Can the market alone fix the economy?

[tchitt]

This is how Joseph Schumpeter claimed capitalism would eventually kill itself off, that because of the incredible standard of living it gives to the people of the nation, complacency is born, laziness, and a hostility to capitalism begins to be born from those who do not understand it and take it for granted, particularly among the intellectual class.

It's funny how people are willing to subscribe to failed ideas over and over again as long as they come back under a different name, isn't it? As long as no one actually says any of those dirty four letter words it'll all be ok.

 

[edward]

Well bombing Japan and Germany is a novel way of helping Detroit.

The DOD could save a lot of money if they would stop awarding contracts for gadgets that do the same thing. We have about 10 different small UAV's now.

http://www.bizjournals.com/albuquerque/stories/2008/11/03/daily14.html

http://www.gizmag.com/raytheon-killerbee-uav-simulated-combat-test/10117/

We recently upgraded the missile defense system contract to the multiple warhead missile defense system. The cost is staggering.

The entire defense budget, especially spending on big ticket systems that only fit into a "what if" situation needs to be looked at realistically. Defense contractors just keep coming up with more and more what if scenarios.

"What if" we were attacked by nuclear submarines and only Raytheon's newest sonar could detect them?"... Raytheon just relieved a contract for just such a situation.

 

[mgb_phys]

The winner has to be Boeing's 747 with a laser to shoot down enemy missiles.
The laser has a range of only a 30-50km so it has to continually fly over enemy territory, it's very vunerable to enemy fire so it needs it's own fighter escort. You also need a set of ground attack fighters to take out any SAM sites - although these same ground attack fighters can't take out the ICBM launch silos because that would be cheating.
It can't inflight refuel so you need a huge fleet of them and a bunch of airfields surrounding your enemy capable of handling a 747.

 

[mheslep]

...

We recently upgraded the missile defense system contract to the multiple warhead missile defense system. The cost is staggering.

The entire defense budget, especially spending on big ticket systems that only fit into a "what if" situation needs to be looked at realistically. ...

Agreed, the missile defense program needs to go, or be scaled back by 10-20x

 

[turbo]

I have no idea how we are going to fix the economy, but when I watched the news tonight, Savannah Guthrie was in a slinky dress with her high-beams on talking about bailouts. I think the news programs have something, there. Distraction is valuable!

 

[WhoWee]

Well bombing Japan and Germany is a novel way of helping Detroit.

What about India, Korea and China...you know the old adage - create a vacuum ?

On a more serious note, have you noticed the 3 aforementioned are building cars for their domestic markets that locals can afford?

 

[Astronuc]

The problem is government can "create jobs" but it cannot create wealth which is what counts.

Um - the US government owned most of the land in the US at one time, e.g. Louisiana purchase, then all the land W. of the Mississippi River, Alaska (purchased from Russia - Seward's Folly), Gadsden Purchase (from Mexico), Adams-Onís Treaty of 1819*, etc. The US government still owns a lot of land (e.g. National Forests), and the mineral rights in much of the western US.

Basically the US government either purchased the land from a government which had claim to the land, acquired land by treaty (usually in settlement of conflict), or it claimed it and took it by conquest (ethnic cleansing). The land was subsequently 'granted' or sold to those with connections to the administration or Congress. Land grants were made to railroads and universities, as well as individuals.

The US government acquired wealth and then sold it to individuals or corporations (collections of individuals). And the government reserved the right/power to tax, ostensibly for the public good. In essence, the government can 'giveth', and the government can 'taketh away'.



*In 1819, by terms of the Adams-Onís Treaty, Spain ceded Florida to the United States in exchange for the American renunciation of any claims on Texas and $5 million. - Wikipedia
Ref: http://www.tamu.edu/ccbn/dewitt/adamonis.htm

 

[Astronuc]

Meanwhile -

US economy's gloom expected to begin lifting by late '09
http://news.yahoo.com/s/csm/20081229/ts_csm/aoutlook

New York – The economic storm that has engulfed the United States – and the world – is expected to continue for most of 2009.

