May 16, 2006

“The Evil Rich are Carrying Us” Table of the Day

Filed under: Economy,Taxes & Government — Tom @ 3:12 pm

May 17 Follow-Up: More on How the “Evil Rich” Are Carrying Us (A more comprehensive look at most other taxes)

The table that follows (about halfway down the linked page) shows the percentage of all federal income tax paid by each quintile of the country’s individual taxpayers. The lowest quintile is negative because the Earned Income Tax Credit outweighs the income taxes paid in by that group.


The bottom 60% of all taxpayers pay less than 5% of all federal income taxes. The top 40% pay the rest.

Is anyone really going to argue that the highest earners aren’t carrying their share of the load?

UPDATE, June 8: (also posted here as a new item) Steve Forbes notes in his subscription-only column in the June 19 issue of Forbes that “The top 0.1 percentile earned 8% of the nation’s personal income and paid 15% of federal income tax revenue. With 136 million tax return filers (second paragraph at link), that means 136,000 filers and their families are shouldering 15% of the personal income-tax burden. Talk about being carried by the few — Is that “progressive” enough?

Can Private Companies Outperform the Publicly-Helds?

Filed under: Business Moves,Economy — Tom @ 1:31 pm

Sure they can, and here’s one that does (from a subscriber-only article in The Wall Street Journal last weekend):

WICHITA, Kan. — Meet Charles Koch. Philosopher, engineer, self-trained economist, libertarian activist, philanthropist — and the CEO of Koch Industries, a $60 billion, 80,000-employee empire, which just recently became the largest and most profitable privately held company in America.

But you’ve probably never heard of it.

Neither Charles Koch nor his firm are household names. Mr. Koch (pronounced “coke”) has managed to live in relative obscurity despite being one of the richest men on the planet, with a net worth estimated at $14 billion. He is a man of modesty who craves none of the fame or public adulation that seems to preoccupy other members of the billionaires’ club.

….. Back in 1967, when Mr. Koch was in his early 30s, he became the reluctant president of the family business, then a $177 million, medium-sized oil firm. He recalls: “My father threatened that he was going to sell the company if I wouldn’t come back home to Kansas from the East Coast and run it.”

Nearly four decades later, that family company is a global conglomerate with net annual sales that exceed the GDP of many small nations, and it includes a diverse range of businesses supplying everything from jet fuel to plastic, asphalt to beef, toilet paper to lumber. It owns many familiar brand names such as Dixie cups, Stainmaster carpet and Brawny paper towels. The firm’s financial performance numbers have been positively gaudy, with a rate of return on investment that has outpaced the Standard & Poor’s 500 at least tenfold under Mr. Koch’s stewardship.

“We couldn’t have achieved the profitability we have,” Mr. Koch insists, “if we had been a public company. No investor would have been patient enough to allow us to build a firm oriented toward long-term growth and profits.” This is one of Mr. Koch’s bugaboos regarding the deficiencies of modern corporate management. He notes, “The short-term infatuation with quarterly earnings on Wall Street restricts the earnings potential of Fortune 500 publicly traded firms. Public firms are also feeding grounds for lawyers and lawsuits.”

He then confidently predicts: “Regulatory laws like Sarbanes-Oxley will only increase the earnings advantages of private firms. I would suspect that there will be more of these private company takeovers of publicly traded companies.” He’s referring to his blockbuster $21 billion purchase of Georgia Pacific last November, a Fortune 500 forest and paper company.

If Mr. Koch is right about the re-emergence of private corporate structures, it is a very big deal for the near-term future of financial markets. The hyperactive trend of the past decade to take companies public may be shifting into reverse gear. The Georgia Pacific deal, which was the largest acquisition of a publicly traded company by a private firm in U.S. history, would seem to confirm Mr. Koch’s thesis. “Since the Georgia Pacific purchase,” he tells me, “other publicly traded companies have come calling, asking whether we would be interested in taking them private, too.”

This creative forward-thinking should come as no surprise, because Mr. Koch is immersed in the ideas of liberty and free markets. Whereas the bookshelves of most of America’s leading CEOs are stocked with pop corporate management and “how to succeed” books, Mr. Koch’s office is a wall-to-wall shrine to writings in classical economics, or, as he calls it, “the science of liberty.”

The article wanders into other areas, but I want to stay with the public-private debate.

