Wednesday, May 16, 2012

Quote of the Day: Give Me Greed and Profits

From a 2004 column by economist Walter E. Williams:

"People in the education and political establishments pretend they're not motivated by such "callous" motives as greed and profits. These people "care" about us, but from which areas of our lives do we derive the greatest pleasures and have the fewest complaints, and from which areas do we have the greatest headaches and complaints? We tend to have a high satisfaction level with goods and services like computers, cell phones, movies, clothing and supermarkets. These are areas where the motivations are greed and profits. Our greatest dissatisfaction is in areas of caring and no profit motive such as public education, postal services and politics. Give me greed and profits, and you can keep the caring."

Featured in today's The Gartman Letter. 

58 Comments:

At 5/16/2012 3:24 PM, Blogger Paul said...

"People in the education and political establishments pretend they're not motivated by such "callous" motives as greed and profits."

Reminde me of that whiny teacher berating Gov Christie last yr. She complained she wasn't being paid enough and then immediately contradicted herself declaring she only did it for "the love."

 
At 5/16/2012 3:45 PM, Blogger morganovich said...

let's look at some of the lowest satisfaction interactions out there:

the dmv and the irs.

it's time to actually put a profit motive into those areas.

license 2 or more competing agencies to serve those markets. let them fight to get you to file your taxes or register your car with them.

pay them per filing and just makes sure they follow clearly set rules on procedure and accounting.

it would almost certainly save money and up service quality.

 
At 5/16/2012 3:49 PM, Blogger Paul said...

Morganovich,

I dunno, do you really want the profit motive introduced into tax collection? I have to think about that one.

 
At 5/16/2012 3:51 PM, Blogger Larry G said...

re: the IRS and DMV - two agencies that perhaps more than any other save for law enforcement let you know who is boss and it's NOT YOU!

Both deal with crooks and criminals and wannabes...

sitting/standing at the DMV has an atmosphere like what one might expect at a criminal detention visitor room or similar.

I'm pretty sure than law enforcement gets first dibs on the security camera feeds...

 
At 5/16/2012 3:57 PM, Blogger morganovich said...

paul-

absolutely. if they get out of line, you switch providers. they cannot be any worse and more draconian than the irs.

i don't know if you have ever had the pleasure of having a serious dispute with them, but it's agony and the rules are stunningly screwed up.

i moved an IRA and they tried to call it a distribution. it took me 11 months to clear it up. you call them, get a call center, sit on hold for often over an hour, then speak to someone at random. you never get the same guy twice and no one even has a direct line or e-mail. i must have wasted 20-30 hours on the phone with them.

it's absolutely surreal.

oh, and if you actually need to go to tax court, you have to pay all the taxes they claim you owe FIRST. until you do, you cannot even challenge them.

with somehting like an ira, this can be several hundred thousand dollars that you need to pull out of somewhere, which, of course, has tax consequences.

it's a serious horror.

 
At 5/16/2012 4:02 PM, Blogger Methinks said...

Morganovich,

That's a terrible plan. You can't expect a government created oligopoly to work like a competitive market. Note how poorly ratings agencies work for this this reason.

I'm with Paul. I already have an agency with a profit motive up my *#% (FINRA) and I can assure you it's not as pleasant as you imagine. The incentive is to fine you just enough so that it's not worth the expense of fighting it and the incentive is also to audit and audit often.

The IRS is the disaster it is because of the complexity of the tax code and the fact that government loves to use the IRS to beat the population into submission. The rules are just vague and complex enough to make all of us criminals.

Besides, I think each state runs its own DMV, so the experience varies. In Connecticut, they're surly and if you live in Greenwich, you're forced to drive about an hour East (on I-95, no less) to be crapped on by the petty bureaucrats. In Florida, I make an appointment and everything runs very smoothly.

 
At 5/16/2012 4:06 PM, Blogger Paul said...

Morganovich,

Oh yeah, I'm sure it's brutal. I haven't had that experience, but I've dealt with other government agencies and had similiar issues. I'm just a little apprehensive about giving a tax collector a profit motive. OTOH, a)I don't have a better idea and b)the idea of "reform" is always a joke when it comes to federal agencies.

