Political Roundtable Quasar of Mayhem part III

[nate33]

Barelyawake, if you give more power to the unions, it'll only result in more jobs moving overseas. All that would be left are governmentjobs and service jobs that can't be exported. That's a recipe for disaster.

[barelyawake]

We've had this argument several times. We are never going to compete with sweat shops (actually in your world of no minimum wage, we would). We are never going to underbid other countries for cheap labor. We both agree that the solution is tariffs on goods shipped back into this country by companies that move overseas. I would also tax companies for overseas employees -- just as we do now for independent contractors. I have told you the market didn't create the middle class -- unions did. And without unions, there is no method for the worker to address wages, health care, etc. -- especially in a global market.

Why is the German economy thriving? A) Strong unions. B) National healthcare. C) Large investments in tech. All of those allow the middle class to thrive. And without a middle class, you have no economy. You have kings and slaves, as we are rapidly reaching.

[barelyawake]

My last word on the topic.

Here's a for instance. Small town. Used to have several small businesses. Walmart has come in and lowered prices, until the entire main street died. Now, the entire town consists of Walmart and fast food chains (BTW, that's most of America at this point). The entire town works for agribusiness, Walmart or fast food. These multinational corporations are paying them 1970 wages (and in most cases no health care). They are going into debt because their wages cannot sustain their family (especially their health care costs). The only way for that town to thrive is to have unions at those corporations -- because then they can negotiate for higher wages; health care; etc. Now, the families of that town have spendable income. Now, small businesses spring up around the town as there is a middle class who can afford creature comforts. Now, there is a decking guy. And a pool guy. And a pet store. And a few new restaurants etc etc....

[DCZards]

Yup, good old wealth disparity. No one wants to talk about "wealth disparity" for fear of being accused of class warfare or, even worse, being called the dreaded "S" word---Socialist. But the disparity is a very real problem that's eating away at our economy from inside out.

It's unfortunate how misunderstood the role and importance of unions is. In large part, it's the fault of the labor movement for not doing a better job of telling its own story. Of course, it hasn't helped that newspapers and other media outlets are owned by mega-corporations who would rather fight and resist unions (for their own selfish reasons) than tell the truth about how unions and their members have helped build and strenghten this country. But anyone who knows their American history knows that unions and collective bargaining are largely responsible for the decent wages, health care benefits and retirement security that many of us, includng conservatives, enjoy today.

Solidarity forever!

[Induveca]

End of the day, the problem is the US rose to superpower status by being a manufacturer. They abandoned that strategy for cheap goods, office jobs, and reliance on credit lines to artificially improve the standard of living. The mortgage crisis shows how unbelievably spoiled and out of touch the majority of the US population is when it comes to personal finance. The American way is excess, and that excess was borne out of misguided use of credit lines.

To make things worse. The US no longer manufactures.....which would be a saving grace. Vast majority of manufactured goods in the US are Chinese made. As the credit crisis lingers, the US currency will fall hard against the Renminbi, suddenly everything will cost 25% more due to the complete and total reliance on Chinese goods and parts. It's inevitable at this point. No more easy credit, weakened economy, no manufacturing jobs, huge inflation due to our reliance on imported goods. Hope that 500k condo and subsequent foreclosure was worth it America.

Also the reason why Germany's economy is so strong is they still manufacture the vast majority of their goods unlike the US (same with France). Drive through the Dusseldorf area and you'll see a manufacturing society in full swing. Same thing on the outskirts of Paris by CDG airport.

To see the death of a manufacturing society? Drive through Trenton, New Jersey. Trenton was considered the manufacturing capital of America (and for a period, the world) in the mid 1900s. Now it's a ghost city with extreme poverty and Wal Marts.

At least you will see brand new leased cars in the projects......which will inevitably be repossessed. The American way unfortunately.

[nate33]

As barelyawake points out, we are now in competition with China and other "sweatshops". To have strong unions in the face of such competition would require substantial tariffs. I'm not in opposition to selective punative tariffs as a means of addressing China's currency manipulation, but I think the evidence is pretty sound that a blanket policy of high import tariffs is very bad economically over the long term.

As much as you guys pine for the glory days of the 50's and 60's when union membership was strong, that strategy is no longer realistic in today's global economy.

