The Cost Shifting Economy

When most people think of business, they think of people buying and selling, making something and selling it or maybe selling a service. The old adage of buy low and sell high is still the basic idea of business. Rich people, however, like the people who currently rule over us, don’t think about any of that stuff when they hatch a business scheme. Instead, they think about how they can shift the cost of doing business onto the public or some unsuspecting suckers, like the American taxpayer. It’s how rich people do business.

This is not a new idea. Cost shifting was an integral part of the Industrial Revolution. The factory owner was not covering the full cost of his labor, for example, because he did not have to cover the cost of workplace health a safety. Building a bridge was a lot cheaper, because the cost of worker deaths was not the responsibility of the builder. No one thought about the costs of environmental degradation in the 19th century, so companies were free to dump poison into rivers and pump pollutants into the atmosphere.

It is not unreasonable to argue that the great fortunes made during the Industrial Revolution, at least in America, were made in large part from cost shifting. After all, it was not just the direct costs like labor, that were shifted onto the public. Once a man got rich, he could afford to buy politicians, who would pass laws giving the rich business owners leverage over their smaller competitors. It’s not an accident that those great fortunes were created early in the industrial age and none were created in later stages.

The political class in the early 20th century was still strong enough to push back against the industrial barons. It became politically popular to push through trust busting to weaken the industrialist. Then it became popular to push through reforms and allow unions to organize labor. Conservative proselytizing against these policies over the decades has obscured the fact that much of it was an effort to push those private costs back into private hands. The end of the industrial age corresponded with the end of cost shifting.

Today, cost shifting is everywhere in the economy. Tech companies have exploited pubic utilities, like the internet, to provide media services, without having to pay distribution costs. Amazon built its business, in part, on not having to collect sales taxes like every other retailer in America. Currently, their shipping costs are subsidized by the US Postal Service which loses billions every year. Then there are the many rackets that rely on government subsidies. Higher education is just one big upper middle-class subsidy.

The biggest cost shifting racket today is the use of imported labor. Recruiting, hiring and training Americans is expensive, because America is a first world society.Citizens expect first world working conditions. That makes it hard to shift labor costs onto the public, so companies prefer foreign labor. That way, they can pay lower wages and they avoid having to deal with employees who know their rights or have ideas about forming a union. Plus, foreign workers don’t sue for things like discrimination or poor safety conditions.

There’s a cost to this sort of predatory labor system, but those costs are shifted to the public in the form of depressed wages and high social costs. The migrants in every hospital emergency room are not having their bills picked up by their employer. When Pablo decides to get drunk and drive over an American, his employer is not paying the victim’s family or covering the cost of Pablo’s incarceration. The fact is, there is nothing more expensive to a society than cheap labor, it’s just hidden from public view.

The question though is if it is possible to get rich in a mature economy without massive cost shifting. No great fortunes were amassed from the end of World War Two until the technological revolution. That was a period when business costs were shifted back onto business. The tech revolution made it possible to get around the regulations and laws, because government never anticipated a digital economy. That’s starting to change just as the technological revolution is winding down and the public is pushing back.

Take a look at the newspaper business. Prior to the digital age newspapers could be run profitably, but they had high labor and capital costs. In theory, the digital age offered the chance to slash those costs. The internet does not require printing presses and delivery trucks. But, the internet also slashed their revenue stream. All those ad dollars are now at eBay, Monster and so forth. Newspapers, without monopoly power and with no ability to shift their costs to the public, are all losing money and headed for extinction.

That does not mean it is impossible to turn a profit without cost shifting, but it does suggest it is impossible get rich without it. At least not billionaire rich. That would certainly explain the fanatical commitment to migrant labor by American business. It also explains the increasingly opaque financial system. It’s not so much about reducing costs as hiding them in the costs of other goods and services, like taxes and health care. It’s a lot easier and profitable than trying to make a better product or become more efficient.

100 thoughts on “The Cost Shifting Economy

  1. My Libertarian brother and I have been having this argument for nearly 10 years. Ever since I predicted the housing bubble and inevitable crash way back in 2007. He denied the bubble. How he could deny it, in spite of the fact that families in my small state were able to buy $300,000 dollar houses in a state with an average household income of less than $50,000 a year was a mystery to me.
    He would argue that a country should have open borders and that anyone who chose to come here benefited the country. I said fine. But only if you end the welfare state first. He disagreed.
    End the welfare state, at the very least to the illegals, and most of them will have a far smaller incentive to move here. It is far easier to be poor ,uneducated and unhireable in Mexico and central America than it is here.

