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Tag Archives: 02: The One Lesson of Business

Switzerland vs Sweden

NY Times on Sweden: Die-hard admirers of Scandinavian socialism overlook the change of heart in countries such as Sweden, where heavy government spending led to the financial crises of the 1990s. Sweden responded by cutting the top income tax rate from nearly 90 percent to as low as 50 percent. Public spending fell from near 70 percent of G.D.P. to 50 percent. Growth revived, as the largest Scandinavian economy started to look more like Switzerland, streamlining government and leaving...

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Why is PG&E shutting down power in California?

The incentives are clear:  to avoid liability from fires caused by its power lines. PG&E filed for bankruptcy in January after amassing tens of billions of dollars in liability related to two dozen wildfires in recent years. As speculation grew that its equipment might be the cause of the Kincade Fire, its stock price plummeted about 30 percent on Friday to $5.08, a small fraction of its 52-week high of $49.42. Liability laws are designed to give potential wrongdoers (tortfeasors)...

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What isn’t for sale? vs. The Market as God

From the Atlantic, What isn't for Sale? lamenting the "commoditization" of society, and calling for a debate about markets: A debate about the moral limits of markets would enable us to decide, as a society, where markets serve the public good and where they do not belong. Note the hubris of the framing, as if society can decide what is best for all of us, rather than letting each of us decide for ourselves.BOTTOM LINE:  This older Atlantic article is much more fun, The Market as God.HT: ...

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Why are 600,000 waiting for apartments in Stockholm?

Good article from Economist on how rent control destroys wealth by preventing housing from moving to higher valued uses: Rent controls are a textbook example of a well-intentioned policy that does not work. They deter the supply of good-quality rental housing. With rents capped, building new homes becomes less profitable. Even maintaining existing properties is discouraged because landlords see no return for their investment. Renters stay put in crumbling properties because controls often...

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Conneticut’s slow job growth

is likely caused by taxes and regulations that prevent assets from moving to higher valued uses:...the governor raised taxes on Connecticut residents by about $1.7 billion over two years, mostly in the form of various new sales taxes.  [the governor] “refinanced” pension payments to state employees. The agreement with the unions doesn’t reform the system but shorts contributions by $2 billion through 2032, only to increase the taxpayer’s obligation by $5 billion from then until 2047.  a 6.5...

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What could possibly go wrong?

In August the knights of the Business Roundtable announced that they are putting “stakeholders” ahead of shareholders as their primary business purpose. Senator Warren sent the Roundtable a letter saying that she "expects" them to "live up to their promises" by endorsing her bill to change the way that capitalism works: ...Every company with revenue of more than $1 billion would have to obtain a new federal charter, in contrast to the current system of state charters. Instead of serving...

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