Tuesday, May 5, 2009

Raping the Free Market Economy

or "Why I Want Obama to Fail" (Part Deux)

I try to not overreact and just scream "socialist" at every thing the Obama administration does that I don't like. The Democrat victories in 2008 do entitle them to make policy, and much of that, while I may loath it, will be the usual wranglings that will get turned back when the Republicans take over.

However, three stories crystallize exactly why I was referring to Obama as "The Marxist" back in the days leading up to the election. And for those of us who do not want anything approaching the old Soviet command economy (and that damn well should be every damned American), here's how we're going to get there.

First, there's this story about a speech by President Obama:

Obama: Wall Street Will Play Less Dominant Role

Obviously, I'm starting with the softest one here. His rationale for pushing the less dominant role of Wall Street?
"What I think will change, what I think was an aberration, was a situation where corporate profits in the financial sector were such a heavy part of our overall profitability over the last decade."
Okay, that's not completely wrong, because there were some bad dealings that were a part of the current financial mess. But he appears to want to regulate Wall Street down by force:
"That means that more talent, more resources will be going to other sectors of the economy," he said. "I actually think that's healthy. We don't want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design."
Considering there doesn't seem to be a shortage of people taking up engineering and computers, what is his motivation here? Two words jump to mind: Command Economy. But this alone is not a pattern.

The second story is distinctly more insidious:

Obama Unveils Plan to Close Tax Loopholes

First of all, a definition: A loophole (in tax law) is a legal method by which an entity may avoid being taxed. They include every deduction and tax shelter on the books. So let's look at the loopholes Obama's after (and why):
"The way to make American businesses competitive is not to let some citizens and businesses dodge their responsibility, while ordinary Americans pick up the slack. Unfortunately, that's exactly what we're doing."
The reason they're doing it (LEGALLY) is because someone in government created a loophole. Those loopholes (in this context) are usually created to offset taxes to keep companies somewhat competitive.
"The current law says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "
That's because India doesn't tax the shit out of people. New York taxes people until they leave the fucking state! Or, to look at it rationally (according to the US Chamber of Commerce:
"The United States is the only major industrialized country which double taxes the overseas earnings of our companies. Since other countries don't subject their companies to double taxation, U.S. companies need deferral to stay competitive in the global marketplace. When you limit deferral, you limit the ability of U.S. companies to compete, you impede growth in the U.S. economy, and you cause the loss of jobs -- both at the companies directly impacted and companies in their supply chains."
Hell, even the Democrats in Congress want to study it before they kneecap our economy! But our Glorious Leader wasn't done yet. He hadn't threatened any companies:
"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly."
That's the strongest argument I've heard so far for moving your whole company to, say, Ireland (low corporate taxes) and opening the minimum necessary subsidiary here. At least this makes it easier for me to consider a move to New Zealand.

And now, the punchline:
"I want to make certain that our tax policies are fair and support the global competitiveness of U.S. businesses. "
In light of all your previous statements: Bullshit, Barry!

The third story though is a combination of the creep of an evolving command economy and the emergence of what I will kindly label as "The New Thugocracy."

In the rush to effectively nationalize the domestic automakers (except Ford, who had the damned sense not to take government money), GM has pretty much kowtowed to the administration's demands and will begin producing what Obama has proclaimed they will produce (the all new Yugo v2.0). But Chrysler has not been so successful at bending to Washington's will and has, after the administration tried and failed to get all the creditors to sign onto a deal where they'd settle for pennies on the dollar (23 cent, I think) while more favorable terms were offered to the United Auto Workers, finally gone into bankruptcy.

Obama chose to demonize those lenders that refused his offer.

The duty of any lender is to make a return on his investment. These particular investors (who remain anonymous due to confidentiality agreements (and hopefully will due to the attitude of the Obama administration)) state it this way:
“The government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.”
The practices they speak of deal with the priorities that occur in bankruptcy. In bankruptcy proceedings, debts are paid or discharged in a certain order. In this case, they're first in line and others (the UAW, for example) are not. And while the outlook isn't so good in bankruptcy, It comes back to following the rule of law.

