Amazon, which famously made itself into one of the world’s largest retailers as a result of a massive government subsidy in the form of an exemption from the requirement to collect state sales taxes, is again looking for the government’s help. The NYT reported that Amazon has taken out a patent on custom clothing ordering over the Internet.
It’s not clear what rights Amazon intends to secure with this patent. If it means to secure the very specific process outlined in the NYT, then it probably wasted money by filing, since it would be very easy for a competitor to alter one or more of the processes detailed in the patent and therefore avoid Amazon’s claim.
On the other hand, if the Amazon is claiming the exclusive right to make clothes to order over the Internet, then this is yet another great effort by a private company to use the patent system to stifle innovation. Selling made to order clothes on the Internet is what would ordinarily be viewed as an obvious innovation that is not patentable. (It’s in the category of telling someone to turn left at the fork in the road to reach their destination. The driving directions are not patentable.)
While it might seem far-fetched to imagine that Amazon thinks that it can patent the right to sell made to order clothes on the Internet, the company did patent one-click shopping back in the 1990s. It has used this government granted monopoly to force competitors to pay it a fee for the last twenty years.
As Jeff Bezos knows well, it’s always easier to rely on the government to give you money than to earn it in the market.
Amazon, which famously made itself into one of the world’s largest retailers as a result of a massive government subsidy in the form of an exemption from the requirement to collect state sales taxes, is again looking for the government’s help. The NYT reported that Amazon has taken out a patent on custom clothing ordering over the Internet.
It’s not clear what rights Amazon intends to secure with this patent. If it means to secure the very specific process outlined in the NYT, then it probably wasted money by filing, since it would be very easy for a competitor to alter one or more of the processes detailed in the patent and therefore avoid Amazon’s claim.
On the other hand, if the Amazon is claiming the exclusive right to make clothes to order over the Internet, then this is yet another great effort by a private company to use the patent system to stifle innovation. Selling made to order clothes on the Internet is what would ordinarily be viewed as an obvious innovation that is not patentable. (It’s in the category of telling someone to turn left at the fork in the road to reach their destination. The driving directions are not patentable.)
While it might seem far-fetched to imagine that Amazon thinks that it can patent the right to sell made to order clothes on the Internet, the company did patent one-click shopping back in the 1990s. It has used this government granted monopoly to force competitors to pay it a fee for the last twenty years.
As Jeff Bezos knows well, it’s always easier to rely on the government to give you money than to earn it in the market.
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No, the Post would never try to read the president’s mind to make Trump look bad. Instead it read Trump’s mind to make him look good. The second paragraph of the lead article told readers:
“With an eye toward keeping his core promise of creating jobs and ramping up economic growth, Trump has fixated on tax reform as the next undertaking of his administration — an opportunity for him to land a first major legislative victory after repeated failures to pass a health-care package.”
Hmmm, so the Post knows that the reason Donald Trump wants to eliminate the estate tax is to create jobs and ramp up economic growth, as opposed to save his children and those of other billionaires from paying billions of dollars in taxes? It’s great they have such mind-reading abilities, otherwise we would might find it hard to believe, since eliminating the estate tax is likely to have no noticeable impact on growth.
In the same vein, Trump’s proposal to create the mother of all loopholes, by allowing pass-through corporations to just pay a 15 percent tax rate (as opposed to the 39.6 percent tax rate now paid by high income individuals) was intended to give his family and other rich people an enormous tax break. The only job creation from this tax cut is likely to be in the tax shelter industry as the nation’s rich restructure their income to show up in pass-through corporations.
We might say the same about Trump’s plan to eliminate the alternative minimum tax. While this move is likely to score pretty much a zero on the job creation front, it would likely save Trump tens, if not hundreds, of millions annually on his tax bill.
Newspapers with reporters less skilled in mind reading would be stuck reporting on just what the president and his staff say and do. Thankfully, we have the Washington Post to tell us Donald Trump’s real motives.
No, the Post would never try to read the president’s mind to make Trump look bad. Instead it read Trump’s mind to make him look good. The second paragraph of the lead article told readers:
“With an eye toward keeping his core promise of creating jobs and ramping up economic growth, Trump has fixated on tax reform as the next undertaking of his administration — an opportunity for him to land a first major legislative victory after repeated failures to pass a health-care package.”
Hmmm, so the Post knows that the reason Donald Trump wants to eliminate the estate tax is to create jobs and ramp up economic growth, as opposed to save his children and those of other billionaires from paying billions of dollars in taxes? It’s great they have such mind-reading abilities, otherwise we would might find it hard to believe, since eliminating the estate tax is likely to have no noticeable impact on growth.
