Political Roundtable - Part VI

[dckingsfan]

Good point, Tontoz - actually the #1 reason that small businesses are failing right now is that they can't borrow (as easily) against the equity in their houses. Some of that though has to do with the new banking regulations - and I thought that was what we were talking about.

[tontoz]

Good point, Tontoz - actually the #1 reason that small businesses are failing right now is that they can't borrow (as easily) against the equity in their houses. Some of that though has to do with the new banking regulations - and I thought that was what we were talking about.

New banking regulations were an inevitable result of the financial collapse, which popper seems so determined to ignore. Part of the reason for collapse was the real estate bubble. Another big cause was banks making too many risky loans without having sufficient cash reserves. There were obviously other causes (ratings agencies being in bed with the investment banks.....etc). But these issues had to be addressed.

After an economic collapse like that of course there were going to be regulations put into place to prevent it in the future. But popper has been drinking the Coulterade, as if the regulations were just a result of Obama's anti-business stance.

[TGW]

Good point, Tontoz - actually the #1 reason that small businesses are failing right now is that they can't borrow (as easily) against the equity in their houses. Some of that though has to do with the new banking regulations - and I thought that was what we were talking about.

New banking regulations were an inevitable result of the financial collapse, which popper seems so determined to ignore. Part of the reason for collapse was the real estate bubble. Another big cause was banks making too many risky loans without having sufficient cash reserves. There were obviously other causes (ratings agencies being in bed with the investment banks.....etc). But these issues had to be addressed.

After an economic collapse like that of course there were going to be regulations put into place to prevent it in the future. But popper has been drinking the Coulterade, as if the regulations were just a result of Obama's anti-business stance.

I wish Popper would step away from his conservative blogs and use common sense. Sometimes the solution that's needed is not popular or centered around your frame of thinking, but it is the RIGHT thing to do. Can't have the banking industry create another economic collapse for the sake of making unsecured loans to people.

[tontoz]

If anyone is interested here is a good discussion about the huge role the ratings agencies played in the financial mess. Came out in november.

http://www.pbs.org/newshour/bb/business ... ils_11-18/

And they are actually being held accountable to the tune of $1+ billion

http://www.reuters.com/article/2015/01/ ... CX20150120

[dckingsfan]

Good point, Tontoz - actually the #1 reason that small businesses are failing right now is that they can't borrow (as easily) against the equity in their houses. Some of that though has to do with the new banking regulations - and I thought that was what we were talking about.

New banking regulations were an inevitable result of the financial collapse, which popper seems so determined to ignore. Part of the reason for collapse was the real estate bubble. Another big cause was banks making too many risky loans without having sufficient cash reserves. There were obviously other causes (ratings agencies being in bed with the investment banks.....etc). But these issues had to be addressed.

After an economic collapse like that of course there were going to be regulations put into place to prevent it in the future. But popper has been drinking the Coulterade, as if the regulations were just a result of Obama's anti-business stance.

True, but some of those same regulations have hurt the recovery. Clearly there was going to be fallout - some good and some bad.

[Zonkerbl]

Why are my ears burning?

God, businesses never ever ever ever stop whining about access to credit. So tedious.

Has nothing to do with business regulations. During the housing bubble credit was easier to get than it is now. Now we have better information about what the growth potential of various businesses are. We are smarter now and we know the economy is going to grow at about 2% in real terms over the next decade or so and banks are lending accordingly. It is consequently much more difficult to get the working capital necessary to start up a business, compared to how much credit was flowing during the bubble.

Look, it's fun to hate. I get it. But Obama and Bush and Clinton have ZILCH NADA ZERO influence over the macroeconomy. NONE.

[pineappleheadindc]

Why are my ears burning?

LOL

[dckingsfan]

Er... yes, both the legislature and administrations do have sway over the macroeconomy. Example: the loosening of loan requirements (micro) allowing the bubble (macro); Taxes - Macro; etc.; etc.; etc.

Now let's get back to banks. The regulations that have been put in place over the last two decades have strangled small banks. And who were the biggest lenders to small business?