Which brings us to Tom Lauria, bankruptcy attorney at White & Case, who represents a group of lenders that object to the Chrysler sale. Speaking on 760 WJR (Detroit), he was explaining why his clients are opposed to accepting the terms the Obama administration has laid out. However, one statement stood out above all others.

He said, "One of my clients was directly threatened by the White House" (1:54 on the clip in the link above).

The administration has denied this, of course, and Mr Lauria has backed away from (but not recanted) his statement. However, a clear pattern has emerged.

President Obama has stated that Wall Street will play less of a role in our economy in he future. He has put plans on the table to levy more taxes on companies who use legal methods to avoid our tax system (with some of the highest rates in the world). And he is using the full might of the government to make decisions for an industry. In essence, he is using the power of the bully pulpit, a willing Congress, and an apathetic and dependent people to shift the United States to a quasi-command economy.

And should he succeed fully, the last vestiges of the free market may soon follow:

When he came for the dirty, filthy, greedy Wall Street speculators, we cheered. When he took over the antiquated car companies and made them green, we lauded his caring for the environment. When he shut down the polluting power companies, we celebrated, especially when he sent us checks to cover the rising costs of the clean power. Then he came for our industry because it failed to meet his expectations. We cried out for help because it was our job, our company, and our livelihood. But as there were too few left, there was no one to speak for us.

The reason we have the rule of law is so that things can't quickly and easily changed at the whims of the majority. When this breaks down, especially for political advantage, we stand to lose fundamental freedoms and natural rights. What Obama moves toward now is control over the right to property. And with property rights evolving into a right granted by the state rather than secured by the state, how long can the others remain?

33 comments:

Beth said...
This comment has been removed by the author.
Gayle said...

Patrick, "The New Thugocracy" works for me. It says it all!

Excellent post. I haven't made an effort though, to not cry "socialist" in reference to what Obama's doing, because he's so, well... "socialist". What other way is there to describe what he's doing?

Patrick M said...

Beth (NY): Is there a reason you keep deleting every damned comment you leave? Even when it's not one subject to deletion?

Gayle: I know. But I wanted to give Obama a chance to prove me wrong. Of course, since I'm never wrong....

KIND AND GENTLE101 said...

Let me ask you Patrick. If loopholes are eliminated, wouldn't we be able to lower taxes as a whole because more revenue is coming in? It makes sense to me. We appear to be in similar economic situations. I got a Hope Credit on my taxes one year that led to a nice refund, but that's the only break I think I've gotten. I don't employ anyone so I can't take advantage of foreign outsourcing and the elimination of social security taxes on my employees.

Last I saw, the police were still responding to burglary calls so the government is protecting private property. Not taking it other than for just reasons, hopefully, as spelled out in our Constitution.


I don't know anyone that isn't outraged by the unconscionable greed Wall Street displayed that cost all our 401Ks, stocks and other savings to go in the tank. Why anyone would want to trust Wall Street again is a mystery to me.


Proper regulation and enforcement are the job of government. I appreciate our society and the role government plays in keeping us safe and free.

I thank our Founding Fathers, and Mothers, for their vision and courage in establishing our Country. And thank you Patrick. You have an outstanding blog. Continued success my friend...

BB-Idaho said...

"Considering there doesn't seem to be a shortage of people taking up engineering and computers, what is his motivation here?"
That's nice. Maybe we can move up from 59th among the world's nations: nations ..make stuff
instead of moving $$ around and calling it wealth creation....

Patrick M said...

101: You are correct that we could lower taxes by eliminating loopholes. But consider: Obama indicates that companies are wrong to be sending money overseas to legally avoid those taxes. And his plan is not to lower taxes when he eliminates loopholes but to make these companies pay their "fair share." In other words, he wants them to pay taxes in the other countries, then pay our higher rate too!

As I said, that's when the companies that can start exporting their headquarterses.

Also, I'm not outraged by Wall Street. They performed as I would expect them to. In trying to find loopholes in laws that keep getting changed for political reasons, they got out of control.

And as for trusting them again, that would require trusting them in the first place. This is why you make your regulations clean, simple, and without political goals.

KIND AND GENTLE101 said...