  2. I work in the car rental business. In my district (a metro area of about 1 million in the NE) 95% of the blue collar jobs are part time (less than 27 hrs per week). Virtually all of them qualify for some form of public benefits. Many single mom’s on Medicaid, etc. Needless to say, the greedy money obsessed company pays nothing for the myriad externalities. Legal trouble, health care, etc. They are also obsessed with diversity and bringing as many foreigners on board as possible. The fact that the foreigners are willing to work for zero benefits at near min. wage is held against the natives.
    When I was a normie Tradcon I supported American business but now the scales have fallen from my eyes and I loathe and despise them.

  3. This comes under the old rubric of “Socialize the costs, privatize the profits.” Of course the Cloud People of the political class love this, because it hands them ever-increasing power to fleece the ordinary John & Jane Doe Taxpayer, hands them more money to spend and more “tax credits” and “tax incentives” to lavish on pleasing their Globali$t Open Border$ Donor Cla$$ $ellout$ of . . . us. It boils down to what is today’s Neo-Feudalism with the Cloud People being todays nobility grinding the rest of us down into voiceless, powerless serfdom.

  4. I think this applies to e.g., when the “mass of free proletarians was hurled on the labour market by the breaking-up of the bands of feudal retainers” when Henry VIII disarmed the nobles. Hey! Let the local towns and villages pay for the Poor Law! We nobles have houses to build in London.

    But the nobodies that invented the machine textile industry? The store clerk that invented the oil industry? The telegraph clerk that invented the steel industry?

    Plus, these punk nobodies gave jobs to the poor that had spent the previous 200 years starving on the land.

    Maybe if they were deep-state operatives expensively educated at ruling-class universities, but not if they started out as underling nobodies.

  5. “Amazon built its business, in part, on not having to collect sales taxes like every other retailer in America. ”

    ++++

    This is flat-out false. Of course, Amazon collects sales tax in every state that has a sales tax (there’s something like 5 of them that don’t have a sales tax). But, you did phrase it in the past tense. But, even in the past, Amazon collected sales tax in every state that it had a presence. Corporate HQ, warehouses, whatever. If they had a physical presence in a state, they collected the tax.

    As the law requires, and as has always been the practice of mail order companies. Because, that’s what Amazon really is: a mail order company. Of course, they have done the mail order thing better than any other mail order company in history, but nonetheless, they are still in that category.

  6. If you’d like to hear about the unpleasant side effects of cheap labor, press 1 for english….

  7. Uber/Lyft owes much of its success to bypassing the taxi medallion monopoly, which is a form of cost shifting. Those taxi companies and drivers had to pay a lot to local governments for access to those markets, yet somehow Uber/Lyft didn’t. I’ve searched without success to discover how they accomplished this. In theory, I’m sympathetic to the taxi companies, whose businesses are severely damaged, but in practice, some of the worst customer service I’ve ever received is from taxi companies, so I have trouble caring.

    • I am happy whenever local government fails to get a cut of business and a voice in it. The taxi companies are-were a perfect example of what happens when they do.

      • I’m not unfriendly to your point of view. I brought up Uber/Lyft as an example of tech companies that succeed in part due to bypassing costs that apply to their competitors.

        To put pressure on the libertarian fault line a bit, suppose you live in a big, anonymous city. Do you really want any person to be able to declare themselves a taxi with no vetting? I think it’s possible that government has a role to play in ensuring that taxis drivers are vetted, but I’m not dogmatic about it.

        • Yeah, government has a role if you believe in dissident right socialist utopian fairytales.

          Do you need big daddy government’s stamp of approval before you hail a ride?

          Why should we penalize free enterprise?

          Why should we reward political entrepreneurs?

          • Well said. The National Socialist “Dissident Right” is all for government control and tyranny as long as they are in control. They are not mad at the Cloud People for being unprincipled sociopaths, they be mad as they and their tribe are *not* among the Cloud People partaking in the spoils.

          • It is amazing that so many of the alt-right / dissident right are so thoroughly ignorant of basic economic principles, including the host, who thinks that tax cuts, along with mortgage interest and childcare deductions, are subsidies.

            Implicit in such a view is the proposition that one’s income belongs to the state.

            Cost shifting? How about all of the progressive / socialist measures forced down our throats by the white men who gave us the income tax, the graduated income tax, the estate tax, the sales tax, the GI Bill, the military industrial complex, the national security state, the national surveillance state, the FBI, the CIA, the TSA, the ATF, the NSA, the FDA, the EPA, the war on drugs, the war on poverty and the war on free enterprise?