And the bubble was largely caused by the government policies, the effect of those policies put many of the individuals that should be starting small businesses into the red. Add to that the student loan policies and there you have it... a perfect set of legislative agendas to do the right thing with really bad unintended consequences.

[dckingsfan]

But Zonk - if we are going to argue - it is about the limitations on growth. The very policies that we have put in place have capped us at 2% - and not even in real terms. The ultimate in legislation that causes pain across not just our economy but others as well.

[Zonkerbl]

It's a lie fed to you by politicians to make you think they have influence over things that they don't.

The current difficulty of starting up businesses is due entirely to factors outside of politicians' control.

Our policies haven't capped our growth. Nothing politicians do has any effect whatsoever on long term growth. None. It's governed entirely by the rate of technology change, which the government has zero influence over.

[dckingsfan]

Okay, we get to agree to disagree on this one... Tax rates, immigration and other policies are well within the scope of the political system - in my opinion

[Induveca]

Salon posted a nauseating piece with the title "the rich are parasites". Very dangerous, completely ignorant propaganda piece.

I've been poor, I've been wealthy. The "road to success" used to be a respected journey in the "land of opportunity". It's not as simple as "the rich aren't hiring enough people".

Between overseas outsourcing, programmatic and robotic automation I hire probably 75% less US employees compared to 2005. Between amazing tools like Amazon's Mechanical Turk, custom automated data sifting, Postmates for random office supplies....I simply don't need as many employees. Being efficient is a good thing. I can "fail fast" and try 4-5 ideas in 6 months and not bet my future on one idea.

Low skill jobs like "office managers", "receptionists", "secretaries", low level paper shufflers are gone or disappearing fast. They've been automated via outside services or programmatically.

Combine the above with the death of a large chunk of physical retail jobs, and the real issue is an under skilled/ill-prepared citizenry. Maybe you can't find a job because you don't have any relevant skills for the current job market? People need to ask themselves if they've been automated out of a job, if so find a new skill.

Education reform in the US is desperately needed, adults and kids alike need to be competent in low level computer science. AI/automation is just getting started. IoT combined with AI is going to kill off a whole sector of technology jobs as well.

Time to adapt, the circa 1995 service economy isn't coming back.

[Dat2U]

The ugly truth. Often times business fails not because of too much government regulation or taxes that are too high... it's because the people running the business aren't very good at what they do. Incompetence is arguably the biggest reason why the majority of business fail. But its always easier to play the blame game and blame big bad government as opposed to looking in the mirror.

[dckingsfan]

Agreement Dat - but the discussion is why so few businesses are being started. I don't think incompetence is the reason for not starting a business.

[Induveca]

The ugly truth. Often times business fails not because of too much government regulation or taxes that are too high... it's because the people running the business aren't very good at what they do. Incompetence is arguably the biggest reason why the majority of business fail. But its always easier to play the blame game and blame big bad government as opposed to looking in the mirror.

A tiny percentage of businesses succeed. I've had three big hits out of 12 tries. Experienced entrepreneurs know when to move on, however in the US legal red tape is quite annoying (exempt/contractor/healthcare etc). It's easier just to outsource until you're reasonably sure profits are sustainable.

That all being said, Western Europe is FAR worse than the US with corporate/employee legal hurdles. Hiring a full time employee is not unlike getting married.

Timely article.....id say the reason most businesses fail is indeed incompetence. Hiring/spending too much before you're ready. Outsourcing is crucial to keeping your business alive during the formative/testing stage. If you're still not profitable after a predetermined set of months put the company out to pasture and try again.

http://www.forbes.com/sites/allbusiness ... -business/

[Zonkerbl]

Because we're the biggest, wealthiest economy in the world we have the luxury of asking our employers to provide lots of nice things to our employees. I don't deny that this has a chilling effect on employment opportunities here vs. abroad. Europe has clearly gone way too far in this direction and yet they still seem to do ok. We do relatively better.

I hope it's possible to train everybody enough to get a (skilled) job in today's economy. I think it's asking a lot. Frankly I suspect that a growing proportion of our population will find themselves lumped in the "unskilled labor" category.

