Completely Unwoven: Business, Economics, and Tax Policy 4.0

[FreshFish]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Wal-Mart began the process back in the late 80s or early 90s, and others were quick to glob onto the new model. That company reinvented a lot of retail processes that have since become industry standards.

In a similar manner, the parent company of 7-11 (Southland Corporation at that time) was a pioneer in linking together checkout price scanners with inventory control. They were able to craft a system by which deliveries to each store were customized based on what actually had been purchased from that store. Today we shrug and think it seems obvious, but back then it was one of those supply chain revolutions that helped them provide lower prices to customers at a time of rising costs for them.

Supply chain management can be fascinating. There was a recent article at 538 about Waffle House, for example. Their supply chain manager looks beyond their suppliers to who supplies them; in many cases the same original manufacturer supplies several of their suppliers and so they want to go several stages further up the supply chain than most people would look to make sure that they can deliver to their customers even if one supplier to suppliers gets disrupted.

[FreshFish]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Can a person be both "pro-worker" and "anti-union [leadership]" at the same time?

I'd say yes. Our extended family has private-sector union members (construction), quasi-public sector union members (utilities), and public-sector union members, and "anti-"private-sector union (i.e., management), and so I've received a wide spectrum of perspectives on the subject. One common gripe from all four groups is that union leadership likes to play the big shot, hobnob with politicians, drive around in limousines, attend conferences at fancy locales, while not always advocating for the best interests of union membership.

The biggest disconnect right now is between public-sector union members and public-sector union leaders. The membership really wants their pensions protected; states have promised plenty of benefits without also providing adequate funding for them, based on the (perhaps erroneous) belief that they could always just raise taxes to cover any shortfall. Well, you raise taxes enough, people start leaving the state, and you have a lower tax base of mostly poorer people left behind. Oops!

Anyway, the public-sector union membership really wants the state to stop offering such generous pensions to new hires (who by definition are not yet union members), in order to shore up the funding for existing pension obligations. The public-sector union leadership has been very resistant to that concept, because they are more interested in preserving their own cushy lifestyle (the leaders want more dues flowing into the union, even if that is economically harmful to the existing membership).

[joecct]

Can a person be both "pro-worker" and "anti-union [leadership]" at the same time?

I'd say yes. Our extended family has private-sector union members (construction), quasi-public sector union members (utilities), and public-sector union members, and "anti-"private-sector union (i.e., management), and so I've received a wide spectrum of perspectives on the subject. One common gripe from all four groups is that union leadership likes to play the big shot, hobnob with politicians, drive around in limousines, attend conferences at fancy locales, while not always advocating for the best interests of union membership.

The biggest disconnect right now is between public-sector union members and public-sector union leaders. The membership really wants their pensions protected; states have promised plenty of benefits without also providing adequate funding for them, based on the (perhaps erroneous) belief that they could always just raise taxes to cover any shortfall. Well, you raise taxes enough, people start leaving the state, and you have a lower tax base of mostly poorer people left behind. Oops!

Anyway, the public-sector union membership really wants the state to stop offering such generous pensions to new hires (who by definition are not yet union members), in order to shore up the funding for existing pension obligations. The public-sector union leadership has been very resistant to that concept, because they are more interested in preserving their own cushy lifestyle (the leaders want more dues flowing into the union, even if that is economically harmful to the existing membership).

Hershey PA is a good example of a benevolent corporation. Milton Hershey was a giant.

[FreshFish]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

One thing that puzzles me somewhat is how many people just cannot grasp the idea that corporations are pure pass-through entities.

Some people just do not understand that corporations are not tax payers, they are merely tax collectors.
-- you go to the store, buy something, and what you pay at the register usually includes sales tax. You pay it, the corporation collects it, and passes it along to the state. That is clear.
-- yet, when it comes to the corporate income tax, people are mystified that the corporation itself does not "pay" that tax at all, it merely collects it from other parties in just the same way as the sales tax, and passes it along to the state/feds. This exact parallel somehow is opaque.
-- what's more, some people seem deliberately resistant to understanding.

I suppose this is another example of a situation in which people's belief is contradicted by facts, and rather than adjust their belief to align with facts, they try to dismiss or ignore the facts instead.

[dxmnkd316]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

One thing that puzzles me somewhat is how many people just cannot grasp the idea that corporations are pure pass-through entities.

Some people just do not understand that corporations are not tax payers, they are merely tax collectors.
-- you go to the store, buy something, and what you pay at the register usually includes sales tax. You pay it, the corporation collects it, and passes it along to the state. That is clear.
-- yet, when it comes to the corporate income tax, people are mystified that the corporation itself does not "pay" that tax at all, it merely collects it from other parties in just the same way as the sales tax, and passes it along to the state/feds. This exact parallel somehow is opaque.
-- what's more, some people seem deliberately resistant to understanding.