I believe Mr. Koch’s company is the exception instead of the rule. There is no doubt that there are definite difficulties involved in being a public company, and it’s getting worse instead of better. But instead of blithely assuming that going private will be the answer, and that the economy will suffer no harm from it, consider these shortcomings you often see at other private companies — shortcomings that I believe on average cause the typical significantly-sized private company to underperform similarly-sized pubic peers:

  • Lack of professional management, or professional management that is willing to stay around without having a marketable ownership stake.
  • Business continuity if a founding owner has no family members available or capable of taking the helm.
  • Weak to non-existent boards of directors or advisors, and therefore a lack of outside-the-box ideas.
  • Complacency, where a private owner might be perfectly satisfied staying at a certain level of business, while the equity markets demand growth. There’s nothing inherently wrong with complacency, but if everyone was that way, the economy would slow a great deal.
  • All too often, a willingness on the part of private owners to drain their company dry, leaving it undercapitalized and unable to take advantage of new opportunities.

I’m sure there are some I have missed on the positive and negative sides. Feel free to add yours.

The Hugo Chavez Gas Price Hike?

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 11:35 am

Looks like it to me:


What a genius. Chavez can’t keep the oil flowing, and production is down about 45%.

Since oil is an inelastic product (meaning that, for example, a 10% price hike leads to less than a 10% reduction in demand, in oil’s case a lot less than 10%), shortfalls in Venezuelan production have directly contributed to at least a portion of the worldwide runup in oil prices.

Why is this happening? That’s simple and so predictable — Chavez has abandoned capitalism. He had the state-run oil company fire half its workers after a two-month 2003 strike. Yet he expects the oil production infrastructure to run itself after placing less competent cronies in key positions and spending money that should be put into infrastructure investment into “social programs.” It’s not happening (third-last paragraph at link):

Former managers of the company have repeatedly said that the company doesn’t have enough experienced personnel on hand to manage the company’s oil fields, which has resulted in falling output.

US liberals have been bought off by Chavez’s home heating oil political stunt this past winter, so don’t expect a lot of US media coverage of the Venezuelan reality.

There’s an election in Venezuela in December. Chavez has been making noises that he should become a permanent president if opposition parties boycott the elections because of the rigged electoral system there.

Through chronic mismanagement, Chavez is well on his way to taking down his only trump card. If the tight oil markets break and production falls further, the country could be in a dire situation indeed. The Venezuelan people deserve better.

UPDATE: Given the situation, this move by the US government (HT Interested-Participant) would appear to be wise.

A Week-Old Virtual “Non-Story” You Should Know About

Filed under: MSM Biz/Other Bias,Taxes & Government — Tom @ 11:05 am

Al Qaeda in Bad Shape in Iraq: A Hard-to-Find Story NOT Brought to You by Major Media

Though this story is a bit over a week old, it has gained almost no traction, because the press wants you to believe there’s nothing to see here, so please move on:

(from Page 3 at link)

10. Northern al-Karkh groups are estimated at 40 mujahid, so is the Southern Karkh. They could double that number if necessary. Al-Rassafah groups in general is estimated at 30 mujahidin as I was informed by the commander of al-Rassafah. These are very small numbers compared to the tens of thousands of the enemy troops. How can we increase these numbers?

100 or so “mujahdin”? Not exactly government overthrow material, I would think.

This is yet another underreported piece of good news not brought to you by the WORMs (Worn-Out Reactionary Media, known to most as The Mainstream Media).

Captain Ed has much, much more.

Does Julie Myers Not Understand the Border Fence, or Did She Give Away the Administration’s Dishonest Game?

Filed under: Immigration,Taxes & Government — Tom @ 9:02 am

In a Hugh Hewitt interview transcribed at Radio Blogger (audio is also at the link) and appropriately entitled “How to undo the impact of a Presidential address in one easy lesson,” Julie Myers, Assistant Secretary for U.S. Immigration and Customs Enforcement (ICE), either didn’t comprehend the President’s speech last night or gave aways its true lack of seriousness about tackling the illegal immigration problem.

First, here is what President Bush said:

At the same time, we are launching the most technologically advanced border security initiative in American history. We will construct high-tech fences in urban corridors, and build new patrol roads and barriers in rural areas. We will employ motion sensors infrared cameras and unmanned aerial vehicles to prevent illegal crossings. America has the best technology in the world and we will ensure that the Border Patrol has the technology they need to do their job and secure our border.

Notice the word “construct.” Though this is not the Pacific Ocean-to-Gulf of Mexico tangible barrier that the majority of Americans and the majority of the House clearly want, the President makes it sound like there is to be some form of physical barrier built in the key areas that need one, and at least some kind significant disruption to any kind of crossing attempt along every other inch of the border. When he says “secure the border,” it should mean that no one who isn’t authorized can get through, or at least can’t get through without herculean effort.

(Aside: Until very recently, I thought the need to parse presidential statements for hidden meanings ended 5 years and 4 months ago.)
Feel the ability of anyone to believe what we wanted to believe the President meant disapppear into the sunset with each passing word from Ms. Myers:

HH: It’s great to have you on. When the President said high tech fence, what was he talking about? How long will it be?