          • One might. In many lesser societies cabbies are known for their dishonesty. Presumably because it’s just easy to prey on tourists, who are frequent cab users. Most folks would prefer to hold cabbies accountable in a systemic way rather than research each individual cabbie on one’s iPhone at CabbieReport.Rand (whilst he patiently awaits their descision). OTOH it is quite possible that in homogenous high trust societies such a precaution would be overkill. That’s the thing about libertarians- they’re blank statists, like the insane clown posse left. That’s why they come up with all these stupid ideas like open borders- cuz one immigrant is identical to the next. And hostility to regulating taxis. Cuz all cabbies are the same. In Peoria you have a point, in Detroit you are nuts.

          • Meanwhile in the USA, until the advent of ride share, if one wanted to operate a taxi business in a large metropolitan city, one had to pay hundreds of thousands of dollars in order to legally operate just one cab.

            The game that the dissident right favors is the rigged game – the progressive, socialist game where there are gatekeepers to be paid and bureaucrats to be bribed in order to make a living.

            What many of the commenters here favor, and the host as well, is a system that favors the political entrepreneur, the very thing against which y’all are ostensibly railing.

        • A ride share company has a great deal to lose if even a few of their drivers are of poor quality, much less dangerous. Bad news gets around at the speed of light, literally. The Uber business of the world have lots of problems to work out but customer service is not really one of them.

    • You bring up an excellent example with uber/lyft. Why didn’t cities simply outlaw uber/lyft, particularly when the cab companies started complaining? If anyone has an answer, I’d love to hear it. More effective lobbying from uber/lyft?

      • Uber/Lyft is consumed by the professional class. Taxi drivers are mostly foreigners, and not always unionized. Pissing off the former group is more dangerous. In foreign countries stronger unions did result in many more restrictions being passed on ridesharing services.

  8. It is possible to get billionaire rich via financial manipulation, e,g., Warren Buffett.

  9. This resonates with LotB’s writing on “value transference”:

    Essay 1
    – (lots more on this topic at his site)

    As you know, it’s my hypothesis that great fortunes are the result not of value creation but the result of transferring the value created by the hard work of other people. This is what I call value transference, and it’s a necessary counterbalance to the now popular term of “value creation.”

    Why do people deny the truth of value transference? No doubt for the same reason they deny the truth of evolution, or HBD. Libertarian-conservative types are so psychologically invested in the idea of wealth equals value creation that any hint of a greater truth causes severe cognitive dissonance. And they get angry at me.

    • I forget where he got this idea from, but it is related to the concept of cost shifting. Facebook, for example, is simply an arrangement whereby they appropriate population data from their users, without compensation, and sell it to interested third parties, without returning any of the proceeds to their users. In fact, they subtly charge their users with ads and internet fees. Basically, Facebook has monetized the labor of their users base.

      LinkedIn is another example of this model. There is some cost shifting, for sure, but basically they are relying on the stupidity of the public to give away their information.

  10. And this net neutrality scam is just an attempt by Netflix, Google and Amazon to shift the cost of maintaining and upgrading the network to ISPs and their consumers.

    • No one is clean in the whole net neutrality argument. The problem is that network connectivity is really a utility. Most people only have one, maybe two, connection to the Internet. Now, you can tell the owner of the pipe they have to treat everything equally or they can discriminate. If everything is equal, then high bandwidth users on both ends of the pipe are benefiting and sticking it to everyone else. If they can discriminate then you are going to have deals cut where Netflix is barely serviceable and Amazon is blazing fast or vice versa depending on the owner of the pipe. Or users will have to pay extra based on the types of services they want with the resulting headaches. Charge by consumer bandwidth used will simply play into the hands of the cable and satellite providers to slow cord cutting.

      It’s a messy situation.

      • The solution is what has worked for water and power. Metered billing. Unlike water and power, there are two customers on either end of the pipe, but the concept works the same. That means banning the ISP from being a content provider, but that’s not going to happen.

        Instead, we will end up with a version of the Chinese model of state control of the Internet. “Private companies” will be granted monopolies where they will regulate content. In ten years sites like this will be invisible to 90% of users.

        • Meanwhile, regulated utilities breed complacency and mediocrity and horrible customer service. They are not exactly a paragon of innovation.

          No thank you, I’ll pass.

  11. There is something very medieval about modern cost shifting. The modern tycoon pretends to have a social conscience even while slyly profiting by shifting the burden of social services for his workers onto the rest of us. The old Dickensian industrialists were very good at it, too. The great cause cause célèbre back then was abolitionism…while crushing the European workers. We seem to have changed the cast of characters but are using the same script.