I suppose this is another example of a situation in which people's belief is contradicted by facts, and rather than adjust their belief to align with facts, they try to dismiss or ignore the facts instead.

This is a load of vine-ripened crap. Especially true given that corporations are people too!

[Kepler]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

This is a load of vine-ripened crap. Especially true given that corporations are people too!

Consider the source. Caveat lector.

[unofan]

Anyway, the public-sector union membership really wants the state to stop offering such generous pensions to new hires (who by definition are not yet union members), in order to shore up the funding for existing pension obligations.

This is either grade-A bullshiat, or your relatives are the epitome of the "Fark you, I've got mine" mindset you peddle on here. So they get to keep their "generous" pensions, but new hires don't deserve them? What a bunch of selfish dillholes.

More to the point, cutting pension benefits to new employees does nothing to shore up a current pension shortfall. If anything, it worsens it because it shrinks both the timeframe available and the amount of contributions coming in to cover the shortfall. It's penny wise and pound foolish.

[5mn_Major]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

One thing that puzzles me somewhat is how many people just cannot grasp the idea that corporations are pure pass-through entities.

Some people just do not understand that corporations are not tax payers, they are merely tax collectors.
-- you go to the store, buy something, and what you pay at the register usually includes sales tax. You pay it, the corporation collects it, and passes it along to the state. That is clear.
-- yet, when it comes to the corporate income tax, people are mystified that the corporation itself does not "pay" that tax at all, it merely collects it from other parties in just the same way as the sales tax, and passes it along to the state/feds. This exact parallel somehow is opaque.
-- what's more, some people seem deliberately resistant to understanding.

I suppose this is another example of a situation in which people's belief is contradicted by facts, and rather than adjust their belief to align with facts, they try to dismiss or ignore the facts instead.

Depends on whether there's price elasticity and the market can bear a price increase.

[FreshFish]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

More to the point, cutting pension benefits to new employees does nothing to shore up a current pension shortfall. If anything, it worsens it because it shrinks both the timeframe available and the amount of contributions coming in to cover the shortfall. It's penny wise and pound foolish.

As typical, in your dyspeptic zeal to be disagreeable, you totally distort the actual situation to knock down another phantom. The plan you do offer basically is to finance existing credit card debt by applying for a new credit card, so that you can take cash advances from the new credit card to make minimum monthly payments on existing credit card debt. I thought you would be smart enough to realize that just does not work.

The issue is whether to switch from defined benefit plan to defined contribution plan, not to stop offering all retirement benefits entirely. so drop your poutrage on that score. and please, let us know of any private-sector employer that still offers a defined benefit pension plan to new hires. What's that you say? nothing? uh huh....

You also are woefully deficient as an actuary.

It is a very common practice in state governments to have multiple pension tiers: the level of pension benefits have routinely been adjusted for decades by walling off one class of people as "Tier 1" and having everyone after them be "Tier 2." etc. Connecticut currently has four different pension tiers depending upon hire date and years of service, for example. The proposal is nothing new, it is just another shift from overly-generous benefits to benefits that can be financed in an affordable manner. Who wins if the state cannot pay any pensions to anyone? ask the municipal retirees of Central Falls, RI about how well that has worked out for them!

The longer a person works, the higher their pension reserves need to be on three different measures, and so the effect is to multiply the deficit exponentially, it does not increase in additive fashion.
-- a typical defined benefit pension is final salary times a factor related to years of service
-- each additional year a person works, the higher their salary gets
-- each additional year a person works, the higher the years of service multiple becomes
-- each additional year a person works, the longer their remaining life expectancy becomes

[FreshFish]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

This is a load of vine-ripened crap. Especially true given that corporations are people too!

I wasn't expecting proof of my observation to be so immediate or so dramatic!

If you tax a corporation, either a supplier, a customer, a shareholder, an employee, or an executive pays the tax. the corporation merely collects it and forwards it along. That is corporate accounting 101. I know facts can be inconvenient, but really, that is indeed how the world works, no matter how much it upsets you.

[FreshFish]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Depends on whether there's price elasticity and the market can bear a price increase.

not really, someone pays somehow and it is never the corporation itself. employees get fired, shareholders see losses instead of profits, suppliers don't get paid on time, it is not only customers who pay the tax. someone else always pays the tax, it is never the corporation that pays it. that's just how accounting works.

[unofan]

As typical, in your dyspeptic zeal to be disagreeable, you totally distort the actual situation to knock down another phantom. The plan you do offer basically is to finance existing credit card debt by applying for a new credit card, so that you can take cash advances from the new credit card to make minimum monthly payments on existing credit card debt. I thought you would be smart enough to realize that just does not work.

