IRS Buttwipes Tackle the Poor

Originally posted by Thorfinn: The severances are an oddity, IMO. Most CEOs could probably get far more in court. During the, um, New Economy, they were able to negotiate some fantastic deals, and anytime there is that much money involved, you will draw some phenomenal attorneys, who can find a precedent to justify anything. Had we not had the extenuating circumstances of manipulation of the credit market via means like the Fed, it would have been literally impossible to have that kind of golden parachute, since the money simply did not exist. But anytime you have Fed created inflation, just as with counterfeiting, you greatly benefit those at the beginning of the money introduction cycle, to the detriment of those below, i.e., Fed induced inflation necessarily benefits the rich at the expense of the poor.

I suppose, but you can't knock the fed too badly, it is what keeps us from having things like the "Great Depression" all over again.....since it's inception our nation has done quite well as a whole.

[Timber Loftis]

Originally posted by Thorfinn: Had we not had the extenuating circumstances of manipulation of the credit market via means like the Fed, it would have been literally impossible to have that kind of golden parachute, since the money simply did not exist. But anytime you have Fed created inflation, just as with counterfeiting, you greatly benefit those at the beginning of the money introduction cycle, to the detriment of those below, i.e., Fed induced inflation necessarily benefits the rich at the expense of the poor.

Hmmm... I think you are stretching the power of the Fed. I'm not saying the Fed doesn't have problems, I'm just challenging the logical disconnect between your facts and conclusions.

Look, Enron could have created Chewco to hide its profits with or without regulators involved. Once you have the corporation's accountants also doing "independent" financial auditing, you are just asking and begging for someone to risk a few little white lies to the tune of $30 million. It's inevitable.

The real problem with these golden parachutes comes from the auditing. If the corp. really had books that were open to its members and could not secret money away, if directors really disclosed corporate transactions they were "interested parties" to, if CEO's really had their pay tied to the real value of the stock, and if insider trading really meant what it originally meant, we would not have these problems.

[ 04-28-2003, 04:22 PM: Message edited by: Timber Loftis ]

[Thorfinn]

Um, the Fed was introduced in 1913, IIRC, and recommended the policy that created the Great Depression, and implemented (with Nixon's complicity) the stagflation of the '70's. Actually, the history of the Fed is far from flattering. That is well beyond this thread, but I would be happy to cite graphs and charts in an appropriate thread. It is not too much of a stretch to say that most modern economic downturns probably have a root cause in government monetary policy...

[Thorfinn]

Right, Timber Loftis, it is inevitable that you will have people willing to risk some jail time to become a multimillionaire. It seems to me that is true regardless of your policy, save possibly if you start dismembering loved ones in front of them. So it seems to me that the appropriate means of discouraging malfeasance is to reduce the profit from that malfeasance, get it down to the point that breaking ethics has roughly the same opportunity cost as working a mimimum wage job. I guarantee you that you will not have many Harvard business majors risking jail terms over $6.50 per hour...

[ 04-28-2003, 04:42 PM: Message edited by: Thorfinn ]

[Timber Loftis]

So, how do you reduce the profitability of malfeasance? Make it illegal/unethical for a corporate employee to own stock in the corporation? Doesn't that hurt their incentive to work hard? Ideas here?

Umm.... on stagflation for just a bit. How can we blame it on any one thing when at its time it was something completely new, that fell outside all our understanding of the market? I mean, no matter how you run the classical market models, unemployment and inflation are inversely related, making the increasing unemployment plus increasing inflation problem of stagflation a seeming anomoly at the time. One it takes some pretty complex math to puzzle through.

[Sir Kenyth]

Originally posted by MagiK: Well then I guess I have to just say my prayers every evening and thank god Im not one of the lower 40%.....Of course, when the nation has 60% (this might be propaganda by the housing industry) of the people owning their own homes ...it seems that some measurements are showing an increasing prosperity for all even the lower 40%...perhaps the lower 40% aren't gaining ground as fast as the upper 60? I don't have any answers but if it is that bad, then something will break. It always does....and revolution will roll around...one way or t'other

Oh, it's not so bad down here MagiK!

[Sir Kenyth]

Originally posted by Timber Loftis: So, how do you reduce the profitability of malfeasance? Make it illegal/unethical for a corporate employee to own stock in the corporation? Doesn't that hurt their incentive to work hard? Ideas here? Umm.... on stagflation for just a bit. How can we blame it on any one thing when at its time it was something completely new, that fell outside all our understanding of the market? I mean, no matter how you run the classical market models, unemployment and inflation are inversely related, making the increasing unemployment plus increasing inflation problem of stagflation a seeming anomoly at the time. One it takes some pretty complex math to puzzle through.

You'd have to put a cap on the amount of money they could make off of that stock annually. Easier said than done of course. For every rule set in place, you can get around it in one way or another. Monetary system manipulation is the only half legal way to make money by stealing. So, as you can well imagine, it's quite popular! The old game of stocks, bonds and dollars should be run by carnies! Maybe it is?

[Thorfinn]

Actually, you make people responsible, personally, for their malfeasance. I know the corporate liability shield intereferes -- kill it. Giving people a pass for their misdeeds only encourages further misdeeds.

And, actually, stagflation was not somthing new. Stagflation was predicted as early as 1938, by Ludvig von Mises. In the late '60s, Rotbard showed that we could face have stagnation and inflation. There were plenty of theoretical reasons that we might face stagflation, yet Nixon chose to focus on the classcal Keynsianism, despite the fact that several of Keynes' proteges had covered the weaknesses in detail.

Again, our problem is probably not so much a complaint of Keynesianism as a compaint of the application thereof...

[Thorfinn]

Nope, Timber, you don't do anything to increase the penalty of lying. Like the War on Drugs, that just ups the ante. You decrease the incentive to lie. In this case, you decrease corporate taxes. This is beyond the scope of this topic, but I would *love* to discuss it further in a different thread...

[Seraph]

How can we blame it on any one thing when at its time it was something completely new, that fell outside all our understanding of the market? I mean, no matter how you run the classical market models, unemployment and inflation are inversely related

The reason the Phillips curve (inflation/unemployment tradeoff) worked was that inflation, on average, was about 0%. *any* inflation or deflation was unexpected, and wages change more slowly than other prices. With a touch of inflation, you can sell for more while paying the old wage, and you hire a bit more. If the inflation is expected, however, it will already be factored into the labor price. This basicly breaks the Phillips curve, which is why the Nixon-Ford economic policy didn't work.
They are related in the very short term, but once the market reacts to the new inflation, it stops working, and all it ends up is destroying savings, this is something that anyone who took the time to model the economy should be able to tell you. In the long term however the unemloyment/inflation tradeoff is just a fairy tale that Keynsians tell themselves to somehow try and feel that the Nixon-Ford economies didn't cause all sorts of problems with "stagflation".

There are some people who were bright enough to realize that the relation was a myth. Friedman predicted "stagflation" with high unemployment and inflation at the same time in his 1968 Presidential Address. He was widely considered a nut, but the years that followed showed him right (and resulted in his Nobel Prize).

In short, it wasn't "new" and it wasn't "outside understanding" it was the case of a group of people believing what they were doing was right, and refuseing to listen to anything that might suggest otherwise.