In the same vein, Trump’s proposal to create the mother of all loopholes, by allowing pass-through corporations to just pay a 15 percent tax rate (as opposed to the 39.6 percent tax rate now paid by high income individuals) was intended to give his family and other rich people an enormous tax break. The only job creation from this tax cut is likely to be in the tax shelter industry as the nation’s rich restructure their income to show up in pass-through corporations.
We might say the same about Trump’s plan to eliminate the alternative minimum tax. While this move is likely to score pretty much a zero on the job creation front, it would likely save Trump tens, if not hundreds, of millions annually on his tax bill.
Newspapers with reporters less skilled in mind reading would be stuck reporting on just what the president and his staff say and do. Thankfully, we have the Washington Post to tell us Donald Trump’s real motives.
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The NYT had a major story about a ruling from a Chinese court requiring shoe manufacturers there to pay New Balance for using its logo on their shoes. The article repeatedly used the term “counterfeit” to refer to items that are similar to those produced by a major brand, but sell at a far lower price. This is inaccurate.
For an item to be counterfeit, the buyer must be deceived. In other words, the people buying the shoes with the New Balance logo must wrongly believe that they are buying New Balance shoes. From the article it appears that this is not generally the case. It tells us that the companies use names that are like New Balance, but are not New Balance. This is presumably telling consumers their shoe is similar to the one produced by New Balance, but it is not actually a New Balance shoe.
This distinction is important for two reasons. First, as long as it is clear that these shoes are not actually made by New Balance, the company does not have to worry that its reputation could be damaged by an inferior product. If the items were true counterfeits, then their poor quality would hurt the reputation of New Balance, which would be a real source of damage to the company.
The other reason the distinction is important is that the consumer is an ally in cracking down on actual counterfeits. In this case, the consumer is deceived because she paid a premium to get a presumably high-quality product, which she did not actually get. Consumers who are victims of counterfeits would be likely to cooperate with enforcement efforts.
On the other hand, consumers who knowingly buy unauthorized copies of major brands are benefiting from the opportunity to buy the copy at a lower cost than the brand product. They presumably are willing to trust the quality of the product produced by the knock-off manufacturer, given the savings. In this case, consumers have no reason to cooperate with enforcement efforts, since they will force them to pay more for the products they are buying.
It would be helpful if the NYT and other news outlets were careful to make the distinction between counterfeits and unauthorized copies in their reporting.
The NYT had a major story about a ruling from a Chinese court requiring shoe manufacturers there to pay New Balance for using its logo on their shoes. The article repeatedly used the term “counterfeit” to refer to items that are similar to those produced by a major brand, but sell at a far lower price. This is inaccurate.
For an item to be counterfeit, the buyer must be deceived. In other words, the people buying the shoes with the New Balance logo must wrongly believe that they are buying New Balance shoes. From the article it appears that this is not generally the case. It tells us that the companies use names that are like New Balance, but are not New Balance. This is presumably telling consumers their shoe is similar to the one produced by New Balance, but it is not actually a New Balance shoe.
This distinction is important for two reasons. First, as long as it is clear that these shoes are not actually made by New Balance, the company does not have to worry that its reputation could be damaged by an inferior product. If the items were true counterfeits, then their poor quality would hurt the reputation of New Balance, which would be a real source of damage to the company.
The other reason the distinction is important is that the consumer is an ally in cracking down on actual counterfeits. In this case, the consumer is deceived because she paid a premium to get a presumably high-quality product, which she did not actually get. Consumers who are victims of counterfeits would be likely to cooperate with enforcement efforts.
On the other hand, consumers who knowingly buy unauthorized copies of major brands are benefiting from the opportunity to buy the copy at a lower cost than the brand product. They presumably are willing to trust the quality of the product produced by the knock-off manufacturer, given the savings. In this case, consumers have no reason to cooperate with enforcement efforts, since they will force them to pay more for the products they are buying.
It would be helpful if the NYT and other news outlets were careful to make the distinction between counterfeits and unauthorized copies in their reporting.
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The NYT had an article discussing various efforts to deal with companies shifting profits overseas to avoid paying the corporate income tax. The piece implies that we don’t know how to ensure that companies pay taxes on foreign profits.
Actually, it is not hard to design a system where companies cannot avoid paying taxes on their foreign profits. If corporations were required to turn over an amount of non-voting shares equal to the targeted tax rate (e.g. if we want taxes to be equal to 25 percent of profits, then the non-voting shares should be equal to 25 percent of the total), then it would be almost impossible for companies to escape their tax liability.
