"[I]t is undeniable that there are now an uncomfortably small number of uncomfortably large players in the fund-management and private-equity branches of American finance, in addition to our too-big-to-fail super big banks"
My own preferred solution to this is for us to have a sovereign wealth fund, so we get government officials who are accountable to the Treasury Department and to Congress overseeing the fund managers directly. (This comes with its own suite of problems around political influence, but I at least hope these would be better than the current problems where fund managers are basically not accountable at all.)
Do an _add-on_ to Social Security -- not the carve out that Bush the Younger proposed -- where we give everyone an account that invests in target-date tranches of the Sovereign Wealth Fund, accessible through postal banking. The cash part of the account is usable for basic checking, receiving direct deposits, etc. So we've resolved the problem of "the unbanked" along the way, and created a receiving point for various government cash benefits, including "helicopter drops" in future recessions.
Fund young people's accounts with Cory Booker's "baby bonds" concept, defaulted into a tranche that "matures" (i.e. the asset mix reaches a conservative blend to preserve the money) around when they turn 22. They can withdraw from that for continuing higher ed, or for a real estate purchase, or for a business investment.
Also default everyone into putting some slice of their paycheck into a tranche that matures when they turn 65. Encourage companies to start moving away from the boondoggle of the 401k system with its exorbitant fees, in favor of just using the SWF. (It may well be that the SWF farms money out to many of the same fund managers, but because of its size it will at least in theory be able to drive a much harder bargain.)
Schrodinger's cat is already out of the box and can't be put back in. It's not so much the index funds being problematic but that hedge funds and private equity are trampling over almost every sector and sucking up assets left and right. There is not a real good way to regulate this sector other than proving some sort of financial crime. Obviously changing the tax code so that income the partners derive from these funds are taxed as ordinary income and not capital gains would be one step forward.
Gretchen Morgenson, in an almost unreadable book, documents some of the real bad actors who have bought up doctors practices and nursing homes. Unfortunately, asset purchasing is not illegal other than anti-trust considerations. Governments seem to be far more worried about what Google has become than more dire threats to the economic well being of our country. Of course we can look for the Republican Party to continue to carry water for the privileged class.
And let's not forget that the accumulated capital to be deployed by the wealthy is due to the much lowered taxation rate on income. That capital is also deployed to lobby legislators to keep taxes low and to protect the various tax dodges that further reduce their tax burden.
This is a systemic issue, not one that can be managed by attacking just parts.
Tell me if I remember wrongly, but when Republicans were passing their "Tax Cuts for the Rich and Deficits Act of 2017" Democrats were pushing back on details like taxation of graduate student stipends and carefully wonking about how unlikely it was that a small decrease in the corporate tax rate would attract enough foreign investment to the US to make the tax cuts growth promoting and revenue neutral. Did they do even that in response to the GWB cuts?
While finance can be the tail that wags the dog, I think Wolf's ("The Crisis of Democratic Capitalism") more encompassing argument about how capitalism has developed, particularly since the 1980s, is more persuasive in regards to its impact on politics and society.
IOW, while finance is a problem, it is similar to the problem of capitalism in general as large corporations become ever more powerful and unconstrained.
Those are nice reviews; I haven't read either book, but you have piqued my interest.
It must be significant that we all elide the cleansing of the temple to just driving *the money-changers* from the temple. Yet both John and the synoptic gospels agree that the object of Jesus' wrath was *merchants* and money changers. Here is Matthew, for example:
And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the [584] moneychangers, and the seats of them that sold doves,
13 And said unto them, It is written, [585] My house shall be called the house of prayer; [586] but ye have made it a den of thieves.
We instinctively feel that money-changing is inherently less legitimate than any other form of commerce; it pains us to lump them together. Nor is this a purely modern perspective; Augustine argued that there must have been two distinct temple cleaning operations, one of merchants and the other of money-changers. He thought that explained the difference in tone between e.g. "den of thieves" and John's formulation "make not my Father's house a house of merchandise".
I have to say that I don't find this very convincing. Why would Jesus drive out the merchants and leave the money-changers alone first time around, if they were so much worse? And since John mentions both, why should he pull his punches? John:
14 And he found in the temple those that sold oxen and sheep and doves, and the changers of money sitting:
15 and he made a scourge of cords, and cast all out of the temple, both the sheep and the oxen; and he poured out the changers' money, and overthrew their tables;
16 and to them that sold the doves he said, Take these things hence; make not my Father's house a house of merchandise.