Unfortunately, many companies put profit before patriotism. President Obama wants to help companies that stay here and contribute to the good of America through employment and paying of taxes.

There is much merit in your reply Patrick. I appreciate your interest.

Satyavati devi dasi said...

OMG....

K&G: two things. 1. I want some of whatever it is you're smoking. 2. I think I love you.

Satyavati devi dasi said...

Patrick:

Don't be jealous, OK? :*

KIND AND GENTLE101 said...

Another place and time perhaps Saty. But here and now I will have to live with the fact that somebody other than I is lucky and special enough to be with you.

Name: Soapboxgod said...

"Unfortunately, many companies put profit before patriotism."As well they should.

Let me remind you that Patriotism is not marked by loyalty or allegience to one's country. Were this true, one would have to conclude that the Nazi's, the Japanese, Soviette Russia, were no less patriotic than the Americans during WWII. Do you believe that to be the case? I certainly do not. Do we send our men and women overseas to fight for their country so that we may preserve the stimulus package? The Department of Housing and Urban Development? Subsidies for Corn Growers, et al.??

No we do not. Patriotism is marked by loyalty or an allegience to an Ideal that the country represents (Individual Freedom and Liberty). So I don't give two shits how "hawkish" someone is about their Patriotism and defending their country if they're not defending what is right.

This ridiculous false altruism that has become so common place in society is really something.

So, you're essentially saying that a company has some sort of moral duty to its country and [presumably] to its employees to preserve their jobs by not going off-shore in light of a corporate income tax rate that is destructive towards said company's end. And you feel that their "patriotism" [or rather their duty/servitude] ought to be to a cause that is greater than their own. Who gets to decide what this "greater cause" is? Who shall dictate them? What if someone doesn't agree with the nobility of this "cause"??

Name: Soapboxgod said...

"...good of America through employment and paying of taxes."And let me further add, Patriotism (contrary to VP Biden) is NOT (let me repeat NOT) marked by "paying of taxes". You'd do well to check your history. The American Experiment is antithetical to servitude to the state. The experiments with servitude to the state are aplenty and none of which resulted in a superior quality of life than even the poorest in America.

Satyavati devi dasi said...

Let me remind you that Patriotism is not marked by loyalty or allegience to one's country.This may be your definition, but here is Webster's:

pa·tri·ot·ism (pā′trē ə tiz′əm)

noun
love and loyal or zealous support of one's country

So we're talking about the difference between a commonly accepted definition and your personal interpretation of the word.

Were this true, one would have to conclude that the Nazi's, the Japanese, Soviette Russia, were no less patriotic than the Americans during WWII.
They absolutely were no less patriotic. They fought for their country, same as Americans did. They cared for their country and wanted to succeed. I am sure that no or very few military folks actually WANT to go to war; however, they know it's part of their sworn duty to obey orders to the best of their ability regardless of their personal convictions and ideals about what they're told to do.


Patriotism in K&G's context means considering the well being of those around you instead of just yourself; realizing that the success of your country in large part depends on economic strength and that by shipping your jobs overseas you strengthen someone else's for your own benefit.

Essentially, selfishness.

But that's the American way, right?

Name: Soapboxgod said...

Hmmm that's pretty subjective for someone claiming the shield of compassion.


I'll take my definition of Patriotism thanks.

"...considering the well being of those around you instead of just yourself..."

And who shall I presume will be the arbiter of "Those around you"?? Am I to presume it is namely you and/or a specific class of employees who feel they've a right to a job which another must provide to them regardless of this individuals own desires?


What of the "those around you" that the business owner should come to find himself in the company of in another country he chooses to outsource to? Are they not as entitled to a job as are you?


When a person (in this case a corporate business owner) works for his own self interest (in a just manner mind you), he is not denying anything from anyone else. His employees are not entitled to a job which he must (by force) be made to provide. He owes them nothing as he pursues his own self interest. And in turn they owe him nothing. In so doing he does not compulse, coerce, or intimidate another as he works towards that endeavor. Now, in your mind, you subscribe this as "selfishness". However, in so doing, you fail to recognize the fact that doing so is not limited to a physical sense. When a man, through his own self-interest, invents a lightbulb, a combustable engine, a software program, etc., his motives for doing so may be for no other reason than because he chooses to do so. However, are you going to sit here and tell me that his "selfishness" has no other beneficiaries? That his "selfishness" begins and ends merely with himself?