Under this system, the non-voting shares would be treated the same way as voting shares in terms of payouts. If a company paid a $2 dividend on its voting shares, then the government’s shares would also get a $2 dividend. If it bought back 10 percent of its shares at $100 a share, it will also buy back 10 percent of the government’s shares at $100 a share.
Under this system, there is basically no way for a company to avoid its tax obligations unless it also rips off its own shareholders. In this case, it would be outright fraud and the shareholders would have a large interest in cracking down on its top management.
It understandable that those who don’t want corporations to pay income taxes would be opposed to this sort of non-voting shares system, but it is wrong to say that we don’t know how to collect the corporate income tax.
The NYT had an article discussing various efforts to deal with companies shifting profits overseas to avoid paying the corporate income tax. The piece implies that we don’t know how to ensure that companies pay taxes on foreign profits.
Actually, it is not hard to design a system where companies cannot avoid paying taxes on their foreign profits. If corporations were required to turn over an amount of non-voting shares equal to the targeted tax rate (e.g. if we want taxes to be equal to 25 percent of profits, then the non-voting shares should be equal to 25 percent of the total), then it would be almost impossible for companies to escape their tax liability.
Under this system, the non-voting shares would be treated the same way as voting shares in terms of payouts. If a company paid a $2 dividend on its voting shares, then the government’s shares would also get a $2 dividend. If it bought back 10 percent of its shares at $100 a share, it will also buy back 10 percent of the government’s shares at $100 a share.
Under this system, there is basically no way for a company to avoid its tax obligations unless it also rips off its own shareholders. In this case, it would be outright fraud and the shareholders would have a large interest in cracking down on its top management.
It understandable that those who don’t want corporations to pay income taxes would be opposed to this sort of non-voting shares system, but it is wrong to say that we don’t know how to collect the corporate income tax.
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The Washington Post ran an article about a new study from the Congressional Budget Office (CBO) comparing the pay of federal government employees with their counterparts in the private sector. The study found that less educated employees tend to earn more in the federal government than in the private sector, while more educated workers on average earn somewhat less. On average, it found there was a small pay premium for federal employees. The article also notes several other studies with different findings, most importantly an analysis from the Labor Department that found the pay of federal employees lags the private sector by 38 percent.
It is worth noting the main reason for the difference in the two studies. The CBO analysis calculates private sector pay by looking at general categories of workers based on experience and education. By contrast, the Labor Department analysis tries to match up specific tasks performed by federal employees with their counterparts in the private sector. For example, the pay of a biologist working at the National Institutes of Health would be compared with the pay of a biologist working in the pharmaceutical industry. If done accurately, this methodology should provide a more accurate comparison.
The Washington Post ran an article about a new study from the Congressional Budget Office (CBO) comparing the pay of federal government employees with their counterparts in the private sector. The study found that less educated employees tend to earn more in the federal government than in the private sector, while more educated workers on average earn somewhat less. On average, it found there was a small pay premium for federal employees. The article also notes several other studies with different findings, most importantly an analysis from the Labor Department that found the pay of federal employees lags the private sector by 38 percent.
It is worth noting the main reason for the difference in the two studies. The CBO analysis calculates private sector pay by looking at general categories of workers based on experience and education. By contrast, the Labor Department analysis tries to match up specific tasks performed by federal employees with their counterparts in the private sector. For example, the pay of a biologist working at the National Institutes of Health would be compared with the pay of a biologist working in the pharmaceutical industry. If done accurately, this methodology should provide a more accurate comparison.
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Donald Trump gets lots of things wrong, but he doesn’t necessarily get everything wrong. On the link between budget deficits and trade deficits, Trump might be closer to the mark than the NYT.
The NYT rightly took Donald Trump to task for being lost in his trade policy. During his campaign Trump railed against NAFTA and repeatedly complained about China’s currency “manipulation.” Now that he is in the White House it is still not clear exactly what he hopes to do with NAFTA.
In the case of China, he has decided he is now good friends with China’s president Xi Jinping after meeting with him earlier in the month. Trump apparently decided it would be rude to raise the currency issue with his new friend and instead settled for some Chinese trademarks for his daughters’ clothing line.
Trump definitely deserves some criticism for this reversal, but the NYT editorial goes a bit overboard in telling readers that Trump’s tax cut plan will make the trade deficit worse:
“Those tax cuts might increase growth somewhat, but history and many experts tell us it is far more likely that the tax cuts would explode the deficit and drive up interest rates as the federal government is forced to increase borrowing. Investors from around the world would then pour money into Treasury bonds, bidding up the value of the dollar, which would increase the trade deficit — $502 billion last year — as American exports become more expensive in the rest of the world and imports become cheaper. This in turn could cost jobs. Economists say that’s exactly what happened in the 1980s when the Reagan administration and Congress drove up the federal deficit through tax cuts and increased military spending.”
