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DougMacG
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« Reply #400 on: May 01, 2017, 08:13:38 PM »

Judge every Democrat proposal to help or expand the "Middle Class" with this in mind...

"The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them."

https://www.usatoday.com/story/opinion/2017/05/01/trump-test-democrats-tax-patriotism-glenn-reynolds/101159082/?siteID=je6NUbpObpQ-sSZk.GAzZjnKA3Zm_U0Yyg

https://philoofalexandria.wordpress.com/2010/09/25/reynolds-law/
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G M
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« Reply #401 on: May 01, 2017, 09:22:33 PM »

"Everybody gets a trophy", writ large.


Judge every Democrat proposal to help or expand the "Middle Class" with this in mind...

"The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them."

https://www.usatoday.com/story/opinion/2017/05/01/trump-test-democrats-tax-patriotism-glenn-reynolds/101159082/?siteID=je6NUbpObpQ-sSZk.GAzZjnKA3Zm_U0Yyg

https://philoofalexandria.wordpress.com/2010/09/25/reynolds-law/
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DougMacG
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« Reply #402 on: May 15, 2017, 01:22:47 PM »

"Please feel free to post that in the Tax thread here and the Economics thread on the SC&H forum too."

 http://www.heritage.org/node/18247/print-display
The tax rate cuts of the 1920s were followed by a 61% increase revenues over 7 years.
The Kennedy tax rate cuts brought a 62% increase in revenues over 7 years.
The Reagan tax rate cuts yielded a 54% increase over 6 years (100% over 10 years).

Then when Bush or Trump propose tax rate cuts, the media demands to know how they will deal with the static revenue loss - a demonstrably false premise question.
--------------------------------------

Opponents argue that revenues increase anyway, but the point is that if revenues surge after rates are lowered, the increase in income is that much more - which is a good thing!
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DougMacG
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« Reply #403 on: May 24, 2017, 08:33:53 AM »

"High social transfers not tied to work incentives emerged as the most likely explanation for the low participation rate. The phase-in of ... minimum wage ... may have also helped to drive down participation rates."   - BROOKINGS INSTITUTION (regarding fiscal collapse in Puerto Rico)

http://caseymulligan.blogspot.com/2017/01/who-wrote-this.html?m=1
https://www.brookings.edu/book/restoring-growth-in-puerto-rico/  (Page 29)


Pay for not working hurts work participation.  Who knew?
« Last Edit: May 24, 2017, 08:35:53 AM by DougMacG » Logged
ccp
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« Reply #404 on: May 24, 2017, 08:41:35 AM »

"High social transfers not tied to work incentives emerged as the most likely explanation for the low participation rate"

What are "high social transfers" - is this politically correct speak for free government sponsored benefits ?
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DougMacG
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« Reply #405 on: May 24, 2017, 09:31:29 AM »

"High social transfers not tied to work incentives emerged as the most likely explanation for the low participation rate"

What are "high social transfers" - is this politically correct speak for free government sponsored benefits ?

Right.  The redistribution economy run amok.  Government directed theft from producers to non-producers both reduces the incentive to produce and increases the receive.  Every additional dollar transferred doubles this incentive/disincentive problem.  Each time one more person switches from contributing to receiving, we are two steps closer to an economy that will not support those in real need.  In the case of the US, we are already $19 trillion in debt, short of being able to pay our bills.

In the US, 27% of the people have full time, private sector jobs.  (I rounded up, using 2014 numbers.)

http://www.cnsnews.com/commentary/terence-p-jeffrey/86m-full-time-private-sector-workers-sustain-148m-benefit-takers

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DougMacG
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« Reply #406 on: June 13, 2017, 11:36:49 AM »

Written from a political perspective but quite telling about how things work economically.
http://www.realclearmarkets.com/articles/2017/06/12/the_democrats_new_economic_agenda_will_solidify_their_minority_status_102738.html

The Democrats' New Economic Agenda Will Solidify Their Minority Status
By John Tamny
June 12, 2017
 The Democrats' New Economic Agenda Will Solidify Their Minority Status
In a column from December of 2015, the Wall Street Journal’s Mary O’Grady unveiled a rather inconvenient fact that poverty warriors on the American left and right would perhaps prefer remain hidden: from 1980 to 2000, when the U.S. economy boomed, the number of Mexican arrivals into the U.S. grew from 2.2 million in 1980 to 9.4 million in 2000. The previous number is a clear market signal that the U.S. is where poverty has always been cured, as opposed to a condition that requires specific U.S. policy fixes.

O’Grady’s statistics came to mind while reading a recent New York Times column by Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities. He writes that a “highly progressive agenda [from Democratic scholars and politicians] has been coming together in recent months, one with the potential to unite both the Hillary and Bernie wings of the party, to go beyond both Clintonomics and Obamanomics.” The problem is that the agenda that's got Bernstein so giddy has nothing to do with the very economic growth that is always the source of rising economic opportunity for the poor, middle and rich.

Up front, Bernstein expresses excitement about a $190 billion (annually) program that he describes as a “universal child allowance.” The allowance would amount to annual federal checks sent to low-income families of $3,000/child. It all sounds so compassionate on its face to those who think it kind for Congress to spend the money of others, but given a second look even the progressive and hysterical might understand that economic opportunity never springs from a forcible shift of money from one pocket to another. If it were, theft would be both legal and encouraged.

The very economic growth in the U.S. that has long proven a magnet for the world’s poorest springs not from wealth redistribution, but instead from precious capital being matched with entrepreneurs eager to transform ideas into reality. Just as the U.S. economy wouldn’t advance if Americans with odd-numbered addresses stealthily 'lifted' $3,000 each from those with even-numbered addresses, neither will it grow if the federal government is the one taking from some, only to give to others. Economic progress always and everywhere springs from investment, yet Bernstein is arguing with a straight face that the U.S.’s poorest will be better off if the feds extract $190 billion of precious capital from the investment pool. As readers can probably imagine, he doesn’t stop there.

