such that he needs to take the loop holes.
Germany is not paying Europe's bills (Score:4, Insightful)
This is over-simplified. Germany might appear to be paying for Europe's bills, but how much of this "bailout" is going right back to German/US/etc. banks which would go bankrupt if the IMF / EU wasn't "bailing out" Ireland?
Follow the money, don't think just one move ahead. These bailouts are nothing more but the partial enslavement of Irish taxpayers in order to rescue foreign banks and governments.
Re:Default? Really? (Score:5, Insightful)
in democracy with deficits allowed you are doomed to wreck your economy, because in order to win the elections you got to promise a shitload of 'freebies' (which are not free at all), otherwise someone else who promises a lot will win. Sanity and economic soundness are not valued by the average voter so it's the race to the bottom.
as Tocqueville said
The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.
Re:It's not the country's debts. (Score:2, Insightful)
It's the private bank's debts.
For some unknown reason the Irish government decided to guarantee all debts by banks in Ireland including banks that are owned and run by people who are not Irish or based in Ireland. These debts were not sovereign debts until the Irish government decided to unilaterally back them without any good cause. They did this back in 2008 [wsws.org] and it's only now that they massive amount that they've basically handed over to private investors is becoming apparent.
I agree the guarantee was handled disastrously but I'm a little leery of the 'dirty foreigner' angle.
Which dirty foreigner private investors would these be? Bank share holders? Anyone who bought shares in the banks over the last decade has seen their investment wiped out. The Irish government owns the lion's share of Allied Irish Banks and Bank Of Ireland. Anglo Irish Bank is fully nationalised, with all shareholders completely wiped out. They gambled, they lost.
Who else then? Property developers with massive loans to the Banks that they cannot pay off? Maybe, but they are not dirty foreigners, they're home grown entrepreneurs!
Where to next? The bond markets? Dirty foreign bastards, buying Irish bonds on the promise of a coupon paid over five or ten years. The cheek of them!
Our problems are home made. Blaming the foreigners is lazy and unbecoming for a country that has sent her children to all corners of the globe. The sad thing is that because of the home grown cock up the exodus is happening again.
Paul.
Re:Defaulting is worse! (Score:2, Insightful)
Luxembourg? Where all these companies got, in best case, a manager and a secretary... A mailbox at best. Neither of those companies is big at all in my home country. I'm pretty sure I'd know some people working there as the IT world isn't exactly big in a small country, but I don't.
It also doesn't help residents at all... For Amazon and eBay, we have to deal with Germany (Try ordering anything but books or CDs at Amazon from Luxembourg... won't happen...). PayPal is officially a bank, but that's really about it. As a matter of fact, I just checked, they are in the same building as the company I work for, which is filled to the brim with small tax-evading companies.... Doesn't inspire much confidence to me. (Yes, I do realize what it says about my job... No need to tell me.)
iTunes? Luxembourg was one of the LAST countries that got access to iTunes from the end-user point of view. I highly doubt they have a single server here.
Also, while Luxembourg is pretty good for corporate taxes (will change, we are impacted by the crisis too...), employees are expensive because the average wages are very high. Foreign companies have a hard time understanding that, especially if they come from countries with lower average wages like Ireland. The local average salaries are understandable, because the country is small and real-estate prices are insane. I have a pretty ok salary, but I don't dream of ever owning any real-estate. Unless I quit the country (which has other downsides), it simply is unaffordable.
Were billionaires really the problem? (Score:2, Insightful)
Or was it a universal feeling of entitlement while living in a welfare state?
Re:Defaulting is worse! (Score:5, Insightful)
moving the capital around has everything with free markets, but exclusive deals, special treatments and subsidies for the chosen do not. Bailouts are such cases. Some failing bank or a car manufacturer gets bailed out, but your favorite bakery at the corner does not. Free market is a fair judge, treats all the same and the winners and losers are decided only by their merits, not by who they know.
Re:Defaulting is worse! (Score:5, Insightful)
moving the capital around has everything with free markets, but exclusive deals, special treatments and subsidies for the chosen do not. Bailouts are such cases. Some failing bank or a car manufacturer gets bailed out, but your favorite bakery at the corner does not. Free market is a fair judge, treats all the same and the winners and losers are decided only by their merits, not by who they know.
The back and forth in this thread really just shows that a "free market" is an illusory concept. It is useful to a limited degree, but you have to keep in mind that it is not possible in real life.
Once you throw government into the mix, you necessarily limit the freedom of the market. But, without a government, you don't have the structure to set up anything resembling a "free market".
The other point that seems to have been missed is that, although you are right in saying that the Irish situation is not due to a real "free market", the term "free market" is what is thrown about to keep the proles in line.