The first thing I would do to address jobs and income disparity (other than import tariffs on China) would be to release the regulative shackles on our energy production. More energy production would decrease unemployment, lower the price of energy, increase tax revenue, and boost demand. For God's sake, why can't we deep water drill in the Gulf yet?

Improved energy production would also permit us to more easily pull out of the Middle East, and it would ease the upcoming turmoil when our dollar collapses and we can no longer afford imported oil.

[Nivek]

End of the day, the problem is the US rose to superpower status by being a manufacturer. They abandoned that strategy for cheap goods, office jobs, and reliance on credit lines to artificially improve the standard of living. The mortgage crisis shows how unbelievably spoiled and out of touch the majority of the US population is when it comes to personal finance. The American way is excess, and that excess was borne out of misguided use of credit lines.

To make things worse. The US no longer manufactures.....which would be a saving grace. Vast majority of manufactured goods in the US are Chinese made. As the credit crisis lingers, the US currency will fall hard against the Renminbi, suddenly everything will cost 25% more due to the complete and total reliance on Chinese goods and parts. It's inevitable at this point. No more easy credit, weakened economy, no manufacturing jobs, huge inflation due to our reliance on imported goods. Hope that 500k condo and subsequent foreclosure was worth it America.

Also the reason why Germany's economy is so strong is they still manufacture the vast majority of their goods unlike the US (same with France). Drive through the Dusseldorf area and you'll see a manufacturing society in full swing. Same thing on the outskirts of Paris by CDG airport.

To see the death of a manufacturing society? Drive through Trenton, New Jersey. Trenton was considered the manufacturing capital of America (and for a period, the world) in the mid 1900s. Now it's a ghost city with extreme poverty and Wal Marts.

At least you will see brand new leased cars in the projects......which will inevitably be repossessed. The American way unfortunately.

Umm, US is still #1 in annual manufacturing output. The lead is getting smaller and we'll soon be passed by China, buy saying the US no longer manufactures is wildly inaccurate. The effects you're describing assume that the US manufacturing can/will never return. But, if prices go up 25% on Chinese goods and other imports, then US companies will be more competitive and manufacturing will return.

[Induveca]

Nivek, what those numbers don't tell you is unlike the earlier portion of the 20th century a huge percentage of the PARTS even in the remaining factories are no longer made in America.

Just because Toyota throws up a plant in the US doesn't mean the parts are made here. Same deal with black and decker "manufacturing" their goods with 90% Chinese parts. If the cost of Chinese parts rise, many of the remaining factories will have to cut jobs or close up shop. It's just a progression of US companies outsourcing manufacturing for the past 30 years. It was foolish to see China as an economy that wouldn't evolve and compete with the US. Higher prices are inevitable with the current scenario.

I highly recommend you read this:

http://www.nytimes.com/2011/02/13/business/13every.html

US manufacturing has been in a free fall for 50 years and is getting worse. "American made" is a joke at this point. Companies buy "American parts" from "American suppliers" who in reality import their parts for their "product" from
China/Taiwan. Look around your house. How many truly American made products make up your home?

That black and decker blender? 90% Chinese parts. Kenmore refrigerator? Same deal.

The numbers you are using don't take into account in the 50s when the US was a dominant manufacturer 99% of the components of an "American" good were made in the US as well. Today the number is below 40% by most estimates. That's a shocking decline.

[Zonkerbl]

I think it's fair to say that the U.S. economy in the 20th Century was manufacturing based, but that it has evolved to a knowledge based economy in the 21st century. High paying jobs in the future for U.S. employees will be in developing the research for widgets that will be manufactured abroad, and developing the software that will reside on the widgets.

I also think the next big technological leap we will take is in biology. Genetically modified animals that can produce drugs super cheaply that would otherwise be super expensive to produce synthetically, stuff like that. We'll be in the thick of that.

What that means is that if you don't have at least a college education your likelihood of getting a high-paying job is virtually zero. That wasn't true in the manufacturing era. That's what's driving the income disparity right now. So that's another reason I was emphasizing education in my 9-step plan.

[Severn Hoos]

The Quasar has been very interesting so far - a vast improvement on the Black Hole of Doom. I leave it to you to draw your own conclusions as to the causes thereof.