Interesting is that Bernstein’s next naïve suggestion involves “direct job creation policies, meaning either jobs created by the government or publicly subsidized private employment.” Ok, but all jobs are a function of private wealth creation as Bernstein unwittingly acknowledges given his call for resource extraction from the private sector in order to create them. This begs the obvious question why economic opportunity would be enhanced if the entrepreneurial and business sectors had less in the way of funds to innovate with. But that’s exactly what Bernstein is seeking through his $190 billion “universal child allowance,” not to mention his call for more “jobs created by the government.” Stating what’s obvious even to Bernstein, government can’t create any work absent private sector wealth, so why not leave precious resources in the hands of the true wealth creators? Precisely because they’re wealth focused, funds kept in their control will be invested in ways that foster much greater opportunity than can politicians consuming wealth created by others.

Still, Bernstein plainly can’t see just how contradictory his proposals are; proposals that explicitly acknowledge where all opportunity emerges from. Instead, he calls for more government programs. Specifically, he’s proposing a $1 trillion expansion of the “earned-income tax credit” meant to pay Americans to go to work. As he suggests, the $1 trillion of funds extracted from the productive parts of the economy would lead to family of four tax credits of $6,000 in place of the “current benefit of about $2,000.” Ok, but what goes unexplained here is why we need to pay those residing in the U.S. to work in the first place.

What gives life to the above question is the previously mentioned influx of Mexican strivers into the U.S. during the U.S. boom of the 80s and 90s. What the latter indicated rather clearly is that economic growth itself is the greatest enemy poverty has ever known. It also indicated that work is available to those who seek it, and even better, the work available is quite a bit more remunerative than one could find anywhere else in the world. Rest assured that the U.S. hasn’t historically experienced beautiful floods of immigration because opportunity stateside was limited. People come here because the U.S. is once again the country in which the impoverished can gradually erase their poverty thanks to abundant work opportunities. If Mexicans who frequently don’t speak English can improve their economic situations in the U.S., why on earth would the political class pay natives who do speak the language to pursue the very work that is the envy of much of the rest of the world? Put rather simply, those who require payment above and beyond their wage to get up and go in the morning have problems that have nothing to do with a lack of work, and everything to do with a lack of initiative. Importantly, handouts from Washington logically won’t fix what is a problem of limp ambition. At best, they'll exacerbate what Bernstein claims to want to fix.

Most comical is Bernstein’s assertion that the tax credits will allegedly mitigate “the damage done to low- and moderate-wage earners by the forces of inequality that have steered growth away from them” in modern times. What could he possibly mean? The U.S. has long been very unequal economically, yet the world's poorest have consistently risked their lives to get here precisely because wealth gaps most correlate with opportunity. Translated, investment abundantly flows to societies where individuals are free to pursue what most elevates their talents (yes, pursuit of what makes them unequal), and with investment comes work options for a growing number. Doubters need only travel to Seattle and Silicon Valley, where the world's five most valuable companies are headquartered, to see up close why the latter is true.

Similarly glossed over by this rather confused economist is that rising inequality is the surest sign of a shrinking lifestyle inequality between the rich and poor. We work in order to get, and thanks to rich entrepreneurs more and more Americans have instant access at incessantly falling prices to the computers, mobile phones, televisions, clothing and food that were once solely the preserve of the rich. Just once it would be nice if Bernstein and the other class warriors he runs with would explain how individual achievement that leads to wealth harms those who aren’t rich. What he would find were he to replace emotion with rationality is that in capitalist societies, people generally get rich by virtue of producing abundance for everyone. In short, we need more inequality, not less, if the goal is to improve the living standards of those who presently earn less.

Remarkably, Bernstein describes the ideas presented as “bold” and “progressive,” but in truth, they’re the same lame-brained policies of redistribution that the left have been promoting for decades. And as they’re anti-capital formation by Bernstein’s very own admission, they’re also inimical to the very prosperity that has long made the U.S. the country where poverty is cured. To be clear, if this is the best the Democrats have, they’ll long remain in the minority.

John Tamny is editor of RealClearMarkets, a Senior Fellow in Economics at Reason Foundation, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). He's the author of Who Needs the Fed? (Encounter Books, 2016), along with Popular Economics(Regnery, 2015)
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DougMacG
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« Reply #407 on: June 25, 2017, 07:26:13 AM »

With the collapsing cost of oil and information we need a new way of measuring productivity.

https://www.the-american-interest.com/2017/05/17/the-new-oil-reality/

It’s possible that the productivity increases are appearing as lower prices rather than as higher incomes. If the price of oil falls from $100 per barrel to $50 per barrel due to increasingly cheap and efficient methods of production, then everybody in the industry is more productive in terms of barrels of oil per hour of work, but since the oil price has gone down, that productivity increase won’t be captured by statistical methods that calculate productivity in terms of money.
...
The African villager with a solar powered smartphone has more access to more information than Louis XIV in the halls of Versailles.