The good news is we're wealthy enough to keep the unskilled laborers clothed and fed. The bad news is that happiness in your material well-being is determined by how you perceive yourself to be doing relative to your peers, so the fact that you are clothed and fed is not necessarily going to make you very happy.

Welfare recipients would be considered fabulously wealthy in many countries. But here they are likely to be pretty miserable about their relative position on the economic ladder.

Personally I view the relative unhappiness of welfare recipients in the U.S. as kind of low on my lists of concerns. I'm more worried about people in other countries who are being shot at by roving bands of marauders, and as a result are dying en masse of disease and starvation. I hope we someday get to a place where the unhappiness of welfare recipients is our most pressing issue.

[Induveca]

Because we're the biggest, wealthiest economy in the world we have the luxury of asking our employers to provide lots of nice things to our employees. I don't deny that this has a chilling effect on employment opportunities here vs. abroad. Europe has clearly gone way too far in this direction and yet they still seem to do ok. We do relatively better.

I hope it's possible to train everybody enough to get a (skilled) job in today's economy. I think it's asking a lot. Frankly I suspect that a growing proportion of our population will find themselves lumped in the "unskilled labor" category.

The good news is we're wealthy enough to keep the unskilled laborers clothed and fed. The bad news is that happiness in your material well-being is determined by how you perceive yourself to be doing relative to your peers, so the fact that you are clothed and fed is not necessarily going to make you very happy.

Welfare recipients would be considered fabulously wealthy in many countries. But here they are likely to be pretty miserable about their relative position on the economic ladder.

Personally I view the relative unhappiness of welfare recipients in the U.S. as kind of low on my lists of concerns. I'm more worried about people in other countries who are being shot at by roving bands of marauders, and as a result are dying en masse of disease and starvation. I hope we someday get to a place where the unhappiness of welfare recipients is our most pressing issue.

Well stated Zonk. For once, we are in complete agreement.

Bravo.

[queridiculo]

I tend to think that European countries get capitalism more right than the United States, but I'm also of the opinion that the relative wealth of those nations is only possible through the systematic exploitation of natural resources and desperate labor in developing nations.

The starvation, war and disease that's so high on your priority list when compared to the relative unhappiness of welfare recipients may just be an expression of the same malaise, a system that disproportionally rewards few over many.

[Zonkerbl]

Well, France and Spain in particular certainly accumulated a lot of their wealth off the backs of their colonies, that's true, and that's why they can afford to have 35 hour work weeks.

And yeah, they left behind very dysfunctional institutions that are the main reason why there is so much starvation, war, and disease in the colonies they abandoned in the 1960s. http://whynationsfail.com/

Though they did abandon them so you can't say they are exploiting them now.

[queridiculo]

If you take a look at the top ten French companies, I think you could very quickly arrive at the conclusion that France continues to benefit from colonialism to this day.

Out of the top 10 french companies, 4 are prominent in the energy sector (Total, EDF, GDF, Schneider Electric), with Total in particular playing a significant role in African oil extraction.

Others like EDF indirectly benefit from land grabbing in Africa and the incredibly destructive process of uranium mining. Over 80% of the power generated by EDF comes from nuclear.

An example of this can be found in Niger, a country with one of the lowest human development indices on the planet but rich in mineral resources. This is a place where AREVA, the French public nuclear energy giant has been exploiting uranium for 40 years now, scarcely providing any opportunity for development. On the contrary, AREVA’s operations have proved to be largely destructive. AREVA’s negligent mismanagement of the extraction process has caused radioactive substances to be released into the air, seep into the groundwater and contaminate the soil around the mining towns damaging the local ecosystem and creating a multitude of health problems for the local population.

http://www.aefjn.org/index.php/370/articles/the-exploitation-of-natural-resources-and-land-grabbing.html

This is not to single out France, but it goes without saying that nearly every major western civilization is complicit in the ongoing exploitation of Africa's natural resources, and plays a large part in the ongoing conflicts it creates as a result.