The issue is whether to switch from defined benefit plan to defined contribution plan, not to stop offering all retirement benefits entirely. so drop your poutrage on that score. and please, let us know of any private-sector employer that still offers a defined benefit pension plan to new hires. What's that you say? nothing? uh huh....

You also are woefully deficient as an actuary.

It is a very common practice in state governments to have multiple pension tiers: the level of pension benefits have routinely been adjusted for decades by walling off one class of people as "Tier 1" and having everyone after them be "Tier 2." etc. Connecticut currently has four different pension tiers depending upon hire date and years of service, for example. The proposal is nothing new, it is just another shift from overly-generous benefits to benefits that can be financed in an affordable manner. Who wins if the state cannot pay any pensions to anyone? ask the municipal retirees of Central Falls, RI about how well that has worked out for them!

The longer a person works, the higher their pension reserves need to be on three different measures, and so the effect is to multiply the deficit exponentially, it does not increase in additive fashion.
-- a typical defined benefit pension is final salary times a factor related to years of service
-- each additional year a person works, the higher their salary gets
-- each additional year a person works, the higher the years of service multiple becomes
-- each additional year a person works, the longer their remaining life expectancy becomes

I love how pension benefits, in the span of two posts, have gone from generous to overly generous.

And let's not kid ourselves, going to 403b's and 401k's screws the vast majority of workers in favor of the employer. Because now the employee bears the risk of return instead of the employer, even though the employer has more assets and can exist indefinitely and shouldn't need to worry about a market turning sour at the precisely wrong time.

Private companies don't offer pensions because the institutional shareholders who own the vast majority of shares are greedy as fark and would sell their own mothers if it meant earning an extra ten points on their returns. And because tools like you buy into the drivel that pensions are bad for the worker even though something like 70% of people say they want one. Because somehow your ilk has convinced the powers that be that it's fair to expect everyone to be the exceptional investment guru who will beat the market, even though they're a kindergarten teacher, or a cop, or a machine operator. If they don't properly invest their retirement savings on their own, then they're just lazy people who deserve to be destitute in their retirement, right?

And you still haven't addressed the elephant in the room. If the pension benefits are overly generous, why should your family members get to keep them while new hires get screwed? Bonus points if they also believe that they deserve their social security benefits while the next generation should have privatized social security because reasons.

[The Sicatoka]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

... the institutional shareholders who own the vast majority of shares are greedy ...

So, institutional shareholders like Fidelity, Vanguard, Blackrock, or any of the plethora of other mutual fund houses that you can buy into via a 401k?

But yes, Fidelity, Vanguard, et al are greedy.

[dxmnkd316]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

I love how pension benefits, in the span of two posts, have gone from generous to overly generous.

And let's not kid ourselves, going to 403b's and 401k's screws the vast majority of workers in favor of the employer. Because now the employee bears the risk of return instead of the employer, even though the employer has more assets and can exist indefinitely and shouldn't need to worry about a market turning sour at the precisely wrong time.

Private companies don't offer pensions because the institutional shareholders who own the vast majority of shares are greedy as fark and would sell their own mothers if it meant earning an extra ten points on their returns. And because tools like you buy into the drivel that pensions are bad for the worker even though something like 70% of people say they want one. Because somehow your ilk has convinced the powers that be that it's fair to expect everyone to be the exceptional investment guru who will beat the market, even though they're a kindergarten teacher, or a cop, or a machine operator. If they don't properly invest their retirement savings on their own, then they're just lazy people who deserve to be destitute in their retirement, right?

And you still haven't addressed the elephant in the room. If the pension benefits are overly generous, why should your family members get to keep them while new hires get screwed? Bonus points if they also believe that they deserve their social security benefits while the next generation should have privatized social security because reasons.

See, I'm ok with 401(k)s. Maybe because I'm not an idiot. But the only fraction of a point I agree with Fish on, maybe, is that the pensions we have now are just not workable. The defined benefit pensions can't promise 10-plus-point returns. They need to be far more reasonable. Or rather, they should stop handing out dividends, buybacks, and massive payouts to executives. Though I understand executive pay would be only a small fraction of a pension's necessary funding.

They should, but they won't without a law.

[dxmnkd316]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

So, institutional shareholders like Fidelity, Vanguard, Blackrock, or any of the plethora of other mutual fund houses that you can buy into via a 401k?

But yes, Fidelity, Vanguard, et al are greedy.

I dunno. Blackrock's annual executive compensation has gone from $38 million in 2011 to $66 million in 2015 while overall compensation and benefits have gone from $3.2 billion to $4.0 billion in the same time. Yeah, that's greed.