« Last Edit: June 25, 2017, 05:16:35 PM by Crafty_Dog » Logged
Crafty_Dog
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« Reply #408 on: June 26, 2017, 01:11:26 PM »

http://www.latimes.com/business/la-fi-seattle-minimum-wage-20170626-story.html
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G M
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« Reply #409 on: June 26, 2017, 01:38:47 PM »


https://townhall.com/tipsheet/christinerousselle/2016/11/30/mcdonalds-to-install-ordering-kiosks-instead-of-paying-people-15hour-n2252849

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DougMacG
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« Reply #410 on: June 26, 2017, 02:39:32 PM »


The costs to low-wage workers in Seattle outweighed the benefits by a ratio of three to one, according to the study, conducted by a group of economists at the University of Washington who were commissioned by the city. The study, published as a working paper Monday by the National Bureau of Economic Research
https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/?utm_term=.9290384225c1

And once again, "unexpectedly".
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Crafty_Dog
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« Reply #411 on: June 26, 2017, 04:46:58 PM »

Coming soon!  Government repeals Law of Gravity!
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G M
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« Reply #412 on: June 26, 2017, 04:58:50 PM »

https://www.facebook.com/Robots4MinimumWage/

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DougMacG
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« Reply #413 on: August 03, 2017, 11:50:25 AM »

Catching up on my Alan Reynolds readings this am.

https://www.cato.org/blog/compare-medical-college-inflation-services-not-goods

JULY 24, 2017
Compare Medical and College Inflation with Services, not Goods
By ALAN REYNOLDS

A Wall Street Journal report, “Colleges Pull Back Tuition’s Long Rise,” includes a graph showing the cumulative increases in consumer price indexes (CPI) since 1990 for College Tuition, Medical Care, and All Consumer Prices.

Adding up nearly three decades of increases looks dramatic, but doesn’t show when various prices changes accelerated or slowed. More important, prices for college tuition and medical care are dominated by skilled human services, so they should be properly compared with service prices in general rather than with all items.

All Consumer Prices (shown as an erratic black line in the graph) includes falling quality-adjusted prices for such tech products as computers and televisions, for example, and cyclically-volatile prices of internationally traded commodities such as oil, steel, and grain.

Service prices largely reflect wages and benefits for skilled labor, which (unlike commodity prices) almost never fall. If service prices did not increase faster than the CPI in general, then real compensation in service sectors could never rise.

See graph:  https://object.cato.org/sites/cato.org/files/wp-content/uploads/compare_medical_care_with_services_not_goods.png

Medical care prices compared to other services & CPI

This graph omits college tuition because that CPI item is particularly problematic due to averaging large differences in quality and “financial aid” (selective discounts from sticker prices). The Bureau of Labor Statistics explains some of the difficulties:

“The inclusion of financial aid has added to the complexity of pricing college tuition. Many selected students may have full scholarships (such as athletic), and therefore their tuition and fixed fees are fully covered by scholarships. Since these students pay no tuition and fees, they are not eligible for pricing. In addition, there are other students who pay a very small fee to the college since the majority of their tuition and fixed fees are covered by scholarships. When these situations are priced by BLS Field Staff, normal increases in tuition/fees and minor declines in scholarship awards can provide extremely large changes for entry in the CPI index. For some of these same quotes, minor tuition declines or minor scholarship award increases can actually result in negative prices, which make the quotes ineligible for use in the CPI.”

The graph compares two decades of year-to-year price increases for Medical Care and Services in general. The CPI for medical services alone (not shown in the graph) has actually increased somewhat less than the CPI for all Medical Care, which suggests prices of drugs and medical devices increased faster than physician and hospital fees. There have been major improvements in the quality of drugs and medical devices, however, and economists doubt the CPI adequately adjusts for quality improvement. As a BEA report notes, “If there are unobserved attributes that change over time (e.g. perceived efficacy or experience with the drug), these indexes will count any price increases associated with these changes as increases in price, not quality.”

Have Medical Care prices risen faster than Services prices in general? Yes, but the difference in annualized price increases was typically smaller than one percentage point except in 2002 and 2010, when recession’s aftermath depressed other services prices more than (heavily-subsidized) medical care prices.

Recessions’ impact on commodity prices pushed the year-to-year overall CPI below zero at times, which underscores the inaptness of comparing prices of medical or educational services to any price index such as the CPI which is heavily weighted by goods.
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DougMacG
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« Reply #414 on: August 14, 2017, 02:48:54 PM »

" It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. "

  -  by Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776

http://geolib.com/smith.adam/won1-02.html
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DougMacG
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« Reply #415 on: August 23, 2017, 10:46:35 AM »

Taking a bit of the Venezuelan story over here including GM's video for illustration.
----------------------------------------------------------
Coercive 'Paternalism' vs freedom with inequality

On the right, what went wrong in Venezuela is a stupid question, too obvious for words.  Socialism led to economic collapse.  On the left, it is the missing question, seldom or never asked.

Hugo Chavez was the hero of the American Left.  Some were explicit; others just argued we should implement all the same policies here. 
"These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina, where incomes are actually more equal today than they are in the land of Horatio Alger. Who's the banana republic now?"  - Bernie Sanders, August 5, 2011  https://www.sanders.senate.gov/newsroom/must-read/close-the-gaps-disparities-that-threaten-america

A year ago I asked my closest, then-leftist confidant the question:

If socialism is so great, how do you explain what is happening in Venezuela?

For background, I even included the following information: 
The story of Chile’s success starts in the mid-1970s, when Chile’s military government abandoned socialism and started to implement economic reforms.  In 2013, Chile was the world’s 10th freest economy.
Venezuela declined from being the world’s 10th freest economy in 1975 to being the world’s least free economy in 2013 (other than North Korea).
http://dogbrothers.com/phpBB2/index.php?topic=1307.msg98285#msg98285

She answered with the best explanation possible:  Maybe they (the socialists) went too far.
I agree and would add at least two exclamation points, They went too far!!
https://www.youtube.com/watch?v=IaCSdtG4MmI

Coercive Paternalism versus Income Inequality

No one on the right wants zero public sector or no safety net, but we want to limit the powers of government and enlarge the liberties of the individual.  In a freer, market-based economy, income inequality is a fact - a feature, not a bug.  Some people make more money than others.  Some work harder, smarter, longer hours or more than one job chasing a dream.  Some keep making more and more over the working lifetime as they get smarter, more experienced and have more invested. Others hang out on discussion boards...  The fruit of our labor is one reason why labor gets done, goods produced and services provided.  The fruit of our investment, too.  Without fruit of your labor, goods don't get produced and services don't get provided.  It's not rocket science but we keep steering away from what is known to work best.

