Slowly, we’re becoming convinced the world is mid-process in a complete Values Reversal.
Consider 50 Years Ago:
- Race mattered little: Performance did. Today, performance has moved to the back seat in corporate H.R. We’re living in the “check-box” world of correctness.
- Gender/bent didn’t much matter: Performance was the whole ball game. Today? Got checkboxes for everything.
- Weather didn’t matter: You worked regardless. Today, it’s not weather – it’s climate. Take a day off to protest.
- And Sports was sports. Period. Today? MLB moves All-Star Game over Georgia voting law.
Americans are being cleaved and divided against one-another as never before.
Stocks Display Madness
A Capper event rolled by Monday as U.S. Treasury Secretary Janet Yellen endorsed a global tax regimen:
“Another consequence of an interconnected world has been a thirty-year race to the bottom on corporate tax rates. Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids. It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government. President Biden’s proposals announced last week call for bold domestic action, including to raise the U.S. minimum tax rate, and renewed international engagement, recognizing that it is important to work with other countries to end the pressures of tax competition and corporate tax base erosion. We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom. Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity.”
Yellen’s “30-year race to the bottom” is simply the down side of the longer Kondratiev wave. Rates meander up 30, or so, years. Then decline.
Enact a global minimum tax corporate rate? Why, it almost makes economic sense, except for one thing: Unless it’s trussed up like the Alternative Minimum Tax for individuals (AMT) nothing will change.
Big corporations will still buy favors and carve-outs. PACs will fund crooks. Same-old, same-old.
So, how could the market go up more than 300 points on talk of higher taxes?
The answer is simple: It’s all talk. Global minimum corporate tax rate? Please. We ain’t that stoopid.
Wait! Maybe we is…
Corporations Own….The World
Here’s one of those “dirty, off-the-books” facts of economic life:
The goal of corporate tax policy is to make corporations achieve some of the roles government would claim in more perverse, socialist and communist regimes.
Instead of having State ownership of everything, The Workers in ‘Merica can own the shares of just about anything. Where socialism and communism would force collectivization on us, we have lighter-weight structures to do that. Corporations. And they’re for sale weekday morning’s at the bell.
Corporations Outperform Government
Speaking of agriculture and the epics fails of socialist collectivism: We assume you noticed – in an article on Motley Fool earlier this year – that Bayer and Nutrien, to name two, are paying pretty good dividends? Food never goes out of style, either. Predictable profits has a nice ring to it…
The Economic Long Wave suggests? In a Depression, buy stocks. At the 30-year later interest peak, buy bonds. I know people who do this kind of thing.
Corporations – when run right – incentivize everyone. Governments don’t seem to know what incentives are. Surely, they must be bad.
The performance gap between ’em, though, is narrowing. Socialist pressures (like the “correctness levers” are slowly destroying performance based rewards. Which, in turn, will kill the Golden Geese.
As the New York Times reports today: “Democrats and Business Are Increasingly Allies.”
The only way to fight this battle is to force incentives into government. Reward smaller, lighter, more responsive government. Sounds radical. Two terms and out.
When we see problems – like “homeless camps” -realize these are bureaucratic growth industries. Let’s call them what they are: Pools of potential workers (and drug addicts) who have failed-out of the system…
The Nanny State opening what amount to lawless day care centers for would-be uprisers is a crock. It drives bureaucratic mission creep. Expansionism to justify higher taxes. So-blessed, social ills become self-reinforcing. Manna from heaven.
“We have to expand to serve these poor people….” Not free, though.
Global Taxes Feed Global Government
Government advocating a Global Minimum Tax flies in the face of American competitiveness. It’s PRICE FIXING because there is no such thing as a “Corporate Tax.” ALL taxes get passed (via markups) to the end purchaser. That’s you and me. Yellen’s being crooked in her call. Consumers in other countries ought to fault her arrogance.
When a corporation chooses a tax-advantaged country (like Ireland) it keeps the end cost of goods lower. Yellen doesn’t like that. She wants someone to drive up the price. A hike in Global Taxes would do that.
Where Yellen (again) runs off the liberal rails is by not stating the situation honestly: “We want higher taxes – and everyone else in the G20 and beyond should grab for ’em, too.” Covid’s an excuse. Recession is a reliable one, too. And the rising international tensions? We need more tax dough to plug into the “national security and defense” industries, too.
The B.S. (Biden States) Government has already torn apart the Mexico border…Meaning the Synthetic Growth plans of the federal kleptocracy should be evident. But apparently they’re not: How else would stocks rally strongly on plans for more government strong-arming?
Yet there it was. Crank in more made up money (and unbacked, except by promises of more tribute from the wee folk) and there’s Monday’s rally.
What the Biden administration has failed to articulate is a National Purpose.
Kennedy had it, with plans to “put a man on the Moon within 10-years.”
Eisenhower had it with fulfilling the dreams of WW II soldiers for the “good life.”
But lately? America has a “hole in her soul.”
National purpose is like a good glue: Binds people into One.
Near as we can figure, the B.S. government is running in exactly the wrong direction. Jingoism of division.
Dow futures are down 30-something. The S&P was down 7 when I looked. Maybe the market will come to its senses, but don’t hold your breath on it.
Fear! Mask! Panic jabs! UK coronavirus variant now reported in all 50 states.
Eviction war front: Feds propose banning foreclosures across U.S. until 2022.
War pending (May 3?) Ukraine Urges NATO to Speed Up Membership in ‘Signal’ to Moscow.
And signaling back: Russia Conducts First Pacific Long-Range Cruise Missile Test
Gee. Cancel our tickets, then: North Korea says it won’t participate in Tokyo Olympics.
And for blown-up hedge fund fans: Credit Suisse Takes $4.7 Bn Hedge Fund Hit.
War Drums Louder
Another hint where to watch from warhammer:
“Like the persistent squatters of San Francisco, illegal Chinese maritime occupation apparently equates to annexation.
The world will soon ‘sea’ if President Joe has the backbone necessary to send a firm military message to the Beijing squatters. Personally, I would not put much money on it. Neither he nor a Dem Congress has the stomach to engage in a long term showdown with China. Too much corporate profit (and potentially American servicemen’s lives) stand to be lost should hostilities eventually arise.”
History argues stability is mostly transitory.
ATR: Check Up Time
It will be a quiet day here.
Because tomorrow is my periodic medical check-up. Figure today I’ll be studying for the blood tests.
To keep the BP down, no radio or television (or streaming). No opening mail. Selective phone calls only…
I quit coffee about two weeks back. Had the “withdrawal headache” for about three days, but feel pretty good now. About mid-morning, I still sneak in a cup of tea, though.
Elaine’s doing fine on the hip recovery – and getting ready for the next one in late May. Most days she does OK, but yesterday was a bit rough. She forgets that some movements aren’t “there” yet. An ibuprofen and a half hour off her feet and she’s back to mobile again.
The right (operative) hip is doing fine with only some residual surface pain from the wound as the scarring heals and the glue they use is absorbed or whatever.
Thursday will be 60-days out from the knife on the right hip. And, except for the 12-hours from hell on Feb 25 (which is when the brain and the leg sorted out how they work again) been a satisfying decision. Except now, the left leg is starting to hurt a good bit. So that drives us to May…
Hour to the open, the pump is back on…Tech is positive now…
Write when you get rich,