JM: Well, he is talking about, kind of thinking about a combination of surveillance and manpower and infrastructure, that the border patrol is seeking to do over a period of several years.

HH: But in terms of actual fencing fencing, how many miles are we talking about?

JM: Well, in terms of actual fencing, I think they’re still looking at kind of what makes most sense in terms of surveillance and manpower and actual infrastructure.

HH: Is he committed, though? Did you have a talk with him about extending, for example, the San Diego fence, which is 1,400 miles long (I believe Hewitt meant 14 miles.–Ed.), and the El Paso fence, which is many miles long, double, and sometimes triple barrier fencing? Is that on the table?

JM: I think certainly all options are on the table to be most effective in terms of fencing. I am actually more the interior enforcement person, so I have not been involved in any direct discussions regarding the specifics of the fence.

HH: So we’re still unclear of how far the administration is committed to actual fencing on the border? I mean, concrete, physical fencing?

JM: Well, certainly I’m not prepared to go further than what the President talked about tonight.

….. HH: So I’m back to the fencing conversation. If fencing is the best way to stop them at the border, why don’t we have a plan laid out for that?

JM: Well, you know, I don’t think we think that fencing is the best way to stop them on the border. I think the President’s called for…if you build a fence, they build a tunnel. We just saw that today. There was another tunnel destroyed, another, excuse me, another tunnel found over in the San Diego area. So you can’t…given the kind of the layout of our land, I believe it’s the President’s view, it’s the border patrol’s view, that a fence alone is not enough. We need a layered approach that includes surveillance, personnel, technology. We are working with the military to make sure we have the best technology. And some places, a fence may be very effective, but some places, it’s simply not.

HH: Assistant Secretary Myers, correct me if I’m wrong. I think you just walked the administration back from the fence.

JM: I…no, I said consistent with what the border patrol chief’s been telling me all along, he’s been telling me what he needs, the combination of all these things. You look at the particular location, the particular terrain, and you decide what’s most effective. You don’t want something people can scale in two minutes and then be in the desert, and then you just have put people on the other side of the fence.

….. HH: But people wanted the fence…and I’m a moderate on this. I get hammered by the deportation crowd every day. And it’s always about when are they going to be serious about the physical fencing that works? And I think it’s a fair interpretation of what you said, is that the administration really doesn’t believe in it.

JM: I think people want results, and the President wants results. I think what he did tonight is talk about where we are so far, and how he’s going to step it up and take it further with the National Guard.

HH: Ms. Myers, with all due respect, they don’t want that, they want a fence. But you’re telling me that the administration is not into the fence?

JM: I’m telling you I believe people want results. And when people see that we’re securing the border, I don’t think people will care how that’s being done. And it’s my understanding that the border patrol believes we need a combination of these things. In some places, fencing may be great. In other places, all you’ll get is a whole bunch of tunnels.

HH: One minute left. Is there anything specific you can tell us about fencing?

JM: You know, I think we’ve talked about how a layered approach on the fencing is a part of the President’s strategy. I will tell you that we’re doing a great job in interior enforcement, and really moving out some of the areas where I think we’ve been…not been as active as we could have been in the past.

HH: Well, I appreciate your coming on. I must be just candid with you. I think that’s disastrous, politically. I think that is a nightmare, both policy and political wise, because I thought the President had come down for the fence, but you’re saying it’s really a much subtler approach.

….. HH: (after thanking Myers for coming on the show) I’m just stunned.

The game I believe Ms. Myers gave away is that when the President said “high tech fence,” he really meant the same thing as the non-physical “virtual fence” idea that most serious critics have discredited as totally inadequate. In other words, barring convincing evidence to the contrary, nothing much has changed. Physical barriers to entry won’t be built. More bodies will be put on the border, but…. they will be only slightly less inadequately “guarding” the same porous border.

If I’m wrong, the President and/or Tony Snow had better say so, hopefully just after the news that Clueless “ICE Princess” Julie Myers has found a more appropriate line of work is announced. Otherwise, we’ve been played, bigtime.

UPDATE: Chez Diva wants to know why this woman is still employed. Me too.

UPDATE 2: Debbie Schlussel’s post today (thanks to Debbie for catching my new post) strenously criticizes Myers, but also points darts at Hewitt for his relatively narrow line of questioning and apparent lack of detailed knowledge of the other holes in our immigration enforcement efforts. His interview left Myers looking like a dunce on the fence issue, but stronger questions could have exposed her as the complete bumbling fool that she apparently is, based on Schlussel’s chronicle of Myers’ frequent missteps in her short time on the job.

Previous Posts:

  • May 15 — Well, It Wasn’t a TOTAL Disaster (See Updates 2 and 3: Or Was It?)
  • May 15 — Two Illegal Immigration Topics President Bush Won’t Talk About Tonight


Conservative Culture Trackback Tuesday participant.