Coercive Paternalism is the ideal of The Left.  http://www.nybooks.com/articles/2013/03/07/its-your-own-good/  I kid you not! You don't want or need free choice when 'smart-planners' can do that for you and do it better.  http://dogbrothers.com/phpBB2/index.php?topic=1518.msg71031#msg71031 

You don't get to equality without coercion.  And then you don't get there anyway.  Big powerful government is a feature not a bug in real world socialism.

In Venezuela, they pursued the policies and dreams of the American Left.  We should thank them and pay them for their experiment.  They took from the rich and they gave to the people, well actually the government, on behalf of the people (the government).  But private sector capitalism requires private sector capital and they chased it away.  Ironically, Public sector investment also requires a vibrant private sector to support it - and they chased it away.  It's a fact, not a cliche, that eventually you run out of other people's money [Margaret Thatcher].

Among the endless ironies of the left is that as you pursue equality and grow poorer, inequality worsens anyway.  Compare Chavez' daughter with median income or see President Obama's record in the US.
http://dailycaller.com/2015/08/10/iron-fisted-socialism-benefited-hugo-chavezs-daughter-to-the-tune-of-billions-reports-say/
http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD783798-ED07-E8C2-4405996B5B02A32E
https://www.counterpunch.org/2016/02/26/during-obamas-presidency-wealth-inequality-has-increased-and-poverty-levels-are-higher/

Who knew?

https://www.youtube.com/watch?v=l5KUadzyV9A
"How important is income equality to you?"
"Really important!"

Good luck with that.
https://www.youtube.com/watch?v=bDm2-1NZBLw
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Crafty_Dog
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« Reply #416 on: September 01, 2017, 04:01:16 PM »


http://www.ftportfolios.com/Commentary/EconomicResearch/2017/9/1/hurricane-harvey-and-broken-windows
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DougMacG
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« Reply #417 on: September 05, 2017, 02:52:55 PM »

I took another look at this because people on the left or looking for balance are still quoting and recommending it.

For anyone interested, please listen to this interview debunking Piketty up, down and sideways.  His little technical flaws make his thesis false.  His dates and basic facts are wrong such as when tax rates were raised in the US during the great depression.  Among his flaws he completely ignores depreciation, meaning that all capital ever put into use is still of full value and in use.

http://tomwoods.com/thomas-piketty-refuted/

All his errors are coincidentally in the direction of supporting his flawed thesis, not in random directions.

As with all leftists, they measure income and wealth of the lower earners without counting their income or wealth.  Housing capital is not capital or wealth, for example.  WIth the rich, they tell how much higher their income and wealth is without accounting for the actions we are already taking (taxation) to limit and discount their income and wealth.

Among those debunking Piketty is Piketty:
http://ww2.cfo.com/the-economy/2015/03/economist-piketty-backtracks-inequality-theory/

His work that ignores capital flight is not as popular in Europe, already plagued by capital flight.

Wages depend on productivity of labor which is dependent on labor.  To fight against capital is to fight against wages.  Who knew.

One who believes his own proposed tax on wealth is not doable is ... Piketty.

https://www.youtube.com/watch?v=QIGM9ga1sWc
http://dailysignal.com/2015/02/18/economic-research-refutes-piketty/
http://www.salon.com/2015/01/02/joseph_stiglitz_thomas_piketty_gets_income_inequality_wrong_partner/
http://www.realclearmarkets.com/articles/2014/04/22/the_systematic_errors_in_thomas_pikettys_new_book_101016.html
https://www.youtube.com/watch?v=QIGM9ga1sWc
https://www.amazon.com/Pikettys-Capital-Theory-Destructive-Program-ebook/dp/B00M0D69S2
https://economics21.org/html/problems-piketty-1307.html

I don't look for economists to predict the future.  I will happily settle for economists who can analyze the past and the present correctly.

Search this thread or "Piketty" in topic search for more on this.
« Last Edit: September 05, 2017, 02:58:35 PM by DougMacG » Logged
DougMacG
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« Reply #418 on: September 13, 2017, 01:59:46 PM »

https://www.amazon.com/My-Life-Work-Henry-Ford/dp/1497432251
https://www.youtube.com/watch?v=fAtyxuaRnHM

The right to the fruits of our labor
Excerpts from Henry Ford’s ‘My Life and Work,’ 1922

When you get a whole country — as did ours — thinking that Washington is a sort of heaven and behind its clouds dwell omniscience and omnipotence, you are educating that country into a dependent state of mind, which augurs ill for the future. Our help does not come from Washington, but from ourselves; our help may, however, go to Washington as a sort of central distribution point, where all our efforts are coordinated for the general good. We may help the Government; the Government cannot help us. The slogan of “less government in business and more business in government” is a very good one, not mainly on account of business or government, but on account of the people. Business is not the reason why the United States was founded. The Declaration of Independence is not a business charter, nor is the Constitution of the United States a commercial schedule.

The United States — its land, people, government and business — are but methods by which the life of the people is made worthwhile. The Government is a servant and never should be anything but a servant. The moment the people become adjuncts to government, then the law of retribution begins to work, for such a relation is unnatural, immoral and inhuman. … The welfare of the country is squarely up to us as individuals. That is where it should be, and that is where it is safest. Governments can promise something for nothing, but they cannot deliver. …
 
The economic fundamental is labor. Labor is the human element which makes the fruitful seasons of the earth useful to men. It is men’s labor that makes the harvest what it is. That is the economic fundamental: Every one of us is working with material which we did not and could not create, but which was presented to us by Nature.

