twk
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Post by twk on Jan 19, 2011 9:25:25 GMT -6
www.businessinsider.com/nassim-taleb-its-big-business-thats-fragile-not-small-business-2010-12... Both big government and big business is bad. Big government favors big business because it looks more like it. Small businesses can't lobby. Republicans love big business, Democrats love big government, so both are bad. ... You should focus on the small guy, small businesses. They are not fragile. They don't get bailouts. Big businesses, that are fragile, get bailouts. ... Summary Nassim Nicholas Taleb is a Lebanese-born writer and a former Wall Street trader, as well as a professor in risk engineering. He is the author of the bestseller "The Black Swan", a book about uncertainty
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twk
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Post by twk on Jan 19, 2011 11:06:31 GMT -6
In keeping with the theme of big is bad, small is good:
Theoretically, many of the air molecules in the room that you are presently in, could all move to the other side of the room and leave you in a vacuum. This does not happen. There are "billions and billions" of little air molecules each doing their own thing, filling in the little vacuums left by the neighboring molecules. Compare this to a room filled with a few very large air molecules and the likely hood of something bad happening is much higher.
Do we really need as many of the large businesses as we use to? Note that computer technology has enabled tiny businesses ( say < 20 people ) to do what large companies were doing 20 to 30 years ago. For example, CNC machines, along with CAD and CAM software allows a hand full of people to build very complex parts and machinery. This use to take large companies, with hundreds of people and much more time.
Like it or not, the computer is changing the very fabric of society, just like the printing press did 500 years ago.
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Post by waltc on Jan 19, 2011 13:44:14 GMT -6
Well it still takes large manufacturers to make the tools for end users. Only they have the resources necessary to make all the high tech advances that benefit from.
On the downside the advances in personal computers has allowed companies to off-shore work done by white collar American workers and have it done by foreigners who work for a 1/4 of our wages. Programmers and engineers were the first, now medical records, accounting and legal counsel can now be done overseas.
If I were advising any young person as to what career path to take. I tell them to avoid engineering and most scientific disciplines as they are becoming dead ends for Americans.
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Post by unlawflcombatnt on Jan 19, 2011 14:39:42 GMT -6
Some firms, like steel mills & shipyards, are necessarily quite large. In such cases, there's an obvious productive advantage to their largeness. Up to a point so-called "economies-of-scale" do produce goods more cheaply, expeditiously, and with a lower price for consumers.
But there's a limit to those benefits. In many alleged economy-of-scale situations, the major benefit is simply pricing power through complete domination of a market.
Many cases of mergers provide no true productive economy-of-scale advantage. They only provide the "lack-of-competitors" advantage.
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twk
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Post by twk on Jan 19, 2011 14:49:28 GMT -6
On the downside the advances in personal computers has allowed companies to off-shore work done by white collar American workers and have it done by foreigners who work for a 1/4 of our wages. Programmers and engineers were the first, now medical records, accounting and legal counsel can now be done overseas. If I were advising any young person as to what career path to take. I tell them to avoid engineering and most scientific disciplines as they are becoming dead ends for Americans. My father was a professor of engineer, my brother is an engineer I am an engineer/programmer. My nieces and nephews are engineers. I use to encourage young people to go into engineering and computer programming. I now tell them to reconsider their decisions and at least consider other alternatives. My children are not engineers. Since I am an old dog, it is hard to learn new tricks. The only future I see in engineering and programming for myself is to be self employed, running a tiny business. I am hoping that "the powers that be" realize that manufacturing is important and the that the tiny businesses are the ones that will stay local, employee local people and help the long term economy. The only way I can see this happening is if government gets taken off of the back of the little guy. As a small business owner, I need to spend my time doing the revenue generating work not complying with government mandates. Changing the payroll tax to a sales tax would be a start. Paying almost %15 for your income just in payroll tax is crazy if you are starting out and making say $10,000-$30,000. If you have employees, then you have to pay unemployment insurance in addition. If you have a corporation for liability reasons, than you have to have an employee and pay payroll taxes and unemployment insurance. If you have a corporation, and you are the only employee, you still have to have documented quarterly stock holder meetings with yourself. In addition to the IRS, the unemployment insurance office can audit most of your tax information and report discrepancies to the IRS. It is true, it happened to me because I "paid too much" that year. Fortunately for me that is the only problem they found. A standard business expense deduction, similar to the one for personal incomes taxes would reduce the need to save lots of business receipts, spend time wading through all of this stuff, generate documentation and add up all of the numbers for tax purposes. A large business can handle this much easier than a tiny business, because a large business can afford to hire someone to do all of the work. It takes a much smaller percentage of their resources. I use the term tiny business because the government's "small" business definition is ludicrous. It seems to me that Nassim Taleb is also saying small is good and large is not so good. And we should be supporting small not big business.
