[FoRK] Obama: communitarian, redistributionist, confused? (from NYT)

J. Andrew Rogers andrew at ceruleansystems.com
Tue Aug 26 12:00:14 PDT 2008


On Aug 26, 2008, at 11:37 AM, Lucas Gonze wrote:

> On Tue, Aug 26, 2008 at 11:05 AM, J. Andrew Rogers
> <andrew at ceruleansystems.com> wrote:
>> ) Explain why more capital should be put into "startups" and made  
>> less
>> available to companies that would produce a superior rate of return  
>> in a
>> free and fair market.  You are suggesting that redirecting capital  
>> from more
>> viable companies to less viable companies is an "improvement".  What
>> happened to the economy the last time the government effectively  
>> subsidized
>> risk to encourage low-quality investment?  See: sub-prime lending
>
> So your feeling that Obama's tax policies would be disastrous is based
> on the idea that favoring startups is bad for the economy?


Simultaneously favoring low-quality "startups" and disfavoring high- 
quality non-"startups" in capital allocations is most assuredly  
disastrous to the economy. It encourages the non-productive allocation  
of capital in industries that have to compete globally. This is  
aggravated by the fact that no one seems to be able to objectively  
define "startup" in a way that is not badly biased toward certain  
types of businesses, unfair, and easily gamed.


> That's an interesting idea which is worth exploring, but a bit out of
> the mainstream.  Consensus is that tax policy which encourages
> startups is pro-business.


Tax policy which encourages startups is good for the economy.  Tax  
policy which encourages startups while simultaneously actively  
discouraging all other business is bad for the economy, since startups  
are only a small percentage of high-value activity in a well- 
functioning economy.  The economic distortion in the former is *much*  
less severe than the latter and net benefit to the economy, but that  
is not what is being proposed.

The consensus that does not understand the difference is the same  
consensus that gave us George W. Bush, DMCA, etc.  I love startups,  
but they are not some kind of absolute objective good.  Merely *being*  
a startup is not the value a startup can provide to an economy.

Cheers,

J. Andrew Rogers



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