[Nivek]

In the 50s US manufacturing had no competition because the rest of the world's manufacturing had largely been bombed into rubble. Europe had been torn apart, but US manufacturing had been cranked into high gear by the war effort. The world needed US goods, because manufacturing capacity had been decimated.

That article says imported components now comprise about 25% of what US manufacturers are using. Not 90%. Not "vast majority."

I'm not arguing that US manufacturing is a picture of health. No question that US manufacturing has declined. Even so, the US is still a leading manufacturer however you want to measure it, and -- with a weak dollar that will drive up prices on imports -- US manufacturing is likely to rebound.

[nate33]

That's okay. Ease of a business profit isn't my first concern as a look at my life, at what I perceive to be the roles of institutions and businesses. I don't care that corporations don't squeeze out that extra penny per dollar (and I admit, 1% is huge) of revenue for their profit line. Look around, there is no profit squeeze in corporate America. Corporate cash hoarding among the "job creators" is at record highs.

This point has been made here and throughout the media. It's wildly misleading. Please read this articlefrom the Wall Street Journal:

From 2007 to September 2010, the value of nonfinancial corporate real estate fell by more than 30%—a loss of more than $2.8 trillion. The ratio of cash to total assets rose largely because the value of total assets collapsed. Meanwhile, liabilities topped $13.6 trillion last fall, up from $12.9 trillion at the last cyclical peak. With real estate falling and debts rising, the net worth of nonfinancial corporations was only $12.6 trillion at last count—down from $15.9 trillion in 2007.

Point No. 2, about safety cushions, alerts us to the fact that $1.93 trillion of liquid assets would not begin to cover $3.67 trillion of short-term debts, let alone ongoing expenses such as payroll. To describe the liquid assets as "hoarding" (regardless of debts) is witless. The recession in 2008-09 would have been far less painful if nonfinancial corporations in 2007 had been "hoarding" more liquid assets (they had $1.53 trillion).

The bottom line is that corporations have shifted more of their assets into cash, but their overall balance sheets (assets versus liabilities) are not good and have gotten worse. Companies are not rich, fat and happy right now. They are struggling and have choosen to sell some of their more illiquid assets and convert them to liquid assets to help weather the storm. (It's also worth noting that many income producing assets like stocks and bonds are no longer yielding much so there is less of a downside in going to non-yielding cash assets.)

[pancakes3]

re: BA

Read the graph in the article. Adjusted for inflation, wages have been flat for 40 years. That's what the hell I am talking about.

The reason that wages have been flat is that we have taken power out of the unions.

this actually hurts your argument, BA. inflation is calculated by the cost of goods and services from year to year. if the price of a "bundle" of goods (things like groceries, a car, etc.) increases, then we get inflation. so if the wages have been matching inflation then really we haven't lost any buying power in the last 40 years.

the reason these wages have adhered so well to inflation is because it's how businesses dole out raises. the COLA (cost of living adjustment) is almost exclusively based on inflation, and that annual 2-3% increase in salary is by design to offset the inflation. now, it's arguable that the bundles that we have been using for the past 40+ years isn't including new inventions like the PC, ipod, cell phone, broadband internet, medicinal pot, and skinny jeans that modern people are buying in addition to groceries, cars, and houses but... those things are "luxuries" and have their '50s and '60s counterparts too:

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re: credit crisis -

what i think is a big part of the "credit" problem is systemic and largely unfixable. in finance, you have lots of people making money off of money without providing goods nor services. noise traders, people who short commodities/stocks for a living, computer monitored trend followers, etc. are all leaches on the financial teat. they don't use the banking system as intended: a way to finance new businesses and innovations. they sit under the proverbial couch of society and collect all the loose change that people drop. then even more unscrupulous leaches still see this kluge of a system and look for new ways to collect loose change. they repackage debits and sell it for credits, mask (and increase) risk by hedging toxic packages with superb ones, cook the books with SPVs, and all this is operated in plain view as accepted practice.

i would discuss these things with my banker friends and they are all brainwashed. they point to the risk calculations and justify those actions with numbers. well sure, with that particular risk model the numbers come out fine... but what if your model is wrong? what if there are (borrowing zonk's word-of-the-thread) externalities that really screw things up? how is that risk mitigated? oh, it's not? why are the formulas all using classical probability rules and not baynesian? just cuz? that's unacceptable. things like nuclear safety, quality assurance, etc. all overestimate risk whereas finance operates on the razor's edge when arguably the failure of a major bank is more disastrous than a meltdown.