"[I]t is undeniable that there are now an uncomfortably small number of uncomfortably large players in the fund-management and private-equity branches of American finance, in addition to our too-big-to-fail super big banks"
My own preferred solution to this is for us to have a sovereign wealth fund, so we get government officials who are accountable to the Treasury Department and to Congress overseeing the fund managers directly. (This comes with its own suite of problems around political influence, but I at least hope these would be better than the current problems where fund managers are basically not accountable at all.)
Do an _add-on_ to Social Security -- not the carve out that Bush the Younger proposed -- where we give everyone an account that invests in target-date tranches of the Sovereign Wealth Fund, accessible through postal banking. The cash part of the account is usable for basic checking, receiving direct deposits, etc. So we've resolved the problem of "the unbanked" along the way, and created a receiving point for various government cash benefits, including "helicopter drops" in future recessions.
Fund young people's accounts with Cory Booker's "baby bonds" concept, defaulted into a tranche that "matures" (i.e. the asset mix reaches a conservative blend to preserve the money) around when they turn 22. They can withdraw from that for continuing higher ed, or for a real estate purchase, or for a business investment.
Also default everyone into putting some slice of their paycheck into a tranche that matures when they turn 65. Encourage companies to start moving away from the boondoggle of the 401k system with its exorbitant fees, in favor of just using the SWF. (It may well be that the SWF farms money out to many of the same fund managers, but because of its size it will at least in theory be able to drive a much harder bargain.)
Schrodinger's cat is already out of the box and can't be put back in. It's not so much the index funds being problematic but that hedge funds and private equity are trampling over almost every sector and sucking up assets left and right. There is not a real good way to regulate this sector other than proving some sort of financial crime. Obviously changing the tax code so that income the partners derive from these funds are taxed as ordinary income and not capital gains would be one step forward.
Gretchen Morgenson, in an almost unreadable book, documents some of the real bad actors who have bought up doctors practices and nursing homes. Unfortunately, asset purchasing is not illegal other than anti-trust considerations. Governments seem to be far more worried about what Google has become than more dire threats to the economic well being of our country. Of course we can look for the Republican Party to continue to carry water for the privileged class.
Yes: for-profit corporate health care looks to be a very bad idea.
And let's not forget that the accumulated capital to be deployed by the wealthy is due to the much lowered taxation rate on income. That capital is also deployed to lobby legislators to keep taxes low and to protect the various tax dodges that further reduce their tax burden.
This is a systemic issue, not one that can be managed by attacking just parts.
Tell me if I remember wrongly, but when Republicans were passing their "Tax Cuts for the Rich and Deficits Act of 2017" Democrats were pushing back on details like taxation of graduate student stipends and carefully wonking about how unlikely it was that a small decrease in the corporate tax rate would attract enough foreign investment to the US to make the tax cuts growth promoting and revenue neutral. Did they do even that in response to the GWB cuts?
What is your point other than trolling?
While finance can be the tail that wags the dog, I think Wolf's ("The Crisis of Democratic Capitalism") more encompassing argument about how capitalism has developed, particularly since the 1980s, is more persuasive in regards to its impact on politics and society.
IOW, while finance is a problem, it is similar to the problem of capitalism in general as large corporations become ever more powerful and unconstrained.
I made my purchase. Can’t wait!
Those are nice reviews; I haven't read either book, but you have piqued my interest.
It must be significant that we all elide the cleansing of the temple to just driving *the money-changers* from the temple. Yet both John and the synoptic gospels agree that the object of Jesus' wrath was *merchants* and money changers. Here is Matthew, for example:
And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the [584] moneychangers, and the seats of them that sold doves,
13 And said unto them, It is written, [585] My house shall be called the house of prayer; [586] but ye have made it a den of thieves.
We instinctively feel that money-changing is inherently less legitimate than any other form of commerce; it pains us to lump them together. Nor is this a purely modern perspective; Augustine argued that there must have been two distinct temple cleaning operations, one of merchants and the other of money-changers. He thought that explained the difference in tone between e.g. "den of thieves" and John's formulation "make not my Father's house a house of merchandise".
I have to say that I don't find this very convincing. Why would Jesus drive out the merchants and leave the money-changers alone first time around, if they were so much worse? And since John mentions both, why should he pull his punches? John:
14 And he found in the temple those that sold oxen and sheep and doves, and the changers of money sitting:
15 and he made a scourge of cords, and cast all out of the temple, both the sheep and the oxen; and he poured out the changers' money, and overthrew their tables;
16 and to them that sold the doves he said, Take these things hence; make not my Father's house a house of merchandise.