Hugo Chavez, RIP

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Mr. Magoo Mr. Magoo's picture

Quote:
The employee only has power when the economy is booming and employers are begging people to work for them.

Wouldn't that mean "when the unemployment rate is near zero"?

RDP

The lower the unemployment rate, given a normal participation rate, the more power the employee has.  Or, simply be very good at what you do.  Then the employee always has power.

RDP

"But at the same time, when we look at countries that ARE doing well, it's hard not to notice a bunch of socialism mixed in with the capitalism.  So I don't think it's that "socialism cannot work" so much as "K00ky socialism cannot work".

I have to disagree.  I would place Canada in the category of 60% capitalistic, 40% socialistic.  (A 53.53% marginal tax rate on income over $220,001 in Ontario (Fed and provincial taxes combined) is socialistic.  Canada performs relatively well economically because of the capitalistic characteristics of our economy and is dragged down by the socialistic characteristics.

Imagine you make $220,000 and the boss walks in and says we have a big new project for you.  You will have to work significantly more hours for the next two years to complete the project.  The boss says the project comes with a 25% raise.  You calculate your $55,000 raise is really only worth $25559 after tax.  You do a mental calculation and conclude the monetary reward is not worth the sacrifice and say "no thank you".  The project gets shelved because they can't find someone qualified to take the project on.  Multiply this many times and one starts to understand how socialism kills an economy.

Venezuela is what happens when an economy moves closer and closer to 100% socialism.

Mr. Magoo Mr. Magoo's picture

I see.  So if only we didn't have a (somewhat) progressive marginal tax rate, more employees would be willing to work on projects and Canada would thrive, instead of just squeaking by?

I would have thought that in a Capitalist (or just non-Socialist) utopia my refusal to take on work that would mean profits for the company would mean my immediate replacement by someone who "wants to work".  Are you seriously telling us that every day, across Canada, companies are reluctantly forgoing millions of dollars worth of potential new revenues because Bob in R&D feels he's paying too much in taxes and doesn't want to take part in inventing the next Facebook?  And THAT'S why Canada is such an unhappy shithole? 

josh

My investigation leaves little doubt that Venezuela is in the midst of a severe crisis, characterized by triple-digit inflation, scarcities of basic goods, widespread changes in food-consumption patterns, and mounting social and political discontent. Yet mainstream media have consistently misrepresented and significantly exaggerated the severity of the crisis. It's real and should by no means be minimized, but Venezuela is not in a state of cataclysmic collapse. 

 

https://www.thenation.com/article/how-severe-is-venezuelas-crisis/ 

Michael Moriarity Michael Moriarity's picture

RDP wrote:

Imagine you make $220,000 and the boss walks in and says we have a big new project for you.  You will have to work significantly more hours for the next two years to complete the project.  The boss says the project comes with a 25% raise.  You calculate your $55,000 raise is really only worth $25559 after tax.  You do a mental calculation and conclude the monetary reward is not worth the sacrifice and say "no thank you".  The project gets shelved because they can't find someone qualified to take the project on.  Multiply this many times and one starts to understand how socialism kills an economy.

This little thought experiment, along with all your other Randian fantasies, leads me to believe that you have never actually been involved in the technology business. I've worked as a consultant and software developer with all kinds of businesses, big and small, for decades and your scenario is just ludicrous. Absolutely nobody with even the slightest hint of ambition thinks or acts the way you describe.

RDP

"This little thought experiment, along with all your other Randian fantasies, leads me to believe that you have never actually been involved in the technology business. I've worked as a consultant and software developer with all kinds of businesses, big and small, for decades and your scenario is just ludicrous. Absolutely nobody with even the slightest hint of ambition thinks or acts the way you describe."

I've never worked in the technology industry.  But, are you saying people aren't motivated by money?  I am not saying people's only motivation is money but how about another thought experiment.  Tell those that you refer to in your post that they will be getting a 10% pay cut.  Let's see how much the aren't motivated by money.

