How Entrepreneurs Can Profit with Obama
businessweek.com
businessweek.com
A lot of this advice is just that "smart people will find loopholes in the new tax codes and avoid paying it like they have been for decades", bordering on tax fraud. He indirectly admits he makes over $250,000 a year, and I hate to voice a knee-jerk reaction, but he should really be counting his blessings he's not been on the short end of the stick (living paycheck-to-paycheck working said minimum wage jobs, for example). Instead, he gets spooked that he might have to give more of his precious precious money away.
When the minimum is forced up, being better than the minimum gets harder.
If you make it harder to fire people, hiring becomes more risky and especially smaller firms will think twice.
If you force employers to pay for employees sickdays, and make it illegal for the employer to even ask you what's wrong, mr. nice guy, who'd never ask anyway, is cornered by mr. bad boss, who's just looking out for the law.
If you force the minimum wage up, all those jobs worth less than the minimum wage will not be done. Not a problem for high-tech startups, but if you're the guy washing staircases at night, and your price goes up, you'll be the first to go when things are rough. Low salary employees are seldom unexpendable.
If you think you're being unfairly treated at work, protest. If that doesn't work, quit.
If you need to keep your job because you have credit card debt and the installments on your new home entertainment center and custom build kitchen and the mortgage and ... well, you got yourself into the mess, do you really think it's fair to get the government to bully evil mr. $250.000 into bailing you out, and imply that he's somehow not deserving of his salary?
When the minimum is forced up, being better than the minimum gets harder.
A lot of that can be drawn out in a straightforward way on an introductory Economics class chalkboard. It makes sense & no one rational would argue that regardless of the lvel, employment would stay the same. At $100 p/h, the level of employment would decrease. On the chalkboard, the biggest most straightforward effect would be that most jobs paying less then that would cease to exist. The other effects of pushing the remaining low pay jobs over the line & a few of the ones close to it up a bit seem to have a hard job of it to make the whole thing worthwhile.
But the real world experience doesn't paint such a grim picture. Minimum wage changes, have not been shown in real world case studies to have very much of an effect on employment rates. The effects are usually cloudy & cannot be distinguished from the effects of say, a credit crisis.
Now economists can rationalise this in lots of ways. Maybe the labor market tends to place employers of low wage employees in better bargaining positions, so when you look at the difference between what a worker is willing to earn (there is no floor other then what his other options set) & what an employer is willing to pay (the marginal output of that labor), they settle closer to the bottom. Perhaps the various wildcards of social & psychological effects of the difference between a minimum wage job & welfare supplements or some such wishy-washy effect is screwing with things. You can even come up with all sorts of circular sounding arguments about stimulating spending by putting money in the hands of the poor. To put it on the chalkboard you need to talk abut it in terms of information availability, market power, mobility, secondary effects etc.
But when you take a step back, there just aren't many good examples of minimum wage humiliating itself in the same way that grain price floors or wool subsidies have. For such a heavy handed economic policy it has remarkably little catastrophe that goes with it. No stockbroker surpluses being dumped on unsuspecting thord world markets. No stockpiles of teachers that need to be refined into ethanol at a cost of 20X higher then cane ethanol.
The automatic rejection of minimum wage increases based on the classic economic theories is not rational.
Now economists can rationalise this in lots of ways...
How about this one? No minimum wage increase yet has exceeded the actual market value of the jobs in question. They have simply been feel-good placebos that have marginalized very few real workers while gaining political kudos for the administrations in power.
Any real attempt to raise the minimum wage too far beyond the market value of the labor will result in mass unemployment, mass inflation, or both. Its actually a kind of rationing, and behaves as such.
In Australia, the minimum wage or equivalent ranges $14-$18 (AUD $1 = aprox US$0.95 a month ago, approx $0.70 now). This is probably close to the median for countries of comparable GDP pp. Many employers pay the minimum.
The minimal US minimum wage is relatively low. But there are plenty of other examples around.
And the money isn't whats important, the work that produced that money is what's important. Whenever someone in the country works hard and produces something, it benefits every person in the US, including you and me. However when we decide that the only important thing is that he made more money then us, then people like him will decide to either produce less (it's not hard if you are already well off to take a well earned vacation), or just produce more overseas to avoid our confiscation attempts.
So now we have trickle down, trickle across, and trickle up?
I don't think many startups are guilty of this. But even so, could you imagine what it would do to the startup community if you required every company regardless of size to offer its employees health insurance? I don't think that Palo Alto would end up looking anything like it does now. There are risks involved in launching a startup the first few years. Everyone knows this. But, with the risks come proportionate rewards, which brings us to:
> Instead, he gets spooked that he might have to give more of his precious precious money away.
You have it backwards. It's been said a lot recently that the "hard working middle class middle americans" are the foundation of our country; actually, the entrepreneurs and business leaders who end up making tons of money are the foundation of our country. Without them, no one else would have jobs. You can offer as much welfare or unemployment benefits as you want, but the people you really need happy are the founders of the world. If you make it totally unprofitable or fail to recognize the risks inherent in going out on a limb with no safety net to offer a service to others, we'll either stop (well, slow down or find a new model to do it) or move elsewhere.
This would be an argument for "single payer" government health care.
How much easier would it be to find people willing to work for startups if they didn't need to worry about health insurance?
I really wonder how long we are going to keep an unskilled proletariat around given the advantages in computer & robotic animation.
OTOH, I'm also really surprised how ancient some of the manufacturing techniques are in "How It's Made."
And if you have your doubts about the Singularity, maybe you should also have your doubts about who exactly will be automated out of existence and who will not. One of the things that surprised AI researchers initially was that it was a lot easier to make a computer good at chess than to make it good at, say, digging a ditch.
Health care costs are already out of control and already preventing companies from hiring more people. If it gets more expensive under Obama, that will just get worse.
To me, this part is not a left-leaning/right-leaning issue.
The downside to this article is that most of it is based what the Obama administrated has stated it ~wants~ to do. You'd be foolish to actually plan a business around campaign promises. But these are definitely some things to keep in mind.
Course, that was a huge generalization with tons of assumptions, so YMMV.
Notably, SBIR/STTR: http://www.sba.gov/SBIR/indexwhatwedo.html
As consumer confidence in our government increases (as it always does in a new administration's honeymoon period), and as the policies of the current and future stimulus packages take effect, the economy will inevitably improve.
Despite the tax issues, if you thought John McCain's federal government spending freeze was a good idea during a recession, you don't know much about economics.
An improved economy means more funding and more customers. Forget the details, it is hard to make ANY money when the stock market is going down 40% in a few months and people are saving every penny because they are scared.
Alternative possibility: move to another country. New Zealand, frinstance, has just elected a new business-friendly government, it has lots of smart, well-educated people and a low cost of living.
That would mean that the US kick ass (Im considering relocating to the US btw).
Are "Capital gains rates" different from "capital gains taxes"?
Because he says:
"Capital gains rates will go up, too." - http://awurl.com/GC4ypKrSY#first_awesome_highlight
and then he says:
"He also plans to eliminate all capital gains taxes on startup and small businesses to encourage innovation and job creation." - http://awurl.com/hICQbvM3H#first_awesome_highlight
Sorry, didn't read the article.