If there is a silver lining, it is that as the year progresses, economists expect the rate of decline in the economy to start to slow – with some modest growth possible by the last quarter of the year.

Before the skies brighten, however, unemployment will rise, business bankruptcies will accelerate, housing prices will continue to fall, and consumer confidence will remain low, according to most forecasts.

"It's a struggle to say there is an upbeat outlook," says Richard DeKaser, Washington-based chief economist at National City Corp. "We would not call the forecast for 2009 optimistic."

Indeed, the worst of the economic news may be just arriving, economists say. Consumer spending for the holidays will be the worst in years, even with all the store promotions. Stores will continue to offer bargains into 2009 in a desperate attempt to unload inventory. Weak consumer spending will be one of the major reasons the economy as measured by the gross domestic product (GDP) will shrink by as much as 4 to 6 percent on an annualized basis in the fourth quarter.

Lagging economic growth at year-end is not a good sign for the New Year. "You try to get a push off into the next year, and if you don't, it sets the tone," says Dan Meckstroth, chief economist at Manufacturers Alliance/MAPI in Arlington, Va.

By the end of March, the economy, as measured by GDP, will shrink another 4 percent on an annualized basis, estimates IHS Global Insight, an economic forecasting concern in Lexington, Mass. By the second quarter, the annualized rate of decline will slow to 1 percent, according to Global Insight. Then the economy will grow by 1 percent in the third quarter and by 2 to 3 percent in the final quarter of the year.

. . . .

We'll just have to wait and see.

 

[turbo]

Ford is supposed to be the best-positioned of the Big 3, but Kirk Kerkorian is pulling out entirely. He may know something that the rest of us don't - his sell-off is locking in some pretty big losses. Makes me think that he wants to try to recover whatever value he can before Ford takes another nose-dive into $1/share territory.

http://news.yahoo.com/s/nm/20081229/bs_nm/us_ford_kerkorian;_ylt=Aoh7b8A0cLbse2QpodVzuZqs0NUE

 

[WhoWee]

Every dollar the government spends first has to be taxed out of the economy, or borrowed from somewhere else.

Government spending takes away capital that could better be spent in the private sector. I would say tax cuts give us a bigger bang for the buck (if they're the proper tax cuts).

Would have to disagree here. The massive increases in government spending likely only helped prolong the Great Depression. The massive government spending took capital that otherwise could have been spent in the private sector to actually create jobs.

The problem is government can "create jobs" but it cannot create wealth which is what counts. For example, in simple theory, the government could employ 50% of the unemployed digging graves, and the other 50% filling them back in. Are those jobs? Yes. Is there any wealth creation? Nope. Thus you can alleviate the pain of a depression or recession somewhat, but not create any recovery. Sort of like how the government can print money, but without wealth creation, this won't work in the long term.

However, a side effect of this spending is that it took away capital that otherwise could have been spent in the private sector by individuals and businesses, which likely helped contribute to prolonging the depression. The Japanese tried repairing their economy after the 1989 real-estate bubble burst with lots of infrastructure spending as well and nevertheless experienced a ten year long recession.

By 1938 the unemployment rate was still at about 8% and the stock market crashed a second time. FDR was actually very close to losing re-election because he had failed to fix the economy.

World War II is what pulled us out of the economy because of the massive military builup. This is also how Hitler instantly "fixed" the German economy from the depression...

...They will stay out of it more because of the increased compliance costs which make it harder to grow businesses and create IPOs. However, like I said, find a lighter, more efficient way to regulate that does the job Sarbannes-Oxley is supposed to do.

IMO.

We are living in a different time, and in many ways a different place (a wired global economy).

World War II did help stimulate the economy, but if the returning soldiers couldn't secure mortgages to fuel an (AFFORDABLE) housing boom and the new highway system wasn't built to open up the country (even though it killed rail travel), the results may have been different?

This kind of infrastructure GROWTH is possible in many places around the world...in places that ditch digging would be a real opportunity.

On the other hand, we need to rebuild/expand much of our current infrastructure...the returns MAY NOT be as significant (but very necessary) this time...and the jobs creation may just mean a return to the past housing boom (construction jobs) levels.