The moral fundamental is man’s right in his labor. This is variously stated. It is sometimes called “the right of property.” It is sometimes masked in the command, “Thou shalt not steal.” It is the other man’s right in his property that makes stealing a crime. When a man has earned his bread, he has a right to that bread. If another steals it, he does more than steal bread; he invades a sacred human right. If we cannot produce, we cannot have — but some say if we produce it is only for the capitalists. Capitalists who become such because they provide better means of production are the foundation of society. …

The only strong group of union men in the country is the group that draws salaries from the unions. Some of them are very rich. Some of them are interested in influencing the affairs of our large institutions of finance. Others are so extreme in their so-called socialism that they border on Bolshevism and anarchism — their union salaries liberating them from the necessity of work so that they can devote their energies to subversive propaganda. All of them enjoy a certain prestige and power, which, in the natural course of competition, they could not otherwise have won.

If the official personnel of the labor unions were as strong, as honest, as decent, and as plainly wise as the bulk of the men who make up the membership, the whole movement would have taken on a different complexion these last few years. But this official personnel, in the main — there are notable exceptions — has not devoted itself to an alliance with the naturally strong qualities of the workingman; it has rather devoted itself to playing upon his weaknesses, principally upon the weaknesses of that newly arrived portion of the population which does not yet know what Americanism is, and which never will know if left to the tutelage of their local union leaders.

The workingmen, except those few who have been inoculated with the fallacious doctrine of “the class war” and who have accepted the philosophy that progress consists in fomenting discord in industry, have the plain sense which enables them to recognize that conditions change. The union leaders have never seen that. They wish conditions to remain as they are, conditions of injustice, provocation, strikes, bad feeling and crippled national life. Else where would be the need for union officers? Every strike is a new argument for them; they point to it and say, “You see! You still need us.” …

The workingman himself must be on guard against some very dangerous notions — dangerous to himself and to the welfare of the country. It is sometimes said that the less a worker does, the more jobs he creates for other men. This fallacy assumes that idleness is creative. Idleness never created a job. It creates only burdens. The industrious man never runs his fellow worker out of a job; indeed, it is the industrious man who is the partner of the industrious manager — who creates more and more business and therefore more and more jobs.

It is a great pity that the idea should ever have gone abroad among sensible men that by “soldiering” on the job, they help someone else. A moment’s thought will show the weakness of such an idea. The healthy business, the business that is always making more and more opportunities for men to earn an honorable and ample living, is the business in which every man does a day’s work of which he is proud. And the country that stands most securely is the country in which men work honestly and do not play tricks with the means of production. We cannot play fast and loose with economic laws, because if we do, they handle us in very hard ways.

The fact that a piece of work is now being done by nine men which used to be done by 10 men does not mean that the 10th man is unemployed. He is merely not employed on that work, and the public is not carrying the burden of his support by paying more than it ought on that work — for after all, it is the public that pays!

https://books.google.com/books?id=8elRmsxDBWsC&pg=PA7&lpg=PA7&dq=clouds+dwell+omniscience+and+omnipotence&source=bl&ots=LyEftCsOah&sig=2PsozpcwrE8HYJeHC0lOwQrW9b8&hl=en&sa=X&ved=0ahUKEwiHh5Lc66LWAhUE5oMKHcmuAM8Q6AEIOTAE#v=onepage&q=clouds%20dwell%20omniscience%20and%20omnipotence&f=false
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ccp
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« Reply #419 on: September 13, 2017, 07:19:13 PM »

Obamster has no problem cashing on the fruits of HIS labor doe  he?
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G M
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« Reply #420 on: September 18, 2017, 01:41:41 PM »


https://techxplore.com/news/2017-09-burger-robots.html
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DougMacG
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« Reply #421 on: September 27, 2017, 09:40:46 AM »


Why robots support a higher minimum wage
https://www.americanexperiment.org/2017/08/why-robots-support-a-higher-minimum-wage/

People Versus Machines: The Impact of Minimum Wages on Automatable Jobs
http://www.nber.org/papers/w23667.pdf

Raising the minimum wage by $1 equates to a decline in ‘automatable’ jobs of 0.43%. Certain industries were affected far more than others. In manufacturing, a rise of $1 in minimum wage drove employment in automatable jobs down a full percentage point.

If you raise the price of something, people will switch to substitutes.


A lot of economic turmoil comes from disruptive innovation and the globalization of markets.  Minimum wage legislation speeds up exactly what they wish to stop.

Leftists stuck on stupid.  Denying science.
« Last Edit: September 27, 2017, 09:43:30 AM by DougMacG » Logged
Crafty_Dog
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« Reply #422 on: October 09, 2017, 06:31:31 AM »

https://www.nytimes.com/2017/10/09/business/nobel-economics-richard-thaler.html?emc=edit_na_20171009&nl=breaking-news&nlid=49641193&ref=cta
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Crafty_Dog
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« Reply #423 on: November 21, 2017, 03:10:58 PM »

https://www.forbes.com/sites/louiswoodhill/2014/03/19/the-war-on-poverty-wasnt-a-failure-it-was-a-catastrophe/#6620686a6f49
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ccp
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« Reply #424 on: November 22, 2017, 05:35:27 PM »

   
"War on Poverty was a Catastrophe"

The LEFT can fix this easily by confiscating more from those who produce .  They curse the rich but at the same time they would have zero power without them.
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DougMacG
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« Reply #425 on: December 22, 2017, 05:08:56 PM »

https://www.forbes.com/sites/jeffreydorfman/2017/12/22/why-growth-matters/#1b84ddcb7141
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Crafty_Dog
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« Reply #426 on: December 29, 2017, 10:07:19 AM »

https://seekingalpha.com/article/4134231-amazon-multi-trillion-dollar-monopoly-hidden-plain-sight?ifp=0
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ccp
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« Reply #427 on: December 29, 2017, 10:48:37 AM »

CD,

cannot read article without logging in
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Crafty_Dog
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« Reply #428 on: December 29, 2017, 10:27:16 PM »

Summary

Amazon is both a direct retailer and a near indispensable platform for competing resellers.

