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jerryking : tax_codes   10

Billionaires have never had it so good
November 13, 2019 | | Financial Times | by John Gapper

* Fortunes are created by technology and globalisation, as well as talent and enterprise.
* The “smart risk-taking, business focus and determination” of rich entrepreneurs give them the ability “to transform entire industries, to create large numbers of well-paid jobs, and to rally the world to find cures for diseases such as malaria.
* billionaires have “an obsessive business focus, constantly scanning the world for new opportunities. And they are highly resilient, undeterred by failures and roadblocks.
* There are more entrepreneurs from middle-class backgrounds who went to elite universities before making their fortunes.

But such success would have been less lucrative in the past — they might have been merely rich rather than super-rich. Before lionising or demonising elite entrepreneurs, consider how their personal talents are amplified.

(1) the superstar effect. Globalisation and technology that allows businesses, such as Google and Facebook, to span markets, help the most successful entrepreneurs to profit faster and at greater scale. Successful founders can create superstar franchises, like some Hollywood stars in China....The economist Sherwin Rosen once noted that “superstar economics” mean the returns to the winner in any category can be vastly higher than the returns to second place. These winners can, as the economist Alfred Marshall commented in 1890, “apply their constructive or speculative genius to undertakings vaster, and extending over a wider area, than ever before”.
(2) The security effect (JCK: aka "long-term vision". One reason why the poor stay poor is that they cannot plan for the long-term.....“the present takes up a great deal of [poor] people’s awareness, so they tend to delay investment decisions”. The reverse is true of billionaires, who can finance ideas over decades and ride out failures and setbacks. UBS says that “the outperformance we call the ‘billionaire effect’ depends on the entrepreneur keeping control [of a company]”, but they may be advantaged by security as much as genius.
(3) the insider effect. People do not turn into billionaires without a keen sense of financial opportunity and the drive to make a series of good decisions. But once they achieve positions of power, they are reinforced by a network of advisers and brokers.
Billionaires do not leave their cash at banks; UBS or other private banks handle it. They have insider access, such as the opportunity to invest in private businesses, or initial public offerings of fast-growing companies. Wealth does not automatically beget wealth but moving in elite financial circles with enviable resources helps.
(4) the tax effect. Many countries tax income higher than capital, because it is simpler and they want to encourage entrepreneurs. But this leads to the rich paying less as a share of their wealth than those on average incomes. Wealth is also mobile... billionaires have scope through trust and offshore structures to shield some of their wealth.

It is salutary that more of today’s super-wealthy built their own fortunes, but they are also lucky to live at an unusually helpful time in economic history.
billgates  Campaign_2020  capital_flows  Elizabeth_Warren  financial_advisors  high_net_worth  insiders  meritocratic  moguls  superstars  tax_codes  tax_planning 
5 days ago by jerryking
How to funnel capital to the American heartland
April 15, 2019 | Financial Times | by Bruce Katz.
* The Innovation Blind Spot, by Ross Baird.
* Ways must be found to rewire money flows in order to reverse the export of wealth
* A federal tax incentive intended to entice coastal capital into the heartland may end up helping to keep local capital local.

Over the past year, economically distressed communities across the US have been engaged in an intense discussion about mobilising private capital. Why? As mayors, governors, real estate developers, entrepreneurs and investors have learnt, buried in the 2017 Tax Cuts and Jobs Act was a provision that created a significant tax incentive to invest in low-income “opportunity zones” across the country......the law’s greatest effect, ironically, has been to unveil a treasure trove of wealth in communities throughout the nation. Some of the country’s largest investors are high-net-worth families in Kansas City, Missouri, and Philadelphia; insurance companies in Erie, Pennsylvania, and Milwaukee; universities in Birmingham, Alabama, and South Bend, Indiana; philanthropists in Cleveland and Detroit; and community foundations and pension funds in every state.

These pillars of wealth mostly invest their market-oriented equity capital outside their own communities, even though their own locales often possess globally significant research institutions, advanced industry companies, grand historic city centres and distinctive ecosystems of entrepreneurs. The wealth-export industry is not a natural phenomenon; it has been led and facilitated by a sophisticated network of wealth management companies, private equity firms, family offices and financial institutions that have narrow definitions of where and in what to invest.

