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Howard Marks: Shall We Repeal the Laws of Economics?
"...In the world of politics, there can be limitless benefits and something for everyone. But in economics, there are only tradeoffs."
Quoting Gore Vidal, again: "politics" comes from the Greek, poly, meaning many. And tics, which are bloodsuckinginsects.
I've not kept up with the Scandinavian picture. Some years ago, I saw a thing explaining about Denmark: you can make more than (equivalent) $300,000.00. But most of whatever you make over that figure goes to taxes. When there are no limits on "wealth creation" (euphemism for evil greed,) you get obscenities like Musk and Bezos and The Zuck... Oops, I forgot: ethics and economics and stock markets and all the rest of it must never be connected. Yes, I'm being sarcastic.
@Old_Joe - My remark was strictly referencing Howard Marks’ economic analysis. Perhaps it came across as overly political. Wasn’t meant to be. I have deleted it in the interest of board harmony & avoiding political debate in the investment section of the forum.
I took Howard Marks as being equally critical of the overfunding proposed by both sides. He may have had some ulterior motives in writing the piece. Don’t know. But, generally, I learn a lot from Marks’ writings.
@hank- I really really think that you have a tendency to be over-sensitive to situations like this. Your post was quite reasonable and absolutely had no justification for being deleted.
I was only using your post to comment on the changes in the nature of political "promises" as we have experienced them during our lifetimes. Unfortunately, by removing your post, you have rendered mine irrelevant, as there is no longer a basis for comparison re "political promises".
@hank, I did not read the rest of the thread, except the last two posts. As public forums go, I have not come across a better one. I hear there are some paid subscription forums, you can check them and see if they are any better.
Howard Marks credits his initial understanding of different economic systems to a book he read in junior high school!
Lengthy excerpt from near the conclusion:
“My first step toward understanding the workings of the various economic systems came in junior high school in the late 1950s, when I read George Orwell’s Animal Farm. Orwell wrote it in 1945 as a thinly veiled critique of Russia and communism/socialism. That book taught me most of what I needed to know about free markets versus command economies. If you haven’t read it, or if you read it so long ago that you can’t remember what it says, I suggest you pick it up.
“In the allegory of Animal Farm, the animals took over the running of the farm. For me, the key lesson emanates from the motto they painted on the barn wall, borrowed from Karl Marx: “From each according to his ability; to each according to his needs.”
“What an idealistic statement! It would be great if everyone produced all they could, with the more able members of society producing more. And it would be great if everyone got what they need, with needier individuals getting more. But, as the animals on the farm soon learned, if workers only get to keep what they need, there’s no incentive for the more able among them to put in the additional effort required to produce a surplus from which to fill the needs of the less able. The great challenge, of course, is to strike the proper balance: to take enough from the successful in the form of taxes to fund services, government programs, and wealth transfers without eroding their incentive to work or encouraging them to seek out low-tax jurisdictions.”
” … I did not read the rest of the thread, except the last two posts.”
Well, I surely would encourage you to read the entire thread. Howard Marks is one of @Mark’s and my favorite financial writers. Admittedly, he can be a tough read. But he provides a valuable, somewhat unique perspective on valuations and investor attitude. ISTM he goes “off the rails” a bit here. I’ve not known him to wade into politics before. But none of us is exempt from all the shouting / loud political posturing and promises being made in the run up to Nov. 5.
I also thought @Crash made some salient points and his comparison to Denmark adds to Howard Marks’ analysis of the U.S. at this juncture.
Don’t get caught up in the sparring with OJ. Been going on for about 15 years. Never ends. But truth be told - I like him. And he adds immensely to the board.
@hank - Please do not erase your post above. I look forward to your posts and learn from them. Thank you.
Appreciate that @Mark. I’ve restored the previously deleted short comment I made September 22 after I’d begun reading your excellent Howard Marks post. I did so out of concern the thread was sliding into a political tit-for-tat which benefits no one. I was wrong to delete it - especially after @Old_Joe had referenced it in his comment. Thanks for giving me a second chance.
Happy to see equanimity restored. All of the commotion did cause me to revisit the Howard Marks post, which is of course the essential standard defense of an unregulated capitalist economy.
That doesn't mean that it's wrong, or outdated. The knotty problem, in fact, is that technically it is accurate and correct, but fails to contemplate or incorporate any modifications to reflect the necessity of providing at least a minimal safety net for the least fortunate of us, or of attempting to control the inevitable manipulations of large financial interests.
I just said that Howard Marks "fails" to consider major social realities. Actually, that's incorrect- it's not that he "fails"... it's that he makes no attempt to even consider that aspect. So coldly, clinically, he's correct. But realistically, there's a lot lacking there.
A few minutes ago I pointed out that Howard Marks fails to contemplate or incorporate any modifications to reflect the necessity of ... attempting to control the inevitable manipulations of large financial interests. Coincidentally I just happened across this from NPR:
The Justice Department sued Visa on Tuesday, accusing the company of illegally monopolizing the debit card market and therefore driving up prices for businesses and consumers.
The lawsuit, filed in the Southern District of New York, says Visa handles more than 60% of debit card transactions in the U.S. and collects more than $7 billion in annual processing fees. The company allegedly used its market power to stifle competition and keep fees artificially high, according to the suit.
"We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market," Attorney General Merrick Garland said in a statement. "Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa's unlawful conduct affects not just the price of one thing — but the price of nearly everything."
Most of what Marks said recently is old news. The massive peacetime budget deficits really started under Reagan when they admitted they wand "to starve the beast".
His famous quote about the 12 most dangerous words in the English language " I am here from the government and I am here to help", probably would not be very popular in Florida today.
GOP in particular is always fighting against government spending, and supporting tax cuts until they want disaster assistance or bailout or money for their personal investments ( look at Devoes supporting her investments in charter schools). Dems do it too but at least they admit government is not the problem.