In that latter capacity, it sets the rules and it can tilt the game in its favor and extract most of the value and valuable data and information.

That information allows it to start competing businesses by picking off its merchants' best-selling products.

It's difficult to see how this can be stopped bar action by competition authorities.

The year 2017 was certainly the year of big tech rising. FANG stocks, like Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Netflix (NASDAQ:NFLX), have risen sheer inexorably:

And there seems to be good reasons for most if not all the rise of the shares of these companies. Facebook and Google have basically cornered the online ad market and they are now responsible for nearly all of its growth. From Business Insider (our emphasis):

    The 10 leading ad-selling companies accounted for 73% of total revenues in Q4 2016, according to the report. So who are these 10 companies that grab the largest share of these revenues? The report didn't say. But analysts for the Pivotal Research Group, cited by Reuters, reported the only two names that really matter: Facebook and Google. In terms of the industry growth, so in terms of the 22% or $12.9 billion year-over-year increase in total internet advertising revenue, Facebook and Google together grabbed 99% of the growth! They're sitting at the sweet spot. Everyone else is fighting for crumbs.

And of course this sets up a virtuous cycle as their platforms become more useful for advertisers and less intrusive for users and it allows them to gather even more data about its users, the input for even better targeted ads, etc.

This data then serves other purposes as well. It's a giant treasure trove for AI applications that can kick these virtuous cycles into overdrive.

The position of Amazon seems only slightly less untouchable. Its leading position in cloud computing brings in the dough, and its ever expanding online (and increasingly offline) retail business doesn't actually have to make a profit.

This allows the company to keep investing in cementing its advantage (like robot technology for automated warehouses, etc.) and riding economies of scope as it expands its reach.

And of course, Amazon has also accumulated a wealth of data about its users which will enable it to put through machine learning and work into AI applications, turning it into gold.

The positions of the other three companies mentioned seem less unassailable to us. While Apple has a booming service business, most of its revenue depends on its sales of its iPhone, which is an already mature market.

One or two relatively less successful new models could quite dent the financials here. Mind you, this is not what we're predicting (we are in fact long in Apple for the SHU portfolio), but it could happen.

Microsoft increasingly depends on its booming cloud business for growth, but it's still distant second behind Amazon here. Netflix also faces considerable competition from Amazon (and others) and could stumble on a variety of issues (lack of a hit series, content cost, mispricing subscriptions, not to mention misbehaving stars).

Again, we don't predict this happening; we merely point out that their position is less unassailable than those of Facebook, Google or Amazon. These three are the top three real big tech commandeering companies, and even in theory it's simply difficult to imagine what could unseat their positions.
Amazon

Amazon is such a juggernaut that it flattens whole retail sectors, malls, and the retail landscape and in doing so it is amassing ever more power. The way it treats its warehouse employees has also come under scrutiny.

Amazon is already generating 30% of all (online + offline) retail sales growth in the US and (from the Atlantic):

    Last year, Amazon sold six times as much online as Wal-Mart, Target, Best Buy, Nordstrom, Home Depot, Macy’s, Kohl’s, and Costco did combined

Source: ILSR
Losses

Amazon has incurred losses on many ventures, but this only serves as a way to flatten the competition and establish a dominant position and hook customers in. It sells at prices and gives perks (free shipping, etc.) which few if any competitors can match.

Equally, Amazon's access to cheap finance allows it to undercut the competition and amass resources with which to expand its advantage and platform.

For instance, it has allowed it to amass a distribution network and fulfillment centers which have been automated by its purchase of Kiva Systems.

And while normal companies suffer when they acquire another company at a steep premium, Amazon's stock actually went up when it acquired Whole Foods earlier in the year; on the day actually by roughly the same amount as the acquisition cost ($13.4B), making it essentially free. Perhaps investors know something that competition watchdogs have yet to wake up to this. From ILSR (PDF):

    Between October 2014 and October 2016, Amazon’s market capitalization - the total value of its outstanding stock - rose from about $140 billion to about $380 billion. In the eyes of investors, Amazon is now worth nearly twice what Wal-Mart is worth, even though the latter generated $80 billion in profit over the last 5 years, while Amazon cleared only a little more than $1 billion.2

It's only gotten worse since. Apparently, investors see something that competition authorities seem to be blind to. Chamath Palihapitiya, a Silicon Valley venture capitalist, argued that ILSR:

    “We believe there is a multi-trillion-dollar monopoly hiding in plain sight.”

Indeed, as Amazon is becoming the first place for shoppers to look for stuff, it is becoming the indispensable gateway for suppliers to sell. And by selling through Amazon, they become captive to its terms and conditions, and the multiple ways in which Amazon can tilt the game in its favor. It is like Wal-Mart (NYSE:WMT) owning all shopping malls.
Indispensable Gateway

Market share figures really do not capture the market power the company has amassed. Its market power is simply hidden in plain sight - hidden because Amazon actually produces very meager margins and profits (apart from its cloud business). Here is an extensive report from the ILSR:

    Today, half of all U.S. households are subscribed to the membership program Amazon Prime, half of all online shopping searches start directly on Amazon, and Amazon captures nearly one in every two dollars that Americans spend online.

Since competition policy, especially that in the US, focuses on companies raising prices for consumers as a sign of monopolistic behavior, this is a pretty efficient decoy. The company actually does the opposite.

