From Yahoo! Finance: 2019-01-04
AAPL
CNBC Videos • Fri 1:57 PM
Trump: China is paying us tremendous tariffs
AAPL
Fox Business Videos • Fri 1:59 PM
Trump: I want Apple to make their products in the US
AAPL
CNBC • Fri 2:53 PM
Trump says he's not concerned about Apple because it builds products in China
Who is paying the “tremendous tariffs? It is not the Chinese. They just pass those tariffs on to the U.S. customers.
But the complexity gets worse. Do U.S. manufacturers cut their costs by manufacturing in other countries. If they cut their costs, do they pass those savings on to their customers or do they just add them to their profits.
If the savings are passed on, the customers benefit. If the savings are considered profits, do those at the top get bigger bonuses or do the share-owners get bigger dividends or bigger profits when they sell their stock.
Showing posts with label executives. Show all posts
Showing posts with label executives. Show all posts
Saturday, January 19, 2019
Wednesday, November 13, 2013
Democratic capitalism is an oxymoron
Democratic means government by the people. It is commonly understood that each person has one vote.
Capitalism is raising money for an enterprise with the contributions of a few people or thousands of people. Each contributor of capital to the enterprise has as many votes as the number of shares he or she holds. One can argue that this is fair; the person who put one million dollars into the company had a greater interest than the person who put one hundred dollars into the company.
In practice, capitalism becomes distorted to the rule of a few. Capitalism leads to a plutocracy both in the enterprise and in the various governments.
In the enterprise, members of the board periodically award themselves and the top executives shares in the enterprise, thus increasing the number of votes they have, at no or low cost.
In government, the executives and other large shareholders put a lot of money into lobbying government for laws in their favor and into campaigns of political candidates who they believe will be sympathetic to their interests. Regular readers of this blog know what Adam Smith thought of that influence. See "The Invisible Adam Smith".
Capitalism, when there are many companies with similar focus, is a very good idea. It means that there are many people working on bringing new or lower cost products to the market. This doesn't mean that government can't produce good ideas; it just does not have enough resources to produce as many good ideas as are needed. And often government is needed to encourage good ideas in certain fields or to curtail bad ideas that are harmful to the public. In fact, corporations fall all over themselves to get government contracts to build roads or build more lethal weapons.
You might be able to come up with a better blended phrase that reflects the need for both democracy and capitalism. My best shot today is balance of democracy and capitalism. Now the next question is: when will this balance be achieved?
Capitalism is raising money for an enterprise with the contributions of a few people or thousands of people. Each contributor of capital to the enterprise has as many votes as the number of shares he or she holds. One can argue that this is fair; the person who put one million dollars into the company had a greater interest than the person who put one hundred dollars into the company.
In practice, capitalism becomes distorted to the rule of a few. Capitalism leads to a plutocracy both in the enterprise and in the various governments.
In the enterprise, members of the board periodically award themselves and the top executives shares in the enterprise, thus increasing the number of votes they have, at no or low cost.
In government, the executives and other large shareholders put a lot of money into lobbying government for laws in their favor and into campaigns of political candidates who they believe will be sympathetic to their interests. Regular readers of this blog know what Adam Smith thought of that influence. See "The Invisible Adam Smith".
Capitalism, when there are many companies with similar focus, is a very good idea. It means that there are many people working on bringing new or lower cost products to the market. This doesn't mean that government can't produce good ideas; it just does not have enough resources to produce as many good ideas as are needed. And often government is needed to encourage good ideas in certain fields or to curtail bad ideas that are harmful to the public. In fact, corporations fall all over themselves to get government contracts to build roads or build more lethal weapons.
You might be able to come up with a better blended phrase that reflects the need for both democracy and capitalism. My best shot today is balance of democracy and capitalism. Now the next question is: when will this balance be achieved?
Friday, February 08, 2013
Across-the-board cuts are always a bad idea
To avoid making decisions, politicians and executives often talk about across-the-board cuts. Not only are the cuts a bad idea because they rarely include politicians' and executives' salaries and perks, but because the cuts often include both the essential and the frivolous.
Let's take a family example. Dad gets a wage cut because the execs decide there should be across-the-board cuts. Now should Dad decide his family should have across-the-board cuts? Is he going to cut the mortgage payment? Is he going to take the bus instead of driving? Probably neither. Is he going to cut the kids' milk budget and his beer budget by the same percentage? If he wants to invest in his kids' futures, he better cut his beer budget a lot and leave their milk budget the same.
Let's take a family example. Dad gets a wage cut because the execs decide there should be across-the-board cuts. Now should Dad decide his family should have across-the-board cuts? Is he going to cut the mortgage payment? Is he going to take the bus instead of driving? Probably neither. Is he going to cut the kids' milk budget and his beer budget by the same percentage? If he wants to invest in his kids' futures, he better cut his beer budget a lot and leave their milk budget the same.
Thursday, January 17, 2013
A clever but off-the-mark sign
"Politicians are like diapers, they need changing often".
This sign has been on a signboard for a business on Woodland Avenue in Duluth for sometime. I'm not sure if the sign belongs to the auto repair business or to a small office that seems to be attached to the auto repair building. Google street view is a bit blurry on the details.
I didn't double check, but many references attribute it to Mark Twain with the added phrase "and for the same reason."
We could also apply this slogan to CEOs. They get entrenched and get the board they selected to give them larger and larger compensation. Boy, talk about a stinky deal!