Instead, we need the new jobs being discussed by politicians on a daily basis in the areas of Green technology and new/emerging technology and markets...we can't look to a 1930's solution to resolve a 2000's problem...unless we want a 1930's standard of living.

(I know I used 3 decades to make a point)

 

[Astronuc]

The airlines killed the passenger service by rail.

The highway system killed the freight rail service, in addition to the fact that the national rail system was run down by heavy usage during the war, and the major railroads, particularly the NY Central and Pennsylvania, and their neighbors in the NE, deferred maintenance. Union work rules didn't help.

Both airlines and road transport were heavily subsidized, something the railroads didn't get.


We certainly live in different times.

Tom Friedman expresses his ideas in Hot, Flat and Crowded and the need for a Green revolution

Book Passage - Hot, Flat & Crowded: Why We Need a Green Revolution -- And How It Can Renew America.
http://fora.tv/2008/10/30/Thomas_Friedman_Why_We_Need_a_Green_Revolution
Alternative presentation
http://fora.tv/2008/09/23/Tom_Friedman_Hot_Flat_and_Crowded

He incorrectly states that the government invested in the railroads. They didn't after World War II. The government invested in airports and traffic control, and highways.

 

[WhoWee]

Again, the decision to re-invest in older and deteriorating infrastructure to maintain a struggling industry OR investment in new growth oriented systems that might spur other development. It's always going to be a balancing act...growth is packaged/sold as higher return and usually wins.

I guess the question might be what are we willing to lose/give away...we've already started down the path with steel, autos and energy...and now we're not so sure.

 

[Astronuc]

A highly mobile economy requires a cheap (inexpensive) energy source, and one that can be more or less controlled within the economy, in order to be stable and sustainable.

Investing in the same old technology and infrastructure just won't work in the long term.

 

[WhoWee]

Here's one problem...coal has been an important component of energy for a long time.

There's a lot of talk about clean coal technology. But, there's also a lot of talk about further regulation of the coal industry.

Who decides if it's worth saving...and at what cost(s)?

 

[WhoWee]

More about coal:

http://www.eia.doe.gov/cneaf/coal/special/coalfeat.htm

Coal mining efficiency continues to improve...more production from less mines and safety has improved.

We have the largest known coal reserves www.eia.doe.gov/kids/energyfacts/sources/non-renewable/coal.html.

Rail transport is available (where needed) and fairly well maintained. River transport is available and marginally maintained. Local trucking (where needed) is adequate.

The United Mine Workers (who supported Obama http://www.huffingtonpost.com/2008/05/21/c_n_102873.html ) only number 105,000 active and retired persons.

Is coal too important to fail...that is...be regulated out of business?

 

[Proton Soup]

coal powers the nation. it's going nowhere anytime soon. more regulation just means higher power bills.

 

[WhoWee]

coal powers the nation. it's going nowhere anytime soon. more regulation just means higher power bills.

Coal is like gasoline...hard core environmentalists would like to see the price of gas go to $10 a gallon...to force us to switch to alternative energies.

So the real question is how much will more regulation cost...and what is the breaking point?

Don't get me wrong, I'm for wind and solar and hydro and (the gravity/wave thing), etc. I'd love to own an electric vehicle that (I could afford and) would have a 300 to 400 mile daily range...which I often drive...but not if the price of electric increases 300 to 400%.

 

[WheelsRCool]

The economy will likely depend greatly upon the policies this government passes. The stock market is finicky now because they aren't sure what policies will be passed, but the market seems to be guessing they will be anti-growth.