Re:Corporations are Assholes. (Score:3, Insightful)
"Here's my beef. A good portion, if not most, government spending is not directed to infrastructure"
Well at some point it was, because we drive on roads made and repaired by local municipalities and through local contractors. We use public water works brought to us by the acts of local and federal government. The roads are patrolled by law enforcement and even our legal system provides a basic security net for public defenders and prosecutors. Take these basic elements away, replace them with pure business and we revert back to either feudal state, war lord control of areas or plain anarchy. The early West in this country was a good example of this type world. I feel that the primary role of government is to provide a basic *stable* foundation for both business and society to thrive. Which leads to my next point...
"pathological hostility in a lot of government regulation towards business"
Perhaps some of the hostility comes from the abuse that business performs against the population and environment. Strip mining mountains, dumping toxic waste into the watershed, cutting corners on safety because business determines the cost of death is less then the cost of safety, regardless the toll on human relationships. When it is personal ,when it hits literally "home" then yes, it can get hostile. This is why I feel government needs to establish reasonable regulation that takes into account not just current impact (safety), but future impact on society. Clearly there are companies that have been able to make profit, even grow with this type of oversight. It is those companies that "cheat" or work around the rules that create the distrust. Me thinks there would be less hostility if the attitude was not "let em eat cake...oh, its poisoned, fuck em".
Re:Defaulting is worse! (Score:2, Insightful)
First of all, for whatever reason Iceland let it banks default, it was the right thing to do. And Ireland should have done the same.
Second, is it so hard to believe that "free market fundamentalist" thinks banks should be allowed to default? After all, "Let fall what cannot stand" is a normal free market attitude.
Thridly, free market people rarely claim that the market is all-knowing and infallible. They just claim that the market is better than the alternatives. When, I believe, Milton Friedman said "capatalism is a profit and loss system", he also recognizes, like most other "free market fundamentalist", that capitalism is not perfect. If you want to look for utopia, you need to go to the other side of the political spectrum.
Re:If you really want to know, from The Economist (Score:3, Insightful)
Short sighted of course. Germany's economy is very export driven. Bring the rest of Europe down and you will have no-one to trade with thereby destroying yourself.
Re:Defaulting is worse! (Score:5, Insightful)
The back and forth in this thread really just shows that a "free market" is an illusory concept. It is useful to a limited degree, but you have to keep in mind that it is not possible in real life.
It's not a very useful concept when used to argue we should remove trade barriers, which it is used all the time to do so.
That, right there, is the real problem. It's not that corporations can make special deals with governments, there is functionally no way for any country to stop other countries from doing that. There is no way to solve that problem, ergo, that can't really be the problem. If houses you build keep falling down, the problem to investigate is not gravity.
The solvable problem is that they then can continue to operate and sell in the US while not paying any taxes here.
We need to get rid of the idea of 'corporate' taxes where profit can mysteriously move from place to place and they pay taxes somewhere we've never heard of. (And they're way to easy to avoid altogether.)
We should tax them when they pay workers, in the location those workers are. We should tax them when they sell goods, in the location those goods are sold. (Or, easier, when those goods are imported.) We should tax their capital and real estate, in the location that capital and real estate is. We should tax their corporate dividends, in the location that stockholders live.
Fuck asking where the company, an entity that is an artificial creation, 'lives'. Tax the things that physically exist where they actually are and tax the money going in and out where it's actually going in and out.
Re:Defaulting is worse! (Score:5, Insightful)
I swear, 99% of arguments against free markets are really arguments against fascism (a form of socialism, where profit is appropriated by corporations rather than ruling party members), which is the OPPOSITE of a free market. It's like saying how terrible a color white is because it is so dark and nasty, and it absorbs all the light. When anyone points out that they are describing the color "black" then they say, oh, well, there is no such thing as white anyways, so we should start off with a baseline grey, which apparently won't change color and turn black like white does, except that in reality, it is closer to black, so it will get that way much faster.
If you want white, pick white, and keep it as clean as you can. Just because you can never get it perfectly clean doesn't mean that the concept or idea of the color is any less valid. It is the same way with the free market. Sure, it is never going to be absolutely free, but it is far better than ANY other system, which is by definition NOT free. Understand that free markets are not just about removing regulations, they are about removing SUBSIDIES as well. Those evil banks that everyone loves to hate so much are totally dependent on subsidies at this point. A free market will wash them all down the toilet, with the fittest honest bank now able to step up and place the highest bid on thier capital, and expand. If they become corrupted, then they will fall, and others will step up to take their place. This is the way it was in the US right up through 1913, and that principle took us from desolate backwater devoid of rich resources other than lumber and fish to industrial superpower. Any nation which followed any other path wound up like any of the South American or African nations.