Michael Moriarity Michael Moriarity's picture

I am not saying that people are not motivated by money. That would be obviously false. I am saying that in the sort of business situation you describe, the overwhelming motivation of anyone who had what it took to get to a $220K job in the first place would be to climb even higher, by producing bigger success stories. Of course, money is a factor, and someone at that level would not have to accept the first offer, and would be able to negotiate for more. If she or he thought about taxes at all, it would be about calling the expensive tax accountant they already used, to see how to optimize this new income.

RDP

"I see.  So if only we didn't have a (somewhat) progressive marginal tax rate, more employees would be willing to work on projects and Canada would thrive, instead of just squeaking by?

I would have thought that in a Capitalist (or just non-Socialist) utopia my refusal to take on work that would mean profits for the company would mean my immediate replacement by someone who "wants to work".  Are you seriously telling us that every day, across Canada, companies are reluctantly forgoing millions of dollars worth of potential new revenues Bob in R&D feels he's paying too much in taxes and doesn't want to take part in inventing the next Facebook?  And THAT'S why Canada is such an unhappy shithole? "

At the level of talent that is earning at the highest marginal tax rate, you can't simply tap the guy in the next desk on the shoulder and say "your in, Bob doesn't want the extra work".  If they go searching for someone, that adds risk.  They know Bob, they don't know the new guy.

Life is a balance between work and leisure.  Income tax is a price on work.  The higher the price of work, the more relatively attractive leisure becomes.  Economics happens on the margins.  Most people do not understand this.  If 1 out of 10 guys is like Bob and 9 out of 10 guys don't change their behavior with a tax hike, the tax hike is a losing tax revenue generator.  The government gets a little more from the 9 guys but loses more from Bob than the little extra the 9 guys generated because Bob chooses retirement.

Or, consider corporate tax rates.  If they are increased, do you think more or fewer projects move forward?  I think you would agree that fewer move forward.  The after-tax rate of return, the relevant rate of return, is lowered as a direct result of the tax increase.  Why would a tax on income for individuals be any different?

If you want less of something, tax it.  If you want more of something lower the tax on it.  Everybody seems to understand this when it comes to smoking.  Raise tax on cigarettes and you get less smoking.  This doesn't mean every smoker quits.  Why would one expect an increase in income tax to not have an effect on one's desire to generate income.  Bob is rational.

Michael Moriarity Michael Moriarity's picture

RDP wrote:

Life is a balance between work and leisure.  Income tax is a price on work.  The higher the price of work, the more relatively attractive leisure becomes.  Economics happens on the margins.  Most people do not understand this.  If 1 out of 10 guys is like Bob and 9 out of 10 guys don't change their behavior with a tax hike, the tax hike is a losing tax revenue generator.  The government gets a little more from the 9 guys but loses more from Bob than the little extra the 9 guys generated because Bob chooses retirement.

What you don't understand is that in most times, and particularly in this job market, there are a dozen more would-be corporate climbers for every "Bob" who gets discouraged by taxes and decides to retire early (which is damn rare in any event). Projects with budgets will not be stopped by lack of self-promoting type A professionals.

montrealer58 montrealer58's picture

The dearly beloved capitalist system is NOT providing the jobs or the investment or even decent returns to investors. So don't bother trying to justify it. It is a fraud.

RDP

"The dearly beloved capitalist system is NOT providing the jobs or the investment or even decent returns to investors. So don't bother trying to justify it. It is a fraud."

How is it doing compared to a very strongly socialistic system i.e. Venezuela or pretty much all of South America?  Or has life improved or made worse for the average Chinese with China's decades long lurch to the right?  I haven't heard too many reports of mass starvation in China lately.

RDP

I do understand this.  But the boss tapped Bob on the shoulder for a reason.  Consider a mid sized company who doesn't have a succession plan and their CEO suddenly passes away.  It takes them a long time to find a new CEO.  You need a correct fit.  (A large company will have a plan in place for this.)  The right person isn't easy to find.  Large companies spend years grooming potential CEO's.   Bob was considered the right man for the job.  He (unexpectedly) didn't want it.