so i guess what i'm trying to say is that Pope's axiom of a little learning being a dangerous thing is in full effect for the financial sector. it's got an army of brilliant men with a narrow view of their world, and they're so goal-oriented on gaming the system that they overlook/willfully ignore a LOT of things. even the head guys like lead economists, CEO's and Bernake. utterly brilliant and supremely confident in the rules of their game. that's what's always turned me off of economics. their rules are rigid and immutable yet completely arbitrary. the models these guys use are jenga boards and if one unexpected fart blows by, the entire thing comes tumbling down and everyone is either completely mystified or saw the fall as an inevitability (yeah, boom-bust cycle is inevitable).

--------------------------------------------------------------------------------------------------------------------------------

re: manufacturing

just because the US isn't manufacturing socks and ipods doesn't mean the US isn't manufacturing. it's gotten exponentially more high tech. airplanes, nuclear reactors, particle accelerators, oil rigs, lasers, etc. more importantly the designs of these are also american. this is phenomenal. not only are we the only ones who know how to make these things, we're the only ones even capable. it's essentially saying, well we may have lost the capacity to manufacture socks to Mexico and China, but we've retained the capacity to build factories to build socks. HOWEVER, sock-factory factories employ much less people than just a sock factory so while we're still making the cash, not as many people are getting it - hence the wealth disparity.

re: cause/endgame of the manufacturing problem -
so we have all these people who once were relatively high paid factory workers now displaced. where are they going? health care. computer/IT. sales. these are all services and rely on the rich to pay them in order to disperse the wealth. so... say what you want about the expansion of service jobs... it's probably the best way that wealth is efficiently redistributed short of the government forceably taxing it out.

-------------------------------------------------------------------------------------------------------------------------

re: unions
this really should go without saying but if you push for stronger unions in low-tech manufacturing, you're just going to end up with $20 socks that just won't sell vs the $5 chinese socks. the result? overpaid factory workers making socks at a loss and really a waste of our nation's resources. that, and china seeing us stupidly selling $20 socks and upping their price up to $19 and laughing all the way to the bank while still getting away with paying slave wages.

----------------------------------------------------------------------------------------------------------------------

favorite anecdote re: our shift to service-based
an old philosophy professor of mine repeatedly said "you can tell a lot of a civilization from where the brightest minds go". for instance in ancient greece, the brilliant minds flocked to mathematics and philosophy. in the dark ages, theology. in the enlightenment, the physical sciences and philosophy. where do the brightest minds in America go these days? Doctoring, Lawyering, and Businessing (all of which are service-oriented). Engineering has fallen by the wayside and it's a crying shame. It really ought to carry the same cache in society as doctor/lawyer/banker.

[Nivek]

Graph to BA's point about wages today being about the same (inflation adjusted) as they were in 1970. One point that should be mentioned -- there are far more two-income households nowadays than there were in 1970.

[nate33]

re: BA

Read the graph in the article. Adjusted for inflation, wages have been flat for 40 years. That's what the hell I am talking about.

The reason that wages have been flat is that we have taken power out of the unions.

this actually hurts your argument, BA. inflation is calculated by the cost of goods and services from year to year. if the price of a "bundle" of goods (things like groceries, a car, etc.) increases, then we get inflation. so if the wages have been matching inflation then really we haven't lost any buying power in the last 40 years.

the reason these wages have adhered so well to inflation is because it's how businesses dole out raises. the COLA (cost of living adjustment) is almost exclusively based on inflation, and that annual 2-3% increase in salary is by design to offset the inflation. now, it's arguable that the bundles that we have been using for the past 40+ years isn't including new inventions like the PC, ipod, cell phone, broadband internet, medicinal pot, and skinny jeans that modern people are buying in addition to groceries, cars, and houses but... those things are "luxuries" and have their '50s and '60s counterparts too:

------------------------------------------------------------------------------------------------------------------------------

re: credit crisis -

what i think is a big part of the "credit" problem is systemic and largely unfixable. in finance, you have lots of people making money off of money without providing goods nor services. noise traders, people who short commodities/stocks for a living, computer monitored trend followers, etc. are all leaches on the financial teat. they don't use the banking system as intended: a way to finance new businesses and innovations. they sit under the proverbial couch of society and collect all the loose change that people drop. then even more unscrupulous leaches still see this kluge of a system and look for new ways to collect loose change. they repackage debits and sell it for credits, mask (and increase) risk by hedging toxic packages with superb ones, cook the books with SPVs, and all this is operated in plain view as accepted practice.