Marks also does not discuss the way the financial industry ( him included) has taken over control of the government for their own benefit. Repeal of Glass-Stengel, legalization of stock buybacks to support option based compensation, total lack of legal consequences for 2008 bailouts , allowing private equity to buy, control and bankrupt hospitals ambulances and health care, and CEO pay hundreds or thousands of times the average worker and people who actually help people ( with no consequences for bad or even criminal performance) all are consequences of a government run for the financial industry.
Our politics are in the mess we are in today because all of these actions and NAFTA (a Democratic achievement) have destroyed the working class, made homes unaffordable and eliminated the chance for a decent life and retirement unless you work on Wall Street.
What does it say about a nation when over 30% of the brightest University students major in finance, not engineering, medicine, biomedical research?
The NYT just had a long analysis of NAFTA. I would also recommend "Democracy's Discontents " by Michael Sandel
Comments
Quoting Gore Vidal, again: "politics" comes from the Greek, poly, meaning many. And tics, which are bloodsucking insects.
I've not kept up with the Scandinavian picture. Some years ago, I saw a thing explaining about Denmark: you can make more than (equivalent) $300,000.00. But most of whatever you make over that figure goes to taxes. When there are no limits on "wealth creation" (euphemism for evil greed,) you get obscenities like Musk and Bezos and The Zuck... Oops, I forgot: ethics and economics and stock markets and all the rest of it must never be connected. Yes, I'm being sarcastic.
Yeah, but that's actually pretty normal, and I doubt that a lot of folks pay all that much attention or even remember what was promised.
But it's the promises of "getting even" and "prosecuting" the other guys that is new, very unwelcome, and those will be remembered.
I took Howard Marks as being equally critical of the overfunding proposed by both sides. He may have had some ulterior motives in writing the piece. Don’t know. But, generally, I learn a lot from Marks’ writings.
I was only using your post to comment on the changes in the nature of political "promises" as we have experienced them during our lifetimes. Unfortunately, by removing your post, you have rendered mine irrelevant, as there is no longer a basis for comparison re "political promises".
Please don't be so damned sensitive!
Regards- OJ
Rough bunch here.
Lengthy excerpt from near the conclusion:
“My first step toward understanding the workings of the various economic systems came in junior high school in the late 1950s, when I read George Orwell’s Animal Farm. Orwell wrote it in 1945 as a thinly veiled critique of Russia and communism/socialism. That book taught me most of what I needed to know about free markets versus command economies. If you haven’t read it, or if you read it so long ago that you can’t remember what it says, I suggest you pick it up.
“In the allegory of Animal Farm, the animals took over the running of the farm. For me, the key lesson emanates from the motto they painted on the barn wall, borrowed from Karl Marx: “From each according to his ability; to each according to his needs.”
“What an idealistic statement! It would be great if everyone produced all they could, with the more able members of society producing more. And it would be great if everyone got what they need, with needier individuals getting more. But, as the animals on the farm soon learned, if workers only get to keep what they need, there’s no incentive for the more able among them to put in the additional effort required to produce a surplus from which to fill the needs of the less able. The great challenge, of course, is to strike the proper balance: to take enough from the successful in the form of taxes to fund services, government programs, and wealth transfers without eroding their incentive to work or encouraging them to seek out low-tax jurisdictions.” Well, I surely would encourage you to read the entire thread. Howard Marks is one of @Mark’s and my favorite financial writers. Admittedly, he can be a tough read. But he provides a valuable, somewhat unique perspective on valuations and investor attitude. ISTM he goes “off the rails” a bit here. I’ve not known him to wade into politics before. But none of us is exempt from all the shouting / loud political posturing and promises being made in the run up to Nov. 5.
I also thought @Crash made some salient points and his comparison to Denmark adds to Howard Marks’ analysis of the U.S. at this juncture.
Don’t get caught up in the sparring with OJ. Been going on for about 15 years. Never ends. But truth be told - I like him. And he adds immensely to the board.
That doesn't mean that it's wrong, or outdated. The knotty problem, in fact, is that technically it is accurate and correct, but fails to contemplate or incorporate any modifications to reflect the necessity of providing at least a minimal safety net for the least fortunate of us, or of attempting to control the inevitable manipulations of large financial interests.
I just said that Howard Marks "fails" to consider major social realities. Actually, that's incorrect- it's not that he "fails"... it's that he makes no attempt to even consider that aspect. So coldly, clinically, he's correct. But realistically, there's a lot lacking there.
Perfect.
His famous quote about the 12 most dangerous words in the English language " I am here from the government and I am here to help", probably would not be very popular in Florida today.
GOP in particular is always fighting against government spending, and supporting tax cuts until they want disaster assistance or bailout or money for their personal investments ( look at Devoes supporting her investments in charter schools). Dems do it too but at least they admit government is not the problem.
Marks also does not discuss the way the financial industry ( him included) has taken over control of the government for their own benefit. Repeal of Glass-Stengel, legalization of stock buybacks to support option based compensation, total lack of legal consequences for 2008 bailouts , allowing private equity to buy, control and bankrupt hospitals ambulances and health care, and CEO pay hundreds or thousands of times the average worker and people who actually help people ( with no consequences for bad or even criminal performance) all are consequences of a government run for the financial industry.
Our politics are in the mess we are in today because all of these actions and NAFTA (a Democratic achievement) have destroyed the working class, made homes unaffordable and eliminated the chance for a decent life and retirement unless you work on Wall Street.
What does it say about a nation when over 30% of the brightest University students major in finance, not engineering, medicine, biomedical research?
The NYT just had a long analysis of NAFTA. I would also recommend "Democracy's Discontents " by Michael Sandel