Good luck with that argument.

What is truly selfish is an individaul who, in their futile attempt to moraly justify their right to a job provided by someone else, has no shame in enslaving that individual into adopting what it is that you find to be moral or just world.

Patrick M said...

Soaptastic: I was about to (kindly and gently) rip 101 for his "profit before patriotism" crap, but I really see no need now.

Satyavati devi dasi said...

So you sort of missed the part where the patriotism and profits collide:

realizing that the success of your country in large part depends on economic strength and that by shipping your jobs overseas you strengthen someone else's for your own benefit.meaning that, for a person or corporation that considers itself to be patriotic (and realizing that your definition of the word is not the commonly accepted one), it seems antithetical to increase the GNP of another country rather than your own, given the understanding that a strong economy is vital to a country.

Was a time that 'American Made' was something to be proud of, right? There are still companies (Jack Daniel's and Coors come to mind) that brag about producing their product only in the US. I've even seen this attitude in a German country that makes it abundantly clear that their product will never be produced anywhere but in Germany.

What of the "those around you" that the business owner should come to find himself in the company of in another country he chooses to outsource to? Are they not as entitled to a job as are you?

I thought we were talking about patriotism here, specifically profits before patriotism.

If we can understand that patriotism means loyalty and love for one's country (standard accepted definition) and that typically if you love and are loyal to something or someone you would support that thing or person in all ways possible, then we can understand that a company, knowing that a strong economy is key for its country's wellbeing, would want to do all it personally could to support that economy.

Instead, what we see is that companies are choosing to support the GNP of other nations at the expense (literally) of our own.

I hardly think this qualifies as patriotic.

Name: Soapboxgod said...

Thank you Patrick. I must say it really is something to see so many of these individuals, who were so vocal during Bush's term crying Fascist War Monger (or some other such term) as he pursued his own subjective "greater cause" while at the same they seem to have no personal problem with employing the same totalitarian measures in pursuing their own agenda.

Patrick M said...

Satyavati: ...companies are choosing to support the GNP of other nations at the expense (literally) of our own.They are choosing this path because the government of their soon-to-be-former country regularly uses them as scapegoats, tries to micromanage them, and punishes them if they are successful, all for political gain.

It's almost like a domestic violence situation. One person (the government) continually berates, attacks, and smacks around the other person (the "evil" Big Corporate). and because the government is physically stronger, Big Corporate has two choices: take the abuse, or get out (killintg the government is just not a viable option). If you were in that situation, how long would you sit there and take abuse before you bolted? I know my tolerance for that kind of shit.

Patriotism (like the Made in America label) only goes so far. And when we do things to discourage, demagogue, and punish those who offer jobs and goods and services, what reason do they have to be loyal.

Name: Soapboxgod said...

"Instead, what we see is that companies are choosing to support the GNP of other nations at the expense (literally) of our own."

Let me first state that the literal demise of our own prosperity is, and both has been, largely attributable to the portion of it which is consumed by an ever expanding government. What's more, given the sheer magnitude with which business is done on a global scale (and as well it should be with as little regulation thwarting the practice as possible) it is to the best interest of America that other economies in other countries are to prosperous. This takes me to the next point.

"I hardly think this qualifies as patriotic."

I would argue that quite the opposite is true. Because I define patriotism as allegiance to an ideal (one which I find to be virtuous) I want to share that with as many individuals as I can in the hope that they too will adopt it. In this manner we can both prosper.


"...it seems antithetical to increase the GNP of another country rather than your own, given the understanding that a strong economy is vital to a country."

You're missing the point Saty. A businessman's motive ought not be "to increase the GNP of his or any other country". It is to get the greatest return on his investment period.


Seriously...What is it with this fascination of servitude to the state or its GDP or its GNP?? If that is a consequence or a secondary fine I can deal with that. But you seem to be chalking it up as a primary.

Name: Soapboxgod said...

