Property taxes

[Hipster Duck]

Actually, not really. Most communist economies failed because they weren't actually communist, but dictatorships under a communist mask. It's not that the task was too big to centrally plan, it's that the government for the most part didn't give a flying toss about their people.

Quick: how many pairs of sneakers need to be produced for Canadians in the next 5 years? How do we distribute these shoes among the populace? Let's say the Central Committee for the Manufacturing of Sport Shoes decides that your factory, Toronto Shoe Works # 57, is going to be responsible for carrying out an order of 5 million shoes and you are given rubber for exactly 5 million soles and canvas for 5 million tops. However, your friend at the Hamilton Rainboot Factory, # 25 is short on rubber because his central planning committee - the Central Committee for the Manufacturing of Rainwear - could not allocate him a sufficient amount of rubber because another committe, the Central Committee for the Production of Rubber Products, misjudged how much rubber needed to be supplied 4 years ago. Knowing that your friend helped you out the last time you faced a lace shortage, you divert half of your rubber sole supply to him. What will the quality of these new shoes you manufacture be?

 

[Second_in_pie]

That's kind of the point. The government was incompetent/corrupt.

EDIT: Not that I'm even for communism. In fact, my dream economy is probably the furthest away from centrally planned you could get.

 

[archanfel]

That's kind of the point. The government was incompetent/corrupt.

EDIT: Not that I'm even for communism. In fact, my dream economy is probably the furthest away from centrally planned you could get.

Well, the weather forecasters can't make long range forecast, you can't really say they are incompetent/corrupt. Chaotic systems are deterministic, but is almost impossible to predict due to its complexity and its sensitivity to the slightest change of conditions.

Also, could you clarify what you meant by "Many people, Americans especially, have had entire years essentially taken away from them through this recent recession, and that's all okay?"? If you meant stock investors, then I'd say yes, that's all okay. They should have known that stocks have risks. And they shouldn't care since unless they are timing the market, short term fluctuations are not all that important to long term investors. I hate it when people say the stock market ruined their impending retirements. If you are about to retire, what are you doing the stock market?

Now, bond market is a different story and I do believe the rating companies failed their customers. Even so, I would argue anything that returns twice as much as GIC is probably not as safe as GIC no matter what the sales people tell you.

 

[Second_in_pie]

Also, could you clarify what you meant by "Many people, Americans especially, have had entire years essentially taken away from them through this recent recession, and that's all okay?"? If you meant stock investors, then I'd say yes, that's all okay. They should have known that stocks have risks. And they shouldn't care since unless they are timing the market, short term fluctuations are not all that important to long term investors. I hate it when people say the stock market ruined their impending retirements. If you are about to retire, what are you doing the stock market?

Now, bond market is a different story and I do believe the rating companies failed their customers. Even so, I would argue anything that returns twice as much as GIC is probably not as safe as GIC no matter what the sales people tell you.

No, I'm not talking about stock investors. I'm talking about small business owners, white collar and blue collar employees. Many of these people and their families have been totally torn up in the past couple years, all because people knew that a lassez-faire government would allow them to essentially cheat money out of others.

 

[archanfel]

No, I'm not talking about stock investors. I'm talking about small business owners, white collar and blue collar employees. Many of these people and their families have been totally torn up in the past couple years, all because people knew that a lassez-faire government would allow them to essentially cheat money out of others.

Except the US government is hardly a lassez-faire government. It has been subsidizing US housing market for years. That's why they had the huge housing bubble.

But let's take a look at manufacture employees in particular. What you said is not accurate, US has been losing manufacture jobs for years. And that's not accurate either, the US has been losing traditional manufacture jobs for years. The reason is that Asian workers can do a better job for a cheaper price. (In general, yes currency manipulation is a problem). The market is telling us that it has found a better source of labour supply and don't need traditional manufacture workers in the US anymore. However, manufacture in the US did not disappear, it's simply moving up. New equipments require educated workers who can program complex machines on the fly. And the market is telling us that it needs more educated workers and indeed college graduated manufacture workers are in high demand in the US. Also, by bankrupting traditional manufacture companies, capitals are freed to flow to the more high tech companies. That's exactly how market make adjust based on condition changes. Yes, it will always hurt some people and benefit other, but there's no other way around it.

 

[Glen]

Except the US government is hardly a lassez-faire government. It has been subsidizing US housing market for years. That's why they had the huge housing bubble.

