Monday, May 5, 2014

The Inequality Trap Distracts from the Real Issue of Freedom

Richard Ebeling emails:

I have a new article on the news and commentary website, "EpicTimes," on "The Inequality Trap Distracts from the Real Issue of Freedom."

Thomas Piketty's new book on, Capital in the Twenty-First Century
has been hailed as a renewed demonstration that capitalism breeds unjust income inequality that can only have its remedy in virtually confiscatory taxing policies to impose a more "just" and more equal range of incomes.

I argue that Piketty misses essential aspects of the workings and nature of the market economy, including;

(a) the connection between work and reward and therefore the origin of incomes earned;

(b) the role of the free market price system in rationally valuing and allocating entrepreneurial and skilled labor talents that would be distorted by Piketty's proposed policies;

(c) the corruptions in people's behavior that Piketty's policy proposals will bring forth.

In addition, and most importantly, his analysis ignores what is the real basis of any issue of injustice in society:

Has income been earned through peaceful production and honest competitive exchange on a free market, or has been gained through a system of political plunder and privilege through the power of the state?

http://epictimes.com/article/328067/the-inequality-trap-distracts-from-the-real-issue-of-freedom

Best,
Richard

6 comments:

  1. honest competitive exchange? how much honesty is there in marketing? Competition makes it nearly impossible to be honest. When two people are selling a nearly identical product, the one who deceives effectively will sell more. A competitive market punishes honesty.

    ReplyDelete
    Replies
    1. Re: Jerry Wolfgang,
      -- how much honesty is there in marketing? Competition makes it nearly impossible to be honest. --

      "Having options is just sooo hard, man!"

      -- When two people are selling a nearly identical product, the one who deceives effectively will sell more. --

      Wow! JW, you must be a marketing genius to have come up with that one all by yourself!

      -- A competitive market punishes honesty. --

      If that were the case, then monopolies must be honest to the point of obnoxiousness, then.

      Go back to school, Jerry. You're making a joke of yourself.

      Delete
  2. JW: Troll who obviously never did business. (I personally think JW never did honest work in his life, though he (or she) has yet to condemn himself by his own words regarding that).

    So, JW - competition or not, you do not fool your customers. Not if you want them to buy from you again. That is called "reputation". You should try acquiring a good one some day.

    Besides, fraud is a crime, and thus lying about your product is a crime. Marketing is not about lying, it is about creating positive image of the product and making people aware of its existence. People buy products not only for the physical content and bare function of the product (as you socialists seem to think) but also for emotional enjoyment of acquiring and using them. That's why you socialists never seem to get why building blocks after blocks of standard 9-story concrete apartments results in inhabitants being unhappy; you never understand why mass-producing drab clothes and food packaged in gray recycled paper creates generations of alcoholics.

    ReplyDelete
    Replies
    1. "So, JW - competition or not, you do not fool your customers. Not if you want them to buy from you again. That is called "reputation". You should try acquiring a good one some day."

      (Pssstttttt...."Property!"-LMAO!)

      Sorry, had to do it.

      Delete
  3. here's your wealth.........debt to infinity club members only!


    Here They Go Again: Wall Street Is Offering Debt-On-Debt-On-Debt!
    by David Stockman • May 5, 2014

    Here’s how the daisy chain of debt works— short form. LBO’s issue debt—loads of it. Leveraged buyouts are now being priced at typical top-of-the-bubble ratios of 10X cash flow (“adjusted EBITDA”). The portion of these LBO debt towers that consists of bank term loans and revolver facilities is sold to freshly minted financial conduits called CLOs (for Collateralized Loan Obligations) which are not real companies and which do not have any money!

    No problem. What happens is that credit hedge funds and Wall Street trading desk hit a computer key, open a new spreadsheet window, wrap it in legal boilerplate, provide this newly minted CLO with a credit line and then start bidding for available LBO paper in the junk loan market. When they have accumulated enough offers, they slice and dice the resulting portfolio of LBO loans, and issue multiple tiers of debt—rated from AAA to junk against the loans listed on the spreadsheet.

    So we now have a spreadsheet, a part-time “portfolio manager” and hundreds of millions of the latest CLO toxic waste. For 95 weeks running, there was no want of buyers for this CLO issued paper. In its infinite wisdom, the Fed drove interest rates on CDs and high quality paper to nearly zero—–so the scramble for “yield” was on. Soon Grandpa was being forced to buy a high yield mutual fund in order to pay the light bills.

    But now as LBO risks soar due to recklessly escalating deal prices and as the LBO kings step-up their patented late cycle cash strip-mining operations in the form of “leveraged recaps” funded with new “cov lite” debt— even yield starved retail investors have begun to turn tail and run. During the last two weeks there were actually outflows form high yield mutual funds.
    So that leaves a big gap in the market.

    http://davidstockmanscontracorner.com/here-they-go-again-wall-street-is-offering-debt-on-debt-on-debt/?

    ReplyDelete