We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everything else is just a symptom of that problem.
You will always lose the fight against corruption in the long run because as the war goes on you get weaker and they get stronger.
This is a fundamental issue with organizational design (and democracy).
Highly recommended further reading/viewing:
Rules for rulers is very helpful at understanding this: https://www.youtube.com/watch?v=rStL7niR7gs
Iron law of Oligarchy (the deterministic outcome of democracy) https://en.wikipedia.org/wiki/Iron_law_of_oligarchy
I'm not sure this is proven yet. Certainly in the past, I'd have agreed, but with communication via the Internet making realtime decision-making between all members of a democracy possible, I think direct democracy is theoretically possible at least.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue. For example, maybe I'd trust a particular economist to vote on my behalf for specific economic proposals, but I'd want Greenpeace to vote on my behalf for anything to do with, say, baby seal clubbing.
So long as the individuals can instantly take back the voting power they have entrusted to someone else, a reasonable semblance of direct democracy could work.
In practice, of course, it would be a hell of a mess to get everything functional, I just don't buy the notion that it's impossible in a world where everyone can communicate with everyone else essentially for free.
Picking on Facebook because they’re the biggest, but Twitter appears to be worse on every axis, as it continues to evolve to favor clout.
But would it be desirable? I don't think so.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue.
The later seems like a very good idea. The former not at all. If you trust someone with a mandate, just allow the time needed to develop a consistent plan. Worrying too much about short term is exactly the opposite of good administration.
Our current issues have nothing to do with latency, they have to do with manipulation and propaganda. The internet has so far made that worse, not better. If every single Facebook trend, or 30 second clip from Fox and Friends had the potential to derail an international treaty, or modify healthcare on the fly, reality would be strictly more terrifying than it is now.
Show me web technology improving stability and deep thoughtfulness, and then we'll have something to talk about.
For a legislative vote where some actors have a lot to gain or lose from the outcome, I'd expect the manipulation to get even more egregious than people trolling polls for amusement.
For example, Suppose on average 1% signup for the military in high school. Next suppose we add an intervention, we add a sign in the lunchroom for military recruiting (touching on all the right emotions). The average in these schools goes up to 3%! We say, these additional recruits CHOSE to join, but we know they wouldn't have had we not added the sign.
It's in this way that I say that realtime voting doesn't solve the problem, because it doesn't look holistically enough, namely at influence. It's not just at the ballot box, but in your daily life. The question then becomes, who can influence and how much?
I agree that this is a big question. What are the divisions between manipulation, persuasion, coercion, influence, information, and education? Intent? Whether or not we agree with the position? I know that this can come off as flip, but it's not at all meant to.
In the case of the poster, what if there were two posters, an additional one for the local university. Average recruitment goes up 3%, and applications for the local university go up 3%. Does that change our perspective on what happened and the students' choices?
In this new scenario, students read the signs, the messages are brought to their attention, and of all the possible things they might do, the odds of choosing one of these two things increased some degree. In other words, the external forces in their environment have shaped their future state (choice).
I'd be curious to see a table of interventions, and the degree they pull out the entropy of what a person might do next. We might then make some categories, like you mentioned above.
When we appreciate the power of manipulation, for better or worse, perhaps we'll give it more serious consideration. This ought to undergird our thinking and decision making, whatever we may CHOOSE. ;)
In the lunchroom example, so long as lots of other folks are putting posters on the wall, and presumably some kids don't look at the lunchroom posters, I don't have a problem with either the college or the military changing behavior that way. There were many alternatives, and the poster wasn't forced on anyone. The influence we're seeing now is expensive (much higher proportional impact if you can pay), and effectively guaranteed (everyone is tuned to the same channel or two).
I hope we don't have to analyze individual interventions, I'd much rather just break up the channels, or increase the diversity of the programming. Mostly because I'm not sure how to (and I'm not sure we should) answer your question.
Yes! In all organizations, money and power buy influence. The internet briefly changed this, but it has reasserted itself.
What do we expect the powerful to do with their influence then? Rules for rulers says they must use it to increase their power for any other decision reduces their evolutionary fitness and long term survival.