  12. I thought there would be some mention of Elon Musk but I guess you didn’t need to.
    I await the libertarian response to this. All hail the market!

    Can someone explain why the USPS is doing this with Amazon at a loss?

    • Yes. I have pretty good knowledge about the competitor side – other shippers. Basically, these guys have told themselves that there is an enormous scale economy in their business. Therefore, shippers like Amazon are doing them a solid when they deign to ship with them, since such massive volume lowers their average costs, as they suppose.

      Since Amazon is making them more efficient with all that volume, they get profound discounts. The joke is that, beyond some reasonable level, there really aren’t scale economies in shipping. But these guys more or less get paid to maximize revenue & not profit.

      • When talking of economy of scale there comes a point of diminishing returns. A hub works best at somewhere between 80 -90 percent of capacity. Because of ebb and flow 100 percent isn’t sustainable.

        Most of the UPS hubs are running far above capacity and the company is spending huge amounts of money to update the system. It will be interesting to see how thing play out for them.

      • The Waltons are looking to cash out of Walmart in the long term, around 10 years or so. The stage is being set for Google to buy them out, along with their Chinese partner JD.com

        The inflated stock price of Amazon is based on the assumption of future monopoly profits. Its not hard to imagine GoogleMart being approved as a way to show that “Amazon is not a monopoly”, as I anticipate antitrust sentiment will only grow in the future despite the attempt to promote “woke capital”

        Amazon also has the contract to run the CIA’s IT. No possible insider advantage there…

    • I disagree with putting Elon Musk in the same position. Yes he is using government subsidies but these subsidies are for Defense purposes. We want electric cars so we can never be blackmailed over oil like we were in the 70’s. We MUST have access to space and the way he’s gone about it has surpassed anything we could have dreamed if. Boeing, Lockheed Martin have wasted over 10 billion and they haven’t flown so much as a bottle rocket. They’ve built nothing. If the same amount had been given to Musk we would have a space fleet now.

      Also subsidizing solar power means individuals are not reliant on massive monopoly power systems. With
      I’m wondering if the mass attacks on Musk that are starting up now are due to his remarks about “you know who owns the press”. Many times the Jews gang up on someone and take their business. I think we are seeing that now.

  13. Well….the cost-shift used by banks is the FDIC (in extremis) or as we saw only 10 years ago, the Too Big to Fail Fed Reserve bail-out. And of course, if a bank loses money on bad loans, they have a smaller tax liability, if any at all.

    Plenty of cost-shifts available in the financial system!!!

  14. Couple problems, Z:

    – companies shouldn’t have to collect sales tax because gubbimints shouldn’t impose them. Our govts have way too much money.

    – unions today are not about workers rights. They are about protecting pooch screwers, deadbeats, and other entitled a-holes that don’t want to work. Sure, bringing in H1B wringers from India is dirty pool – but so is extorting suicidally high manpower costs from employers through collective bargaining. The fact is when I was a kid foreign car makers didn’t have a chance here. Then the unions started building junk and charging top dollar for it. In the mid 70’s North Americans discovered that you could buy much cheaper Japanese junk. Unions would have destroyed Dodge had it not been for Lee Iococca and Ronald Reagan. You can lay a lot of the blame for cost shifting at the feet of the union slob. You can thank rich people like Iococca for re-introducing the idea of building the best product you can and marketing it honestly.

    • None of which is germane. What matters is Amazon got special rules that allows them to shift their costs onto others. As to unions, their defects don’t change the fact business was forced to state the full cost of their labor on their financials, as a result of changes in labor law.

      • Then I am missing something.

        If you are referring to Amazon getting special freight rates from UPS – well, that is a non-starter. Of course they are going to get better freight rates than say, Filthie’s Mercantile & General Store – there is nothing shady or unfair about volume driven pricing structures. UPS is just one competitor among many, and if you want to nitpick about that – it is the gov’t that transferred their costs, not Amazon. If I make them a better deal on shipping you can bet they will go with me.

        I think you may be misreading this. The general idea is profit margin. If you crank up my taxes, I will crank up my costs to cover it. If I need the floor swept and the union slob wants $42.00/hour, takes no pride in his work, and actually boasts about his lack of work ethic – yeah, he is going to be at the mercy of the migrant that will do the job for $15.00/hr and be thankful for it.

        Sometimes a cigar is just a cigar.

        • Amazon gets massive subsidies from government, because they are permitted to shift parts of their cost structure onto unsuspecting others through the tax code and scams like their USPS deal. The old robber barons worked similar scams in their age.