The US, in other words, doesn’t have a capital problem; it has an organisational problem. So how can capital flows be rewired to reverse the export of wealth?

Three things stand out:

(1) Information matters. The opportunity zones incentive has encouraged US cities to create investment prospectuses to promote the competitive assets of their low-income communities and highlight projects that are investor-ready and promise competitive returns.

(2) norms and networks matter. The opportunity zone market will be enhanced by the creation of “capital stacks” that enable the financing of community products such as workforce housing, commercial real estate, small businesses (and minority-owned businesses in particular) and clean energy, to name just a few. Initial opportunity zone projects are already showing creative blends of public, private and civic capital that mix debt, subsidy and equity.

(3) institutions matter. Opportunity zones require cities to create and capitalise new institutions that can deploy capital at scale in sustained ways. Some models already exist. The Cincinnati Center City Development Corporation, backed by patient capital from Procter & Gamble, has driven the regeneration of the Over-the-Rhine neighbourhood during the past 15 years.

More institutional innovation, however, is needed. As Ross Baird, author of The Innovation Blind Spot, has argued, the US must create a new generation of community quarterbacks to provide budding entrepreneurs with business planning and mentoring, matching them with risk-tolerant equity. These efforts will succeed if they unleash the synergies that flow naturally from urban density. New institutions will not have to work alone, but hand-in-glove with the trusted financial firms that manage this locally-generated wealth.
books  capital_flows  cities  coastal_elites  community  economic_development  economically_disadvantaged  economies_of_scale  high_net_worth  howto  industrial_policies  industrial_midwest  industrial_zones  institutions  investors  match-making  midwest  municipalities  networks  network_density  P&G  PPP  packaging  place-based  private_equity  property_development  prospectuses  Red_States  rescue_investing  rust_belt  tax_codes  venture_capital 
april 2019 by jerryking
What the Tax Bill Fails to Address: Technology’s Tsunami -
DEC. 20, 2017 | The New York Times | Farhad Manjoo.

Manjoo posits that the Republican tax bill is the wrong fix for the wrong problem, given how tech is altering society and the economy....The bill (the parachute) does little to address the tech-abetted wave of economic displacement (the tsunami) that may be looming just off the horizon. And it also seems to intensify some of the structural problems in the tech business, including its increasing domination by five giants — Apple, Amazon, Microsoft, Facebook and Alphabet, Google’s parent company — which own some of the world’s most important economic platforms.....some in Silicon Valley think the giants misplayed their hand in the legislation. In pursuing short-term tax advantages, they missed a chance to advocate policies that might have more broadly benefited many of their customers — and improved their images, too......This gets back to that looming tsunami. Though many of the economy’s structural problems predate the last decade’s rise of the tech behemoths, the innovations that Silicon Valley has been working on — things like e-commerce, cloud storage, artificial intelligence and the general digitization of everything and everyone around you — are some of the central protagonists in the economic story of our age.

Among other economic concerns, these innovations are implicated in the rise of inequality; the expanding premium on education and skills; the decimation and dislocation of retail jobs; the rising urban-rural divide, and spiking housing costs in cities; and the rise of the “gig” economy of contract workers who drive Ubers and rent out their spare bedrooms on Airbnb....technology is changing work in a few ways. First, it’s altering the type of work that people do — for instance, creating a boom in e-commerce warehouse jobs in large metro areas while reducing opportunities for retail workers in rural areas. Technology has also created more uncertainty around when people work and how much they’ll get paid.
Farhad_Manjoo  preparation  job_loss  job_displacement  Silicon_Valley  tax_codes  corporate_concentration  platforms  income_inequality  short-sightedness  e-commerce  cloud_computing  artificial_intelligence  gig_economy  precarious  automation  uncertainty  universal_basic_income  digitalization  Apple  Amazon  Netflix  Microsoft  Facebook  Alphabet  Google  inconsistent_incomes  Big_Tech  FAANG 
december 2017 by jerryking
Empty talk on innovation is killing Canada’s economic prosperity
Mar. 19, 2017 | Globe & Mail | by JIM BALSILLIE.