Bizzy’s AM Coffee Biz-Econ-Life Links (051606)

Filed under: Economy,Taxes & Government — Tom @ 8:03 am

Free Links:

  • What if this guy’s right? He predicts that the federal budget will be in balance beginning with the report to be published on April 4, 2008 about March 2008′s receipts and disbursements. A few days ago, he moved his prediction up from his previous break-even estimate of October 2008. His evidence is pretty compelling, but it of course assumes Congress won’t step in and ruin things by porking out or losing the will to extend the tax system beyond its currently scheduled expiration in 2010.
    You may be wondering, if this serendipitous event occurs, if it will convince those who have previously been unmoved that supply-side tax cuts work. Nah — As I noted this past weekend, they’re already trotting out the “it would have happened anyway” excuse.
  • Advice — If you’re going to commit a crime, don’t brag about it on MySpace.
  • A very disappointing ruling from the Supreme Court yesterday on tax incentives:

    In a decision that supports the use of incentives by states in recruiting corporations, the United States Supreme Court ruled Monday that taxpayers in Ohio have no right to challenge nearly $300 million in tax breaks that state officials used to lure DaimlerChrysler to build a plant in Toledo.

    “State taxpayers have no standing … to challenge state tax or spending decisions simply by virtue of their status as taxpayers,” Chief Justice John Roberts wrote in the Supreme Court decision issued Monday.

    The 9-0 decision means that the justices do not have to make a ruling on whether such incentive programs are constitutional.

    Two points — First, if taxpayers don’t have the right to challenge these incentive deals, I’d like to know who in the world does; or are we now at the point where imperial elected and non-elected leaders get to set tax policy without the bother of legislation or voter approval? Second, I hate it when the court decisions enable the justices to dodge the big issues, like whether or not incentives are constitutional in the first place. I personally do not believe they are, but we’re going to have to wait for a brand-new challenge from some non-taxpayer with standing, whoever that might be, to run a case all the way up to the Supremes again.

  • I did this post last night, and I’ll betcha that as of this moment, despite predictions all around that it’s a fait accompli, Karl Rove has not yet been indicted (I’m not saying he won’t be.). Speaking of bets, TradeSports, which IS taking bets on, among other things, Scooter Libby’s guilt and various congressional races (see left frame at Luskin’s site), including Ohio’s Sixth District, didn’t have any pools set up on Karl the Evil One as of last night. Some on the left side of the aisle just can’t wait for the official word (if there ever is to be one) — the indictment was announced, and then had to be retracted, at a meeting of the Michigan Trial Lawyers Association. If the Jason Leopold from Truthout is the same guy that Howard Kurtz described last year (HT Boraxo at TPM Cafe), I think Karl can sleep soundly.
  • You’ve gotta love this campaign strategy, even if you don’t like his politics, which has its shaky elementsIn a John Fund column primarily about Pennsylvania’s endangered incumbents, who became that way because of an arrogant dead-of-night 16%-54% pay raise passed last year (the pay raise has since been repealed, but not the bad taste in Keystone State taxpayers’ mouths), there is this item about a successful conservative insurgent candidacy in an Indiana primary race (bolds are mine):

    Political types in Indiana already are paying attention. They were shocked earlier this month when three out of 25 incumbent state legislators facing primary challengers lost. The biggest casualty was Robert Garton of Columbus, president of the state Senate and a 36-year Republican incumbent. He lost to Greg Walker, a political neophyte and tax accountant.

    Mr. Garton outspent his opponent 10 to 1 and had groups such as the National Rifle Association and the Indiana Chamber of Commerce in his corner. But in a move eerily similar to what happened in Pennsylvania, he set off a prairie fire of protest when he pushed through a bill to give state legislators lifetime health-insurance benefits.

    Mr. Walker seized on the issue and coupled it with criticism that Sen. Garton had become a status quo politician. “Many elected officials serve for so long they become spokesmen for government, rather than those who elect them,” he said. The challenger drove an orange 1970 Plymouth Valiant to emphasize the incumbent had been in office since then and that it was “time for a trade-in.” He cobbled together just enough financial backing from a building contractor group and conservative school choice advocate J. Patrick Rooney to pull off a stunning upset.

    That Valiant must have been quite a sight. Attempts to find a pic of the actual vehicle Walker used did not bear fruit. If anyone has one, send it on.


UPDATE: Porkopolis in the comments refers to AN Orange Valiant I found last night in a search as well, just not THE Valiant. Anyway, here it is (it’s a Valiant/Duster):


UPDATE 2: Michelle Malkin has more on the non-existent Rove indictment.

Positivity: A Emotional Rescue in New Zealand

Filed under: Positivity — Tom @ 5:59 am

Their words, not mine: