All the Missing Billions of Our New Gilded Age

one percent pay gap auth
(Tony Auth via GoComics.com)

Professor Krugman blogs:

I had lunch with Gabriel Zucman today, co-author of the startling new paper (pdf) showing that the concentration of wealth at the very top — the 0.1% — is fully back to Gilded Age levels. And he pointed me to another paper that flew under my, and I suspect other peoples’, radar: his demonstration that a lot of wealth at the top is held in offshore tax havens (pdf).

You might have suspected that already, but it’s one thing to rely on anecdotal evidence, another thing to find the clear footprint of underground money in official statistics. What Zucman points out is that we have international data on investment positions, with each country reporting its assets abroad and foreign-owned assets at home. But the numbers don’t add up: globally, liabilities are substantially larger than assets. That’s mathematically impossible, but Zucman shows that it’s what will appear in the statistics if a lot of money is run through offshore havens, so that the ownership doesn’t show up in anyone’s national statistics. And he uses other data and information to show that this is by far the most compelling explanation…

98 replies
  1. 1
    efgoldman says:

    Tumbrels are too good for the bastards.

  2. 2
    geg6 says:

    Jump, you mother fuckers. Before we bring out the tumbrels.

  3. 3
    Baud says:

    I don’t get the cartoon. So we shouldn’t be fighting for equal pay?

  4. 4
    geg6 says:

    @Baud:

    I hope not. But it does have a point in that this is how they divide and distract us from their thievery. Not us, as in you and me, but “us” as in most of the country. It’s no different than the Southern Strategy.

  5. 5
    srv says:

    This is just the normal evolution of things. Once they have robots and drones, our betters can fix all the big problems like traffic, hunger and the environment through eradication.

    You people need to welcome our new state-less overlords.

  6. 6

    Meanwhile, “liberal” columnists like Nicholas Kristof, give the GOP every benefit of the doubt by discussing the issue of income inequality on their terms.

  7. 7
    Baud says:

    @geg6:

    While I agree that they will use every tool in the toolbox, I’ve never been a fan of the “distraction” framing. There’s simply no way to judge which issues are distractions and which are worth fighting for.

  8. 8
    Schlemizel says:

    What I don’t know is how, in the world in which we actually live as opposed to the one we would like, do we put an end to hiding money offshore? There really is no good way to make these bastards act like members of a human society. There are no laws we could pass to make them behave as if they were part of America, no rules that they could not either circumvent. We really don’t have a chance. While the Guillotine is attractive and well deserved I think many would just pick up and move offshore themselves while continuing to operate the way the currently are.

  9. 9
    mai naem says:

    Why can’t these pigs be forced to live solely in their offshore havens? Caymans, The Channel Islands, Monaco, San Marino- whatever. You can’t go to France during Cannes, NY for New Years, Canada to get drunk, Germany for Oktoberfest, the UK to see Stonehenge, Chinese New Years in Hong Kong. Forget going to the Grand Canyon, the Taj Mahal, Angkor,Rio, the Olympics. Forget using the American court system. Sit there and roll around in your money. Build the finest medical facilities in the world on your island. Build the finest schools on your little island. Too bad if you don’t have the space. Oh, and if there’s some natural disaster in your residence just make sure you have all that you need to make sure you’re okay. If there’s some manmade disaster like some oil spill – sit and eat it.

  10. 10
    geg6 says:

    @Baud:

    True, but you have to pick your fights. Personally, I think we should fight both at once. They are linked and worth the battle. We have to find our voices like the progressives in the Gilded Age, when the battles were being fought on very similar issues. If we have to fight those battles again, it’s worth it. It was worth it then and it’s worth it now. It’s up to us to demonstrate that it’s a part of the same battle, we’re all in it together. I don’t know how we do it, or I’d be running for office and not commenting on a blog. But I’m in it for life, regardless.

    Being a liberal sucks, for the most part. But the victories are so sweet that it’s worth it.

  11. 11
    Mike in NC says:

    Want to see America in 50-100 years? Check out that Matt Damon sci-fi flick “Elysium”, where the fabulously rich live on space stations above a dystopian planet Earth where the bottom 99.5% fight over scraps.

  12. 12
    Baud says:

    @Mike in NC:

    Wasn’t that a Star Trek TOS episode?

  13. 13
    Baud says:

    @geg6:

    All true. Although being a liberal isn’t so bad. We get to hang out on this fancy blog after all.

  14. 14
    JGabriel says:

    Mike in NC:

    Want to see America in 50-100 years? Check out that Matt Damon sci-fi flick “Elysium”, where the fabulously rich live on space stations above a dystopian planet Earth where the bottom 99.5% fight over scraps.

    That’s not the future – it’s the present. The space stations are just a metaphor for the stratospheric wealth gap.

    .

  15. 15

    @Baud: Are you thinking of DS9’s Past Tense ?

  16. 16
    Tommy says:

    @JGabriel: Yeah saw a story with a chart of the highest household incomes. Four of the ten are in the DC metro area. I used live there and those counties are like their own little walled off nation. I had some friends that lived in them and it was almost like another world going to them. And this was back in the late 90s. I assume it has only gotten worse.

  17. 17
    Baud says:

    @schrodinger’s cat:

    The Cloud Minders, from the original series.

  18. 18
    Violet says:

    @Baud: Of course we should be fighting for equal pay. But everyone’s pay would be much, much higher, whether it was equal or not, if we managed to band together to increase the minimum wage, make 1%ers pay their fair share in taxes, limit inherited wealth, stop corporate mooching, etc.