If they go into a tax and spend mode, and pass the Employee Free Choice Act, which will remove the workers's right to a secret ballot vote and make it a lot easier to unionize, and enact a carbon cap-and-trade system, the economy will likely be hamstringed. Take a look at what has happened to the state of California for an example. California is like the government equivalent of the Big Three right now. The state is on the fiscal cliff and is in a deadly spiral because to fund the public pension systems and employees keeps requiring higher and higher taxes and more debt (California already has the most debt of all the states). Taxes may have to double or triple in California. But this is having the nasty effect of sending businesses and high-earning individuals fleeing the state already, which decreases the tax base further, requiring higher taxes, etc...meanwhile entitlements are insane in the state. California punishes harshly hard work and financial success with high taxes, and their high regulation, unions, environmental groups, etc...make it very unfriendly for business as well. But they reward laziness with generous welfare policies. Which is very bad from fiscal standpoint.

Senator Obama has not once ever bucked organized labor from what I can see, and this is shown more by his choice for Labor Secretary. And the unions want payback for all that money they spent getting him elected. Senator Obama also expressed support for the Employee Free Choice Act during the campaign, so, time will tell. But if passed, it could add a burden to the economy for a generation.

The United States may well be becoming one of the most harsh countries for business. Once the Bush tax cuts expire, the top marginal income tax rate goes back up to 39.6%, which will hit many small businesses taxed at that rate, the tax on capital will return to 20%, which is a 33% increase from where it is now (15%), and Barack Obama may raise it even higher, and the tax on dividends will return to 39.6%, an over 100% increase from where it is now (15%).

The current tax on capital is already rather high, at 15% (Switzerland and Germany don't tax capital at all, and Australia and the UK have a graduated tax on capital that ultimately amounts to less than the U.S. rate I believe).

Increasing the tax on capital will devalue the stock market and also slow down venture capital investment, thus slowing down new business growth, and wage growth, which is tied to capital, further (wages are tied to productivity and productivity is increased through capital, i.e. computers, plants, equipment, etc...a worker with a forklift is far more productive than one carrying boxes on their back). Businesses that would expand will not do so or not do so to the extent they would have previously, and startups that might otherwise have received funding will not get it. Venture capital firms only make money from one out of multiple businesses they fund; the less capital is taxed, the more businesses they will risk money on. The more it is taxed, the less.

Also, historically cutting capital gains tax rates always has increased revenues, and increasing the tax has cut revenues. Some economists argue that revenues only increase initially, than decrease in the long run, but this view seems to forget that cheaper capital means more business expansion and new business, and thus job, creation.

But it probably isn't wise to enact a tax increase (or allow one to occur) that will cut revenues to the Treasury right now, meanwhile strain businesses more, all in the name of "fairness."

The Left like to claim that the capital gains tax cuts only benefit the rich and wealthy, because the wealthy own the majority of the stock, and thus raising it is only sticking it to the wealthy. But capital gains is a tax on capital period, whether it's stocks, a car, home, business, whatever, and whether owned by middle-class, wealthy, well-off, whatever (and many middle-class own stock too). Also, as shown above, capital is what affects wages and job growth. So taxing it more can inadverdently hurt the middle-class a good deal.

Senator Obama talked about wages supposedly being stagnant, well you don't increase the tax on capital if you want wages to increase.

We have one of the highest corporate income tax rates, which incentivizes businesses to go overseas to take advantage of cheaper rates and to use our incredibly convulted and complex tax code to loophole their way out of the corporate tax rate.

Europe is advertising itself as a "Sarbannes-Oxley-free zone," a piece of regulation that has made it very costly to startups wanting to go IPO.

Throw in giving the unions the biggest piece of pro-union legislation in decades possibly, and carbon cap-and-trade (powerful unions and carbon regulations, along with high taxes and out-of-control spending are destroying the California economy), and you have a recipe to make the U.S. highly anti-business.

The only way the U.S. may handle this is if the U.S. economy is rich and strong enough to take all of these measures if passed. If not, we may see a repeat of the high inflation, high uemployment, recessionary 1970s.

California itself has a large influence on the U.S. economy because it is the world's 7th largest economy alone. Just as when America sneezes and the rest of the world catches a cold (or maybe it's when America catches a cold, the rest of the world sneezes?), well when California gets sick, it affects the whole country.