 
At 5/16/2012 4:08 PM, Blogger Methinks said...

absolutely. if they get out of line, you switch providers. they cannot be any worse and more draconian than the irs.

That's not going to work. That situation is going to work like repo men. You want to talk about seriously unpleasant situations? I once rented a house from a guy who apparently never paid his bills (Bentlys are very affordable if you don't pay for them, apparently). The repo men started arriving within a few days of our moving in. The police informed me that they compete to repo the item and they'll keep coming until the landlord does something about it or the item is repossessed.

The firms will compete to get you to pay your taxes in the same way Repo men compete to repossess property. And they apparently take it first and then you have to prove you don't owe on it. They sometimes repo the wrong property too. No thanks. The IRS is bad enough.

 
At 5/16/2012 4:37 PM, Blogger Larry G said...

actually the IRS is a huge job creator.

Anyone with anything more than simple income better hire a "professional".

I mean how many jobs would go out the window if we simplified the tax code?

:-)

 
At 5/16/2012 4:38 PM, Blogger AIG said...

A government created oligopoly isn't going to be a marked improvement over a government created monopoly, because none of the players are "really" in any danger or competition. It it not likely that a local government is going to hire 5 independent companies, or allow anyone to enter and operate simultaneous DMV shops in one city, allowing the unprofitable ones to sell off. It will, as usual, grant territorial monopolies.

The solution, I think, is only in reducing and simplifying the rules. After all, the costs and headaches of the DMV don't come about because of the unpleasant nature of the employees or of the surroundings, but rather the hit on your wallet.

Likewise, the IRS is pretty good at getting your tax returns and getting back to you. Mater of a couple of weeks. But that's not why we hate them.

Ultimately the problem is mission creep. The original intentions of these "services" were to provide some form of licensing, or to collect for the treasury. What they do now, however, isn't that.

The same goes with "vouchers" and charter schools etc, in my opinion. The real benefit in vouchers is not that it allows the student to go from one school to another. Ultimately, the benefits of this will be slight because in most places the distances themselves provide barriers. The real benefit will be in switching the focus of schools back on education, rather than being welfare programs for the armies of unionized teachers.

 
At 5/16/2012 4:42 PM, Blogger AIG said...

actually the IRS is a huge job creator.
When I was about to graduate from my engineering school, the IRS tried to recruit me. Apparently they hire engineers too (for when they audit certain companies). They offered a wage that was close to 50% higher than the market average for a new graduate in my degree.

The IRS is a good gig, which is why it will never, ever, simplify.

 
At 5/16/2012 4:48 PM, Blogger efimpp said...

>immediately contradicted herself declaring she only did it for "the love."

no contradiction here.
did you sleep with him for love or money? for love, of course, twenty bucks isn't really "money".

 
At 5/16/2012 5:20 PM, Blogger Benjamin said...

Yes, I often re-read Walter Williams columns from 2004.

And when they sewed me up in the emergency room at Glendale Memorial, I thought how much better I liked Big Macs.

The 16 years of education I got in California public schools, including four at one of the finest universities anywhere (then) Cal Berkeley---really, I had more fun watching football.

I don't like traffic signals either. Government controlled traffic. WTF? I enjoy video games more. More lights and action.

 
At 5/16/2012 6:19 PM, Blogger AIG said...

Yes Benji, because without government, who would have sewed you up at the hospital. Who?

PS: The one time I had to go the emergency room to get sewed up, I went to a public hospital since it was the closest, only to discover about 3,000 people waiting in line ahead of me. I then went to the private hospital nearby, to discover no waiting line.

 
At 5/16/2012 6:38 PM, Blogger Benjamin said...

AIG-

Yes, I waited for hours, and then more hours, with a gash deep enough to expose silvery-white muscle sheathing on my leg. My "room: for minor surgery (interior sutures were required) was a gurney in a hallway, curtained off. I have received far better care, many times, in Thai hospitals.

In retrospect, I should have gone to a private-sector Industrial Medical Clinic, though it was 10 pm at night.

Nevertheless, at Glendale Memorial, they treated me first, then asked for payment. Obviously, many patients cannot pay. I paid with credit card, and counted myself lucky to be alive in a era of painkillers and antibiotics.

