Robert Reich on the runaway billionaire greed.

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Robert Reich on the runaway billionaire greed.

The link below is of Robert Reich explaining the absurity of uber billionare greed. 


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 So why don't you consider

 So why don't you consider women that have kids with deadbeat men that can't or won't provide for their children greedy as well? That is who you'll give this wealth to. right? Why aren't the politicians that would control all this wealth also greedy?

What exactly does the left offer hard working men that invent, construct, maintain civilization and do all the dirty, dangerous and difficult jobs? The left only ever offers them tax slavery to pay for those that don't work and never try to improve to make themselves more valuable in the labor market. Look at you, you just write blogs instead of learning a skill that would be valuable to others. That is why no one can find a plumber or an auto mechanic. You just want free shit, why can't you just admit what is so obvious to everyone?

What do you have to say to the 8 million men of working age that are out of the labor force to get them back in it? You offer them nothing but slavery to give to lazy and incompetent.

Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state represents a complete defeat for the civilized world, while a totally voluntary society represents its ultimate success. --Mark Skousen


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 Many silly

 Many silly fallacies. 

 

"If you're a centibillionaire, you can afford a brand-new gulfstream every single day." - No, you can't. 

 

"A centibillionaire could easily buy every team in the entire major league." - No, they couldn't. 

 

Give every teacher an $8,000/year raise, wipe out all the medical debt, give homes to all the homeless people, buy COVID-19 vaccines for the entire world etc. No, they couldn't. 

 

All of these are wrong for two reasons: 

 

First, money isn't magic. Money doesn't build gulfstreams, sports teams or anything else. That isn't the role that money plays in the world. People build things. Money incentives them to put their time and efforts into it. If someone had $100 billion and spent all of it on buying gulfstreams, they would single handed increase the price of Gulfstreams. If you wanted to buy 365 of them, you would be buying every Gulfstream built over about 7 years. Nobody has that many Gulfstreams to sell you. So those selling would raise the prices in the face of such immense demand and your $100 billion wouldn't go so far. Same thing with sports teams - you can't just buy one, you have to find a willing seller. Offering more money increases the odds of finding a willing seller, but you are buying from people who already have extreme amounts of wealth. Money isn't a huge motivator for someone who is already a billionaire - being able to say "I own a sports team" is. Nowadays, it seems like $1-$2 billion is enough to convince one or two owners to sell their team. But that doesn't indicate every owner would sell for that range. Offer Jerry Jones $10 billion for the Cowboys, about double his net worth, and I bet he'll tell you where to shove it. Remember Rush Limbaugh, had the money had the agreement to sell the team, but the NFL decided he wasn't good enough to join the cool kids club. Supply and demand. Money doesn't create things, it is the reward that people get for creating things that other people want. It is a tool of trade. So if you buy all the Gulfstreams, you have to offer enough money to encourage the airplane company to create a new production line, and they have to offer enough money to convince people who are doing something else to build airplanes instead. Nobody can snap their finger and bring a plane into existence to sell the centibillionaire. The very act of spending money, influences the supply and demand of any product. With super high-end rare products, the impact is more noticable and extreme because one person can influence the market. But when you go to the chip aisle and choose Doritos or Cheetos, you are making a small impact on demand which ultimately decides how the workforce is allocated among those who make Doritos and those who make Cheetos. 

  

Second, being a "centibillionaire" doesn't mean that you have $100 billion in liquidity. Indeed, I doubt most of them have a mere $1 billion in cash. When Elon Mush bought twitter, he provided a mere $4.4 billion of the cash himself, and he had to borrow to get that much. Even though on paper he is worth more than $200 billion. Why would someone worth $200 billion need to borrow money to spend $4.4 billion? Because virtually all of his networth is tied up in the companies he owns. For Musk, its TSLA. He was an early investor, and owns over 20% of the company worth over $600 billion today. Musk's options for accessing that value is either to use his shares as collateral, or sell them. Selling them is a bit problematic, because you have to have someone to sell them too. Additionally, when news breaks that Musk is selling shares, the market sells off and the price declines. Just a year ago, shares were about 50% lower than they are today. In 2021, they were twice as high as they were today. So in the last 3-years, Musk's position in TSLA has varied in value from $240 billion, to $60 billion and today roughly $120 billion. It could be higher or lower tomorrow, and Musk's decision to sell shares would negatively impact the price. Nor could Musk borrow the whole amount, as margin loans require excess collateral, and if the share price falls, Musk would have to come up with cash or extra collateral, or risk losing all of his shares to the bank. Even billionaires can lose literally everything when they borrow too much - it has happened. So of Musk's $120 billion in TSLA stock, he can safely borrow to use roughly 25% of that value. Or $30 billion. Still a lot of cash, that you can do a lot of things with, but if you are buying all the things Reich is talking about, it suddenly isn't enough. For Musk to access the wealth in his private companies like Space X - virtually impossible. It's there, it's a number, it wins a lot of dick measuring contests at the private yacht club. But it isn't accessible wealth that can be spent on things like cars, planes, mansions, yachts and sports teams. Someday, maybe those companies go public, have an initial offering and Musk gets cash (an IPO is the owners of the company selling a portion of their position). 

