Sorry, I'll take the opposite side: a very poor, pathetic representation of the main causes of income inequality today
1. Technical points: a. That Salerno barely remembered the name of Watson from IBM was odd, but more significant he claimed that Apple took the risk of "creating" the personal computer, when IBM failed to do so. Apple was not a significant player in personal computer at the time, and in fact, IBM became the standard world-wide. b. However, IBM did lose the battle, because of a more serious error: they sold the rights to what became MS-DOS to Bill Gates & Microsoft, for $50,000. It was Gates who changed the computing world, eventually pushing the one huge advantage IBM had with its operating system.
But the more significant economic issues are disturbing, IMO. Yes, Gov't deficits do aid, and cause much income inequality, and certainly Fed printing is a huge factor. But another major factor is tax policy -- on every level.
Economically, if one is going to have an income tax at all, then income is income. Having a much lower capital gain rate vs. ordinary income, merely directs economic activity. And is a major factor in aiding those with assets, vs those whose income is "ordinary."
I think capital gains tax policy explains the major reason for income inequality. Not only does most of the 1% receive compensation in form of stock and stock options, but even their salary is often tied to the performance of the stock. Income inequality has been growing way before Bernanke/ZIRP, or Obama came on the scene.
Level capital gain tax to = ordinary income tax, which would mean increasing capital gain tax and reducing ordinary income rates, and you would remove much of the incentive for companies to borrow money and buy back stock; or to borrow money to buy another company, along with employee reductions.
I think it was Greenspan, and low interest rate policy, in addition to tax policies, that turned much of the world into stock/futures day-traders. Actually "working" for a living, did not compare with the possibility of flipping houses, or flipping stocks. And throw in the "wasted" man and brain power of tax lawyers, accountants, even much of financial planning, and you would free-up huge assets.
excellent 2 aisle examples, fn pro
ReplyDeleteSorry, I'll take the opposite side: a very poor, pathetic representation of the main causes of income inequality today
ReplyDelete1. Technical points:
a. That Salerno barely remembered the name of Watson from IBM was odd, but more significant he claimed that Apple took the risk of "creating" the personal computer, when IBM failed to do so. Apple was not a significant player in personal computer at the time, and in fact, IBM became the standard world-wide.
b. However, IBM did lose the battle, because of a more serious error: they sold the rights to what became MS-DOS to Bill Gates & Microsoft, for $50,000. It was Gates who changed the computing world, eventually pushing the one huge advantage IBM had with its operating system.
But the more significant economic issues are disturbing, IMO. Yes, Gov't deficits do aid, and cause much income inequality, and certainly Fed printing is a huge factor. But another major factor is tax policy -- on every level.
Economically, if one is going to have an income tax at all, then income is income. Having a much lower capital gain rate vs. ordinary income, merely directs economic activity. And is a major factor in aiding those with assets, vs those whose income is "ordinary."
I think capital gains tax policy explains the major reason for income inequality. Not only does most of the 1% receive compensation in form of stock and stock options, but even their salary is often tied to the performance of the stock. Income inequality has been growing way before Bernanke/ZIRP, or Obama came on the scene.
Level capital gain tax to = ordinary income tax, which would mean increasing capital gain tax and reducing ordinary income rates, and you would remove much of the incentive for companies to borrow money and buy back stock; or to borrow money to buy another company, along with employee reductions.
I think it was Greenspan, and low interest rate policy, in addition to tax policies, that turned much of the world into stock/futures day-traders. Actually "working" for a living, did not compare with the possibility of flipping houses, or flipping stocks. And throw in the "wasted" man and brain power of tax lawyers, accountants, even much of financial planning, and you would free-up huge assets.