Barack Obama may govern as a moderate, I mean he has chosen moderate economists, and he said recently that we don't want to enact heavy, burdensome regulations and ultra-high taxes, so I am hoping he will hold to this. But as said the unions want their payback and the unions, trial lawyers, environmental lobbyists, etc...will push for all of their policies, and the current Democrats in Congress are led by some very Left-leaning folk, i.e. Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid.

Jimmy Carter originally wanted to govern more to the center, but the Democrat Congress at the time pulled him more to the Left.

The economy performed okay with a tax increase in the 1990s, but the thing is that this was before many of the other countries had enacted their flat tax rates they have now and also under Clinton the capital gains tax rate was cut from 28% to 20% in 1997; this was when the economy really went into hyperdrive and the budget went into surplus. The Republican Congress at the time also kept Clinton more fiscally conservative, and because it was peaceful times, military spending was able to be kept to a minimum.

Had the Republicans not spent so much money like they did, we likely would have had a $100 billion plus surplus in 2007, so the deficit would be lower.

The traditional idea was that deficits are bad, but now the government seems to have the attitude that deficits don't matter, which isn't good.

The dollar will likely stay weak and grow weaker if foreign investment begins fleeing the country fast.

Since healthcare is about 16% of the economy, the economy will also likely depend somewhat upon how Senator Obama's universal healthcare plan works. Healthcare costs currently are exploding because 50% of healthcare is government-provided, the other 50% so heavily regulated it can't really be called a free-market, and without competition, costs are shooting up. This is bankrupting businesses and individuals.

Also infrastructure spending may lengthen the economic recovery period, because the money spent on public works is money that instead could be in the private sector creating new businesses and creating jobs.

A danger here is that Senator Obama is likely hoping the economy will be recovered by the time the Bush tax cuts expire, so that it can withstand these tax increases and no legislation is needed to actually "raise taxes," as it happens automatically. But if other policies, such as massive infrastructure spending, lengthen the time it takes for the economy to recover, the economy may still be rather stalled come the time the tax rates increase.

Also is the concern over free trade. Senator Obama spoke much against free trade during the election, and said he wanted to make free trade more "fair" (which there is no such thing; either it's free or "fair" (whatever that means); certain people will always lose their jobs from free trade, just as certain people will always lose their jobs from technological change). But on net, free trade creates millions more new jobs.

If free trade is infringed upon through say high tariffs, that could be big trouble. Time will tell though.

Also of great concern is the minimum wage. Increasing the minimum wage and indexing it to inflation as Senator Obama wants to (he wants to raise it to $9.50) will artificially increase the cost of labor to a business, which means they will higher fewer workers.

This especially hits hard the inner-city areas, the very areas it is meant to help. It also has other adverse effects, such as a business may take full-time jobs with benefits and divide them each into two part-time jobs that have no benefits, or employees will get less pay, or worse working conditions, etc...it greatly helps big monster firms like Wal-Mart though, which can easily afford a minimum wage increase and thus benefit from the increased stuggle of the small businesses, which may have to raise their prices, or offer less benefits, or whatnot. Wal-Mart supports a minimum wage increase as well (probably precisely for this reason).

Mom-and-Pop stores can't handle a minimum wage increase like a Wal-Mart can. A guy who say owns a small chain of stores, say five big Wal-Mart/K-Mart type stores, suffers more as well because he can't offer the prices like Wal-Mart can.

But right now, it's all speculation. I hope Senator Obama and the Democrats will govern as economic moderates, not overspending or overtaxing or regulating or anything like that.

 

[WhoWee]

Give Obama a chance...he said 2.5 million new jobs by 2011 (by the way...it's the normal amount of new jobs generated) and he'll probably deliver...Bush did...it's a safe number.

http://www.nytimes.com/2008/02/09/business/09charts.html

As for tax and spend...are you serious? The latest 2009 Stimulus Package is estimated at $1.2 TRILLION.

http://www.istockanalyst.com/article/viewarticle/articleid/2832513

At the end of the day, Obama may be our only hope to keep Congress from really spending.