 

How did Musk get all that wealth? After selling his position in Paypal for $100 million, Musk invested $6.5 milllion into TSLA in 2004. It was an open funding round, anyone with $6.5 million could have done the same thing. Now why couldn't you invest in TSLA in 2004? Because the US government believes that you are incompetent and unable to make investment decisions if you have less than $1 million in liquid assets or make less than $300k/year in income to be an "accredited investor". If you are an accredited investor, these types of opportunities are available to you, and you could have invested a relatively modest $100k and you would be a billionaire today. If you invested $1,000 you would have $18 million today. Of course you couldn't. That isn't Elon's fault, or the fault of any super rich person today. You can blame FDR and the democratic controlled house and Senate in 1933. They were the ones who decided that rich people were smarter than you yokels, and that those of us who obtain a certain level of wealth should get different investment options. I agree, it is unfair and I oppose the existence of that law. I don't think it is fair that I am able to make investments in companies that aren't regulated by the SEC, but you are stuck with those that are. Especially since there are just as many publicly traded companies that are complete sinkholes that lose money as there are non-public companies that are frauds. Poor investments are everywhere, and the SEC is like the police - they show up and clean up after you are murdered, they don't really protect you before you are murdered. Of course, Reich is rich enough, he could have invested in TSLA when Musk did, he chose not to. Maybe he is jealous.

If Musk sells TSLA stock, who is he selling to? Mostly the wealthy. Just like goods, the stock market is based on supply and demand. It is allocating money from one business to another, determining which businesses are providing enough services to justify expanding and which should be closed down. Most people buying TSLA, are probably selling stock in another business to get the money. 
 

You didn't have an option to invest in TSLA until July of 2010. At which point you could have invested $1,000 and you would have a cool $117k today. Anyone with $1,000 and an internet connection could make that investment. Not too shabby, and I'd daresay that would have made a material difference in your current financial situation if you had. $1,000 in 2010, would have been enough for you to buy a small house or mobile home free and clear today. What did you invest $1,000 into? 

And that is the crux of the problem. You are poor because you never took advantage of the opportunity to become an owner of any company. If you had invested $1,000 in TSLA, and then contributed a mere $100/month, you would have over half a million dollars in TSLA stock today. In 2022, you would have been a millionaire. $100/month, about the cost of cable tv. But you didn't. You didn't invest $100/month into anything. Now you whine about it because the people who did invest have more than you do. Of course they have more, the did something useful with their money. You spent yours on whatever your whims and "needs" were of the moment. Heck, $100 to start and $10/month in TSLA and you would have $57,000 today, enough to buy a couple of decent used cars. But you couldn't even be proactive with $10/month. People pay for phone bills, Hulu, Netflix, etc. They don't think twice about spending $10/month. But if instead of paying for Netflix, you invested $10/month into Netflix since it IPOd (June 2002), you would have $300k today.  

I've been on here for 16 years now. Over that time, I have frequently suggested that you invest. You've treated such advice with scorn. You can lead a horse to water, but I'm not going to force you to do what is smart. You live in a system where you have the option to be a part owner of companies. You have thousands of options that are publicly traded, and once you get past that cool $1 million, you have the option to invest in thousands of non-public ones. Or you can do what I did - offer to help out a struggling buiness with a privately negotiated investment - my first investment was $8,000 into a florist. At the time, $8,000 was A LOT of money to me. I was driving a $500 car and living in a $300/month apartment. I could have bought a new car, I didn't. I could have gotten an apartment with a bedroom, I didn't. I knew the owner, knew they were struggling to pay rent and faced with going out of business. They couldn't get a loan. I provided cash, brain power and a bit of elbow grease. It worked out, I could have lost everything. My money and efforts could have failed to turn the business around and my money simply would have been gone. Which would have been devastating because $8,000 was a lot of money for me to replace back then. My day job paid me like $30k/year before taxes. Did you take that risk? No, you didn't.

Now, I have achieved my dream. I have the means that I can invest in various small business. Provide them my knowledge, advice and capital. It isn't always enough. Even with my means today, some of the businesses I've invested in have failed. Sometimes I was screwed over - one person I considered a friend basically took my investment and spent it on himself. Sometimes the entrepreneur had good intentions but just didn't have the ability. And money isn't magic, I can only throw so much at a company before I have to admit the idea isn't working and stop throwing good money after bad. A restaurant I invested in simply never recovered from COVID. My partner just lost heart and refused to fight when he was evicted from his location for refusing to enforce the mask mandate on his employees.   