          Why are trying to lose yourself in the forest of unrelated topics like floor sweepers?

          • The USPS itself is a subsidy program for its disproportionate (20%) black workforce and empty rural regions of the country. We could deliver mail on 2-3 less days per week with minimal consequence. Several thousand post offices could be closed, but too many small town pols raise a racket whenever this is suggested.

          • Most of that USPS black workforce is in management. They are fast tracked to promotions there.

          • The USPS also is effectively subsidized by not having to pay property taxes on their owned real estate, and having postage costs not subject to state sales tax.

            On the other hand, you can’t ship alcohol or ammunition through the mail. So there is some business lost. Law/Regulation actually forces handguns to only be shipped the most expensive Next Day Air, almost certainly designed as punitive, though possibly as a theft reduction measure.

          • That may be true, but that has no bearing on the issue. Government is a necessary expense, with assumed waste, fraud and theft.

          • The USPS is supposed to be a “private entity”. Of course, they aren’t. However their de facto subsidies just shows how hard it is for the “new” guy starting out.

          • Perhaps because you have me at a disadvantage. Have you done any reading on this Z? Any material you can recommend?
            I readily admit I may be misinformed and/or uninformed. A scholarly detailed lecture o this might be worth your time and attention.
            No offence meant.

          • Oops – I see my moral and intellectual superiors have already weighed in… served me right for trying to view your hateful blog on my Hitler phone I guess…:)

          • Can you specify the subsidies Amazon receives from government?

            What are they?

            Which government provides them?

            Upon what basis do you assert that Amazon’s deal with the USPS is a scam?

          • Amazon got reductions on its property taxes when it built warehouses in Northeast Ohio where I live. Twinsburg, North Randall, Euclid.

            Third party retailers on Amazon often still don’t collect sales tax. We know that the USPS is allegedly forced by the Universal Postal Union treaty to allow Chinese packages to be shipped here at a loss. We also don’t know the specific deal the USPS has with Amazon, and the President cannot release it, only the Regulatory Commission can.

          • Property tax reductions are not subsidies.

            The payment of property taxes are, however, subsidies to public employee unions, including their compensation, benefits packages, health insurance, and retirement, which are usually better than what is available in the private sector.

            Presumably,Northeast Ohio has benefited from the economic activity generated by the operation of the Amazon warehouses.

          • Your wordsmithing falls on deaf ears. A tax break is a subsidy, even if it doesn’t meet some dictionary definition that says there has to be direct payment from a government.

            Amazon simply substitutes one form of retail for another. It might quite possibly be more efficient, but that doesn’t justify giving a predatory corporation a break that you and I can’t get on our taxes.

          • How is a tax break a subsidy? Just saying so does not make it so.

            Amazon’s revenue stream belongs to it, not local governments. Of course, you may harbor progressive / socialist thoughts and think otherwise. Free people would beg to differ.

            That one slave is able to persuade his master to reduce his burden should not be viewed with envy.

            Why shouldn’t more slaves insist upon their burdens being reduced, if not eliminated?

            Of course, you and I can’t get the tax breaks that Amazon has received or that many other large companies have been able to receive. Perhaps that is another reason to insist upon their being no property taxes levied.

            What about the subsidies given to the public employee unions? What about the salaries, perks, health insurance, and retirement that almost all private sector employees do not get? Its not as if the public employee union member actually makes or produces anything.

          • How is a tax break a subsidy?

            Mortgage interest deduction. Child care deductions. When you tie the tax break to specific behavior, you are, in effect, subsidizing the behavior.

          • Mortgage interest and child care deductions are not subsidies.

            Your position is premised upon the preposterous, and progressive, notion that the taxpayer’s income belongs to the federal government.

            The deductible interest on a mortgage constitutes an amount of his income that a taxpayer can KEEP from the preying hands of the federal government.

            You, on the other hand, appear to think that such an amount is a subsidy. By your reasoning, a tax cut is a subsidy.

          • You are playing word games to defend your ideology. That’s why libertarianism is nonsense. It inevitably forces the adherent to speak in tongues.

          • Cost shifting IS all over the place. BUT – the main thing we should be all peeved about is when costs are either shifted onto our backs thru the mechanism of government – or – when government enforced special rules are implemented so that businesses can cost shift onto the backs of municipalities or other businesses.

            If UPS wants to offer preferential shipping rates to Amazon because they’re stuffing a huge volume of boxes into the UPS distribution system – then that is an a agreement between UPS and Amazon. Bulk equaling lower prices is a normal part of doing business in pretty much EVERY single market I’ve ever seen, from painting houses , to buying steel – to buying a new automobile. As long as the government isn’t getting their corrupt little fingers into it – then it’s an agreement between two private parties in how they do business – and if you don’t like it – then it’s still a semi-free country and a semi-free market – so go find yourself another option.

            Are we REALLY hurting from whatever the USPS deal is? Last time I checked (and I ship A LOT of stuff thru the USPS system ) ….. shipping small packages thru USPS is still cheaper and quite a bit more convenient than going thru UPS or FedEx. I hear people bitch about the USPS all the time – but in my experience they do a pretty good job – at a pretty good price. Around here they even deliver certain things on Sundays now. And a while back they were talking about going to only 5 days a week ( think they were going to cut out Wednesdays)

            Should taxpayers who don’t give a shit about sportsball be forced to subsidize building new stadiums ? – NO.

            Should taxpayers who don’t give a shit about whether Iraq or Afghanistan or whatever crap-hole we’re involved in at the moment give a shit that everybody only has one goat and a mud hut in those countries – and be forced to subsidize “modernizing their infrastructure” – so that our leftist overlords and influence peddle and make themselves feel good ? NO.

            Should solar and wind power be subsidized? NO

            Should companies like Tesla be allowed to continue in their tax farming? NO

            Should unions be allowed to get legislation passed that allows them to metastasize and act as tax and profit farming operations for their members and especially the people who run them? NO ( Unions in the private sector are a dying breed – it’s the public sector where unions are especially a problem these days)

            We would have a completely different world if it weren’t for cost shifting. Cost shifting is one of the fundamental building blocks of the progressive leftist world order AND all the immigrant importation they’ve been pushing for the last few decades. Cost shifting is also behind things like affirmative action.

            One of the reasons why I’ve spent quite a bit of time reading Lew Rockwell type libertarians – is because of their long analysis of the cost shifting shennanigans committed by leftist big government types. There is no argument on the paleo-libertarian side in defense of cost-shifting ANYWHERE that I remember. Run a big factory and dump your toxic chemicals into the river? Sorry – but not defended under any libertarian economic types that I’ve ever read.

            It’s usually leftists that are constantly talking about “the commons” – and “the commons” are most often used as a way to cost shift. Socialism itself is a cost-shifting mechanism. The commies came right out and admitted they were cost-shifters: “From those who can to those who can’t”

            As far as I’m concerned one of the MAJOR things we could do to dis-assemble the progressive leftist world and take down those cloud people who deserve to be taken down: is to ruthlessly root out and eliminate cost-shifting.

            I’m fully confident of my own ability to survive. What I’m not confident of is my ability to survive the relentless loading onto my back (cost shifting) – of the costs of a useless black underclass, losing wars around the globe, government funding of what should be private enterprise, and the ongoing costs of the whole progressive welfare state, which is to it’s root and core nothing but a massive cost shifting exercise.

  15. Great article – they are always looking for the scam.

    I said something similar last week – It isn’t just costs they are desperate to shift, it’s revenue too.

    I see Pablo and family spending as much as I do at the grocery store with and EBT card, then loading their free stuff into a new Ford. All good for Pablo, ShopRite and Ford, not so good for me.

    • Immigrants (some Subcontinental H-1B and Chinese EB-5 exceptions) generally have lower living standards, as even a minimum wage in the US is several times what your cousins are earning in the Old Country.

      We don’t like the multi-generational household, and we don’t enjoy cooking with cheap staples. That is seen as a luxury product in the Third World. There are also a noticeable amount of the native underclass that doesn’t take welfare benefits (SNAP, Section 8, EITC, UI) because they view it as shameful. Foreigners don’t have that sense of guilt.

      • I remember seeing a short movie produced by Nancy Pelosi’s daughter (of all people) – where she interviewed a bunch of blacks standing outside a welfare office in NYC. The general take-away that stuck with me – and I think the point she was trying to make ….. was that these people thought they DESERVED all these government benefits that were being handed to them.

        Then she went into the deep South ( I don’t remember which state – might have been Alabama or Tennessee) and interviewed a bunch of poor back country whites. They all fully admitted to being on the dole, but didn’t seem to be proud of it at all, it was more of a case of it almost being shoved into the hands so they just took it. When asked what they would do if the welfare was taken away they all pretty much had the attitude “we’ll find a way to get by”.

        I was just down in Kentucky on Sunday and Monday (bought a piece of equipment and had to go pick it up) – and the guys I talked to down there said they had a huge drug problem, lots of jobs in the area at $15-$20 an hour – but they’re hurting for workers because nobody can pass the drug tests. And people would rather sit on the dole and do drugs – than go out and work for a living.