But let's take a look at manufacture employees in particular. What you said is not accurate, US has been losing manufacture jobs for years. And that's not accurate either, the US has been losing traditional manufacture jobs for years. The reason is that Asian workers can do a better job for a cheaper price. (In general, yes currency manipulation is a problem). The market is telling us that it has found a better source of labour supply and don't need traditional manufacture workers in the US anymore. However, manufacture in the US did not disappear, it's simply moving up. New equipments require educated workers who can program complex machines on the fly. And the market is telling us that it needs more educated workers and indeed college graduated manufacture workers are in high demand in the US. Also, by bankrupting traditional manufacture companies, capitals are freed to flow to the more high tech companies. That's exactly how market make adjust based on condition changes. Yes, it will always hurt some people and benefit other, but there's no other way around it.

China's advantage is not labour. It is capital, which is heavily subsidised. Also it is stretch to say that China et al. are a better source of labour. By all measures, productivity measured by man-hours, is far higher in the US compared to China.

PS. China's rise is nothing more than a result of mercantilism. They have wedded themselves to it, and just lie Japan before them, they will not be able to reduce in any meaningful way, the amount of US dollars reserves they hold. Doing so would fore the value of their currency to a level much higher than normal market forces would dictate. Just as the holdings were acquired to underappreciated the currency today. disposition would over inflate later.

 

[Glen]

Suggested reading.........

The Innovation Delusion

In the United States, innovation has become almost synonymous with economic competitiveness. Even more remarkable, we often hear that our economic salvation can only be through innovation. We hear that because of low Asian wages we must innovate because we cannot really compete in anything else. Inventive Americans will do the R&D and let the rest of the world, usually China, do the dull work of actually making things. Or we'll do programming design but let the rest of the world, usually India, do low-level programming. This is a totally mistaken belief and one that, if accepted, will consign this nation to second- or third-class status.

Cheap labor abroad is cited as the incurable handicap that explains why the United States cannot compete. But cheap labor doesn't explain the fact that Japan and Germany, both high-wage countries, are successful in the automobile industry. Nor does it explain how semiconductors, a model of a high investment, low-labor content industry, are mainly made in Asia. The premise that the inescapable burden of competing against low wages means failure is simply not correct.

Friedman is only the latest to assume that we can avoid this fate by emphasizing designs, ideas, and R&D and trading them for the items we need. This is an attractive idea; we often hear about innovation parks and university research centers and often their work is both exciting and good.

But the chasm-sized flaw in this otherwise alluring proposition is scale. Balancing trade on ideas and R&D simply cannot be done. The most elementary analysis shows that the scale is entirely wrong. As one who spent many years as the head of research of a large corporation, I know how much R&D matters; I also know how small it is. Eight percent is a very large percent of revenue to spend on R&D. Even in manufacturing, which is relatively R&D intensive, 4 to 5 percent is typical. It is really wrong to think that you can scale up R&D to be big enough so we can trade it for the huge quantity of things we need but don't make in this country.

 

[archanfel]

China's advantage is not labour. It is capital, which is heavily subsidised. Also it is stretch to say that China et al. are a better source of labour. By all measures, productivity measured by man-hours, is far higher in the US compared to China.

PS. China's rise is nothing more than a result of mercantilism. They have wedded themselves to it, and just lie Japan before them, they will not be able to reduce in any meaningful way, the amount of US dollars reserves they hold. Doing so would fore the value of their currency to a level much higher than normal market forces would dictate. Just as the holdings were acquired to underappreciated the currency today. disposition would over inflate later.

And the US capital market is not heavily subsidized?

Because labour is cheap, there's little need to improve productivity (although it is still improving very quickly). Their labour can live with less than what the US labour demands.

But more importantly, the Chinese labour force is far more disciplined. And so is Japanese labour force although in a different way.

In the end, no matter what they are doing, it's not something that can be easily duplicated in the short term. That gives them an advantage, even only a temporary one. Nobody can hold a permanent advantage in the market, of course. That's why capital is always flowing.

And to be frank, there's nothing new in the article you quoted. He doesn't even have the gut to spell out his conclusion, which is simply protectionism and subsidization. Unfortunately, neither is easy to do and both comes with tremendous costs. The Chinese can do it because their people is willing (or forced) to accept those costs. That's their advantage (not protectionism itself) and the market is rewarding them in some cases. Of course, it is also their disadvantage and the market is punishing them in other cases.

 

[Glen]

And the US capital market is not heavily subsidized?

Not to the same extent, and predominantly the subsidy went to individuals, not corporations. In place in China is a system that basically transfers huge amounts of capital to SOEs, all the while the risk is socialized.

But more importantly, the Chinese labour force is far more disciplined. And so is Japanese labour force although in a different way.

That is a strange comment. What do you mean by discipline? Again, of you measure productivity by man-hours or pollutants, the US (or the West) is far more efficient.

And to be frank, there's nothing new in the article you quoted. He doesn't even have the gut to spell out his conclusion, which is simply protectionism and subsidization. Unfortunately, neither is easy to do and both comes with tremendous costs. The Chinese can do it because their people is willing (or forced) to accept those costs. That's their advantage (not protectionism itself) and the market is rewarding them in some cases. Of course, it is also their disadvantage and the market is punishing them in other cases.

First off, the current scenario is not one in which there is not already protectionism and subsidisation. It is just more one sided. Undervalued currency is a subsidy. Having nominal lending rates at half the level of nominal GDP growth rates is an implicit subsidy.Export restrictions (think rare earth metals coking coal etc. even some foods) are subsidies. Technology transfers and non existent IP protection are subsidies.

Ralph does have the guts to say spell out his conclusion, you have to read his other articles.

 

[archanfel]

Not to the same extent, and predominantly the subsidy went to individuals, not corporations. In place in China is a system that basically transfers huge amounts of capital to SOEs, all the while the risk is socialized.

That is a strange comment. What do you mean by discipline? Again, of you measure productivity by man-hours or pollutants, the US (or the West) is far more efficient.

I mean if a worker does not work hard, he gets fired. If a worker refuses an order, he gets fired. If a worker dresses differently, he gets fired. The companies are far more powerful relative to workers in China. It's different in Japan, but their workers are also more disciplined due to culture and peer pressure . From what I hear about US manufacture, the discipline is lacking.

First off, the current scenario is not one in which there is not already protectionism and subsidisation. It is just more one sided. Undervalued currency is a subsidy. Having nominal lending rates at half the level of nominal GDP growth rates is an implicit subsidy.Export restrictions (think rare earth metals coking coal etc. even some foods) are subsidies. Technology transfers and non existent IP protection are subsidies.

Ralph does have the guts to say spell out his conclusion, you have to read his other articles.

Isn't that what I said? That China is willing to use protectionism and subsidization whereas the US is not. Such tools do not come without costs (inflation, lower living standards, etc...) The US is simply not willing or not able to pay the prices. Of course, another problem is that the US is also restricting its exports. It may be for good reasons, but still.

In the end, companies have no national attachments. They will do whatever that is most profitable for them or they perish. The US has advantages in other areas, including high-tech manufactures. And workers in those industries are enjoying cheap imported commodities. I am not even sure it would be worth the US's trouble to use protectionism or subsidization to shore up low-tech manufacture anyway. Unfortunately, traditional manufacture workers became the victims of this transition.

 

[Glen]

Isn't that what I said? That China is willing to use protectionism and subsidization whereas the US is not. Such tools do not come without costs (inflation, lower living standards, etc...) The US is simply not willing or not able to pay the prices. Of course, another problem is that the US is also restricting its exports. It may be for good reasons, but still.

Sorry, but I mistook what you said earlier and took it it mean the the US was the more protectionist of the two. To elaborate on what you said here though, I agree. In many ways both parties have been able to have their cake and eat it too. The transference of jobs from the loss of manufacturing was disguised by the housing bubble. That has run its coruse, so the benefit of cheaper imports on the cost of living now has a direct cost on employment and GDP. Conversely for China, the growing asset bubbles and massive misapplications of capital are coming to ahead. The impact has not been felt yet, but eventually the piper needs to be paid. Real inflation is running much higher than wage growth, and would be even higher if not for price controls.[/quote]

In the end, companies have no national attachments. They will do whatever that is most profitable for them or they perish.

That in itself is something that can and should be addressed. Again Ralph Gomory wrote an excellent piece on the subject.....
http://www.huffingtonpost.com/ralph-gomory/country-and-company-part_b_174875.html
http://www.huffingtonpost.com/ralph-gomory/country-and-company-part_b_196131.html

Jeffrey Immelt asserts: "If the U.S. government wants to fix the trade deficit, it's got to be pushed. GE wants to be an exporter. We want to be a good citizen. Do we want to make a lot of money? Sure we do. But I think at the end of the day we've got to have a tax system or a set of incentives that promote what the government wants to do."