I did resent the traffic signals to and from the hospital. Government-controlled traffic. Regulation, all the time. Didn't they know I wanted all green lights and was willing to pay for it?

 
At 5/16/2012 7:10 PM, Blogger AIG said...

You can't see it right now Benji, but a tear is streaming down the side of my cheek after reading of your plight.

 
At 5/16/2012 9:33 PM, Blogger OBloodyHell said...

>>>> Note how poorly ratings agencies work for this this reason.


This has to do with the way ratings agencies are funded more than with the agencies.

Agencies need to be funded by the organization that has the most to lose if they're wrong... in most cases, this is tied somehow to the insurance agencies.

That motivates the rating group to be cautious and pessimistic, rather than "hey, whaddya want? Ah, no problem!!"

 
At 5/16/2012 11:00 PM, Blogger juandos said...

"Both deal with crooks and criminals and wannabes"...

Both agencies are staffed by bureaucratic and parasitic 'crooks and criminals and wannabes'...

"sitting/standing at the DMV has an atmosphere like what one might expect at a criminal detention visitor room or similar"...

Yeah, I think that's a pretty apt description...

.

 
At 5/16/2012 11:01 PM, Blogger Pulverized Concepts said...

A more rare sight than the abominable snowman: a guy in a bar wearing an IRS SOFTBALL t-shirt.

 
At 5/16/2012 11:03 PM, Blogger juandos said...

"including four at one of the finest universities anywhere (then) Cal Berkeley"...

Hmmm, pseudo benny at the UC Berkeley, eh?

Well that might explain a lot...

 
At 5/17/2012 6:20 AM, Blogger Methinks said...

This has to do with the way ratings agencies are funded more than with the agencies.

I disagree. Even if agencies are funded by the very companies that seek to be rated, they have little incentive to provide unearned favourable ratings in a competitive market. If they did, their ratings would soon be worthless to those who rely on them to make decisions and thus worthless to the companies seeking to be rated.

The problem with the ratings agencies is that there is zero competition. The SEC licensed the three that we have and that's it. As a result, the rating process is relatively opaque, poorly understood, favours the companies being rated instead of those that rely on the ratings for decisions and They can screw up without real consequences.

 
At 5/17/2012 6:25 AM, Blogger Larry G said...

" Even if agencies are funded by the very companies that seek to be rated, they have little incentive to provide unearned favourable ratings in a competitive market"

I thought that was the exact problem with MBS/credit default swaps.

weren't they being rated as 'investment grade" by the companies who were being paid by the companies trying to sell those "investments"?

 
At 5/17/2012 6:25 AM, Blogger Larry G said...

" Even if agencies are funded by the very companies that seek to be rated, they have little incentive to provide unearned favourable ratings in a competitive market"

I thought that was the exact problem with MBS/credit default swaps.

weren't they being rated as 'investment grade" by the companies who were being paid by the companies trying to sell those "investments"?

 
At 5/17/2012 7:15 AM, Blogger Methinks said...

You have to read the rest of the comment, Larry.

If the market were open to competition, instead of barricaded from competition by regulation, ratings agencies would have incentive to behave very differently.

In a competitive market, there would be strong disincentives to providing undeserved favourable ratings. In the government-created oligopoly, there are none.

 
At 5/17/2012 9:35 AM, Blogger Hydra said...

"Give me ... Profits"

Hmmm. I like that.

 
At 5/17/2012 9:37 AM, Blogger Hydra said...

If the market were open to competition, instead of barricaded from competition by regulation, ratings agencies would have incentive to behave very differently.

==============================

Not proven, but anyway, how does that change the source of funds?

 
At 5/17/2012 9:47 AM, Blogger morganovich said...

methinks-

1. finra has no competition, so it's not really a great comp.

2. neither are repo men. it's more like the rating agencies. they will struggle to be customer, not government friendly. keep in mind, they are being paid per return processed, not for money they shake out of you like a repo man.

 
At 5/17/2012 9:53 AM, Blogger bart said...

http://www.nowandfutures.com/grins/greed.wav

-g-

 
At 5/17/2012 10:25 AM, Blogger Methinks said...

Morganovich,

FINRA has competition from other SROs. It's the largest, but it's by far not the only.