Therefore in the long run altruism is strongly selected against and we would expect to see less of it.
The problem is that speech isn't free (as in free beer). It's a commodity. The wealthier or more powerful get more of it. When people see messages frequently they tend to believe them [1]. It doesn't matter how direct your democracy is if people can be strongly influenced to vote as desired.
I used to believe that a sufficiently intelligent and enlightened being could lead a democracy. Rules for Rulers says this is impossible, because the altruistic entity would always lose to the practical power-optimizing one.
[1] https://www.psychologytoday.com/blog/the-new-resilience/2012...
(This time we got Trump. Oops.)
Only that a system breakdown leads people to seek out extremes. In the late 19th and early 20th century there were ideologies in Europe and the U.S. that were available to cling on to, whether you were a union member, a soldier returned from a devastating war, or a deeply religious person, something was there to explain the order.
Today we have Facebook news (60%, is it, of Americans get their news primarily from there?). We have programmatic advertising, a feedback loop of information being sent to our attention and our behaviors being tracked and sending back datapoints for further optimized tracking... I'm not sure what this says about the state of ideology and the tremendous disunity in western society compared to 100 years ago, in the sense of people coming together under the banner of coherent ideas... But it'd make an interesting thesis paper.
Those who cannot remember the past are condemned to repeat it.
Amazon receiving 238 bids of localities falling over themselves to handover tax credits and other goodies is the example I've been thinking about recently.
https://www.reuters.com/article/us-amazon-com-headquarters/a...
How to fix it though?
Unfortunately the states are not turkeys voting for Christmas
Don't think we can. We're more likely to fix one of our other big, fundamental problems—the two party system + gerrymandering, for which proportional representation or any of several other schemes would be a good fix—than we are that, and I'd say the odds of our fixing that this century are maybe 50/50. We have no stomach (or mind...) for questioning such foundational premises of our system in the face of something as abstract and high-falutin' as a kind of political root-cause analysis, and aside from that we have too many states-can't-possibly-do-anything-right-ever-evidence-be-damned-no-really-I-proved-it-from-first-principles-it's-just-like-math folks running around.
I don't think you can save that many people when there are so many of them. It becomes cultural. Their identities are defined by their conviction. In earlier times, that would be the point where you leave the society and go somewhere else, but there is really no where left to go on Earth - every country has their own flavor of brooding fundamentalists supporting some faction of the government through propagandized anti-intellectualism.
This exists even though EU nation states have far more individual power than US states.
For example, Belgium recently updated certain tax laws to reduce the amount of withholding tax payable by certain major foreign investors, to keep the AB Inbev holding company in Belgium instead of letting the shareholders move their holding entity to the UK.
Yes, because such "subsidies" would create competition for companies from more developed EU countries, the same countries that drive the acceptance of new EU members. Removing these obstacles crushed local industry, which is why less developed countries ended up with close to zero industrial production after joining the EU (thus starting the social, employment and competitiveness problems most smaller EU nations are facing).
Nevertheless, EU nations keep subsidizing "selected" businesses, especially for big foreign companies outsourcing their operations, using tax benefits.
These sorts of talking points exist everywhere, in the West and in the East, state aid is one of the most attacked elements of the EU. Actually the talking point is near identical in the UK, that manufacturing has died because the government hasn't been able to step in (in effect, to prop up uncompetitive industries). Manufacturing has in fact plummeted in most developed countries, and it's easy for governments to pass the blame onto the EU.
Not really. The problem with most of the small-ish EU countries is that with the exception of Cyprus, Austria, Finland and Sweden, all the 13 countries that joined after GDR/BRD unification were former USSR or Yugoslavian countries + the GDR itself which was USSR allied. This means that their entire industry companys were either uncompetitive since decades (but kept artificially alive by the realo-socialist states) or got fleeced by local or foreign mafia (or, in the case of former GDR aka East Germany, by the Treuhand which has had its fair share of scandals) after the fall of the USSR.