Re:Defaulting is worse! (Score:5, Insightful)
Borrowing from social security to pay for non-social-security-related expenses is like borrowing from your kid's college fund to pay for a new deck. Yes, you've increased your wealth in terms of material assets, but it's not like you can liquidate the deck to pay back the college fund later. So, the government has to borrow to pay back the cookie jar. The debt isn't reduced, it just gets muddled.
As to your response re: teachers, you seem to harp on one part of a list to try and make the person you're replying to sound dumb. Soldiers, civil servants at various levels, etc, can start at 18 and retire after 20 years. And not all of those soldiers get shot at. Desk clerks, supply sergeants, etc, can all retire after never having seen action. Of course, there is a chance they could be made to if the situation were dire enough.
Federal dollars do go to the states to pay for education, so teacher salaries are going to be a part of that. However, it's likely not statistically significant, but to say that its not at least a little bit related is just being sloppy at best.
Frankly, this country has been on an unsustainable path since Andrew Jackson was President. We've finally reached the breaking point because we can't expand anymore. We've propped up all the countries we could expand into in order to get cheap labor and a new market without having to spend on infrastructure or let them vote, but they're realizing that they don't really need us anymore. We've spent too much, borrowed too much and let it get out of control.
It's gotten to the point where no one on the left or the right really has the will to do anything about it, or a plan that's worth a damn if they do. Combined with lowered standards in education (my mother is a public high school teacher and has been for the last 15 years or so. New requirements that all students graduate in 4 years have created a situation where now teacher's aren't allowed to give any grade lower than a 40 and grades have been readjusted to a 10-point scale, making it practically impossible to fail no matter what. She's so angry about it she's about ready to just give up and go find a new job that doesn't suck (AB from an ivy league school and a MA in her subject, she's not going to be hurting to find work)), this is pretty much the death knell of America.
Re:People would protest against raising corp. tax (Score:3, Insightful)
They could go back to subsistence farming, even abandon the euro and go to a bartering system, but that is not the model they have decided to go with. Ireland decided to attract top-level business from all over the world via a highly educated workforce and a business-friendly environment.
Yes this means working to remain competitive, but I don't think throwing a successful business model out in a tantrum is going to help them long term. The Irish banking crisis was not caused by low corporation tax, it was both private and public debt spiraling out of control exacerbated by a ridiculous property bubble.
Phillip
Re:A parable on taxing the rich (Score:1, Insightful)
That's the funniest parable I've ever heard.
The truth is the 10th guy is the guy with capital. The 10th guy is the retired man whose using his lifetime savings to provide the capital for the 9 20 year old guys to dig using mechanical diggers. When they kick the 10th guy out of the bar, he takes his diggers with him and the 9 guys get to keep 100% of the revenue from digging with spades. Which is 1/100th as much.
Re:Defaulting is worse! (Score:3, Insightful)
The fiscally responsible thing to do is to make the banking industry pay back in full what the government has had to pay out plus some. And not just the TARP money, all of the money that they lost on behalf of other people. Will it happen, in a word no, the Republican party is just way too opposed to any sort of meaningful reform that might hurt the wealthy.
It's also important to note that we are coming out of the recession because of the stimulus not in spite of it, and that the folks at the bottom, you know the ones that actually create wealth, are still hard hit. The bills that folks tend to point to as fiscally irresponsible are probably the least of the problems. The biggest being the oversized DoD budget and tax cuts for the rich.
The healthcare reform pushed the point of insolvency down the road by at least a decade alone, and the Republicans are the main champions of extending the tax cuts to the rich as well as delaying any sort of DoD cuts.
buddy, you don't know what you are talking about (Score:4, Insightful)
Re:This is why (Score:3, Insightful)
I'm arguing that extremes of any of the above are harmful, and when these extremes and their lackeys attempt to justify themselves through obvious strawman arguments, they're still wrong.
Re:Defaulting is worse! (Score:3, Insightful)
During the Clinton years, the U.S. was actually repaying its debts.
- biggest lie.
Clinton didn't 'repay' any debts, he REFINANCED them.
There is a difference.
Re:Default? Really? (Score:5, Insightful)
Debt is intrinsically bad when it's gov't debt, because gov't is not supposed to be a business.
That sounds like you've bought into that position as an a priori assumption. While I'd agree that governments aren't businesses, to say that all government borrowing is therefore bad is foolishness. The purpose of good borrowing is so that investment can be made so as to increase income in the future that will repay the debt and ensure more money to do other things with. When applied to a government, the purpose has got to primarily be to invest in steps that will lead to increased total tax take in the future, generally through increasing overall economic activity in some way.