This isn't easy to grasp.  Try this.  The highest marginal tax rate in Ontario was over 80% in 1970.  Imagine you are Bob and you are offered the big raise for the project.  What would you do?

RDP

"I am not saying that people are not motivated by money. That would be obviously false. I am saying that in the sort of business situation you describe, the overwhelming motivation of anyone who had what it took to get to a $220K job in the first place would be to climb even higher, by producing bigger success stories. Of course, money is a factor, and someone at that level would not have to accept the first offer, and would be able to negotiate for more. If she or he thought about taxes at all, it would be about calling the expensive tax accountant they already used, to see how to optimize this new income."

 

Really?  Producing bigger success stories is the overwhelming motivating factor?  It is a factor, no doubt.  But I would say that money is the overwhelming factor. Most want big success stories so they can command more money in the future.

Contrary to popular belief, when one earns T4 income there isn't much wiggle room for the expensive tax accountant to do much.

montrealer58 montrealer58's picture

Big business is constantly bailed out by central banks who act in their interests and not in those of the people. There is practically no small business lending, even though small business creates jobs. When they make profits, those are shuffled to the lowest tax jurisdiction. They are not reinvested in Canada. So please, take your arguments about how capitalism is a wonderful system to somewhere where they might buy your cloying micro scenarios. 

RDP

I hate bailouts.  Bailouts are not capitalism.  I wonder what UNIFOR's (a protector of the people and a sponser of Rabble) stance was on the auto sector bailout?  What was your stance while we are at it?

6079_Smith_W

https://www.theguardian.com/world/2016/jun/22/venezuela-economic-crisis-...

Quote:

The opposition have put high hopes in a referendum, and launched a signature drive in April but Venezuela’s National Electoral Council (CNE) has imposed a set of high hurdles for a petition to pass before the choice can be presented to the general population. Roughly 1.3 million people signed a petition for a recall vote – far more than the 200,000 required by law, but 600,000 of the signatures have already been rejected by the CNE, and people have been queueing for hours to validate the rest of the signatures by having their fingerprints scanned. Even if they are found to have passed the required threshold of 1% of voters, that just allows them to go forward to a second petition, in which opponents would have to amass close to 4 million votes to trigger a recall vote.

 

Mr. Magoo Mr. Magoo's picture

When Maduro needed to stack the STJ as fast as possible, before the newly elected legislature could be sworn in, the National Assembly held a special session over the Christmas holidays.

But when they have to validate 200K signatures so that a recall vote can proceed, well, clearly there's just not enough time.  Can't be done.  The government has even gone so far as to announce that it won't happen this year.

Looks like Venezuelans are going to get to choose between Maduro, and whoever Maduro chooses.  Which would be like Torontonians voting to recall Mayor Rob Ford, and getting Mayor Doug Ford.

montrealer58 montrealer58's picture

I have no objection to governments buying shares in companies. This is not the same as the free ride that the central banks are giving to international finance capital. This is not the same as constant layoffs, shuffling money offshore, exploitation of workers, destruction of natural habitats, and all the things which modern capitalists seem to find virtuous. 

Perhaps there is something virtuous about supply and demand. What about the demand for stable and secure incomes and a public health care system? What about the demand for clean air, water, and food? Modern capitalism does not want to supply these demands, so it has failed as an economic system.

wage zombie

6079_Smith_W wrote:

The disaster in Venezuela is not because of any inherent difference between public and private ownership. It is a combination of a government which happens to be corrupt and has no idea what it is doing, and international business and government interests who have been doing whatever they can to sabotage the situation there and get their hands on one of the world's largest deposits of oil.

Thanks Smith, that was very succinct.

Mr. Magoo Mr. Magoo's picture

That said, the default plan for the U.S. to "get their hands on" Venezuelan crude has thus far been "to buy it".  They're the largest importer of it, and home to three Venezuelan-owned CITGO refineries.