But it is not the actual slice of the market that is the most worrying part of Amazon's market power, even if this is growing pretty fast. It's its control over an increasing part of the infrastructure of sales. From the ILSR (our emphasis):

    Amazon increasingly controls the underlying infrastructure of the economy. Its Marketplace for third-party sellers has become the dominant platform for digital commerce. Its Amazon Web Services division provides the cloud computing backbone for much of the country, powering everyone from Netflix to the CIA. Its distribution network includes warehouses and delivery stations in nearly every major U.S. city, and it’s rapidly moving into shipping and package delivery for both itself and others. By controlling this critical infrastructure, Amazon both competes with other companies and sets the terms by which these same rivals can reach the market.

That is, companies that want to reach the market increasingly have to rely on Amazon. Basically everything Amazon does is targeted at becoming the indispensable gateway for online sales (and increasingly offline sales as well), creating the famous flywheel that Jeff Bezos likes to invoke as its business model.

Third-party sellers broaden Amazon's sales, make the platform more valuable for shoppers, and allow it to gain knowledge of new segments and amass invaluable data in order for it to extract much of the value from these third-party sellers, or even enter these segments itself and eliminate them.

Half of worldwide Amazon sales are generated by third-party sellers, but buyers wouldn't know it, as they are almost completely anonymous on Amazon's platform. And apart from invaluable data and amassing buyers fortifying its platform, Amazon also gets a cut (15% to 50% in some cases) with zero effort.

Take for instance LeTravelStore.com. It did very well online until more and more people skipped online search and went straight to Amazon. For the owners, it became clear that if you want to sell online, you have to go through Amazon.

But that wasn't a success either, as Amazon restricted its interaction and building relationships with customers, and the company closed. It's not alone. From ILSR:

    They can either continue to be independent, hanging their shingles out on search engine byways less and less traveled by shoppers, or they can set up shop as third-party sellers on Amazon’s site, forfeiting much of their knowledge, revenue, and autonomy to their most powerful competitor.

Or take Nike (NYSE:NKE), or Hachette, From Fast Company:

    Last week, Amazon offered to police the many counterfeiters that sell fake Nike shoes on its site as a bargaining chip to get Nike to agree, for the first time, to offer a full line of its products to Amazon. Similarly, when the publisher Hachette resisted Amazon's demands in negotiations over book pricing, it found the buy-buttons removed from all of its titles, putting thousands of books off-limits to both buyers and sellers.

Birkenstock, another shoe brand, fell into the same problem as Nike. And as strict as Amazon is with policies in its Marketplace, it is lax with others, like those involving counterfeited items. This is just another way for Amazon to gain leverage.

Keep in mind that Nike and Hachette aren't exactly small companies, but Amazon can waltz right over them nevertheless. As a side note, Speaker of the House Paul Ryan was one of its victims, as he has just had a book published by Hachette. Amazon restored his book to normal status (instead of delaying shipping and modifying search and recommendation algorithms), but not those of others.

In the book business, Amazon is extracting ever more value in annual negotiations about fees from publishers (the so-called "Gazelle project"). Those that don't play ball risk payback that will severely affect its sales.

Publishing house Melville House experienced the removal of buy buttons from all its titles on Amazon when the latter was shaking it down for another hike in fees.
Data

Amazon amasses a treasure trove of data from its own sales and those on Marketplace. From the ILSR:

    The company uses its data on what we browse and buy to shape what we see and adjust prices accordingly, and its control over suppliers and power as a producer itself means that it’s increasingly steering our choices, deciding what products make it to market and what products we’re exposed to... Already there is evidence that Amazon is using its huge trove of data about our browsing and buying habits to selectively raise prices, and it’s also started blocking access to certain products and delaying shipping for customers who decline to join its Prime program.

The mechanisms involved aren't really all that different from those that provide Facebook and Amazon with their increasing return in the online ad market.

Instead of ever better targeted ads, the company can provide customers with ever better targeted products and services. In itself, this isn't bad, but the company has a lot of leeway to skew the process, just like Russian trolls can misuse Facebook or Twitter to skew political processes.

And there is another side to this. In skewing, Amazon can also tilt the production of goods and services itself and/or demand a premium for premium access, or even any access at all.
Amazon products

Another thing that Amazon increasingly does with all the data it has amassed both from its own sales and that of third-party sellers selling on its platform. From The Atlantic:

    Some merchants have accused Amazon of secretly using Marketplace as a laboratory: After collecting data on which products do best, it introduces low-price competitors available through its flagship service.

Since half of all online shopping searches start directly on Amazon, it can heavily skew these searches in favor of its own (or preferred party) solutions. After all Amazon increasingly produces stuff itself, like books, audio books (Audible), TV shows, video games (via its platform Twitch), it has its own streaming music solution, groceries, etc. From ILSR:

    Earlier this year, the company unveiled 7 of its own fashion lines, offering more than 1,800 items of apparel. It’s added hundreds of new products to its AmazonBasics brand, which now furnishes a wide range of household items, from computer cables to swivel chairs. On Amazon.com, many of these products rank as top sellers in their categories and show up first in search results. Amazon publishes books too, and it’s not uncommon for as many as half of the titles on its Kindle bestseller list to be its own.

And the Marketplace also serves as a great lab to figure out where to expand. From ILSR:

    It also appropriates their product knowledge. Upstream Commerce recently tracked 857 apparel items first offered for sale by Marketplace sellers and found that, within 12 weeks, Amazon began selling 25 percent of their top-selling items. Another study by researchers at Harvard Business School also looked at patterns in Amazon’s entry into new product areas and found, “The likelihood of Amazon’s entry is positively correlated with the popularity and customer ratings of third-party sellers’ products.”

Other elements

The acquisition of Whole Foods gives Amazon another leg up in its competition with other retailers:

    Another series of distribution centers often located in the best neighborhoods.
    The ability to merge online and offline data to create an even bigger data advantage (readers might want to read up on the possibilities here, for instance, through our treatment of the same topic describing Alibaba's (NYSE:BABA) O2O strategy).

See for instance how its ever denser network of fulfillment centers gives it a leg up in distribution. From Business Insider:

    New and improved Amazon shipping options made it easy to get last-minute holiday gifts in time for the holiday. Customers use of Amazon's one-day, same-day, and two-hour delivery doubled this holiday, according to the company. This dovetails with Amazon's commitment to being the most convenient option to gain market share, at the expense of margin.

Another brilliant idea to rope in consumers was Amazon Prime, which provides a series of perks like streaming media (competing with the likes of Netflix). But perhaps its most important feature is free shipping. The benefits of this accumulate with use so it greatly reduces people's motivation to shop anywhere else (ILSR):

    Less than 1 percent of Prime members visit competing sites while shopping on Amazon, and Prime members spend almost three times as much with the company as non-Prime customers do

Then there is its digital assistant, Alexa, which is a full frontal attack on brand power. Do you want batteries? Alexa doesn't give you the option of choosing between brands. And Alexa's reach is rapidly increasing. From Business Insider:

    The Alexa app, which is required to set up Amazon's Echo devices and other products with the Alexa digital assistant built in, was the top app for Android and iPhone on Christmas day. Since app store rankings reflect what people are downloading almost in real-time, it's a strong indication that Echo products were some of the most popular gifts this Christmas.

From ILSR:

    Amazon presents a vastly more dangerous threat to competition than Wal-Mart, because its ambition is not only to be the biggest player in the market. Its intention is to own the market itself by providing the underlying infrastructure—the online shopping platform, the shipping system, the cloud computing backbone— that competing firms depend on to transact business. In effect, Amazon is turning an open, public marketplace into a privately controlled one.

Already there is evidence that Amazon is using its huge trove of data about our browsing and buying habits to selectively raise prices, and it’s also started blocking access to certain products and delaying shipping for customers who decline to join Prime.
In summary, how Amazon squeezes the competition

    Half of shoppers already begin their search on Amazon; Amazon has the ability to produce at a loss aided by cheap finance; and its fast and cheap shipping are becoming the norm. All of this gives independent sellers little choice but to join Marketplace.
    Once they join, they have to accept the terms and conditions (like no interaction with customers outside Amazon's platform and little in the way of marketing or branding). Fulfillment terms are another point of leverage for Amazon.
    Amazon's platform is strengthened by more third-party Marketplace sellers, and here Amazon gains knowledge of new verticals and transaction data which it can then use against these third-party sellers.
    It can tilt the playing field (fulfillment, search and recommendation algorithms, or even removing the sell button or the seller altogether) in order to extract better conditions.
    It can also use the seller data to see what sells best and to produce similar items (again tilting the field in its favor).
    Amazon Prime is another powerful instrument to get even more people to its platform and stick with it, as the transport cost reductions are cumulative for instance.
    Alexa can further reduce brand power of suppliers and make the shopping experience seamless and sticky.

This is by no means a complete picture, but you get the idea of the flywheel which Bezos likes to talk about. A bleak conclusion from Fast Company:

    Amazon treated the book industry the same way companies like Wal-Mart once treated the territories into which they expanded: Use a war chest of capital to undercut prices, put competitors out of business, become the sole employer in the community, turn employees into part-time shift workers, lobby for deregulation, and effectively extract all the value from a given region before closing up shop and moving to the next one.

Conclusion

Amazon is both a retail competitor and a near indispensable platform for other retailers to sell on. But in that second capacity, Amazon has numerous ways to extract value and valuable data and information from these third-party sellers, and it has multiple ways at its disposal to tilt the playing field in its advantage. After all, it's Amazon's playing field. Amazon sets the rules, and Amazon controls the information and the customer interface.

The flywheel is all but unstoppable; Amazon is indeed a multi-trillion-dollar monopoly hidden in plain sight. Investors seem to realize this, but few others do - certainly not competition authorities, who happen to be the only ones who can do something about it. They, like consumers, are loving it.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in AMZN over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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DougMacG
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« Reply #429 on: January 11, 2018, 12:55:36 PM »

It was utter nonsense for our economically illiterate mainstream media to poll CEOs of existing large businesses and ask them how they will distribute the windfall of a static  tax rate cut as they pay out a smaller portion in taxes of a fixed pie.  If they are benevolent, the story goes, they will give all of it to workers, and if they are mean and selfish they will pocket it for themselves and their shareholders.  As Woody Boyd might say, that isn't how it works in the real world.  Companies don't pay more for inputs like labor because they want to.  They pay what they need to pay in competition with other bidders for scarce resources.

Lower business tax rates and other improvements like immediate expensing of capital equipment purchases means that, all other things equal, more capital will be invested in this economy.  Now we hear that Samsung, LG, Toyota and Mazda are building plants or expanding in the US.  (Maybe Apple will come to the US someday too!)

These companies and their expansions add jobs, but how, when the unemployment rate is at essentially at ground zero.?

Newly relocated companies with really good jobs to offer have to hire people away from other companies, not invent people out of thin air.  The existing companies that stand to lose good employees have to drive those wages up.  How can they do that?  Capital investment is investment is synonymous with productivity improvement.  They will have to invest more, grow, innovate and be more efficient and effective in their field.

When they do lose key employees to competition, they have to promote people up and hire people in.  This affects supply and demand up and down the labor economic ladder.  The people out of the workforce coming in might not land jobs as plant managers or robotics engineers but their world of incentives, disincentives and job offers will be affected by incoming investment and hiring.

We live in an amazingly integrated and interconnected economy, not a trickle down one that flows in only one direction. 

Hiring and retaining good people is the hardest job of every vibrant and dynamic organization.  Let the bidding begin!
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