Immigration, traditional infrastructure such as roads and bridges, tax policy, stable banking regulation and traditional trade agreements are all 19th- and 20th-century economic levers that advance Canada’s traditional industries, but they have little impact on 21st-century productivity.

The outdated economic orthodoxy behind our discourse on innovation is causing the steady erosion of our national prosperity.

Over the past 30 years, commercialization of intellectual property (IP) became the primary driver of new wealth. The structure of the 21st-century company shifted and IP became the most valuable corporate asset. IP is an intangible good that requires policy infrastructure that’s completely different than the infrastructure required to get traditional tangible goods to market. IP relies on a tightly designed ecosystem of highly technical interlocking policies focused on scaling companies, which are “agents” of innovation outputs.....Canada doesn’t have valuable IP to sell to the world so we continue exporting low-margin resource and agricultural goods while importing high-margin IP. If our leaders want to create sustainable economic growth, Canada’s growth strategy must focus on creating high-margin IP-based exports that the world wants and must pay for.........IP ownership is the competitive driver in the new global economy, not exchange rates that adjust production costs. That’s why despite the strong U.S. dollar, U.S. company valuations and exports are soaring – IP-intensive industries added $6.6-trillion (U.S.) to the U.S. economy in 2014. So what is Canada’s strategy to increase our ownership of valuable IP assets and commercialize them globally? Supply chains in the innovation economy are different than in traditional economies because IP operates on a winner-take-all economic principle with zero marginal production costs. IP is traded differently than tangible goods because IP moves across borders on the principle of restriction, not free trade. Trade liberalization increases competition and reduces prices, but increased IP protection does the exact opposite. The economy for intangible goods is fundamentally different than the one for tangible goods. Productivity in the global innovation economy is driven by new ideas that generate new revenue for new markets. What Canada needs is a strategy to turn its new ideas into new revenue.....The Growth Council missed our overriding priority for growth: a national strategy to generate IP that Canadian companies can commercialize to scale globally.

We urgently need sophisticated strategies to drive the commercialization of Canadian ideas through our most innovative companies.
innovation  Jim_Balsillie  happy_talk  intellectual_property  scaling  tax_codes  winner-take-all  productivity  intangibles  digital_economy  ideas  self-deception  patents  commercialization  national_strategies  global_economy  property_rights  protocols  borderless 
march 2017 by jerryking
A rigorous Canadian innovation policy needs to be able to evolve and pivot - The Globe and Mail
BILAL KHAN
Contributed to The Globe and Mail
Published Friday, Apr. 15, 2016

++++++++++++++++++++++
But a big part of the problem is our knee-jerk reaction to expect governments to provide the solutions. Need corporate R&D? Ask Ottawa for more tax credits. Lacking venture capital? Insist tax dollars are put into a fund. Want more high tech? Demand provincial governments to spend more on university research.

Good public policies can certainly nudge us in the right direction, but it’s lazy to sit back and wait for government to solve the problem. The truth is that tax credits and research subsidies do not drive innovation. Curiosity drives innovation.

Maybe we’re asking the wrong question. Instead of “what policy can drive innovation?”, we need to ask “how can we become a society of inquisitive individuals?” That’s a more difficult question. It is too simplistic to call for more creativity in the classrooms, but surely strong literacy skills at an early age form the bedrock of curiosity and innovative thinking in adulthood. Children who are encouraged to read, to question, to wonder and to imagine will carry those abilities with them into adulthood.

++++++++++++++++++++++
innovation  innovation_policies  public_policy  agility  risk-taking  Todd_Hirsch  curiosity  organizational_culture  inquisitiveness  questions  bottom-up  hard_questions  asking_the_right_questions  tax_codes 
april 2016 by jerryking
The FDIC's Sheila Bair: Going bare-knuckled against Wall Street - The Globe and Mail
Jun. 22 2013 | The Globe and Mail | KEVIN CARMICHAEL.