        Apparently the ghetto attitude is spreading.

      • Back in the 80s, my brother got fired from his job, rightfully so, because he was a drunk. He refused to take food stamps, i. Spite of the fact he had kids to provide for, sobered up , did side jobs and collected cans until he was unemployable again. 30 years sober now. And a good man who owes no man anything. Would that the world worked that way today.

  16. I started out my medical practice by doing something unusual at the time. I opened two offices serving two separate hospitals simultaneously. This meant a lot of hard work. It also meant that I was not declaring loyalty to a single institution. This wasn’t viewed as being revolutionary by most in my profession, but as something heretical. One fellow gave me some encouragement, saying that successful people do what other people can’t or won’t do. I now sit in retirement more successful than almost all of my peers, partly because I was able to avoid some of the vicissitudes that my colleagues, who were tied to a single institution suffered, because I could not be pressured in the same ways they could.

    I didn’t totally see this at the time. I knew where I wanted to live, made a mental estimate that opening one office would not be busy enough to provide the income to live there, so opened two. The other implications only became apparent to me as the years went by and I could see how the other docs had to make more radical changes in the way they managed their offices and practices than I did.

    I think that in business, sometimes people can see these kinds of advantages ahead of time, and others take advantage because of other motivations, or out of serendipity. I have also seen other people recognize advantage because they are not limited in their imaginations by the same moral standards that we usually are. They break unwritten rules (like I did to a certain extent) not out of necessity, but because they are not subject to the same built-in taboos that most of us are. A sort of moral obliviousness, that when taken to extremes could be called evil. This is all about recognizing in some way holes in the structure of society and taking advantage of them.

    Just like the dwarves in Time Bandits.

  17. There is the phrase Beltway Bandit around the Imperial Capitol. That refers to businesses that derive their income from government activity. Whether it is the transformation of St. Mary’s Maryland due to the growth of Pax River or the tremendous changes taking place in Middletown Delaware due to Amazon it all comes down to political influence. As long as there are politicians to be bought the only way to make money as you have said is cost shifting. Just maybe if the size and scope of government were to shrink and businesses would spend their money building instead of bribing they could due well. However, since there are far too many people that have a vested interest in the status quo I don’t expect things to change until everything comes crashing down.

    • The ultimate bandit makes sure their company has the right faces on the ownership roster. Those faces give them an edge allowing them to profit around the edges.

      The prime contractor needs one or two right faced owned companies on the bid to give them an edge.

      Visiting these types of bandits is fascinating as they only have employees who handle the paperwork of the scam.

      • Quite a few of the smaller companies around the Imperial Capital are either woman or minority “owned”.

        The really smart ones are minority woman owned.

        That way they get priority on the government contracts.

        It makes all the Cloud People happy when they tout how they are helping the disadvantaged.

    • Ho hum. In 1828 congress passed a 32% tax on 92% of imports to protect northern manufacturers, at the expense of southerns farmers. What else is new?

  18. ‘From WWII to the tech revolution’

    Seems a bit of an over reach. Think about Walmart. Sam Walton’s heirs are worth billions. That was a company that came of age after WWII but well before people like Gates and Zuckerberg became the new gilded age aristocrats.

    • Building just outside the tax district is one of Walmart’s schemes; Sam’s Ivy-trained kids have erased most all of his America-friendly policies, such as “made in USA”.

      It really doesn’t help that they abandon the anchor store after bankrupting locals with a no-tax term deal. What to do with 100,000 sq. feet on a dead main street?

      Sam Walton revolutionized the retail supply chain after seeing French hypermarkets, a good idea, but one with consequences.
      We see this over and over as companies mutate into limited-liabilty corporations, far removed from their original product.

      • But after Walmart officials did their homework, they found Indiana had the most tempting location, workforce and business climate, he said.

        The Indiana Economic Development Corp. offered Walmart $2.9 million in Hoosier Business Investment Tax Credit and an $850,000 conditional tax incentive, based on the company’s hiring plans. Allen County commissioners approved abatements that would save the company about $10.7 million over a 10-year period.

        http://www.journalgazette.net/news/local/20180614/walmart-opens-local-milk-plant

    • Explicit example of cost-shifting. Add in the unpaid costs of obliterating local community retail and replacing it with these abominations and see what the score is.