i would discuss these things with my banker friends and they are all brainwashed. they point to the risk calculations and justify those actions with numbers. well sure, with that particular risk model the numbers come out fine... but what if your model is wrong? what if there are (borrowing zonk's word-of-the-thread) externalities that really screw things up? how is that risk mitigated? oh, it's not? why are the formulas all using classical probability rules and not baynesian? just cuz? that's unacceptable. things like nuclear safety, quality assurance, etc. all overestimate risk whereas finance operates on the razor's edge when arguably the failure of a major bank is more disastrous than a meltdown.

so i guess what i'm trying to say is that Pope's axiom of a little learning being a dangerous thing is in full effect for the financial sector. it's got an army of brilliant men with a narrow view of their world, and they're so goal-oriented on gaming the system that they overlook/willfully ignore a LOT of things. even the head guys like lead economists, CEO's and Bernake. utterly brilliant and supremely confident in the rules of their game. that's what's always turned me off of economics. their rules are rigid and immutable yet completely arbitrary. the models these guys use are jenga boards and if one unexpected fart blows by, the entire thing comes tumbling down and everyone is either completely mystified or saw the fall as an inevitability (yeah, boom-bust cycle is inevitable).

--------------------------------------------------------------------------------------------------------------------------------

re: manufacturing

just because the US isn't manufacturing socks and ipods doesn't mean the US isn't manufacturing. it's gotten exponentially more high tech. airplanes, nuclear reactors, particle accelerators, oil rigs, lasers, etc. more importantly the designs of these are also american. this is phenomenal. not only are we the only ones who know how to make these things, we're the only ones even capable. it's essentially saying, well we may have lost the capacity to manufacture socks to Mexico and China, but we've retained the capacity to build factories to build socks. HOWEVER, sock-factory factories employ much less people than just a sock factory so while we're still making the cash, not as many people are getting it - hence the wealth disparity.

re: cause/endgame of the manufacturing problem -
so we have all these people who once were relatively high paid factory workers now displaced. where are they going? health care. computer/IT. sales. these are all services and rely on the rich to pay them in order to disperse the wealth. so... say what you want about the expansion of service jobs... it's probably the best way that wealth is efficiently redistributed short of the government forceably taxing it out.

-------------------------------------------------------------------------------------------------------------------------

re: unions
this really should go without saying but if you push for stronger unions in low-tech manufacturing, you're just going to end up with $20 socks that just won't sell vs the $5 chinese socks. the result? overpaid factory workers making socks at a loss and really a waste of our nation's resources. that, and china seeing us stupidly selling $20 socks and upping their price up to $19 and laughing all the way to the bank while still getting away with paying slave wages.

----------------------------------------------------------------------------------------------------------------------

favorite anecdote re: our shift to service-based
an old philosophy professor of mine repeatedly said "you can tell a lot of a civilization from where the brightest minds go". for instance in ancient greece, the brilliant minds flocked to mathematics and philosophy. in the dark ages, theology. in the enlightenment, the physical sciences and philosophy. where do the brightest minds in America go these days? Doctoring, Lawyering, and Businessing (all of which are service-oriented). Engineering has fallen by the wayside and it's a crying shame. It really ought to carry the same cache in society as doctor/lawyer/banker.

Excellent post, pancakes! Every point is very well thought out. You should post on this board more often.

Regarding the financial sector parasites, I think you are largely correct, but we need to make sure we don't throw out the baby with the bathwater when we look for solutions to the problem. Gaming the system with trading algorithms to reap short term profits is indeed a net drain on the economy. But intermediate and long-term speculation is good for the economy. Speculation is all part of the efficient pricing mechanism. Without speculation, we get more surpluses and shortages.

[nate33]

re: cause/endgame of the manufacturing problem -
so we have all these people who once were relatively high paid factory workers now displaced. where are they going? health care. computer/IT. sales. these are all services and rely on the rich to pay them in order to disperse the wealth. so... say what you want about the expansion of service jobs... it's probably the best way that wealth is efficiently redistributed short of the government forceably taxing it out.