    It’s not an either/or–either we fight for equal pay OR we fight the 1%. It’s a both/and–we fight for equal pay AND we fight the 1%. Right now there’s some fighting for equal pay and there’s very little fighting of the 1%. The second one needs a lot more attention and effort.

  19. 19
    JPL says:

    The next election cycle could be brutal because a very few wealthy folk, can control the message. The Supreme Court has opened the flood gates.

  20. 20
    Tommy says:

    @JPL: Brutal might be an understatement.Heck my pretty liberal congress critter didn’t run for reelection. A former two star general ran against a tea party guy. Young guy worth about $50M he got from his dad. He almost won, which would have been unheard of in my district.

    He flooded the market with ads, which is easy to do in a media market that cost a fraction of a large media market. I think we don’t know what is going to happen in the rural, middle of the US where a million dollars goes a lot farther then in say LA or NYC,

  21. 21
    Chris says:

    @schrodinger’s cat:

    That was one of DS9’s better moments.

  22. 22
    Chris T. says:

    I did not merely “suspect”, I knew; but it was not until I read Nicholas Shaxson’s Treasure Islands that I learned how it was done.

    It turns out that the US / Wall Street is the main “offshore haven” for most of Europe, and The City is the main offshore haven for the US. The Caymans, Jersey, and so on are all significant as well, but it’s the big banking centers where the money is hidden in plain sight.

  23. 23
    Violet says:

    @JPL: Could be. Or it might end up differently. Last presidential election cycle we thought the Citizens United decision would ruin everything. Instead, a bunch of billionaires spent propped up presidential candidates like Newt Gingrich. And the conservative SuperPACs didn’t end up delivering.

    Maybe they’ll learn from last go-round and get more for their money this time. I’m skeptical, though. The ultra rich are so separated from reality they think their money can buy them everything. It can’t.

  24. 24
    Anne Laurie says:

    @Schlemizel:

    What I don’t know is how, in the world in which we actually live as opposed to the one we would like, do we put an end to hiding money offshore?

    The two classical methods used by sovereign governments are to keep the money from going out in the first place (confiscatory taxation of assets sent out of the country, like Great Britain in the 1950s) or to discourage the ‘tax haven’ countries from accepting offshore funds. Look at the various Swiss bank maneuvers involving assets stolen by the Nazis, for instance. Or the ‘bank account tax’ invoked by the EU in Cyprus just last year, which were widely suspected of being a way for Russia to crack down on those of its more fortunate citizens who were hiding their ill-gotten gains rather than using them patriotically in the motherland.

    The reason thieves like the Koch brothers spend their precious money buying lawmakers is that laws could be turned against them. First step in the neverending war is convincing enough of us to stop making excuses for them

  25. 25
    Chris says:

    @Violet:

    That’s certainly the epitaph of the Romney campaign. The pessimist in me says they can’t stay dumb forever, but maybe they can.

    All that money will probably go much farther in local elections, though. Not as many people scrambling to buy local governments as the national one, and money goes a lot farther there than on the national stage. And if you can buy up the local elections, it’s a lot easier to screw up the job of whoever wins the national one.

  26. 26
    some guy says:

    so let me get this straight, the 0.1% hide their money in off-shore tax havens? This tax avoidance scheme is different from Apple, ExxonMobil, Catepillar, Bank of America, Google, Oracle, and the rest of the top publicly traded US companies how, exactly?

  27. 27
    Tommy says:

    @Violet: I hope with all my heart you are right. I was an ad agency guy for most of my adult life. I know advertising. My gut is the billionaires are as you said out of touch with reality. I mean Newt, really that is who you want to spend tens of millions on? Really. One of the fastest way to waste money on advertising is making an ad you like and not your target audience.

  28. 28
    Cassidy says:

    @some guy: point?

  29. 29
    Mike in NC says:

    @Tommy: McLean, VA is probably the richest of the DC suburbs. That’s where folks like Colin Powell and John McCain have gated mansions out of the sight of the riffraff. Cheney lived there, too, before decamping to the Naval Observatory’s VP residence.

  30. 30
    Tommy says:

    @Mike in NC: My former boss lived in McLean, VA. Wealth beyond words.

  31. 31
    Violet says:

    @Chris: It will go farther in local elections, that’s for sure. But there are other forces at play too. Candidates that accidentally say what they believe (Todd Aiken), Republican legislatures that overstep and get people mad at them (North Carolina), corruption (VA Governor Bob McDonnell). No amount of money is going to stop those things from happening. In fact, money can make it worse in some cases (corruption).

    If you’re talking really local elections–city council, mayor–those are the kinds of offices where the elected officials have to govern or they get thrown out of office. You elect a mayor and then roads don’t get fixed and snowplows don’t run and trash collection is cut off–that mayor will get thrown out of office no matter how much money is spent on fancy commercials. And as we all know, Republicans don’t like to govern. They want to whine and posture and talk about lowering taxes but they sure as hell don’t want to get in and do the hard work of governing. And a local government that won’t do the work isn’t going to get to stick around.

    I’m more optimistic than you guys about the money in politics. In the end, there’s only so far money can go. And when there’s tons of money being thrown around, there’s a lot of people stepping up to get a piece of the pie. Really dumb commercials get made, expensive consultants give bad advice, bad candidates get propped up. People involved can get sloppy and lazy because of all that cash flying around and then stuff starts falling apart.