This is all independent of how wisely governments in your locale are spending, taxing or borrowing. If you're going to make an argument, it helps to start out from an intellectually-sound basis, which saying that "government borrowing is bad" is not. Reality just doesn't allow for such simple distinctions, and any sane policy must be at least grounded in reality.
Re:Defaulting is worse! (Score:3, Insightful)
Re:Default? Really? (Score:3, Insightful)
None of gov'ts business, it's not what the gov't is for - creating factories/hospitals/etc. I can't believe this is even an argument.
Gov't is a monopolistic structure by default, which is incapable of any sort of competition and thus does not follow the rules of price discovery through trade.
Gov't funding in itself is anti-competitive in nature, as gov't gets its funding by force. You can't build anything of use if it's all dictated by gov't, gov't cant't build independent structures in the market that are not profit motivated, and profit driven motivation system is the only sound economic system we have to date, it ensures market level price discovery through trade, it ensures nearly correct market saturation levels with various products/services at the prices that the market is willing to bear.
You don't want gov't to deal with economy, it's a big mistake to allow a monopolistic, non-profit driven, income ensured, bureaucratic, ever growing, anti-competitive, money printing system to set economic rules, it will inevitably crash the society by imposing itself all over the economy.
Gov't is supposed to be just a cost, it's a cost of having minimum military for protection and a cost of having a working justice system to look after criminal and contract laws.
Leave the individuals to take care of market requirements, leave the individual choices for price/quality discovery, leave the market to set interest rates, do not allow gov't to borrow, do not allow gov't to tax production, keep it on a short consumption financed leash, otherwise it will destroy the economy and society, because it has no boundaries.
Re:Defaulting is worse! (Score:4, Insightful)
1) Payroll taxes
Um, no. Unemployment insurance is about it, and that's capped at $434 a year, so isn't that impressive a tax. A tax of $1.19 a day is probably less than what the employee wastes in going to the bathroom.
2) Sales and use taxes
The Federal government does not collect sales tax or use tax.
3) Import/export duties/tariffs
We have almost no import and tariffs, and none at all on companies that are 'outside the US', but somehow manufacture all their stuff here, like Microsoft.
4) Income tax
Foreign businesses that employ Americans do pay income tax, correct.
Your score: 1/4.
Better luck next time.
Any tax dinged against a business MUST be passed along to the consumer,
No it doesn't. The price that customers are charged has NO BEARING on the taxes assessed against it.
You have no clue how supply and demand works, do you? Businesses charge the amount they can. If they can charge more and make the same profit, they will, if they have to charge less to make a profit (by selling more), they will.
In your universe, apparently, businesses sit there going 'Well, we're making 10% profit, and even though we could raise prices 5% more and make 15% profit, we're not going to....Oh no, they just raised taxes 5%, we better raise prices 5% to get back to our 10% profit.'
Do you have even the simplest grasp of how businesses operate? Businesses do not pick a 'profit level' and operate there, moving up and down in response to costs.
That is just insane. It's not even a simplified version of economic theory. It's an economic theory designed by a second grader.
Income tax on dividends hurts mainly small investors relying on it for their retirement, who hold (per the last figures I saw) over 90% of stocks.
If you want to assert that that's a bad idea, I will not object.
Re:Germany is not paying Europe's bills (Score:3, Insightful)
You don't get the full picture.
Germany has been economically successful the past years, including living through the crisis fairly well, by a constant and pretty aggressive redistribution from the bottom to the top. Real wages (i.e. adjusted for inflation) have been falling for years, the number of people employed in part-time and low-wage jobs (there's no minimum wage in Germany, except for a few very small areas) has exploded. Millions of full-time workers don't earn enough to feed a family.
Now add the "paying for the rest of Europe" feeling to that. Do you think the simple people care if the money comes back to some german bank? Not the least. This is just the latest episode where taxes are raised to rescue banks and large corporations that gambled more than they could handle.
Unfortunately, none of the left has so far realized and made into a political movement that the people in all countries are being exploited in the same way. The irish and the german taxpayers are both abused in this. The right-wing and neo-liberals have successfully divided the people of Europe against each other, with open animosity against the greek, etc. being visible already. There are some demonstrations with mottos like "we don't pay for your crisis", but very little international solidarity. If the left were serious in their opposition, they would not only demonstrate against the "rescue package" in Ireland, but also in Germany and France, which is basically taking money from the taxpayers to finance the package which then goes into paying the banks. It's a bank tax, and Ireland is just the step inbetween to make that less transparent.