In addition, there's a _massive_ wealth gap between the EU/EEA core (Germany, France, the Nordic states, Switzerland and UK), which bled all other EU nations dry of young people (they went off to study and stayed) and loads of working-age people (they went off to earn money to support their families at home, and stayed). The people "left behind" tend to be old-ish and politically conservative, which doesn't exactly help when everything around is changing at an unknown (for Soviet/Yugoslavia) pace... and what's left of young people today flees from the corruption and religious-conservative politicians.
What saddens me is that I have no idea if the situation can be fixed at all. Manufacturing or heavy industry isn't going to come back, no matter how hard Trump or his ideological "friends" try. It will stay in China or maybe migrate to Africa as soon as Chinese labor gets too expensive/the Chinese politics too restrictive. All that remains is agriculture (which is going to be more and more automated), tiny chunks of natural resources exploitation, and tourism. Maybe a bit of IT stuff, but people are highly skeptical of nearshoring/offshoring since the "big companies" (Accidenture, IBM, whatever) spoiled the well, and the local markets by far don't have as much demand...
Source: am half Croatian, half German (born and raised in Germany though).
If tax agencies would just stop accepting any "transfer pricing" BS from multinational corporations, and simply divide their total net profit (wherever) by the share of the national market and base corporate tax on that, I think that would be a start.
Localities competing for business is i.m.o. much less problematic: it's a one-time write-off, there is legislation, and it has to be "sold" to tax-payers.
Outside of those though, their are many cities of considerable size where local developers hold the most sway. These local developers behave and are motivated by different things then the mega corps.
It's laughable to think a country could solve any of those things through stricter legislation; that will simply encourage those companies to move more of their operations to jurisdictions with more advantageous laws/taxes/labor/etc.
So how do you "level the playing field"? One way would be bringing those advantages to smaller companies through businesses that exploit those same loopholes / tax strategies, providing them as services to companies who otherwise couldn't afford doing it themselves (i.e., exploiting legal loopholes as-a-service, international tax strategies as-a-service, etc).
Or, you embrace the global economy, specialize in what your country can do most efficiently (hint: it's not manufacturing anymore in the US), and make it advantageous for companies to keep operating domestically. You lower taxes for everyone, so even the companies with few resources can enjoy the eased financial burden of taxes that normally only the big guys could avoid. In short, you compete globally rather than stick your head in the sand pretending that your country is somehow isolated from the rest of the world and you can fix everything through legislation.
treat it like the olympics. if an athlete that takes a performance enhancing drug that has yet to be prohibited, they still loose their medals and cannot compete.
The US leverage is limiting access to US markets for companies that do that.
As bad as China is to foreign companies, they're still bashing away at the doors to be let in. Imagine any of GAFA being blocked from doing business in the US.
You have multinationals getting around a design flaw in the US tax system, by acquiring a foreign entity and going abroad.
Of course those companies will just search out another legal alternative to avoid paying taxes. And that is well within their rights.
In 1952 corporate tax in the US was 33% of total revenue. Today it’s less than 9%.
I’m also pessimistic but that doesn’t mean we should give up. There’s nothing about this that’s writ in stone.
I know it’s hard to believe, but the next 15 years will see a dramatic rise of government power and higher corporate taxes. This will happen very suddenly with one party taking complete control of all the branches of government along with having a dominant ideology at their back. Doesn’t really matter if Republicans or Democrats are in control, we can see the progressives on the left like Sherrod Brown, and populists like Steve Bannon on the right (who has spoken highly of Senator Brown), advocating shockingly similar proposals.
There's not much laws can do to change that, that is just the way having the flexibility to structure your business in whatever way you prefer works.
If you were to reduce the US corporate tax rate to 10%, a lot more profit would be booked in the US again.
Until other countries lower theirs, then it's just a race to the bottom, no?
Imo, it's smarter to tax shareholders more, and corporations less. Corporations are generally productive and having the statutory seat of a multinational company in your country leads to an increase of tax revenue, because 1) people will have jobs, 2) those people will pay income tax, sales tax, will spend at (mainly local) businesses whose shareholders will be taxed, etc.
Dividend and capital gain taxes are generally also harder to avoid for the wealthy. At best you can defer them, so you'll always have to pay some tax if you want to spend $1-2-5m a year. Corporate taxes and income taxes are (very) easy to avoid.