    I guess we’ll see.

  32. 32
    Roger Moore says:

    @Violet:

    Last presidential election cycle we thought the Citizens United decision would ruin everything. Instead, a bunch of billionaires spent propped up presidential candidates like Newt Gingrich.

    I don’t want to depend on my opponent’s incompetence as a long term strategy. We really need to figure out a way of shutting off the flow of money, or the billionaires will eventually figure out how to spend their money intelligently.

  33. 33
    Omnes Omnibus says:

    @Violet: I lean toward your view on this. After a point, people tune out ads.

  34. 34
    Tissue Thin Pseudonym (JMN) says:

    @some guy: Keep in mind that those corporations pay taxes in whatever jurisdiction the money is earned and they don’t need to pay U.S. taxes on it until they move the money into the country. They cannot pay it out as dividends or share buybacks until it is repatriated.

  35. 35

    @Chris: DS9 is my favorite Trek.

  36. 36

    Money in politics is important but once you reach a saturation point, throwing more ad money just gives you diminishing returns. When Scotty was running against Warren, you could not get away without listening to both their ads if you turned on the TV. After a while I just tuned them out.

    A better ground game and turning your voters out is the key. When the turnout is low GOP wins, so we should focus on GOTV.

  37. 37
    Violet says:

    @Roger Moore: I agree it’s a problem and I’m all for figuring out how to shut off the money flow. But in some ways I kind of like seeing it out there in the open. Let’s see Sheldon Adelson prop up a ridiculous Newt Gingrich. Let’s watch candidates grovel in front of billionaires. At least if we can see it then sunlight has a chance of being a disinfectant.

  38. 38

    Since this is an open thread, my friend has a kickstarter for her second album. I have a post about it. It has one of her music videos. If you like her music and would like to support her visit her kickstarter. I have the links in the post.

    If it makes any difference, she has 3 kittehs, so Tunch would approve.

  39. 39
    Roxy says:

    @Mike in NC:

    Cloud Minders from the original Star Trek series had the Cloud Dwellers and labor-class Troglytes, who work hard in the dangerous mines, while the elite city-dwellers (cloud dwellers) reap all the profits and live in luxury.

    Damn sounds like what’s happening today.

  40. 40
    Roxy says:

    The Supreme Court also is part of this 2nd Gilded Age as they were during the 1st Gilded Age. Take a look at the cases the Supreme Court was ruling on during the 1st Gilded Age. Just like today, they were ruling in favor of business and the rich.

    History is repeating itself

  41. 41
    FlipYrWhig says:

    @Roxy: Sounds like a pretty straight crib of the Morlocks and Eloi from H.G. Wells’s _Time Machine_.

  42. 42
    Roger Moore says:

    @Tissue Thin Pseudonym (JMN):
    The very strong suspicion is that they’re holding out, hoping for some kind of tax holiday to repatriate it. One of the ways the tools of the ultra-rich respond to talk about money in offshore tax havens is by proposing a repatriation holiday, where we would agree to look the other way while they brought it back into the US. It’s never clear to me why we’re supposed to want to do that, since the big reason for wanting to bring that money back on-shore is so we can tax it, but you can bet that will by high on the Republicans’ agenda the next time they get back in power.

  43. 43
    Pogonip says:

    @mai naem: Where do we get the firepower to hold them there?

  44. 44
    Tissue Thin Pseudonym (JMN) says:

    @Roger Moore: Sure. Those holidays, though, are only for money earned in a foreign jurisdiction on which the proper foreign taxes were paid at the time. They do not apply to money that has been illegally hidden.

  45. 45
    kdaug says:

    Late to the party, but damn you, Cracker. This has been the earworm today.

    I hadn’t thought of Bow Wow Wow in years.

  46. 46
    gogol's wife says:

    @Violet:

    Thank you for this. I keep telling myself this when I despair.

  47. 47
    gogol's wife says:

    @Violet:

    Linda MacMahon has tried it twice here in CT and it hasn’t worked — because she’s still Linda MacMahon!

  48. 48
    Ultraviolet Thunder says:

    Low inflation favors capital over indebted labor so we have low inflation. High unemployment favors capital over labor so we have high unemployment. Automated services and manufacturing raise productivity while allowing capital to retain profit and not pay labor so we have automation.
    Read those three sentences in 2024 and you’ll be looking at the last decade’s history. The 0.1% will continue to vigorously support policies that allow them to retain their wealth.
    Oh, and where did the economic conditions that led to high unemployment and indebted labor come from? I believe that was capital wrecking the financial system and getting away with it scott free.

  49. 49
    kdaug says:

    Pinnochio’s a real boy. Look around.

  50. 50
    🌷 Martin says:

    @Tissue Thin Pseudonym (JMN):

    Keep in mind that those corporations pay taxes in whatever jurisdiction the money is earned and they don’t need to pay U.S. taxes on it until they move the money into the country. They cannot pay it out as dividends or share buybacks until it is repatriated.

    Well, let’s narrow this down to one case. Apple has probably 10% of that offshore cash.

    I don’t think for them it’s case of waiting for a tax holiday. They are doing buybacks and dividends regardless (to the tune of $60B, one of the largest buybacks ever). They’re not having a problem with that because they floated $17B in bonds to pay for the buyback. It’s far cheaper for them to pay the 1% in interest for the bonds than the tax liability.

    And they are investing in the US. They’ve built several large data centers, and on top of that built out solar and fuel-cell power for them. But the main use for their cash is either capital investment in equipment or prepayment of goods. They buy a lot of the equipment that is used in their suppliers factories, and some of those are in the US (Samsung semi factory in Texas, GT Advanced in Arizona, Flextronics in Texas, Corning in Kentucky) but most are outside of the US, and Apple can’t do terribly much to change that. There simply are few suppliers in the US producing the kinds of things Apple needs. So Apple would repatriate the cash simply to move it back overseas because most of their suppliers are overseas. Plus a lot of Apple retail expansion is taking place overseas because Apple is trying to grow sales in those markets. They put a few billion dollars into those as well.

    There’s really no reason for them to move the money back to the US because there’s simply not much use for it here. If there were assemblers here, or semiconductor suppliers here, or LCD suppliers here, or battery suppliers here, Apple would have more reason. But there aren’t – and these aren’t things that Apple themselves does, so there are no Apple employees to bring back to the US. They’re already all here. Hell, they’re even spending $5B on a new HQ here, as something of a vanity project.

  51. 51
    🌷 Martin says:

    @some guy:

    This tax avoidance scheme is different from Apple, ExxonMobil, Catepillar, Bank of America, Google, Oracle, and the rest of the top publicly traded US companies how, exactly?

    Because at least some of those businesses earned their money outside the US and will spend their money outside the US. There’s no reason to repatriate it. The top 1% often aren’t earning it outside the US and often aren’t spending it outside the US.

    I think the better question to ask is ‘What productive use is that money being put to?’ If the answer is ‘none’, well, that’s the real problem.

  52. 52
    Tommy says:

    @🌷 Martin: I feel like Apple gets a little more heartache on this topic then they should, but they have so much cash in the bank that it is jaw dropping. And the new headquarters they want to build is so amazing I am not sure what to even say.

  53. 53
    srv says:

    @Ultraviolet Thunder: I was thinking of rebranding cat food for nursing homes, but you got me to think that was backwards.

    Perhaps a caviar flavored cat food for the 0.1% of cats would be a better idea.

  54. 54
    Tommy says:

    @srv: I bet they already have it. Look I like nice things but at some point you are just wasting money. Heck people like Paris Hilton carries her dog around in like a $10,000 dog carrier/purse. Now I used to travel a lot for work and nice luggage is well nice, but come on.

    Back to the pet idea, my Target has a new section of dog food. A single serving can cost more then $10. Look I love my pets but I am not spending more on a meal for my wonderful cat then I might at Subway for myself. But alas clearly a lot of people will.

  55. 55
    srv says:

    @🌷 Martin:

    these aren’t things that Apple themselves does

    But Apple does fund many of these suppliers up front with the cash, driving R&D and capital investment costs for mass production. In turn, they lock-up access to the tech in advance (touch screens, gorilla glass, retina displays). These are things that would not happen in some cases, or would take a lot longer to happen otherwise if they were just another company.

    So at least they’re trying to do something “new” with their cash.

  56. 56
    Tommy says:

    @srv: I don’t think most people understand how little Apple makes outside of software. Same with many tech companies. Heck my Google Nexus tablet doesn’t have a single thing in it that was made by Google …. outside of the Jellybean OS.

  57. 57

    Y’all following all of this Bundy Ranch stuff? Bunch of armed teabaggers rallying to defend some asshhole who’s been illegally grazing his cattle on BLM land for years. He’s their big damn hero.

    I think this is bringing up all of their Ruby Ridge fantasies.

  58. 58
    🌷 Martin says:

    @Tommy: Apple is a unique case. At this stage they’re basically an investment bank. That came in no small part due to the tightening of capital after 2008. Their suppliers want to expand, there was no money out there to do that, so Apple put up the cash. It’s all highly strategic, though. If you want to buy industrial sapphire, you’re probably SOL. Apple’s CapEx last year was $11B. Their purchase commitments last year were $22B. Dividends and buybacks were another $25B combined. They’re using a decent chunk of their cash, but it refills as fast as it goes out. And keep in mind that Apple was nearly bankrupt when CEO Tim Cook was first hired. Apple is going to keep a large endowment on hand to make sure they can invest in their business even is revenues fall off.

    Apple also relied on their cash after the Japan tsunami. Many of their suppliers were damaged, workers displaced, etc. Apple flew executives with cash-on-hand to Japan the next day to give to suppliers so they could get their businesses repaired and up and running, get their workers into housing and back to work. Sony had to delay a number of products due to the tsunami, but Apple reported no impact even though a number of their key supplies were affected. When those suppliers got up and running, all of their production went to Apple because Apple was there to get them working when it mattered.

    Recently Apple has begun investing in diversifying its supply chain to protect against natural disasters impacting it like that. Apple is concerned about supply chain disruption in China – either due to natural or manmade disaster or political unrest. And they’re investing in moving production to different geographic regions – right now Brazil, Turkey, and the US. Turkey suffers from both natural disasters and political unrest, but they are also investing heavily in modern industries (more than the US is). Israel is another investment region.

  59. 59
    Tommy says:

    @Southern Beale: The guy also has 14 children. Look to each your own but 14 children. What is it 1850 or something? I bet as more stuff comes out about the guy we won’t be that surprised he is a loon. Heck the Reuters story I just read said he only owes the government $300,000 not the million BLM says. I am like OK the at least pay that.

  60. 60
    efgoldman says:

    @Southern Beale:

    Y’all following all of this Bundy Ranch stuff? Bunch of armed teabaggers rallying to defend some asshhole who’s been illegally grazing his cattle on BLM land for years. He’s their big damn hero.

    Some discussion of it next thread down.

  61. 61
    🌷 Martin says:

    @srv: What I meant is that Apple doesn’t fully control how production takes place. When they invest in Sharp, they can’t necessarily mandate that Sharp build the new factory in the US and hire US workers. That’s what a lot people want to see happen, and it does happen in some cases, but there’s a limit to what can be done there.

    As to locking up tech, that’s controversial in other ways. That Apple can lock up tech means that there is insufficient supply, which usually reflects a misallocation of capital. It’s not that there isn’t money out there but that investors are either bad at determining good places to invest, or are disincentivized from doing it. In my opinion, it’s the former. They’d rather invest in the financial machinery itself (which has a greater ability to manipulate it’s own outcomes) rather than something as risky as sapphire production. Basically, the capital market is inefficient because everyone would rather try to screw other people out of cash rather than actually make something, because the people that have most of the money don’t know how to make anything. Mitt Romney doesn’t know shit about producing anything – he just knows how to buy a company, borrow against the workers pension, and then sell it for more than he paid. Nothing of value was created. So Apple is out there with little competition, gobbling up supply because almost nobody else can measure the value of it.

    But the downside of Apple cornering markets like that is that it makes it impossible for smaller players to compete. It’s why the phone market is just Apple and Samsung, and Apple is even squeezing Samsung out of markets, and Samsung is responsible for 40% of South Korea’s GDP. Monopsonies are not illegal, but they can still be damaging to markets. The reason they aren’t illegal is that Apple isn’t able to stop new supply from arriving. It’s the incompetence of the capital market preventing new supply from arriving.

  62. 62
    Tommy says:

    @🌷 Martin: On some tech site a few years ago they talked about the supply chain for an iPhone launch and it was staggering how detailed, organized, and orderly it was. But from your comments you clearly know more about this topic then I do. Tried to find the article but couldn’t. The logistics of their operation is mind-blowing.

    That wasn’t always the case. As a Mac user from 1987 until about 2003 I recall times where they had a product launch (when they were using Motorola chips) and you couldn’t even place an order. Those times are a thing of the past.

  63. 63
    cckids says:

    @gogol’s wife:

    Linda MacMahon has tried it twice here in CT and it hasn’t worked — because she’s still Linda MacMahon!

    Sure, for now. Sooner or later they’ll wise up & run someone who isn’t so repellent, and then what will we do?

  64. 64
    Tommy says:

    @cckids: And that is what worries me, they’ll start to run semi-sane folks. I’ve lost count of how many seats they have lost running candidates like Akins and MacMahon.

  65. 65
    Roger Moore says:

    @Tommy:

    Last presidential election cycle we thought the Citizens United decision would ruin everything. Instead, a bunch of billionaires spent propped up presidential candidates like Newt Gingrich.

    You need to check the details carefully. I’ve seen two figures mentioned, $300K in unpaid grazing fees and $1M owed to the government. It’s possible that both are true because the $1M includes stuff like legal fees and interest. The thing I’m maddest about is that it’s taken more than 20 years for the government to get to the point of physically removing the cattle. It seems crazy that he’s been allowed to go on for this long.

  66. 66
    Tommy says:

    @Roger Moore: The most current number I’ve seen is $1.1. I can’t tell what part of that are fees for the grazing rights and court fees/fines (appear there are a lot of these). I wish he paid what he owes but I am like you, that it took 20 years to do anything just isn’t acceptable.

    Look I am all for his right to go to court and appeal decisions, but 20 years. Give me a break.

  67. 67
    efgoldman says:

    @Tommy:

    And that is what worries me, they’ll start to run semi-sane folks. I’ve lost count of how many seats they have lost running candidates like Akins and MacMahon.

    That assumes a TeaHadi primary electorate that can choose rationally.

  68. 68
    Tissue Thin Pseudonym (JMN) says:

    Well that period didn’t go like I was hoping . . .

  69. 69
    Roger Moore says:

    @🌷 Martin:

    It’s why the phone market is just Apple and Samsung

    That’s more than a bit of an exaggeration. There are several other big players, including LG, HTC, Motorola, and Sony. Nokia probably could be bigger in the market than they are if they hadn’t shackled themselves to Microsoft. And there are a bunch of cheap makers like Huawei and Kyocera. Those guys don’t have as much of the smartphone market as Apple or Samsung, but they are able to make phones- some of them at least as good as anything from Apple or Samsung- and make money in the process.

    That said, I think your point about the uselessness of much of Wall Street is well taken. It certainly seems that a lot of the big investment banks and hedge funds are making money mostly by leeching off the real economy rather than by wisely allocating capital where it’s needed. The natural response is something like what you’re describing: companies with good management and cash reserves effectively taking over the role of capital distribution from investment banks. I expect to see more of it in the growth of giant conglomerates than in companies lending money to their suppliers, though.

  70. 70
    Higgs Boson's Mate says:

    Wait, isn’t the NSA supposed to be aware of everything that’s going on? And yet that agency managed to miss the transfer of billions of dollars into offshore accounts. That money could have gone anywhere, including going into the hands of very bad people. What the fuck are we paying for here?

  71. 71
    Tommy says:

    @Higgs Boson’s Mate: I had the same thought but came to this conclusion. Sure we know of the tech companies helping out the NSA but we’ve heard nothing about the banks. I can’t believe they are not important in trying to determine where money might be going to terrorist organizations. I am thinking the NSA wants help when they want the bank records of somebody and doesn’t have a court order.