    • For most of us this is moot

      The US economy is configured with 10% of people having all the gains and 40% of all GDP being government

      Instead of an 18 trillion economy, the rich and the corps have a 9 trillion economy, the State a 7 trillion one spread in various ways (this is why the US isn’t as poor as it would be otherwise) and the rest of us live in a 2 Trillion dollar one, a second tier economy basically

      As such growing the GDP is irrelevant for most people as they don’t even get trickle down .

      What has to happen is broader distribution but that is impossible without heads on pikes and recovery from that well…

  19. It was very hard to get rich from WWII to Kennedy as the top bracket was taxed at 92%… what fool would risk investment when most all of the subsequent profit was confiscated by unle Sam….

    • I think the worse problem is the unholy trinity: the FED, central banking with its SDRs and Wall Street. The amount of wealth this combination pulls out of hard working American is incalculable.

    • The taxes were paying back the huge war debt. The war bond drives got a large number of non-rich people to buy bonds (alebit at a low interest rate). The savings from war bonds helped fuel the consumer spending and suburbanization boom after the war.

      More important was that the power of labor was at its highest. No foreign competition, factors or immigrants. The NLRB wasn’t run by those hostile to unions until Reagan.

    • This is a misconception. The leftoid love of taxes was not about collecting more of them, because high taxes take in less revenue. It is about controlling investment according to tax law. The very rich pay 16 or 19 percent in taxes, then or now. They may have made less money because of the tax code but not through percentages.

      • The US was farther Right under Roosevelt than under Reagan

        Deductions are the tax policy failed. Confiscatory taxes over a certain point with no deductions are generally a good thing. However the existing elite weren’t going to give up the power they had an instead of setting a ceiling, it ended up a barrier of entry

        Mind, you can’t make people equal and you shouldn’t try but you can set a floor and a ceiling and you have to in a society with any degree of automation or technology.

    • That’s not the whole story though. In those days there were myriad loopholes and exemptions that have since been closed. All interest was 100% deductible. Earned income could be offset with passive “losses” generated by bullshit investments in oil wells and race horses. Meals and entertainment were fully deductible. Up to 50% of capital gains were excludable from tax. There was no generation skipping tax or alternative minimum tax. No one with a decent accountant paid more than 30% net tax, then as now.

    • What fool would risk investment? When it only cost 10% if you were wrong, and deducted it?

    • Conservatism is about creating the conditions for living in a moral fashion not a system of economics

      Markets are a must of course but economic regulation especially in the age of millisecond trades is mandatory , you need a lot in at every level not a little especially in banking

      Frankly a society in which there were caps on how wealthy someone could get wouldn’t be a bad one as it would decrease the ability of the elite to opt out of policy choices or to cost shift

      Economy of scale and vast power accumulation by a few is as bad in its own way as Stalinist thinking and the WW2 generation understood this to a high degree.

  20. People like Bezos view environmental protection, trust-busting, and so on, basically the same way the Mob viewed law enforcement. If and when they can use it to their advantage to hurt their enemies, they will, but that’s as far as it goes. Bezos will throw some sop to Earth Day (maybe change the banner page on Amazon for twenty-four hours) and then work on a way to create a diesel-powered predator drone that can deliver rare peppers from India and region 2 DVDs to Peoria, and no one will call him on his own carbon footprint. Philanthropy also covers up a lot of the misery these people create. Around the time Armand Hammer was scooping up every Daumier and Rembrandt in sight, he was also trying to find a way to take the chemicals that were sterilizing his workers at Love Canal and make a legal contraceptive from it. Just buy some pretty pictures for an art gallery and start a fund to teach African villagers to code Java and all’s forgotten. Empty gestures have the desired PR effect on the empty-headed.

    • Whole Foods has basically imploded since amazon acquired it. One has to wonder what drives an individual like bezos. How much money will be enough? What’s he trying to prove?

  21. Your observations tie in with the “missing trillions”, mismatched debits and assets on government balance sheets discovered by Catherine Austin Fitts and others while she was working at HUD during the Reagan administration.

    On 9/10, Donald Rumsfeld mentioned two trillion dollars missing from the Pentagon budget. The very next day, a hijacked airplane hit exactly the exact area where Pentagon auditors were working to discover what happened to the missing money. The backup team at the WTC was also blown up, oops, “disappeared” on 9/11. So many unfortunate coincidences!

    • … a hijacked airplane flown by an inexperienced pilot (who had never trained with a 757) just happened to hit the EXACT SAME area where …

    • $21,000,000,000 (21 trillion dollars) have gone AWOL so far (tracked by CAF and friends): related to cost-shifting. We deplorables pick up the tab for trying to hold society together, while somebody else gets to start a separate civilization free of charge. Not a bad deal!

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