Deposit insurance agencies are vital to the smooth functioning of the financial system. Without them, banks would face cascading withdrawals at the first whisper of trouble. Yet within the constellation of financial regulators, deposit insurance agencies are more like Mars or Venus, dominated by the Jupiter-like presences of the finance ministries, central banks and securities commissions....Sherrod Brown and David Vitter, Democratic and Republican senators respectively, have co-sponsored legislation that would force the biggest banks to hold equity equal to 15 per cent of assets, which is much more onerous than current law. An idea that Ms. Bair long has advocated as a way to make the biggest banks less risky – forcing them to hold higher levels of long-term debt – is catching on with policy makers.....How did it get so bad? Ms. Bair has a theory. Over eggs and oatmeal in December, she explained what it was like to be on Capitol Hill in the 1980s, when Ronald Reagan and Tip O’Neill, the Democratic speaker of the House of Representatives, made an agreement to overhaul the tax code. That generation of leaders was influenced by the Second World War; many had fought in it. Such experience teaches you to “put country first,” Ms. Bair says. “We’re the pampered Baby Boom generation. We’re not willing to make the sacrifices as much as our parents were.”
too_big_to_fail  FDIC  financial_system  Sheila_Bair  profile  women  Wall_Street  WWII  the_Greatest_Generation  regulators  sacrifice  baby_boomers  Kevin_Carmichael  shared_experiences  shared_consciousness  policymaking  tax_codes 
june 2013 by jerryking
Clayton Christensen Wants to Transform Capitalism | Wired Business | Wired.com
By Jeff Howe
02.12.13

Howe: You’re working on a new book now, right? The Capitalist’s Dilemma. How is that related to the Innovator’s Dilemma?

Christensen: I wrote a piece for The New York Times just before the election. I was wrestling with a paradox. If you look at the financial measures of prosperity in the economy, things seem to be going just great, especially company balance sheets. They haven’t been so strong in decades.

Howe: High market caps all around.

Christensen: It looks like the economy is emerging from the recession in an exciting way, but we’re not creating more jobs or income for the average person. And in all humility, I think I articulated a simple model that explains why. The bad actors are business school professors like me who have been teaching people what I call the Doctrine of New Finance. We’ve encouraged managers to measure profitability based on a return on net assets, or return on capital employed. That encourages companies to liberate their capital, so they invest in efficiency innovations, which means they can make more money with fewer resources. But what the economy ultimately needs are empowering innovations—like the Model T, the transistor radio. Empowering innovations require long-term investments, which tie up capital for years and years. So companies are using capital to create more capital, and consequently the world is awash in capital but the innovations we need to advance aren’t there.

Howe: What’s the solution?

Christensen: I don’t know the solution, but I believe solutions exist. The government can’t dictate, “Oh, that’s an empowering innovation and that’s not.” But what government can do is create tax rates that transform what I call migratory capital into productive capital. Migratory capital flows to investments that will maximize the speed with which it can then be withdrawn, which plays to the doctrine of new finance. Productive capital wants to stay on the job and not go truant after 366 days.

Howe: Can we structure a tax code that encourages that?

Christensen: Absolutely. The idea would be to peg a tax rate to the length of time the capital is deployed. The longer the capital is invested, the lower rate it’s taxed at, until it gradually approaches zero and maybe goes negative
disruption  Clayton_Christensen  capitalism  innovation  books  ROCE  management  capital_flows  sweating_the_assets  moonshots  breakthroughs  tax_codes 
february 2013 by jerryking
Canada urged to defend lead in mining business
January 30, 2013 | Globe & Mail pg. B2 | by Pav Jordan.