    So I bet they are willing to look the other way as long as the banks give NSA what they want. Or at least that is what I think.

  72. 72
    Jim Faith says:

    @FlipYrWhig:

    Or Fritz Lang’s Metropolis – a 1927 silent classic. If you haven’t seen it, Netflix has the version with the Giorgio Moroder soundtrack.

  73. 73
    Roger Moore says:

    @Tommy:
    It also worries me about what’s going to happen when the government starts to shut down grazing in other areas. There are plenty of other areas of BLM land where the government wants to shut down grazing for various reasons, and I can’t help but wonder how many times the same basic drama of ranchers refusing to give up “their” grazing land is going to play out.

  74. 74
    revrick says:

    Rather than merely whining about this, we need to think of strategies to counter it. So, let’s attack their enablers. Here’s my suggestion for a universal Democratic attack ad. The visual is various dogs pissing on fire hydrants. The ad content: “If your a woman, you’re the hydrant and the Republicans are the dogs, because every antiabortion law they sponsor is based on the assumption that you are incapable of making moral choices. If you’re a college student, you’re the hydrant and the Republicans are the dogs, because they want to throw you off your parents health insurance and slash college loans. If you’re an African-American, you’re the hydrant and the Republicans are the dogs, because they’re sponsoring laws to crush your right to vote. If you’re an Hispanic-American, you’re the hydrant and the Republicans are the dogs, because they’re blocking all efforts at immigration reform. If you’re someone who works in a low-paying job, you’re the hydrant and the Republicans are the dogs, because they’re blocking efforts to raise the minimum wage. If you’re unemployed, you’re the hydrant and the Republicans are the dogs, because they refuse to extend unemployment insurance. If you have a chronic health condition, you’re the hydrant and the Republicans are the dogs, because they want to repeal the law that protects your right to health insurance.

    I don’t know about you, but I’d hate to be the hydrant. If you don’t vote or aren’t registered to vote, you’re saying it’s okay for the dogs to piss on you. Don’t let them!

    Vote Democratic!

  75. 75
    🌷 Martin says:

    @Tommy: It really is staggering, and you can’t credit anyone more than Tim Cook for setting it all up. Tim made the case to Steve Jobs that you could not effectively manage supply chains for hundreds of products (that’s what he was responsible for doing at Compaq) and that your low-margin, insignificant products were undermining your ability to control your key products because the width of the product offerings demanded that the supply chain be shallow. Apple needed to have a very narrow supply chain to allow it to be very deep and detailed.

    Products like the Mac Mini were designed to be small and light enough to move from container freight to air freight, allowing them to eliminate the warehousing costs because the product could be built to market demand (48 hours from factory to door rather than 3 weeks). Apple does enough air freight that they can lock up transportation networks for product launches. The photo is from a FedEx employee at a routing facility. Those nearly identical boxes are iPhones. Apple bought up capacity from all the freight companies months ahead of time.

    They still blow it time to time, but the ability to front cash makes the effort a lot more straightforward and predictable.

    Interesting piece on how Apple is moving beyond supply chain dominance to supply IP dominance.

    Rather than just cornering the market through purchase commitments and strategic investments, Apple has moved to producing the IP directly, such as with their CPU efforts.

    Unfortunately I don’t have enough data on Swift to really produce a decent comparison image. With six decoders and nine ports to execution units, Cyclone is big. As I mentioned before, it’s bigger than anything else that goes in a phone. Apple didn’t build a Krait/Silvermont competitor, it built something much closer to Intel’s big cores. At the launch of the iPhone 5s, Apple referred to the A7 as being “desktop class” – it turns out that wasn’t an exaggeration.

    Rather than buying off-the-shelf processors, Apple is designing their own that are unlike anything on the market. That’s risky (unique doesn’t always mean better), but the payoff is massive if they don’t screw up. Also a pretty big investment – another use of that cash.

    The sensors used for their TouchID fingerprint sensor are also unique – Apple bought the company that invented them ($356M for AuthenTec). They’re now looking to do the same with the wireless radios by hiring key talent from Broadcom, Qualcomm, etc.

  76. 76
    Tommy says:

    @Roger Moore: Oh this will be a template for others. Been reading about it for the last few hours and Think Progress seems to have the best coverage. Although it is way more complex then many media sites I first saw have indicated. Many court decisions. Multiple government agencies. It is really a mess all around best I can tell.

  77. 77

    @Tommy:

    He’s probably Mormon, who the hell knows. He’s in Nevada, right? Lot of Mormons out there.

  78. 78
    🌷 Martin says:

    @Roger Moore:

    That’s more than a bit of an exaggeration. There are several other big players, including LG, HTC, Motorola, and Sony. Nokia probably could be bigger in the market than they are if they hadn’t shackled themselves to Microsoft. And there are a bunch of cheap makers like Huawei and Kyocera. Those guys don’t have as much of the smartphone market as Apple or Samsung, but they are able to make phones- some of them at least as good as anything from Apple or Samsung- and make money in the process.

    None of the others turn a profit, and non-smartphones are a rapidly shrinking market in every country. Even in sub-sahara Africa which is the fastest growing smartphone market. Unless something substantial changes, your players above are merely temporary, to be replaced later by either Apple or Samsung or other zero-profit brands for limited periods of time. Companies cannot compete without profits. They may be able to rebadge white-brand products with effective marketing for a while, or run a profitless division on the back of profits from another division, but they are not driving any segment of this market.