"Patriotism (like the Made in America label) only goes so far."

Exactly. I bought a 2005 Jeep Grand Cherokee last year. I didn't purchase it out of some servitude or loyalty to Chrysler and certainly not for the preservation of UAW jobs. I purchased the car for my own damn self centered motives (I know the nerve of me). I can't imagine doing it for any of the aforementioned reasons as it seems you're suggesting. Why the hell would I want to preserve that clusterfuck operation simply for the sole sake of preserving that clusterfuck operation?

Satyavati devi dasi said...

I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country. Thomas Jefferson said that 200 years ago.

He saw what was coming.

KIND AND GENTLE101 said...

"You're missing the point Saty. A businessman's motive ought not be "to increase the GNP of his or any other country". It is to get the greatest return on his investment period."

I would never question your love of our Country Soapboxgod. That is why I believe that once you take a closer look at what you wrote, you will remember the words of JFK. "Ask not what your Country can do for you. But what you can do for your Country."

Taxes are the price we pay for a civil and prosperous society. Infrastructure. Defense. Security. Proper regulation and an enforcement mechanism are all vital to individuals and business.

To avoid helping to pay for these vital components of civil society is unpatriotic.

Thank you all for the forum. Excellent post as usual Patrick M.

Name: Soapboxgod said...

If only that were true that corporations were willing to challenge government. The fact of the matter is that the two have become cozy bed partners. However, were it left to me to chose between the two, I shouldn't hesitate to prefer the former. A corporation, no matter its size and jurisdiction does not hold the monopoly on force. As such, their existence is wholly dependent on individuals willing to purchase their goods and or services on a strictly voluntary basis.

Name: Soapboxgod said...

"Ask not what your Country can do for you. But what you can do for your Country."

I've taken a good long gander at that one actually. And, I've concluded that the relationship between man and government is neither one of those arguments. Man is not to expect that government serves him and equally government is not to expect that he serves it. The relationship is purely and literaly neutral.

In this neutral relationship, man agrees to pay for these legitimate services of government to better secure his prosperity which he will attain of his own volition.

Name: Soapboxgod said...

"To avoid helping to pay for these vital components of civil society is unpatriotic."

I would make the argument that a corporation/business pays when they first open a business in this country which provides jobs, goods and services. Payment is not always monetary and it is because of this payment towards the "vital components of civil society" that I support the abolishment of our nation's corporate income tax rate.

KIND AND GENTLE101 said...

Ours is a government "By the people. Of the people and for the people" SBG. It is not a neutral arrangement. It is government serving the people. People pay their taxes to support their government. We say the Pledge of Allegiance. We sing The Star Spangled Banner. We sing Hail to the Chief. At least the Democrats do now. You may just stand there smirking. Which I respect as your right and the right of all to smirk.

Your arguments just don't hold water with what I thought your beliefs were SBG. I was pilloried by the Right for taking positions opposite president Bush and the Republican Congress at the time. They said I was unpatriotic and should be a good American and shut up. They said it was unAmerican to speak out against our government and President.
We cannot be neutral about our government and our government's role is to make our lives better. You will disagree with this at first, but then you will admit after some more civil discussion that you do agree. The disagreement we may have on this is how wide a role government should play.


Thank you for the discussion Soapboxgod.

Satyavati devi dasi said...

their existence is wholly dependent on individuals willing to purchase their goods and or services on a strictly voluntary basis.We have had this discussion before. There are whole sectors of business without which the country would cease to function. They're called UTILITIES for that reason. They include water, sewer, electricity, telephone, fuel.

Certainly you are free to put your cell phone minutes with whomever you like. Not necessarily the case with landlines; and there are many people (myself included) who have to have a landline. You don't have a choice about your electric company; unless you have your own solar/wind setup or would like to be Amish (I'm sure you'll be citing this as 'voluntary') you have to pay for electricity. Unless you have a hand pump on your own well, you have to pay for water (and if you class this as voluntary....) and unless have your own septic or you want to have an outhouse (ew) which would probably violate sanitary codes, you have to pay for sewerage.