RDP

"I have no objection to governments buying shares in companies. This is not the same as the free ride that the central banks are giving to international finance capital. This is not the same as constant layoffs, shuffling money offshore, exploitation of workers, destruction of natural habitats, and all the things which modern capitalists seem to find virtuous. 

Perhaps there is something virtuous about supply and demand. What about the demand for stable and secure incomes and a public health care system? What about the demand for clean air, water, and food? Modern capitalism does not want to supply these demands, so it has failed as an economic system."

So, you are ok with a bailout, it was a bailout, of the auto sector but not of other sectors?  Why?  If government bails out the auto sector, why not the banking sector.  More people work in the banking sector.

http://business.financialpost.com/news/transportation/canadas-9-billion-...

No economic system provides completely stable and secure incomes or a public health care system.  No economic system provides clean air, water.  Capitalism provides good food (when was the last time you heard of mass starvation in a free country).  At least capitalism provides the wealth that allows us to tackle these problems.

 

montrealer58 montrealer58's picture

The banking sector is constantly bailed out by the central banks. They are allowed to charge the government interest on money which belongs to the people in the first place. They are allowed to print money out of thin air using fractional reserve, and then profit off of it. If banks can't survive these extremely favorable conditions, all they will do is lay off people until they can balance the books again. Anything for the 1% who live off of the dividends of bank shares. 

The deck is stacked against the 99% who are trying to survive as First Nations, pensioners, workers (unionized and otherwise), unemployed, disabled people, and in small business.

Elsewhere on this site there is serious discussion about increasing democracy in this country. The democracy we have seems to be incapable of defending the best interests of the people of Canada. People are getting frustrated about this, and elsewhere in the world we see them voting to destroy this system, even if their leaders and causes may be wrong. 

Mr. Magoo Mr. Magoo's picture

I felt somewhat bad when this thread became a catch-all for any topic Venezuelan.  But I figured that if it's at least about Venezuela, then hey, that's how threads sometimes work.

But is there any temptation to spin the topic of "Capitalism vs. Human Happiness" or "Socialism vs. Prosperity" into its own whole thread?  Does such an abstract and lofty discussion deserve as much?

kropotkin1951 kropotkin1951's picture

Mr. Magoo wrote:

I felt somewhat bad when this thread became a catch-all for any topic Venezuelan.  But I figured that if it's at least about Venezuela, then hey, that's how threads sometimes work.

But is there any temptation to spin the topic of "Capitalism vs. Human Happiness" or "Socialism vs. Prosperity" into its own whole thread?  Does such an abstract and lofty discussion deserve as much?

No I prefer having a Randian come into this thread and piss on Chavez's grave. That is the true spirit that was envisioned when rabble and babble were founded. 

I wonder if our right wing ideologue can explain the mechanics of why capitalism works so well in places like India that has been a capitalist country for hundreds of years.

RDP

India has hardly been a bastion of capitalism for the last 100 years.  India if famous for its reams of economy strangling regulations.  Modi is trying fix this and is met with strong opposition at every turn.

kropotkin1951 kropotkin1951's picture

RDP wrote:

India has hardly been a bastion of capitalism for the last 100 years.  India if famous for its reams of economy strangling regulations.  Modi is trying fix this and is met with strong opposition at every turn.

So it appears your definition of capitalist country simply means any country that has a good economy except those in Scandinavia. To make a conversation with you mean something I think you need to define some terms. What economic system do you think was used to run the British Empire and is now used to run the American Empire?

RDP

"So it appears your definition of capitalist country simply means any country that has a good economy except those in Scandinavia."

No idea how you came to that conclusion.

"What economic system do you think was used to run the British Empire and is now used to run the American Empire?"

Capitalism and democracy.  India didn't exactly embrace this ideology after the Brits left.   And then Britain lost its way.

 

kropotkin1951 kropotkin1951's picture

RDP wrote:

Capitalism and democracy.  India didn't exactly embrace this ideology after the Brits left.   And then Britain lost its way.