You have chosen not to invest anything. You have chosen not to take the risk and be a part owner of a company. You have the option. You could start today with $10/month into whatever company you believe will be the next TSLA. You aren't doing that. You aren't supporting companies, you aren't contributing capital to them so that they can build anything. Where the fuck do you think the money came from for TSLA to build factories and start production when they weren't even making cars yet? It came from Elon and then the public investors at IPO. Without it, Tesla cars wouldn't exist. Electric vehicles would probably still be a futuristic concept if not for TSLA - they did a ton of research that makes them somewhat practical. You didn't contribute any money towards that effort. Not one damned penny. What in the hell entitles you to part of the reward? Elon changed the freaking world - you didn't. That's why Elon is a Centibilionaire and you aren't. I haven't changed the world, but I've changed the lives of some people for the better. I've changed the fortunes for a few businesses, I failed at a few others. My reward for my efforts and the risks I took is a net worth with two commas - I doubt I'll ever reach the three comma club, and frankly I don't even care to try. It's ok that there are some folks who have changed the world a lot more than I have. I know what I did, I'm proud of it and I know what I achieved and that's enough for me. 

 

So stop bitching about what other people get for the things they have done. Go change the fucking world, go invest in businesses that will provide something useful for the world. If you aren't willing to do that, then you shouldn't be a millionaire, let alone a billionaire or centibillionaire. You had your chance to invest in TSLA, you didn't. Elon did. 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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 Oh, and the thing about

 Oh, and the thing about Elon paying less taxes - no. If you invested, your capital gains tax rate would be 0% until you made more than $47k. Elon's capital gains tax rate is 20%. Capital gains are taxed when you realize the gain - when you sell and actually convert your investment into cash. Until then, it is just a "value" that as I noted above you might not be able to actually realize. 

 

Now should capital gains be taxed at lower rates than income? Well, its the government's way of encouraging certain activities. The government routinely uses the tax code to encourage activities it thinks are good, and discourage activities it thinks are "bad". The capital gains tax being lower than the income tax was instituted in 1921 as the World War was over and the government was attempting to stimulate investment in US businesses. It wasn't created by the "evil rich" of today with their lobbyists. Everyone involved is dead. It served its purpose, the US might not have become the economic power we are today if it didn't experience the substantial domestic and foreign investment it experienced from 1920-1950. I don't think the tax code should be used to influence behavior, but it clearly is. 

If the capital gains tax rate were raised, that would discourage investment in expanding companies like TSLA, and it would encourage investment in established "cash cow" businesses that pay a dividend like Walmart. So Walmart's share price would go up, and TSLA's share price would go down. The Walton's would be richer, and Elon would be poorer (though probably still ridiculously rich). I think it is difficult to say how much of an impact that would make, I think it would be less than most think because the reality is that Musk isn't likely to realize most of the capital gains he has in his lifetime. It will be realized by his heirs, and in 3-4 generations, the Musk family is probably broke because the further you get from the original wealth builder, the more likely you get good for nothing spoiled brats who squander their wealth trying to do something stupid like buying every Gulfstream in existence. 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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What government needs to

What government needs to limit with the rich is not their income, but their monopolization natural resources. What right wingers and libertarian economists always ignore is that we live on a tiny planet with very limited resourse and a very fragile environment. When they present their view of economics, they always pretend there is infinite natural resourse to allow for infinite population growth and infinite economic growth here on this tiny planet. And of course, just as with leftists, talking about population and quality of people our society produces is taboo. Our govenrments practice reverse eugenics, but this obvious fact must never be discussed.

To have a thrifing economy that provides for what people want, we of course need the encouragement of work through little or no taxes and now welfare state. But if we have a succesful economy, it just means mass migration and then resouces become in short supply. That is why we now have a shortage of farmland and high food prices. Why we have a shortage of building materials such as lumber to build new homes. Any successful economy is going to produce sky high cost of living(e.g. Silicon Valley, Wall Street) in the end this only benefits the rich(landlords). But most libertarians don't think we need to limit immigration. Just pretend we have infinite natural resources that can support infinite population growth. We can't.

That is why they support billionairs like Gates, Bezos, Ted Turner,  and wealthy countries like Saudi Arabia and China buying up tons of farmland. You can't expect people to pull themselves up by the boot straps if the rich have monopolized all the materials to make boots and straps.

BS has seemed to fall into the trap that economic growth and GDP equals prospertity for all. It does not, it only benefits a few investors at the top. Every place with a booming econonmy has unaffordable rents and everything else. There must be an alternative to leftist politics that encourages non-work over work and moving investments overseas over keeping it at home. Or right wing politics that leads to monopolization of land and other resources by the rich. Regulate behaviors that are destructive to civilization such as having a child you won't or can't take care of and buying up all the farmland and housing by the super rich.

 

 

 

Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state represents a complete defeat for the civilized world, while a totally voluntary society represents its ultimate success. --Mark Skousen