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Grade A Anti-Randian Rant


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The current crisis is not exactly conducive to your current argument. Tax rates are higher and governments have never been more powerful, and they have done little to ameliorate peoples' desire to take on debts in the run upto the crisis.

As for Hoover running balanced budgets and free markets and for Roosevelt to save the day 4 years later, is patently untrue. Hoover initiated public works programmes in 1929 (I don't have the numbers to hand but I'll dig them out), and engaged in manipulation of the wheat and cotton markets through the FFB (Federal Farm Board). The 1930 Smooth-Hawley Tariff decimated US exports when the rest of the world retaliated with similar tariffs (U.S. exports to Europe decreased from $2,341 million to $784 million. Overall, world trade decreased by some 66% between 1929 and 1934), further Hoover ran a budget deficit of $2.1 billion in 1931, and a deficit of $1.7 billion in 1932.

Look at after tax incomes rather than headline tax rates, that tells a different story.

As for the rest of your post sadly its a little late at night for me to start digging in to numbers and such.

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Precisely why I said "end limited liability, and tax payer bail outs", which you seem to have ignored.

There is no need for convulted regulation.

I'm not sure completely removing limited liability is the best way to do it. You need some risk to be taken. Ending LL might make the system too risk adverse.

As for ending bailout's this does nothing for the problem of those filling their boots, then leaving, then the companies collapsing.

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Look at after tax incomes rather than headline tax rates, that tells a different story.

As for the rest of your post sadly its a little late at night for me to start digging in to numbers and such.

Exactly, high tax rates do not lead to higher earners bearing their share of the tax burden.

If you want to show that Hoover was some sort of free market lunatic that destroyed the US economy during the depression, you'll need to provide some numbers.

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I'm not sure completely removing limited liability is the best way to do it. You need some risk to be taken. Ending LL might make the system too risk adverse.

As for ending bailout's this does nothing for the problem of those filling their boots, then leaving, then the companies collapsing.

Neither you or I know what the "perfect risk profile" should be, nor how to measure, it's more important for people to be accountable for their actions, and ending limited liability is the simplest most transparent way to do this in business (limited liability was not widely available in the UK until after the Joint Stock Companies act of 1844, by which time the industrial revolution was well under way)

Your second point is therefore non-sequitur, that's exactly what ending limited liability will stop.

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The current crisis is not exactly conducive to your current argument. Tax rates are higher and governments have never been more powerful, and they have done little to ameliorate peoples' desire to take on debts in the run upto the crisis.

As for Hoover running balanced budgets and free markets and for Roosevelt to save the day 4 years later, is patently untrue. Hoover initiated public works programmes in 1929 (I don't have the numbers to hand but I'll dig them out), and engaged in manipulation of the wheat and cotton markets through the FFB (Federal Farm Board). The 1930 Smooth-Hawley Tariff decimated US exports when the rest of the world retaliated with similar tariffs (U.S. exports to Europe decreased from $2,341 million to $784 million. Overall, world trade decreased by some 66% between 1929 and 1934), further Hoover ran a budget deficit of $2.1 billion in 1931, and a deficit of $1.7 billion in 1932.

And the "Hoover Dam" gives a further clue.

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A good start would be to end limited liability.

whilst there is a kneejerk "Yay" to this line of thought there is a need to think further.

Take RBS.....a busted bank.

Execs parachuted out to safety, big big pensions secured, the debt of the bank now fully insured by the taxpayer.

Just how would taking away LTD or PLC have secured the right people got their come uppence?....It is BUST, it should have closed, but it wasnt.

Then there is your shop keeper, mortgaged his house (for it is the only way to get start up capital for most), does well for a couple of years, goes pop when the Hypermarket arrives 2 doors up.

He has LTD probably, but the debt makes him bankrupt.

In either case, the LTD was no protection for the robbed, and no protection for the Entreprenuer.

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whilst there is a kneejerk "Yay" to this line of thought there is a need to think further.

Take RBS.....a busted bank.

Execs parachuted out to safety, big big pensions secured, the debt of the bank now fully insured by the taxpayer.

Just how would taking away LTD or PLC have secured the right people got their come uppence?....It is BUST, it should have closed, but it wasnt.

Then there is your shop keeper, mortgaged his house (for it is the only way to get start up capital for most), does well for a couple of years, goes pop when the Hypermarket arrives 2 doors up.

He has LTD probably, but the debt makes him bankrupt.

In either case, the LTD was no protection for the robbed, and no protection for the Entreprenuer.

Ending limited liabiliy has to come with ending bail outs at the expense of the tax payer.

In terms of your shopkeeper example, you are looking at this through the lens of today's crazyness (i.e. shopkeeper has to take on a huge loan to purchase a hugely expensive lease, with eye watering rents and rates), where prices and behaviour have been increasingly skewed for a very long time by various guarantees and "regulations" i.e. the cost of living needs to fall massively, and people need to take more responsibilty for themselves rather than abrogating it to the government.

How to unpick all of this is a very good question as it is clear that none of this is possible without causing an awful lot of disruption, simply because people have arranged their affairs based on certain guarantees and promises from the government (this is precisely why politicians shy away from such things and tinker round the edges while the core goes rotten).

One way to get away from limited liability would be to offer large tax advantages to companies that choose this option. I am aware that if the government said they were ending limited liability on 20th November this year, there would probably be a huge wave of defaults.

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Ending limited liabiliy has to come with ending bail outs at the expense of the tax payer.

In terms of your shopkeeper example, you are looking at this through the lens of today's crazyness (i.e. shopkeeper has to take on a huge loan to purchase a hugely expensive lease, with eye watering rents and rates), where prices and behaviour have been increasingly skewed for a very long time by various guarantees and "regulations" i.e. the cost of living needs to fall massively, and people need to take more responsibilty for themselves rather than abrogating it to the government.

How to unpick all of this is a very good question as it is clear that none of this is possible without causing an awful lot of disruption, simply because people have arranged their affairs based on certain guarantees and promises from the government (this is precisely why politicians shy away from such things and tinker round the edges while the core goes rotten).

One way to get away from limited liability would be to offer large tax advantages to companies that choose this option. I am aware that if the government said they were ending limited liability on 20th November this year, there would probably be a huge wave of defaults.

I would also add that ending limited liability doesn't do away with competition, having been involved in running a retails store we were accutely aware of the competition and were always looking to sell items that our competitior did not (if business dropped off I didn't blame Sainsbury's, I tried to find other things that people wanted), we also didn't buy stock with loans (besides that the loan rates were too steep to make it worthwhile).

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As an example in the entire history of the Premier League there are only 4 managers who have been able to show a statistically significant correlation between them being in charge and what could have been achieved with any other manager in place and the same budget (Moyes, Ferguson, Wenger and Alladyce (spell at Bolton)). In other words every other manager on a multi-million salary is fairly interchangeable with no noticeable effect. So why are they paid so much?

Interesting example. Though using the same type of example, are footballers similarly deserving of their salaries? (I would argue yes.. in that they are genuinely best at what they do and clubs value that performance).

Perhaps that is the crunch. You have some people who are paid the most by being the best, and some people who are paid the most by talking themselves into the best jobs.

I would perhaps include some fund managers in the latter. It's not about how well they do their job, but how well they convince people to part with their money.

All skills I guess you could argue..

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