I wonder how much it would cost to completely eliminate corporate taxes but increase dividend and capital gain taxes to say, 35-40%. Now, that said, I don't think this will ever happen. People in power love their tax breaks too much.
Take that away and I have no incentive to invest in stability but have every reason to disrupt the market and take advantage of the swings. I'm not sure you want that.
> The reason long-term investments are taxed at a lower rate is because you want to incentivize long-term investing as it increases stability.
Since most equities are held by tax exempt entities (whether that is domestic or abroad, e.g. pension funds or hedge funds in a tax haven), this argument doesn't make sense. The stock price of AAPL or YELP is not going to tank because an individual investors sells (barring perhaps the CEO).
The tax rate is lower generally to account for inflation. But not all countries have sliding capital gains tax rates. The UK has a 28% rate, most capital gains are exempt in Belgium and the Netherlands (but the latter has a small wealth tax), France just introduced a 30% rate, etc.
The "race to the bottom" is the reason why free markets are so prosperous. Each business independently works to reduce costs and competition forces companies to share those savings with consumers.
The best example of the "race to the bottom" stopping are monopolies (often gov't supported) like Comcast where they can sit fat and happy raking in a ton of profits and telling consumers to shove it.
Have they increased in line with the larger national budgets required for basic public services?
Furthermore most major corporations have had government involvement to attain their status, whether in the forum of subsidy, bailout or military procurement. Unfortunately most people aren’t aware of this “corporate welfare”.
Basically corporations which are unaccountable concentrations of public power, should not be allowed to dictate to the government, which is at least in theory accountable to the public. Unfortunately the trend has been in the opposite direction.
Which would do what, exactly, for most people? Precisely nothing.
And they'd use loopholes to bring their tax burden down to 0 anyway.
If you want to lower or eliminate corporate taxes (with a positive effect for people), you would need to increase dividend and capital gains taxes to compensate. You don't need to collect more corporate tax than is collected today, but if you can create more jobs, that's a net win.
Comparing the corporate tax rate in 1952 to today is pointless. In 1952, the U.K. was a shell burned out from WWII. Today, it's a tax haven luring American companies to reincorporate there. You cannot fight this process with legislation--you'll just shoot yourself in the foot and drive companies out to other countries that will be happy to receive them. This isn't just a U.S. thing--even accounting for deductions and tax breaks, the U.S. has higher corporate tax rates than our competitor countries: http://www.npr.org/2017/08/07/541797699/fact-check-does-the-.... The "real" amount of taxes paid in the U.S. is about 18.6%, versus 8.5% for Canada, 11.2% for France, and 4.1% for South Korea.
It’s quite simple, with financial power comes political power. Elections cost a lot of money these days and if you look at the donor list of both parties it’s dominated by large corporations.
Edit: a more useful metric will be the percentage of total revenue paid by corporations. As can be seen the tax rate is misleading.
The government doesn't "permit" outsourcing of U.S. jobs. Thanks to the technology created by folks here on HN, there is nothing the government can really do if IBM decides to fire a worker in New York and hire one in Bangalore. The only thing the government can really do is offer concessions and incentives to reduce the bleeding.
> It’s quite simple, with financial power comes political power. Elections cost a lot of money these days and if you look at the donor list of both parties it’s dominated by large corporations.
The party that spent the most money just lost the most recent major election, so I'm not convinced money really matters much. In reality, we spend a minuscule amount on politics given the size of the country. About 0.0037% of GDP on Presidential elections, and 0.019% of GDP on lobbying. For context, we spend less on lobbying each year than we do on specialty coffee.
If money really bought elections, companies would spend a lot more of it trying to do so.
This scholarly study found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.“
Hardly a surprising fact. Polls show most Americans believe the government is dominated by a small group of special interests who are looking out for themselves.
https://www.cambridge.org/core/journals/perspectives-on-poli...
Even the threat of money buys politicians. Case in point: the repeal of Obamacare is wildly unpopular with the US public, but the Koch brothers got a majority of the house of representatives to vote for it. How? Simple: they threatened that any GOP representative who voted against it, would face a primary opponent in their district next year with $millions in funding. They don't even have to spend the millions (although they do), because simply the threat of a well funded primary challenger is enough for them to buy votes.