The US has advantages in other areas, including high-tech manufactures. And workers in those industries are enjoying cheap imported commodities. I am not even sure it would be worth the US's trouble to use protectionism or subsidization to shore up low-tech manufacture anyway. Unfortunately, traditional manufacture workers became the victims of this transition.

These advantages are quickly being eroded though. Through forced technology transfers, limiting market accesses and a national champions strategy. China, like Japan and other countries that wedded themselves on the export based development model has no intention of being a good customer to the West.

 

[archanfel]

Sorry, but I mistook what you said earlier and took it it mean the the US was the more protectionist of the two. To elaborate on what you said here though, I agree. In many ways both parties have been able to have their cake and eat it too. The transference of jobs from the loss of manufacturing was disguised by the housing bubble. That has run its coruse, so the benefit of cheaper imports on the cost of living now has a direct cost on employment and GDP. Conversely for China, the growing asset bubbles and massive misapplications of capital are coming to ahead. The impact has not been felt yet, but eventually the piper needs to be paid. Real inflation is running much higher than wage growth, and would be even higher if not for price controls.

That in itself is something that can and should be addressed. Again Ralph Gomory wrote an excellent piece on the subject.....
http://www.huffingtonpost.com/ralph-gomory/country-and-company-part_b_174875.html
http://www.huffingtonpost.com/ralph-gomory/country-and-company-part_b_196131.html

Jeffrey Immelt asserts: "If the U.S. government wants to fix the trade deficit, it's got to be pushed. GE wants to be an exporter. We want to be a good citizen. Do we want to make a lot of money? Sure we do. But I think at the end of the day we've got to have a tax system or a set of incentives that promote what the government wants to do."

These advantages are quickly being eroded though. Through forced technology transfers, limiting market accesses and a national champions strategy. China, like Japan and other countries that wedded themselves on the export based development model has no intention of being a good customer to the West.

I am not sure that's true. I have confidence in US innovation. That's the beauty of a free system. Also, the western culture emphasis on innovation whereas the eastern culture emphasis on obedience. (I know, I know, I am stereotyping, but it's partially true). I foresee the US (and other western countries) occupied the upper food chain whereas China (may be replaced by others) occupied the cheap stuff. For example, China produces all the iPad, but it's Apple reaping most of the rewards.

However, overall, I agree with you. The trade imbalance can not last forever. Who knows how the world is going to be like in 20 years.

 

[Glen]

I am not sure that's true. I have confidence in US innovation. That's the beauty of a free system. Also, the western culture emphasis on innovation whereas the eastern culture emphasis on obedience. (I know, I know, I am stereotyping, but it's partially true). I foresee the US (and other western countries) occupied the upper food chain whereas China (may be replaced by others) occupied the cheap stuff. For example, China produces all the iPad, but it's Apple reaping most of the rewards.

However, overall, I agree with you. The trade imbalance can not last forever. Who knows how the world is going to be like in 20 years.

I also have faith in the US. What makes Gomory's opinion interesting is that he was the head of the largest private R/D department in the world at IBM. You can read why he calls it the innovation delusion here.

http://democrats.science.house.gov/...ngs/2008/Oversight/22may/Gomory_Testimony.pdf

 

[Admiral Beez]

Did anyone else receive a Property Tax increase last week? Mine's up by over $100 per each of six annual payments. The explanation is that my property value is deemed by MPAC to have increased in value at a higher rate than the average increase. In the same way, if your property value has increased at less than the average rate, your taxes are supposed to decrease. I wonder how often that occurs.

As the MPAC value shows my house is up over $200K since its 2008 value, the gov't is applying the increase in stages over the next five years. At this rate, by 2020 I'll likely be paying double what I paid in 2000. I don't mind paying my share of taxes, but I sometimes wonder if setting tax against property value is the ideal way. Having a high value house is not always an indication of ability to pay more - in my case we bought the house in 1998 and never plan to sell or leave, so we'll never realize any of that hypothetical value, but meanwhile we must pay property tax on that value.

I'd much rather my estate paid capital gains tax on the difference between purchase and sale - that seems fairer, charge the tax on actual profit making, not hypothetical financial gain.

Anyway, there's nothing one can do about it beyond move, so suck it up and pay is the only way forward.

 

[CDL.TO]

In the same way, if your property value has increased at less than the average rate, your taxes are supposed to decrease. I wonder how often that occurs.

I'd estimate about 50% of the time.