Last, SOX was conceived with good intentions...but let's face it...compared to the latest Madoff Ponzi scheme and the derivatives market, ENRON was small potatoes.

http://www.lieffcabrasersecurities.com/cases/madoff.htm?gclid=COPPvNDH55cCFRNOagod7nd_Cw

http://www.theherald.co.uk/business/news/display.var.2475566.0.Royal_Madoff_hit_may_overshadow_loss_from_Enron.php

 

[WheelsRCool]

Give Obama a chance...he said 2.5 million new jobs by 2011 (by the way...it's the normal amount of new jobs generated) and he'll probably deliver...Bush did...it's a safe number.

I am; all that stuff I posted is stuff Senator Obama said he intends to do. He himself said in an interview, for example, that he intended to make it where creating a new coal plant would be so expensive it would bankrupt the person/company creating it. President Bush benefited from the housing boom, plus he cut taxes, and under him we did not ratify the Kyoto Treaty which would have imposed costly carbon regulations on the economy.

As for tax and spend...are you serious? The latest 2009 Stimulus Package is estimated at $1.2 TRILLION.

That's a lot of spending...

At the end of the day, Obama may be our only hope to keep Congress from really spending.

He is the one who proposed so much new spending in the first place. But I hope you are right. If he turns out to be fiscally conservative, it will 1) Drive the hardcore socialist Leftists nuts, and 2) Be great for America.

Last, SOX was conceived with good intentions...but let's face it...compared to the latest Madoff Ponzi scheme and the derivatives market, ENRON was small potatoes.

Good intentions or not, it is too constricting.

 

[WhoWee]

I feel your pain...but I think Obama will need to be a moderate and at least appear to be in charge if he wants to be re-elected in 4 years.

He has to keep Pelosi and Reid in check and substantial tax increases would be insane.

 

[WhoWee]

As for the economy...we have to fix the parts that are fixable and will yield the greatest returns.

Unfortunately, short term need will take priority over long term growth...with one possible exception in the area of Green power.

As usual, smoke and mirrors will be part of the act...expect a portion of defense spending to be re-labeled as R&D of some type for Green programs...and marketed as defense cuts.

 

[mheslep]

The airlines killed the passenger service by rail.

The highway system killed the freight rail service, in addition to the fact that the national rail system was run down by heavy usage during the war, and the major railroads, particularly the NY Central and Pennsylvania, and their neighbors in the NE, deferred maintenance. Union work rules didn't help.

Both airlines and road transport were heavily subsidized, something the railroads didn't get.

I don't have time to run this down now, but last I looked the highways generally do pay for themselves via gas taxes (and property/state taxes for maintenance). Light intercity transit rail does not, though ~20% of the gas tax is siphoned off for mass transit projects.

We certainly live in different times.

Tom Friedman expresses his ideas in Hot, Flat and Crowded and the need for a Green revolution

Book Passage - Hot, Flat & Crowded: Why We Need a Green Revolution -- And How It Can Renew America.
http://fora.tv/2008/10/30/Thomas_Friedman_Why_We_Need_a_Green_Revolution
Alternative presentation
http://fora.tv/2008/09/23/Tom_Friedman_Hot_Flat_and_Crowded

He incorrectly states that the government invested in the railroads. They didn't after World War II. The government invested in airports and traffic control, and highways.

Eh? Did you mean that in terms of relatvie scale?
http://en.wikipedia.org/wiki/Rail_Passenger_Service_Act" of 1970. Creates Amtrak at ~$1B/year
http://en.wikipedia.org/wiki/Railroad_Revitalization_and_Regulatory_Reform_Act" t of 1976, creating Conrail with billions from the government.
http://en.wikibooks.org/wiki/Annotated_laws_relating_to_Conrail#Northeast_Rail_Service_Act_of_1981" of 1981.

 

[Astronuc]

I was referring to the late 40's, 50' and 60's. The US railroads ran themselves into the ground, litterally in some cases. Conrail was basically a government take-over of the bankrupt PennCentral (which was a failed merger between Pennsylvania and NY Central RR, with the bankrupt New Haven thrown in), along with the Erie Lackawanna, Lehigh Valley, Reading, Central of New Jersey, Lehigh & Hudson River, and Ann Arbor Railroad. Prior to Conrail, there was essentially no rail subsidy.