A new report on the mining sector is urging Canada to streamline worker immigration procedures and boost tax incentives to encourage exploration in remote areas.
The report by the Canadian Chamber of Commerce warns that the country must not sit on its laurels if it wants to hold its lead in global mining, pointing at areas from the equipment supplies sector to bank financing and legal services and infrastructure as places where government and companies can work together to sharpen the nation’s edge.
The Canadian mining industry is among the world’s biggest, contributing $35.6­ billion to gross domestic product in 2011. That same year mining exports were valued at $102 ­billion, more than 20% of the national total. The Toronto Stock Exchange is the global capital for mining equity and British Columbia has the largest concentration of mining exploration firms anywhere.
mining  competitiveness_of_nations  Canada  Canadian  tax_codes  TMX  capital_markets  geology  engineering  legal  epicenters  hyper-concentrations 
january 2013 by jerryking
What the Silence Said - WSJ.com
December 12, 2003 | WSJ | By DANIEL HENNINGER. A tribute to Bob Bartley.

In a December 2000 column about the Bush cabinet (titled, "Think Big"), Bob said this about the attorney-general slot: "The Occam's Razor answer is Jim Baker, just displaying legal generalship in Florida."

If you understand Occam's Razor, you understand the entire Bartley persona. I think Bob put this phrase in print about five times in his career, never of course bothering to explain its origins with the 14th-century English philosopher William of Occam, who posited the principle that the best and sturdiest solution to a problem is often the least complicated. Bob believed mightily in this idea. He thrilled, for instance, at James Carville's summation of the 1992 election: "It's the economy, stupid." Pure Occam's Razor.

Thus: To incentivize an economy you can either rejigger the entire tax code -- or reduce marginal tax rates. To keep prices stable, you can either swim through swamps of economic indicators -- or use a price rule, such as the gold standard. To find out what a nation wants, "hold an election." I think Bob saw Ronald Reagan, more than anything, as an Occam's Razor President ("Mr. Gorbachev, tear down this wall"). The day Bob heard that Jimmy Carter was scheduling the White House tennis court, he knew it was hopeless.

At the Journal editorial page, if you watched Bob Bartley work through the day's events -- in the news, in ideas, in life -- you learned to focus on the core of an issue, the fulcrum. The taciturnity wasn't an eccentric quirk; it was Bob's adamant, lifelong refusal to allow an issue or idea to be defeated by secondary or irrelevant detail. He defeated the irrelevancies by refusing to legitimize them with talk. Bob Bartley was in the game to move events, to move history. He knew how to do that, and in the 36 years he ran this page's editorials, he taught the rest of us how to do it: Think big. We did, and we will.
Daniel_Henninger  taciturn  tributes  wsj  Occam's_Razor  game_changers  James_A._Baker_III  thinking_big  problem_solving  incisiveness  high-impact  tax_codes 
august 2012 by jerryking
The Launching Pad - NYTimes.com
July 21, 2012 | NYT | By THOMAS L. FRIEDMAN.

Obama should aspire to make America the launching pad where everyone everywhere should want to come to launch their own moon shot, their own start-up, their own social movement. We can’t stimulate or tax-cut our way to growth. We have to invent our way there. The majority of new jobs every year are created by start-ups. The days when Ford or G.E. came to town with 10,000 jobs are over. Their factories are much more automated today, and their products are made in global supply chains. Instead, we need 2,000 people in every town each starting something that employs five people.

We need everyone starting something! Therefore, we should aspire to be the world’s best launching pad because our work force is so productive; our markets the freest and most trusted; our infrastructure and Internet bandwidth the most advanced; our openness to foreign talent second to none; our funding for basic research the most generous; our rule of law, patent protection and investment-friendly tax code the envy of the world; our education system unrivaled; our currency and interest rates the most stable; our environment the most pristine; our health care system the most efficient; and our energy supplies the most secure, clean and cost-effective.

No, we are not all those things today — but building America into this launching pad for more start-ups is precisely what an Obama second term should be about, so more Americans can thrive in a world we invented. If we can make America the best place to dream something, design something, start something, collaborate with others on something and manufacture something — in an age in which every link in that chain can now be done in so many more places — our workers and innovators will do just fine.
Tom_Friedman  Obama  Campaign_2012  start_ups  entrepreneurship  Cambrian_explosion  product_launches  rule_of_law  interest_rates  institutional_integrity  currencies  moonshots  tax_codes 
july 2012 by jerryking

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