    The best runner-up right now is Xiaomi who is doing well in China, selling relatively decent products. We’ll see if they can go anywhere from there.

  79. 79
    🌷 Martin says:

    Oh, and FYWP moderation.

  80. 80
    Tommy says:

    @Southern Beale: I had not thought about that, but good bet you might be right. I don’t know why this story interests me so much, but it does. Maybe cause I an a huge hiker and camper and I flat out love our National Parks. And I hate so often I see rights for minerals or grazing on Federal land given away for like pennies on the dollar, yet this guy won’t even pay that.

    And Think Progress has reported some stuff I didn’t see on other sites. When they told him finally he had to remove the cattle he actually expanded the areas of land he was using. This guy wants a fight and I think he is going to get one.

  81. 81
    efgoldman says:

    @Roger Moore:

    There are plenty of other areas of BLM land where the government wants to shut down grazing for various reasons

    Shutting off existing grazing lands is a whole different kettle of beef stew from confiscating the cretin’s herd because he owes 20 years’ worth of fees and court costs. I expect the reaction of most ranchers would be different, too. Grumbling and complaining is different from open defiance of the law.

  82. 82
    efgoldman says:

    @🌷 Martin:

    Oh, and FYWP moderation.

    Were we a naughty boy?

  83. 83
    Anne Laurie says:

    @efgoldman: Too many linkses, FYWP doesn’t allow more than three and that includes your ‘reply to’ link.

    Sorry, Martin, went out to dinner for a few hours…

  84. 84
    rda909 says:

    Haven’t read the article or comments here, but I’m going to go way, way out on a limb here and guess that there’s no mention of how the Obama Administration has done more than anyone ever to stop and reverse offshore tax havens since their creation.

    Nay, “we” as “progressives” must never ever acknowledge actual progress, and use that progress for momentum to get even more progress made. Instead, in the face of a complete fascist takeover of America by the Koch Brothers and their brethren, we should just pout and shout about how terrible everything is and maybe “hold our noses” in the midterms and vote for Democrats, if we can be bothered on that day to miss our favorite shows on our massive HD TV, and spend our 5 hours/day on our high-speed Internet connections, and if mommy and daddy aren’t coming over for a big meal and do our laundry later that day. That’s how to really beat the fascists! Let’s storm the gates, progressives!!!!1!!1! (only if you feel like it that one day though…DM me and I’ll decide then if I’m up for it….kthnxbai)

  85. 85
    efgoldman says:

    @Anne Laurie:

    Sorry, Martin, went out to dinner for a few hours…

    What? You mean you don’t pay strict attention to us whiners 24/7/365? Who do you think you are? John Cole?

  86. 86
    rda909 says:

    @rda909: And before the inevitable reply “Link?” You can get a primer here and then learn more about the many, many things the Obama Administration has done to curb offshore tax havens.
    http://www.forbes.com/sites/ro.....en-fatter/

  87. 87
    a hip hop artist from Idaho (fka Bella Q) says:

    @efgoldman: This. He’s been refusing to pay grazing fees for ~20 years and litigating the issue at every step. Where he got the jack for his legal fees for multiple appeals is beyond me – it would have cost lest to pay the fucking grazing fees. But as a “sovereign citizen/patriot” kook, it’s a matter of principle for him.

  88. 88
    Tommy says:

    @a hip hop artist from Idaho (fka Bella Q): Now I can’t find the link I read on Google News, but they only wanted him to pay $1.13 per month per head of cattle. Then well it refused to pay. I don’t know, that sounds like a deal to me.

  89. 89
    🌷 Martin says:

    @efgoldman: Too many links.

  90. 90
    Roger Moore says:

    @efgoldman:

    Shutting off existing grazing lands is a whole different kettle of beef stew from confiscating the cretin’s herd because he owes 20 years’ worth of fees and court costs.

    But shutting off existing grazing lands is exactly how this got started. He was grazing on land that was determined to be critical desert tortoise habitat, so the feds designated it as protected and told him he wasn’t going to be able to graze there anymore. He’s been fighting that ever since, and refusing to pay fees is just a small part of the dispute. That same kind of thing is going to happen in other places, especially in some of the National Monuments managed by BLM where grazing is grandfathered. At some point, those grazing leases are not going to be renewed, and the ranchers are going to be told they can’t keep grazing on the land their ancestors used. Most of them may accept that, but there are going to be more hold-outs who will replicate this whole business.

  91. 91
    gian says:

    @Baud:

    to use numbers instead of the visual scale.

    working men make $1
    working women make somewhere between 60-80% of that $1

    the .1% make 10,000,000% of that $1

    It’s a variation on how the left splits itself into fights over my subgroup should the THE priority this time targeting women. you could do the same cartoon and sub in native americans, latinos, african americans, etc. Of course this tendency echoes colonialism and the pitting of natives against one another.

    in between GWB and the irrational hate for Obama (and the irrational right wing hate for Clinton anyone remember the hammer and sickle Clinton bumper stickers?) I get all confused about the race versus class debate myself

  92. 92
    J R in WV says:

    I have a neighbor in Arizona who ranches 7000 acres of land, mostly leased from BLM and the state of Arizona.

    His herd is (was, last time we talked) down to 160 head, because of the drought in the SW section of the country. Nearly 44 acres for every cow!