It's a great tragedy that the supreme court has effectively taken our democracy away from us by ruling that money is speech, and protected by the first amendment.
Also, you’ve got it backwards about Citizens United. The Supreme Court didn’t rule that money is speech. Instead, detractors are trying to convince people that speech (the case was about a political movie) is actually money.
They have influence on government because they pay politicians bribes that get them elected. Endless evidence to support that where companies or industries give money, politicians get elected, and politicians pass laws to give those companies benefits they want that aren't good for voters or even the voters money. The politicians get wealth and power in return. End of story.
The rest is narrative the politicians use to distract from that. Now, they do like bringing jobs and contracts into their districts to increase their votes. They operate on money, though. Recent example with ISP's:
https://www.theverge.com/2017/3/29/15100620/congress-fcc-isp...
The oil companies make it even more obvious. They're making insane profits but still get tax subsidies from the politicians they paid off.
https://www.theguardian.com/environment/2015/may/12/us-taxpa...
And this is one of the many reasons I despise the UK currently (I'm British). The citizenry do not benefit from these arrangements. If anything people seem to becoming more aware of it and more pissed off about it.
I love how the UK likes to torpedo any EU attempt to overhaul and address these greedy little sweetheart deals as well.
But I agree with you that you can't ignore corporations' outsized influence on corporate taxes.
I highly doubt that is true. I mean, there are only 3 basic economics sectors, and you just stroke an entire one out of the question.
It is way more likely that the reality is more nuanced, and the US can not efficiently manufacture some things, while keeping the lead on some other things.
Facebook will generate near $20 billion in earnings before tax for fiscal 2017. You're positing that if they pay $6 billion in taxes, instead of $4 billion, then their monopoly will unwind or somehow their competitors will finally be able to catch up (yeah, it's just not fair, the tax rate that Snap is paying).
Now apply the exact same thing to the other tech giants (Apple, Microsoft, Google, Oracle, Intel, Cisco, etc). It's just as far-fetched with them as it is Facebook.
You are flat wrong. The integration has already occurred. The corruption is currently ingrained. Being able to source from your own penny factories in another country put many of the behemoths into their market dominant position or solidified them. Facebook is an odd duck which leveraged capital wisely. Amazon had decades of massive loses (revenue-wise) until, roughly, AWS took off. The capital markets favor bigger players at almost every turn and smaller successful companies are consumed and destroyed at a shocking rate after they rise above a starting locality. Microsoft used to afford that kind of market attrition, but now it's been largely Yahoo, Google, Alibaba, etc.
That sounds a little too extreme. Has vertical integration never occurred without the help of tax law?
It's much more complicated that what the OP laid out.
This is, however, why you cannot just have a strict free market. Some industries emerge - and will emerge - that are naturally hard to enter and compete in. But at the same time, you need to have the lightest touch necessary, because the same regulatory apparatus can (and does in spades today) be abused to prevent competition by industry incumbents. But again, it is hard to accumulate the capital or scale to control government unless you have one of those non-competitive revenue streams.
The important historic realization is that we have failed to police businesses that had such extreme margins, probably because at the time those invested in such businesses felt it was just the success of the American market instead of being a wound in society that would grow infected.
Can you really tease those apart in our mixed economy? Look at ISP monopolies, or the bizarre state of the "deregulated" electricity market and what remains of the long-distance telephone market. Or take pharma, where tremendous resources are needed to comply with regulation. Or the -- tremendous scare quotes required -- "marketplace" for health care. In a mixed economy, monopoly exists because of state and market.
> In a mixed economy, monopoly exists because of state and market.
No. We live in global economy. Most companies have to compete globally. You might get favours from few countries but not most. Note whether your home country gives you a boost or not, is irrelevent. The success in a foreign country without its govt's blessing, is the question.
Though, USA is an exception, achived arguably due to history of low market intervention. I would not say that the MNC does not care but achieving global monopoly in heavely regulated industry is very hard. Case in point, in banking industry (the most regulated sector), there is no private (or even public) global monopoly.