With Staggers Act of 1980, Conrail was able to start turning a profit.

Amtrak was created to take over the money loosing passenger rail service. It basically nationalized passenger rail service.

I believe that historically the taxes paid by trucking companies did not cover the wear and tear on the highway system, and the US government has spent more on highways than the taxes collected.

The light rail or transit taxes are relatively recent.

 

[mgb_phys]

the highways generally do pay for themselves via gas taxes (and property/state taxes for maintenance). Light intercity transit rail does not

I'm guessing that NY's property taxes pay for the subway?
I don't imagine much property tax would be collected if the alternative was for everyone to drive into Manhattan.

 

[Astronuc]

I'm guessing that NY's property taxes pay for the subway?
I don't imagine much property tax would be collected if the alternative was for everyone to drive into Manhattan.

Financing for the subway system is complicated. The subway system collects tolls, but there are various taxes, and someone (preferably who owns real estate) from NYC would have to answer the question. I believe NYCity residents pay an income tax, in addition to property and excise (sales) tax.

In my area, there are state taxes (surtax on capital) on transportation and utility companies, and the proceeds ostensibly are used to support mass transit. I found this out when I looked into starting a short line railroad. The taxes and regulations were a huge impediment. There is a 'transportation' company in Connecticut that did buy the rail service I was interested in, but they were very clever. They formed a holding company which owned the right-of-way and equipment. They are not a 'transportation' or utility company, but essentially a real estate or holding company. They control the railroad that uses the right of way, but the railroad simply leases the ROW and equipment from the holding company, and that means they do not pay taxes that a railroad ('transportation') company has to pay. It's unnecessarily complicated because of stupid government regulations.

 

[mgb_phys]

My point was that rather than the subway being a socialist drain on NY's finances - it subsidizes NY since the city wouldn't be viable without it and then there wouldn't be any city tax to collect.

 

[Astronuc]

My point was that rather than the subway being a socialist drain on NY's finances - it subsidizes NY since the city wouldn't be viable without it and then there wouldn't be any city tax to collect.

The subway is definitely a necessity. The issue for many is - who pays for it.

NY City, like London, has looked into charging surcharges on automobiles and trucks in areas of the city, simply because the traffic congestion is so bad at times (in some cases to the point of paralysis). I believe there are even restrictions on trucks, i.e. what routes/streets they can use and so on.

 

[mgb_phys]

NY City, like London, has looked into charging surcharges on automobiles and trucks in areas of the city, simply because the traffic congestion is so bad at times

The congestion charge appears to be working in London it's reduced the traffic by about 1/3. It's only mon-fri during the day so hasn't had a bad effect on tourism
There are some political rows about extending it into certain suburbs (particular low traffic but rich areas) since people living inside the zone still have to pay. There are also demands to charge SUVs more to punish the owners.
All the money raised is supposed to go to public transport but like all government accounting it's a bit opaque.

The Us government thinks the congestion charge is a good idea - but the US embassy in London refuses to pay (claiming it is a tax rather than a toll), it owes about $2M.

I believe there are even restrictions on trucks, i.e. what routes/streets they can use and so on.

There have been time restrictions on trucks in London for years - so that deliveries to shops were all made before the rush hour.
Then they introduced a scheme so that individual trucks had to be licenced to go into London - this didn't work because the trucking companies only licenced a few vehicles (it was expensive) and so there were many more journeys as particular trucks had to be repositioned to depots.
The biggest effect was probably the M25 - the orbital freeway. Without this the direct route for traffic from the channel to the rest of the country was through the middle of London (as it had been for 2000years).

 

[turbo]

Most cities here in Maine have truck routes clearly labeled and commercial vehicles (with the exception of road-maintenance, trash removal, etc are restricted from driving in residential areas. The road I live on is a lightly-paved 2-lane on an inadequate gravel base. The road is posted to bar commercial vehicles over 60,000 lb GVW, but I routinely see fully-loaded log trucks heaped to the stakes with hardwood - easily hitting 120,000. There is a state trooper living on the other end of this road, but the scofflaws continue to wreck the road.