The repo market is apparently very competitive.

I don't understand how your tax solution differs from the current system of CPAs. I can have any CPA I want to file my taxes with the IRS. What agency in government is going to ensure you've been shaken down for the maximum amount by your preparer?

If you limit the number of preparers the way ratings agencies are now limited to three, you'll have the same problems.

 
At 5/17/2012 11:29 AM, Blogger Jon said...

I think what Williams really means is he and his right wing buddies complain a lot about the postal service and Social Security. Meaning they invent the controversy. And he and his right wing buddies don't talk about how their free markets are actually imposed throughout the world. Whether debt bondage for Wal-Mart workers, or maybe chained sweatshop laborers in Saipan. Union organizers murdered in Colombia. Chinese laborers beaten and imprisoned for trying to unionize.  Greed that caused a complete collapse in life expectancy in Russia and the other Soviet states as privatization was implemented and price controls removed. Give him the greed. Because he's not the one sewing underwear in Haiti for 31 cents an hour. He benefits from greed and others suffer. Give him the greed.

Some of us have dealt with the greed of private health insurance companies. In my case they just keep figuring out ways to make "mistakes" that always tend in the same direction. More money in their pockets, more out of pocket for me, less coverage for me. I'm particularly tenacious with my health insurance provider and watch them like a hawk. They try and screw me constantly, and I'll fight months to get compensation that is due to me. How many times have I missed it? How often are older people that are less capable on a computer screwed over?

But he likes computers. Does he like the billions in state subsidy spent for decades in the development of computers? Does he like the interstate highways that make the supermarkets possible? I think what he really likes is state intervention that makes his life better and free markets when those make his life better at the expense of the extremely poor. He's basically a selfish prick.

 
At 5/17/2012 11:52 AM, Blogger Methinks said...

How often are older people that are less capable on a computer screwed over?

By what? Medicare? LOL.

 
At 5/17/2012 12:00 PM, Blogger Jon said...

I said older rather than elderly for that very reason.

 
At 5/17/2012 12:07 PM, Blogger Methinks said...

Oh, I see. "older" and computer illiterate is younger than 65 in your benighted opinion. Even funnier.

 
At 5/17/2012 12:24 PM, Blogger Jon said...

I always learn a lot from your substantive and informative commentary, Methinks.

 
At 5/17/2012 12:25 PM, Blogger Larry G said...

now STOP ..SUCKING UP Jon!

geeze!

 
At 5/17/2012 12:54 PM, Blogger Methinks said...

Larry, you and I are those incompetent, computer illitrate old geezers Jon's talking about. Lord Chumpsky is not, however. The mind of a socialist is a fragile thing.

 
At 5/17/2012 12:56 PM, Blogger Larry G said...

perhaps... perhaps... but there's no need to suck up even to self-admitted geezers either...

 
At 5/17/2012 1:24 PM, Blogger Methinks said...

Lar, he wasn't sucking up. That was Socialist Sarcasm.

 
At 5/17/2012 1:28 PM, Blogger Larry G said...

geeze..who woulda thought THAT?

gee.. I thought all you had to do to be computer literate (anyhow) was be on FB and have a SmartPhone.

no?

gotta watch that Jon Boy..I did not realize he was that sly...

but I find your commentary sharp and incisive... (does that count?)

 
At 5/17/2012 1:46 PM, Blogger Methinks said...

Larry, it counts. More than the blathering of a socialist who thinks anyone over the age of 30 is to old to use a computer.

 
At 5/17/2012 1:51 PM, Blogger morganovich said...

methinks-

the difference is that repo guys get paid only by taking an asset (and ofter a % of its value). the customer of a repo guy is not the one getting repo'd, it's the finance co.

you have zero choice on who repos your car.

if you're going to compare repo guys to a private tax board, you need to realize its the finance co that's the customer, not they guy getting his bentley grabbed.

if there are 3 places you can file your taxes and they get paid per filing they have great incentive to make it easy, provide good tools to use, customer service, etc.

they get paid when you pick them, so you have a real say in whose offering you like and can vote with your feet.

 
At 5/17/2012 2:06 PM, Blogger Jon said...

Yeah, Methinks is right. It was Socialist sarcasm. