"Ten Things We Evil Capitalists Really Think"
Hey, OWSers, clear out your misconceptions by checking out this terrific list by Daniel Hannan at the Telegraph. A few of the points:
1. Free-marketeers resent the bank bailouts. This might seem obvious: we are, after all, opposed to state subsidies and nationalisations. Yet it often surprises commentators, who mistake our support for open competition and free trade for a belief in plutocracy. There is a world of difference between being pro-market and being pro-business. Sometimes, the two positions happen to coincide; often they don't.2. What has happened since 2008 is not capitalism. In a capitalist system, bad banks would have been allowed to fail, their profitable operations bought by more efficient competitors. Shareholders, bondholders and some depositors would have lost money, but taxpayers would not have contributed a penny (see here).
3. If you want the rich to pay more, create a flatter and simpler tax system. This is partly a question of closing loopholes (mansions put in company names to avoid stamp duty, capital gains tax exemption for non-doms etc). Mainly, though, it is a question of bringing the tax rate down to a level where evasion becomes pointless. As Art Laffer keeps telling anyone who'll listen, it works every time. Between 1980 and 2007, the US cut taxes at all income levels. Result? The top one per cent went from paying 19.5 per cent of all taxes to 40 per cent. In Britain, since the top rate of income tax was lowered to 40 per cent in 1988, the share of income tax collected from the wealthiest percentile has risen from 14 to 27 per cent.
For example, Estee Lauder heir Ronald S. Lauder's tax dodging under the current system here in The New York Times. And check out the rest of Hannan's ten at the link above.
via @WalterOlson
Coop, a favorite lefty.
Crid [CridComment at gmail] at November 28, 2011 10:54 PM
Shareholders, bondholders and some depositors would have lost money, but taxpayers would not have contributed a penny
Actually, the problem is the money with the banks is not money that belongs to the banks, but belongs to the depositors. So a capitalist would have probably not opposed a bank bailout simply because the money that was gone was not money that belonged to the capitalist running the bank or money that was given to him/her by someone who willingly assumed the risk. The word banks in this article is being used too broadly and makes the whole thing look skewed.
The problem was that no distinction was made between money which was meant for risky plays(equity, money for investment banking wings of the banks) and money that was kept for safekeeping and ultimately banks ended up doing risky stuff with all the money and not just the money meant for risky plays.
A capitalist would have opposed the bailout of Lehman Bros or AIG, not the bailout of Citibank. And he would probably ask for Citi to be split into different companies based on the risk profile of the operations involved and had a bailout of just the retail banking wing and let the rest of them go down.
Redrajesh at November 29, 2011 1:25 AM
Regarding the bank bailouts: Hannan either disregards or is ignorant of the situation policy makers were faced with, which was (pick one):
1. Nationalize the crippled banks
2. Bail out the crippled banks
3. Allow the complete collapse of the global financial system
Saying that he would let banks fail is to choose the third option.
Does he not recall that Lehmann's bankruptcy caused credit markets to freeze? Have no idea of what systemically important institutions are? Know that a large portion of companies rely on short-term paper provided by the institutions he'd allow to fail to purchase goods and make payroll? I'd say no.
It's fine to hate the bailouts and think it's wrong that so many who fucked up so badly could get bailed out by the rest of us; or think they should have been done differently, or prefer nationalization. But the idea that banks could have just been allowed to fail without destroying the broader economy is lunacy.
Christopher at November 29, 2011 9:04 AM
Why so hard on Ronald Lauder? His parents earned that money, and he's using legal means to protect it. He probably feels, as do I, that the government will more than likely squander that money and he'd rather keep it for himself.
The NYT piece was a hatchet job, but of course it's the NYT.
roadgeek at November 29, 2011 9:10 AM
The NYT piece was a hatchet job, but of course it's the NYT.
And as Reason pointed out, the NYT is attacking Lauder for using the same tax avoidance schemes they use themselves:
http://reason.com/blog/2011/11/28/new-at-reason-ira-stoll-on-the-new-york
Astra at November 29, 2011 11:43 AM
So, let the banks fail. We'll survive. Regarding the collapse of the world's economy that would supposedly result, sorry, not buying it.
If the government must bail them out, then what they should have done was assigned accountants to each bank to be bailed out, not just hand them a huge sum of money and expect them to use it wisely. Every penny spent by the banks to be bailed out will be accounted for and used only for approved purposes. Executive bonuses? Ah, no. You don't get a bonus for poor performance. "Whine, whine, whine...that's so unfair..." It's a bailout, not a reward or entitlement. It's not supposed to be pleasant, just a minimal expenditure to keep the banks from going under.
Patrick at November 29, 2011 1:44 PM
I'm sorry but trying for a soft landing with the bailout has now left us just as fucked if the Lehman had just crashed.
It is just taking longer to get there. The same with Fannie and Freddie. Waiting to liquidate all the bad properties will just glut market later.
Jim P. at November 29, 2011 7:03 PM
So the enormous pink elephant in the room here is MF Global (was there ever a more appropriate name?), and the chattering classes are avoiding that story like everything. Everything that the banks named above are accused of doing, MF Global did, and lots more. They violated the Prime Directive of investment banking by "borrowing" from customer accounts to cover their own positions.
However, since Jon Corzine and MF Global's directors are very, very tight with Obama and the Democratic Party, they will skate and the depositors will be screwed. This is the event that has the potential to take down entire financial markets, and all those fine words about how the institution has to be bailed out in order to prevent a widespread collapse won't apply here. It's not about what you know -- it's about who you know, and which tribe you belong to. Every other explanation is just a coverup.
Cousin Dave at November 29, 2011 7:07 PM
For CD
Crid [CridComment at gmail] at November 30, 2011 12:52 PM
Crid, that's great!
Cousin Dave at November 30, 2011 6:36 PM
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