Actually, there is a very weak relationship between the budget deficit, interest rates, and the value of the dollar. While the dollar did rise a great deal in the early 1980s, arguably theis was at least as much due to Paul Volcker’s interst rate policy at the Fed as the budget deficit. The dollar fell sharply in the second half of the decade following the Plaza Accord, in which our major trading partners agreed to try to bring down the value of the dollar. This is in spite of the fact that there was little reduction in the structural deficit over this period.
The biggest run-up in the value of the dollar occurred in the late 1990s, when the budget deficit was turning into a surplus, following the I.M.F.’s bailout of the countries of East Asia, after the 1997 financial crisis. Developing countries in the region and around the world began to accumulate massive amounts of reserves in order to avoid being in the same situation as the countries of East Asia. This accumulation of reserves caused the dollar to rise by more than 30 percent against the currencies of U.S. trading partners.
The trade deficit exploded in response, eventually reaching almost 6 percent of GDP in 2005 and 2006. The budget deficits of the 2000s almost certainly increased employment by creating demand in a context where there was a worldwide saving glut.
Given this history, and the fact that the U.S. economy arguably still has a considerable amount of excess capacity (the employment-to-population ratio for prime-age workers is still down by 2 percentage points from pre-recession levels and 4 percentage points from 2000 levels), it is far from clear that an increase in the budget deficit will lead to a higher dollar and a larger trade deficit.
Note: Typos have been corrected from an earlier version.
Donald Trump gets lots of things wrong, but he doesn’t necessarily get everything wrong. On the link between budget deficits and trade deficits, Trump might be closer to the mark than the NYT.
The NYT rightly took Donald Trump to task for being lost in his trade policy. During his campaign Trump railed against NAFTA and repeatedly complained about China’s currency “manipulation.” Now that he is in the White House it is still not clear exactly what he hopes to do with NAFTA.
In the case of China, he has decided he is now good friends with China’s president Xi Jinping after meeting with him earlier in the month. Trump apparently decided it would be rude to raise the currency issue with his new friend and instead settled for some Chinese trademarks for his daughters’ clothing line.
Trump definitely deserves some criticism for this reversal, but the NYT editorial goes a bit overboard in telling readers that Trump’s tax cut plan will make the trade deficit worse:
“Those tax cuts might increase growth somewhat, but history and many experts tell us it is far more likely that the tax cuts would explode the deficit and drive up interest rates as the federal government is forced to increase borrowing. Investors from around the world would then pour money into Treasury bonds, bidding up the value of the dollar, which would increase the trade deficit — $502 billion last year — as American exports become more expensive in the rest of the world and imports become cheaper. This in turn could cost jobs. Economists say that’s exactly what happened in the 1980s when the Reagan administration and Congress drove up the federal deficit through tax cuts and increased military spending.”
Actually, there is a very weak relationship between the budget deficit, interest rates, and the value of the dollar. While the dollar did rise a great deal in the early 1980s, arguably theis was at least as much due to Paul Volcker’s interst rate policy at the Fed as the budget deficit. The dollar fell sharply in the second half of the decade following the Plaza Accord, in which our major trading partners agreed to try to bring down the value of the dollar. This is in spite of the fact that there was little reduction in the structural deficit over this period.
The biggest run-up in the value of the dollar occurred in the late 1990s, when the budget deficit was turning into a surplus, following the I.M.F.’s bailout of the countries of East Asia, after the 1997 financial crisis. Developing countries in the region and around the world began to accumulate massive amounts of reserves in order to avoid being in the same situation as the countries of East Asia. This accumulation of reserves caused the dollar to rise by more than 30 percent against the currencies of U.S. trading partners.
The trade deficit exploded in response, eventually reaching almost 6 percent of GDP in 2005 and 2006. The budget deficits of the 2000s almost certainly increased employment by creating demand in a context where there was a worldwide saving glut.
Given this history, and the fact that the U.S. economy arguably still has a considerable amount of excess capacity (the employment-to-population ratio for prime-age workers is still down by 2 percentage points from pre-recession levels and 4 percentage points from 2000 levels), it is far from clear that an increase in the budget deficit will lead to a higher dollar and a larger trade deficit.
Note: Typos have been corrected from an earlier version.
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