Sunday, October 16, 2011

Steve Jobs Day

California has declared today Steve Jobs Day.  In this post I will discuss how I am concerned that we no longer have a great industrialist to lead us out of the Great Recession.  Where is our Henry Ford?

But first, this seems like an appropriate time to reflect on what a great industrialist Steve Jobs was.  He helped create the personal computer market with the Apple II (and I have fond memories of my Apple IIc and IIgs).  He led the creation of the first mouse based graphical computer system.  He helped make Pixar the great studio it is today.  He helped revolutionize music with the iPod.  Reinvented the phone with the iPhone (and gave what was one of the best presentations I have ever seen....the iPhone launch speech still gives me completely changed smartphones).  He helped create a new product category with the iPad, a device I use all of the time in my practice (I realize that there were Windows tablets, but those were very different devices.....really just PCs with a little bit of touch interface).  I am just beginning to get the hang of iCloud, but I am certain that it is a giant leap forward in the post-pc age.  It will take many years, perhaps even a century, to fully appreciate how important these changes will be.

Now about Henry Ford.  No one can deny how much the automobile changed the American landscape, and how the automobile changed how America was perceived around the world (the Germans and others even used "Fordism" to describe American mass production).  Henry Ford was an essential part of this great industrialization.  He was also an essential part of the war effort, despite being both a pacifist as well as quite elderly.  This great industrialization led America to victory in World War II.  The Germans simply could not keep up with American production.  Moreover, this industrialization led America out of the Great Depression.

Before Steve Jobs and his amazing "second act" (taking over control of Apple for the second time, and leading to be the most valuable company on Earth), it seemed like the coolest tech products came from other countries, such as Sony in Japan.  Now, people around the world line up for these iconic products designed in Cupertino California.  Although I am convinced that Apple will be fine for awhile, who else in American industry will be able to so invigorate American ingenuity?  In other words, who will be our Henry Ford now, and help industrialize America, and lead us out of the Great Recession?

I plan to post soon regarding a fellow Colby alum, Mike Daisey, and how he is completely wrong about Apple, and why you should never trust someone who hasn't run a company to comment on capitalism.

Wednesday, October 5, 2011

Very sad day....Steve Jobs has passed away....

I really didn't think it would come this quick since it wasn't that long ago that he did the iCloud announcement.

It's no secret that I am quite a fan of Apple products, and in this difficult economy its even more tragic to lose one of the greatest industrialists in US history.

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Saturday, October 1, 2011

In the United States, are the rich paying enough taxes?

My answer on @Quora to: In the United States, are the rich paying enough taxes?

Yes, the rich are paying enough taxes.

There are many on here who talk about all of the great loopholes that the rich supposedly take to avoid tax. However, most of the great tax shelters have been shut down, and there are severe penalties (look at what happened to all the Swiss bank accounts.....look at the 2011 Offshore Voluntary Disclosure Initiative).

There is no such theory as "trickle down." If you Google trickle down, you get this:

"Economist Thomas Sowell has written that the actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. He noted that money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners—but in the absence of a profit motive, which is reduced in the aggregate by a raise in marginal tax rates in the upper tiers, this activity does not occur. Sowell further has made the case that no economist has ever advocated a "trickle-down" theory of economics, which is rather a misnomer attributed to certain economic ideas by political critics."

Trust me, it is not much fun to run a business, pay all the bills and employees, and then have nothing left over to pay yourself, or worse to have to lend money to the business to make payroll. Happens all the time with businesses.

This is a competitive world. If we tax people disproportionately higher than in other countries, people will leave. We are already starting to see this in the US...

Warren Buffett is disingenuous with much of what he is saying. For example, when he talks about paying less than his secretary, he is failing to take into account the corporate taxes he pays. When you combine the corporate taxes with the individual taxes, the US pays one of the highest rates in the world. If we didn't, then why all the effort to shut down tax shelters? Why are so many companies holding their profits offshore? Moreover, Warren Buffett had already made his money, and he likes to hold his positions for a very long time. As such, he really doesn't have much income anyway.

WIth our current rate of spending, you would have to tax people who make over 10 million dollars a year at a 700% tax rate to close the budget gap. Massive increases in tax anyway were one of the causes of the great depression (the Revenue Act of 1932 was one of the largest tax increases in history and made the Great Depression much worse).

As for borrowing our way to prosperity, Japan tried this for a couple decades, and has a lot of debt and not much growth to show for it (Google the "lost decades").

As for solutions, we need to strongly encourage economic growth through attractive tax and regulatory policies and sensible government spending. We need to make sure that investment is still flowing to the US.

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