 

[Al68]

FYI, new legislation that was passed in 2005 makes is much much more difficult for consumers to file for bankruptcy.

FYI, those changes only apply to people making above medium income, and even for them it's only slightly more difficult. This issue was grossly misrepresented in the media.

 

[mgb_phys]

There is a bridge in cambridge labeled "weak bridge, weight limit 5tons - except for deliveries", I always wondered how that worked?

 

[WhoWee]

I remember a bridge in Philly/New Jersey area that said something to the effect of...stay in your car...keep moving...unsafe for pedestrians.

I guess you could fall through the holes if on foot and maybe your tires could touch both sides?

 

[rcgldr]

The economy will likely depend greatly upon the policies this government passes.

More likely to be the spending behavior of the public, which depends somewhat on the perceived state of the economy in spite of the actual effects on individuals.

Employee Free Choice Act, which will remove the workers's right to a secret ballot vote and make it a lot easier to unionize

I don't understand this or why it would make it easier to unionize. In Texas there's right to work law that prevents unions from requiring all employees of a company to be in the union. Would this change?

Taxes may have to double or triple in California. But this is having the nasty effect of sending businesses and high-earning individuals fleeing the state already

Businesses yes, high earning individuals probably like the lifestyle, and can afford to stay in California, despite the taxes. Then again, the desirability of living in California means that some business will need to have facilities there to attract the tech industry workers that prefer to live in California.

California punishes harshly hard work and financial success

Seldomly is financial success related to hard work. In most cases, it's the result of reaping the benefits of the labor of others. The vast majority of "hard workers" are not financially successful if you mean above upper middle class.

The United States may well be becoming one of the most harsh countries for business. Once the Bush tax cuts expire, the top marginal income tax rate goes back up to 39.6%, which will hit many small businesses taxed at that rate, the tax on capital will return to 20%, which is a 33% increase from where it is now (15%), and Barack Obama may raise it even higher, and the tax on dividends will return to 39.6%, an over 100% increase from where it is now (15%).

You mean the tax on capital income. Why should any form of income (other than government bonds) get preferred tax treatment over other forms of income?

Increasing the tax on capital will devalue the stock market and also slow down venture capital investment

Or return the stock market to a truer valuation. Why should investment income be treated differently than other forms of income? If it's a level playing field, investments will continue to follow where the investors feel there's money to be made.

The left like to claim that the capital gains tax cuts only benefit the rich and wealthy, because the wealthy own the majority of the stock

Sounds like a reasonable assessment of the situation.

But capital gains is a tax on capital period, whether it's stocks, a car, home, business, whatever, and whether owned by middle-class, wealthy.

Few cars experience an increase in value over time. Home owners get a one time exemption. The rest has little effect on the vast majority of the midde class. Do the 401K plans that most people have get a capital gains tax rate on the capital gains portion of their 401K plans when they start withdrawing their retirement money?

The dollar will likely stay weak and grow weaker if foreign investment begins fleeing the country fast.

Wouldn't that result in USA products becoming relatively cheaper than "foreign" products?

Healthcare costs currently are exploding because 50% of healthcare is government-provided.

My opinion is that the greed aspect of healthcare crept into the system starting in the late 1950's. Take a look at incomes of the medical community versus the rate of inflation over the last 40 years.

But on net, free trade creates millions more new jobs.

Probably, but few of the unemployed in the USA will care that millions of people in China now have more new jobs.

Increasing the minimum wage and indexing it to inflation as Senator Obama wants to (he wants to raise it to $9.50) will artificially increase the cost of labor to a business, which means they will higher fewer workers.

I don't see an issue here as long as it's a level playing field.

Mom-and-Pop stores can't handle a minimum wage increase like a Wal-Mart can.

Isn't that the point of a free economy, the non-competive business are free to fail?

 

[WhoWee]

Isn't that the point of a free economy, the non-competive business are free to fail?

Do you mean companies with labor agreements that are so expensive they need a bailout to fund operations for the next 3 months?