    The pickings are slim for range cattle out there – everything that grows in the desert is either prickley, spiny, or poison. So cattle and horses have to be really careful how they take each bite.

    I dunno how much Harv spends on his leases, I imagine it’s per head and not too much either. He really only runs that little herd so he can still be a rancher, after all it’s what he has done for 60 years or more, some good stories there, for sure.

    This right wing nut job needs to get right with the authorities, pay his back rent bills, and act like a law abiding citizen instead of being a domestic terrorist. The first law officer or government official that gets hurt, that guy goes to prison, for a long time.

    If it was me in charge, I’d bust all those guys for assaulting a law officer for kicking that dog, who didn’t do anything to deserve that attack. The kicker for the primary act of violence, everyone else in that crowd for conspiracy to commit, and the rancher who started the whole thing for leading the conspiracy.

    These right-wing nut jobs need to learn they don’t make up their own rules, the culture as a group makes the rules, and everyone needs to follow them.

  93. 93
    Glocksman says:

    @🌷 Martin:

    I know the Mac is profitable for Apple, but the huge driver of Apple’s profits are the iDevices.
    If the majority of future market growth is in undeveloped markets, how in the world is an average consumer in sub-Saharan Africa or Vietnam going to afford an iPhone 5c?

    Unless Apple has something in the pipeline that I don’t know about, IMHO the days of runaway growth at Apple will be over sometime sooner or later.

    As for other phones, I love my LG made Nexus 5 and wouldn’t give it up for an iPhone if you paid me.
    That said, I’m almost positive that Google is either selling the things at cost or is even subsidizing them to an extent.
    That’s not a way to make money in the hardware market, but making money from hardware isn’t Google’s strategy.

  94. 94
    Glocksman says:

    @a hip hop artist from Idaho (fka Bella Q):

    sovereign citizen/patriot=leech who wants all of the benefits of modern society but doesn’t want to pay his share of the costs for it.

  95. 95
    StringOnAStick says:

    @J R in WV: Yep. This needs to be resolved, and by resolved I don’t mean “BLM backs off, returns cattle”. That just encourages these nut jobs.

    Drought is an issue throughout the west, and grazing will have to be reduced in response to that, period, endangered species or not. These assholes think that these federal lands are theirs just because they’ve leased them for a long time. No law supports them and such a case is unwinnable, so now we are letting domestic terrorists decide what laws they will and won’t follow. Time for the hand of the law to get a lot heavier; I’m thinking land confiscation for his legal fees is on the near horizon.

  96. 96
    Chris says:

    @Glocksman:

    Also known as “conservative.”

  97. 97
    🌷 Martin says:

    @Glocksman:

    If the majority of future market growth is in undeveloped markets, how in the world is an average consumer in sub-Saharan Africa or Vietnam going to afford an iPhone 5c?

    They won’t. Not really Apple’s concern yet either. Selling $35 devices isn’t going to vault anyone to a leadership position. Yes, that’s the retail cost for the lowest-end unlocked devices now.

    Unless Apple has something in the pipeline that I don’t know about, IMHO the days of runaway growth at Apple will be over sometime sooner or later.

    They always have something in the pipeline. But people are badly missing what Apple is doing. Global marketshare isn’t their goal. Ubiquity in key markets is the goal – 50% share in the US, Japan, they’d like someplace in the EU, China if they could pull it off. They’re pretty close to that mark in the US and Japan. They have 15% phone share in China. Most of that is 2nd hand sales – iPhones are durable enough that there is a viable resale market. Eventually that will become new sales.

    The ubiquity is to secure an ecosystem, and that’s the next driver for Apple. Just their content revenue (apps, music, movies, books) is now comparable to Starbucks global revenue. It’s ¼ of Amazon’s revenue. It’s more profitable than either. Unlike Google or Amazon, Apple sells in nearly every country, including places like Liberia and Bhutan and Palau (all 21,000 residents). Apple has more credit card backed accounts than anyone else. They sell over ⅓ of all music worldwide. They’ve sold/rented over a billion TV shows and about half a billion movies. Users download about 80 apps each from the store. They should hit 100 billion apps downloaded within the year (this doesn’t include updates – it’s individual app downloads).

    As Apple establishes dominance in content, even nation by nation, they can more easily sell devices into that market that leverage the content – Apple TV, watch or other wearable, etc. and they maintain a steady revenue/profit stream, and they can expand into new services. Electronic point of sale seems almost inevitable at this stage.

    And this is why Apple isn’t terribly worried about selling new $50 phones in China provided they can sell used iPhones there. They’ll make their money off the content for now rather than try and sell unprofitable hardware. Apple will increase their new phone sales over time, and eventually they may bring out lower priced hardware. For now, they’ve convinced China Mobile to go for better subsidies so the phone is more approachable to their 700 million subscribers.

    It’s a complex strategy, and it may not work, but it has worked so far.

    As to the next big thing, look at what Apple is doing with their CPUs. The A7 is terribly underutilized in the current devices. Apple wouldn’t over engineer it unless they had a reason and my guess is that they intend to push the iPad into greater competition with low-price laptops by expanding the range of software. Or it could be for a new device.

  98. 98
    John M. Burt says:

    @revrick: Excellent ad, especially if it ends with a dog approaching a hydrant, with the voiceover saying, “But if you vote Democratic this November . . .” and we zoom in on the the hydrant as it suddenly unleashes a blast of water, accompanied by the sound of a startled yelp.

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