The problem with this slogan is that it assumes that a frequent turnover of politicians will ensure new ideas. It might on occasion, but like all serious jobs, being a politician requires a lot of effort and learning. If we had the turnover as the sign implies, then the politicians would be at the mercy of their staffs or lobbyists. The degree that they do depend on these two groups is bad enough, but a greater number of new politicians would make the situation even worse.
Besides, we do get to vote against politicians. We have a hard time voting against CEOs. And we want neither our politicians or CEOs to be like diapers.
An afterthought! A complaint about politicians is a bit of elitism. The people get to choose the politicians; the plutocrats get to choose the CEOs. This phrase then implies that the people are ignorant and not to be trusted with governance.
This sign has been on a signboard for a business on Woodland Avenue in Duluth for sometime. I'm not sure if the sign belongs to the auto repair business or to a small office that seems to be attached to the auto repair building. Google street view is a bit blurry on the details.
I didn't double check, but many references attribute it to Mark Twain with the added phrase "and for the same reason."
We could also apply this slogan to CEOs. They get entrenched and get the board they selected to give them larger and larger compensation. Boy, talk about a stinky deal!
The problem with this slogan is that it assumes that a frequent turnover of politicians will ensure new ideas. It might on occasion, but like all serious jobs, being a politician requires a lot of effort and learning. If we had the turnover as the sign implies, then the politicians would be at the mercy of their staffs or lobbyists. The degree that they do depend on these two groups is bad enough, but a greater number of new politicians would make the situation even worse.
Besides, we do get to vote against politicians. We have a hard time voting against CEOs. And we want neither our politicians or CEOs to be like diapers.
An afterthought! A complaint about politicians is a bit of elitism. The people get to choose the politicians; the plutocrats get to choose the CEOs. This phrase then implies that the people are ignorant and not to be trusted with governance.
Thursday, February 17, 2011
What is a "fair share"?
One of the buzz words on taxes is "fair share", meaning that those who have higher incomes should be paying more taxes than currently. Those who oppose taxes in general think that "fair share" will stifle business.
What we should really be asking is: are people paying for government services balanced according to what they receive in government services and according to what they can afford to pay.
To take a trite example, many theaters offer student and senior prices. If there are no seat-related prices, the benefit to all ticket purchasers is the same. The assumption is that students or seniors will be less able to pay the full price and so are given a discount. Actually it is to the theaters' benefit to entice a few more buyers to fill the seats.
So it is with government services. Some people really can't afford to pay the taxes commensurate with the services received. Firefighters aren't going to determine if the occupants have paid sufficient taxes before they turn on the hoses.
On the other hand, some people with relatively high incomes receive far more benefits than others. Their businesses would not survive without the services provided by taxes. For example, without an efficient highway system, they could not have goods brought in and goods moved out, they could not have customers come to their stores, and they could not have employees come to work.
How many big box stores went to the outskirts of cities to get cheap land? Now few customers and employees can walk to these stores, few if any bus lines are available, and almost all customers and employees have to drive on more miles of roads. What is the fair share of taxes for the executives of these stores who are getting big salaries?
How many oil executives are getting rich because people are driving more miles for their daily business? What would the fair share of taxes be for them to cover all the costs of the roads, including repair, widening, traffic management, and crash assistance?
Who benefits from public education? Of course, each of us benefits personally from our education, whether it is knowing how to be a good citizen or acquiring a marketable skill. On the other hand, would businesses prosper without a good supply of educated people? Since a good work force makes possible a successful company, what is a fair share of taxes for the highly-paid executives of a successful company?
"Low taxes" and "fair share" are almost meaningless phrases. I don't have much hope for any serious thinking among politicians or voters to think past these slogans.
What we should really be asking is: are people paying for government services balanced according to what they receive in government services and according to what they can afford to pay.
To take a trite example, many theaters offer student and senior prices. If there are no seat-related prices, the benefit to all ticket purchasers is the same. The assumption is that students or seniors will be less able to pay the full price and so are given a discount. Actually it is to the theaters' benefit to entice a few more buyers to fill the seats.
So it is with government services. Some people really can't afford to pay the taxes commensurate with the services received. Firefighters aren't going to determine if the occupants have paid sufficient taxes before they turn on the hoses.
On the other hand, some people with relatively high incomes receive far more benefits than others. Their businesses would not survive without the services provided by taxes. For example, without an efficient highway system, they could not have goods brought in and goods moved out, they could not have customers come to their stores, and they could not have employees come to work.
How many big box stores went to the outskirts of cities to get cheap land? Now few customers and employees can walk to these stores, few if any bus lines are available, and almost all customers and employees have to drive on more miles of roads. What is the fair share of taxes for the executives of these stores who are getting big salaries?
How many oil executives are getting rich because people are driving more miles for their daily business? What would the fair share of taxes be for them to cover all the costs of the roads, including repair, widening, traffic management, and crash assistance?
Who benefits from public education? Of course, each of us benefits personally from our education, whether it is knowing how to be a good citizen or acquiring a marketable skill. On the other hand, would businesses prosper without a good supply of educated people? Since a good work force makes possible a successful company, what is a fair share of taxes for the highly-paid executives of a successful company?
"Low taxes" and "fair share" are almost meaningless phrases. I don't have much hope for any serious thinking among politicians or voters to think past these slogans.
Subscribe to:
Posts (Atom)