So you are saying the British Empire's capitalism was a force for good and that the UK is no longer a capitalist country?

Mr. Magoo Mr. Magoo's picture

@RDP:  are the Nordic European countries prosperous and liveable because of the socialism mixed into their policies, or (mysteriously) despite it?

RDP

The Nordic countries "hit the wall" in the early 90's and reduced the size of their government as a result and have remained prudent since.

http://www.economist.com/news/special-report/21570835-nordic-countries-a...

This brought the founder of IKEA back to Sweden after a multi-decade exile in Switzerland.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/101450...

 

 

RDP

"So you are saying the British Empire's capitalism was a force for good and that the UK is no longer a capitalist country?"

I am not saying that.  And, who knows how India would've turned out if the Brits never arrived...maybe better, maybe worse.  However, I think it is clear that the folks in Hong Kong were much better off than their cousins in Red China.  This is changing now but where would you rather have been born in 1950; China or Hong Kong?

Left Turn Left Turn's picture

[url=http://www.telesurtv.net/english/news/Venezuelan-Private-Sector-Siphoned... Private Sector Siphoned Off $259B in Public Funds[/url]

Quote:
In order to keep prices for essential goods at an affordable level, the government implemented an exchange rate system that effectively subsidized the provision of dollars for imports of key goods. 

A private business would request cheap dollars from the Venezuelan Central Bank with the stated aim of using them to import food or raw material for food production. The Central Bank would provide the dollars at the preferential rate reserved for essential goods of 6.3 Bolivars to one U.S. dollar.

These private business would then lie about what was imported or produced in order to allegedly stash dollars away in offshore accounts or sell the goods at the illegal black-market rate of approximately 500 bolivars to one U.S. dollar.

The Venezuelan government claims that in some cases, business that were given dollars never imported anything at all, hoarding the cash instead.

This kind of illegal behavior repeated thousands of times by the private sector is in many ways responsible for the shortages seen on shelves and the exorbitant prices.

Left Turn Left Turn's picture

Mr. Magoo wrote:
I felt somewhat bad when this thread became a catch-all for any topic Venezuelan.  But I figured that if it's at least about Venezuela, then hey, that's how threads sometimes work.

Postingg in this thread ought to have ceased when the discussion of Hugo Chavez's death ceased.The thread still shows up as "Hugo Chavez, RIP" on the Active Topics page, and yet the conversation has moved on. And folks who are not familiar with the thread will think we are still dioscussing Hugo Chavez on babble.

This is one of the reasons I've barely posted in this topic, despite having an interest in it.

Mr. Magoo wrote:
But is there any temptation to spin the topic of "Capitalism vs. Human Happiness" or "Socialism vs. Prosperity" into its own whole thread?  Does such an abstract and lofty discussion deserve as much?

The "capitalism vs. human hapiness" or "Socialism vs. Prosperity" discussion really ought to end, as I happen to think that RDP's posts are in violation of rabble's policy guidelines (the spirit of the policy, if not the letter).

RDP

I think Hugo would want disciples to spread the word of socialism to the masses and to try and convince capitalists that they are wrong.  I also hope that Hugo would want socialists to challenge their own belief system.

Mr. Magoo Mr. Magoo's picture

Quote:
This kind of illegal behavior repeated thousands of times by the private sector is in many ways responsible for the shortages seen on shelves and the exorbitant prices.

For the sake of argument, let's assume this is true.  FWIW, I've no doubt it happens, just doubt that it could possibly be happening on the kind of billion dollar scale needed to drive an entire country to the brink.

Anyway, COULD THIS SILLY MULTI-LEVEL EXCHANGE RATE BE PART OF IT??

Imagine that there are two banks in your neighbourhood that will exchange Canadian dollars for U.S. dollars.  One of them exchanges them at 2 Canadian to one U.S., and the other exchanges them at par.  What are your plans for the day?

Mr. Magoo Mr. Magoo's picture

Alright, what say we take this show on the road?

Other, more appropriate thread.

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