I've got a minor quibble about your praise of services. The problem with services is that you can't really export them (or at least not much of them). If we rely on imported manufacturing, and then try to keep everyone employed via the service industy, the net result is a massive trade deficit. For years, we made up for the trade deficit by selling green pieces of paper to China. But as we can see now, that strategy is doomed to failure as the interest payments on those green pieces of paper eventually overwhelm our budget.

Ultimately, we need to balance our imports and exports. The only way to do that is to produce exportable goods and sell them. That can happen either by lowering our wages so that we can compete with China, by them increasing their wages, or by a currency devaluation relative to the Renminbi. China is currently manipulating their currency to prevent such a devaluation.

[barelyawake]

Pancakes, what you fail to mention is the purchasing power of those dollars -- which has steadily declined since the 1910s. So, if wages are "flat," the person still can't buy as much -- which is why we no longer have a nation filled with one working parent with two cars in the garage.

And I believe I mentioned we will never compete with sweat shops. What I said was Walmart and similar entities need unions to drive up wages -- by sharing the wealth of the brass. And if said unions drive up prices to where small business can compete, which I don't believe will happen, wouldn't that be a shame?

More to say. No time to say it.

[Nivek]

Malcolm Gladwell has made the point that in the 50s, the marginal tax rate on incomes above $200k (equivalent to about $2 million per year) was 90%. As Gladwell puts it, the country's policy was essentially that income should be capped at that amount. And, that the amount is a lot of money -- that folks can live a great life on $2 million per year.

Just wondering the reaction of folks here to this. Were we just a bunch of wealth redistributing socialists back then? How could the economy possibly grow with high earners taxed so heavily? Or, was this an absurd tax rate on the money folks were earning?

[Severn Hoos]

Malcolm Gladwell has made the point that in the 50s, the marginal tax rate on incomes above $200k (equivalent to about $2 million per year) was 90%. As Gladwell puts it, the country's policy was essentially that income should be capped at that amount. And, that the amount is a lot of money -- that folks can live a great life on $2 million per year.

Just wondering the reaction of folks here to this. Were we just a bunch of wealth redistributing socialists back then? How could the economy possibly grow with high earners taxed so heavily? Or, was this an absurd tax rate on the money folks were earning?

Let me tell you how it will be,
There’s one for you, nineteen for me,
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
Should five per cent appear too small,
Be thankful I don’t take it all.
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.

This wasn't poetic license - the top marginal tax rate in the UK in the '60s really was 95%.

I mean it is possible - and it would make the current CBA negotiations, well, irrelevant, since they would just be arguing over who gets to pay the taxes to the government.

I think the big problem - as nate has been pointing out in other facets - is mobility. Take the NBA. Suppose we imposed a 90%+ tax rate on everyone for income over $2M. And here comes Barcelona or Olympiakos or a Russian team or whoever offering 5-10 times that much, maybe even tax-free. Sure, these guys love the life here in the US, but do you think they'd stick around in that scenario? NBA fans would be left with Brian Cardinal as an All-Star.

Likewise the best and brightest in Finance, Business, Science, whatever. But even more devastating would be the capital outflow if that type of rate was imposed on non-payroll forms of income. Those options weren't there in the 50s, but are now.

I guess I'm saying it's an experiment I wouldn't want to try because the effects could be devastating. Unintended consequences and all that, you know...

[nate33]

Tax policy is like anything else, it has to be viewed in context of a competitive market. In the 1950's, America was the only place to be. It was the only place where it was even possible to earn $2M a year. If someone didn't like the tax rate, there was nowhere to go. (Also, let's keep in mind that nobody really paid 90% with all the loopholes that were in place at the time.)

It's not so simple anymore. There are plenty of nations in Europe, not to mention China and Hong Kong, where fortunes can be made and invested. If you institute a punative 90% tax on income, the rich will leave and take their money with them. That's not to say that taxes can't be raised on the rich. I suspect that upper tax brackets of 40-50% wouldn't result in massive capital flight since that's the going rate in most developed countries. But 90% is too much.

I've said in the past that somewhat higher taxes could probably be imposed on "the rich" without excessively negative economic effects. I don't think that applies to business. If anything, business taxes should be reduced (and simplified) to attract capital.