The fuel we discussed when gas prices were so high. Sure, you can choose between Chevron and GoGas if you like, but the industry is essential; without fuel EVERYTHING is impacted (as we saw).

It's not all as simple as you make it.

Name: Soapboxgod said...

"We cannot be neutral about our government and our government's role is to make our lives better."

Pray tell just how, without any of its own resources, government will make our lives better? Government could give you alot of things that could very well make you feel all warm and fuzzy inside. But you know something....it can't provide one single thing for you without first taking something from someone else. Will you make a moral justification for using government as your means of denying your neighbor the fruits of his labor so that government may work to "make your life better"? Government doesn't make people's lives better or give them things. Government's proper role is to provide with safety and security and that's it. The "pursuit of happiness" dear boy. There are no guarantees that you'll attain it.

And Saty..I don't know where the hell you are with that last post. It doesn't make any sense. So I need water and electricity. What's your point? Too bad government doesn't allow the market to work as it should. No instead they give me no market options for my electricity or phone. They cut a deal with the utility company (or maybe it's the other way around) so I'm left with but a single option.

Are you saying the country would cease to function without utilities? I think you are. And who the fuck is going to argue that? You've just proven my whole point. People will want their utilities, their water, their phone, their whatever else. That means there's a "market" for it. It's not a service that without government wouldn't be provided or available so again I don't what the hell you're trying to get at with that post. Those companies will offer those services to people who can pay for those services if they wish.

Lastly, I got to thinking today...for someone who is such an advocate of all things government this and that (regulation and or otherwise) it struck me as odd that you had such a problem with the regulatory apparatus of your own place of work which precluded you from wearing your long sleeve shirts and your beloved red shoes.

A contradiction? No...maybe just two wholly seperate premises working there huh?

Satyavati devi dasi said...

you had such a problem with the regulatory apparatus of your own place of work which precluded you from wearing your long sleeve shirts and your beloved red shoes.The issue I had with this was that it was perfectly fine to wear red shoes and long sleeves on Monday, and then on Tuesday with no prior notice it became an offense you could get fired for.

You want rules and regulations, that's your prerogative as an employer. But share them with the people you expect to follow them first, instead of punishing them out of left field today for the same things you allowed yesterday.

Name: Soapboxgod said...

I'll concede that such is not what I would prefer for a business practice. However, my personal preference does not negate the fact that the employer reserves the right to make changes to company policy (and I'd be willing to hedge a bet that any paperwork you signed upon employment attests to this in some degree) without prior notice.

KIND AND GENTLE101 said...

"Government's proper role is to provide with safety and security"

I believe safety and security makes our lives better SBG. Your words validate my beliefs friend.
Next I would like you to thank President Eisenhower for establishing the interstate highway system making it easier to go across country. Thank the government for the FDA which works to keep the food we eat and the medicines we take safe.

Name: Soapboxgod said...

"Thank the government for the FDA which works to keep the food we eat and the medicines we take safe."

Seems to me the FDA no better keeps the food we eat safe than would likely otherwise be done via the Free-Market. Let's be clear here, first you had the spinach thing, the tomato thing, the peanut thing, the pistachio thing. What's more, the FDA has held up potentially life saving drugs that people and doctors actually want.

Satyavati devi dasi said...

make changes to company policy (and I'd be willing to hedge a bet that any paperwork you signed upon employment attests to this in some degree) without prior notice.Making up rules without telling anyone they exist is counterproductive except in the situation being created at my job at the time, which was to find a way to fire as many people as possible in as short a time as possible. To illustrate short a time, ALL of the nurses except one (and two who quit) were fired over a two week period.

If you're actually seeking compliance with your rules, you put them out, be sure your staff is aware, and give them a warning the first time they forget. If you're looking to decimate your entire staff, you don't tell anyone that things have changed and just fire them when they do the same thing they've been doing.

I can tell you that part of my employment agreement included occasionally having to work overtime and unscheduled time to ensure patient care. It also included occasionally being called off when census was low. It did not include an OK to get fired because the company changed their mind and never told anyone.

It was a BS tactic that no rational company (which it isn't) would ever do if they weren't looking to get rid of everyone without having to pay unemployment (which they are having to anyway).