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Post by graybeard on Jan 19, 2011 20:37:13 GMT -6
The same technology that enables NC machines also enables things like Quackbooks, which automate all your reporting. Sales tax is hardly any less burdensome than payroll taxes and withholding.
GB Principal in 3 tiny corporations
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Post by unlawflcombatnt on Jan 19, 2011 21:15:35 GMT -6
On the downside the advances in personal computers has allowed companies to off-shore work done by white collar American workers and have it done by foreigners who work for a 1/4 of our wages. The low wages paid in 3rd world countries are the major problem. Cutting you tax burden and paper work is not going to offset the advantage of a Chinese manufacture whose workers' work for 1/20th to 1/50th as much. Compared to American labor costs, Chinese labor costs are almost negligible. The latest study I've seen puts average Chinese wages at 72¢/hour. The average hourly wage of American workers is $19/hour. This makes Chinese workers 1/26th as expensive as American workers. No amount of tax cuts or tax shifting of any kind is going to offset that difference. The solution for helping save small businesses is the same as for protecting larger ones: Impose Tariffs on all foreign manufactured imports.
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twk
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Post by twk on Jan 20, 2011 10:37:33 GMT -6
The same technology that enables NC machines also enables things like Quackbooks, which automate all your reporting. Sales tax is hardly any less burdensome than payroll taxes and withholding. GB Principal in 3 tiny corporations For me Quackbooks is just a "treatment for the aliment", "aspirin for the headache" , not a cure. A retail sales tax has its own issues, but not all tiny businesses are in the retail business. I am not recommending a sales tax on services and I am NOT recommending a VAT.
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twk
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Posts: 58
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Post by twk on Jan 20, 2011 10:51:33 GMT -6
The low wages paid in 3rd world countries are the major problem. Cutting you tax burden and paper work is not going to offset the advantage of a Chinese manufacture whose workers' work for 1/20th to 1/50th as much. Compared to American labor costs, Chinese labor costs are almost negligible. The latest study I've seen puts average Chinese wages at 72¢/hour. The average hourly wage of American workers is $19/hour. This makes Chinese workers 1/26th as expensive as American workers. No amount of tax cuts or tax shifting of any kind is going to offset that difference. The solution for helping save small businesses is the same as for protecting larger ones: Impose Tariffs on all foreign manufactured imports.My concern is that tariffs are not going to happen in the near future. It is probably going to take Jeffolie's "end of the financial world as we know it" in the next couple of years before "free trade" gets fixed. Go to Google news and do a search on new free trade agreements. US and South Korea, Canada and the EU, Japan and the EU. We live in a Plutocracy and the little guy does not win. The big guys might buy into a change in the payroll/sales tax system because it may help them also. The big guys want "free trade", so we are going to get free trade.
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twk
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Posts: 58
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Post by twk on Jan 20, 2011 11:14:36 GMT -6
On a side note:
Is any body else on this board afraid of the future?
I feel like we are getting ready to drive off a cliff, and we are not even trying to slow down.
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Post by unlawflcombatnt on Jan 20, 2011 11:54:36 GMT -6
On a side note: Is any body else on this board afraid of the future? I feel like we are getting ready to drive off a cliff, and we are not even trying to slow down. Yes, I sure am. I think we've driven off the cliff already. But due to the speed we were traveling when we went off it, we haven't started falling yet. There's nothing sustaining this economy except false hopes about growth in non-existent industries, and the dumping of newly created by money by the Fed into the pockets of the rich. Symbolic of the Obamamessiah's lack of "hope-and-change" message was the following idiotic upchuck from yesterday: [/i]"[/ul] THE most tangible & fixable problem with our economy is the $250 bill/yr trade deficit with China. Eliminating it would predictably add 3.5 million jobs to the US economy (@ the rate of $70K per job). This could be accomplished, at least in part, by imposing 100% Tariffs on Chinese imports. And if such a Tariff didn't reduce Chinese imports any, it would still be a huge benefit to our economy. Since total imports from China are over $300 billion/year, it would result in a Federal revenue increase of +$300 billion. Most likely such a Tariff would do some of both--reduce Chinese imports and increase Federal revenue. As such, imposing Tariffs on Chinese imports would be THE most "pro-growth" policy this administration could implement.
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Post by blueneck on Jan 20, 2011 12:42:35 GMT -6
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Post by waltc on Jan 20, 2011 13:33:19 GMT -6
Yep we've driven off the cliff, except we haven't hit bottom yet.
When we do though, we're gonna be in for a world of hurt.
The only thing we can do until then, is prepare ourselves economically for the crash.
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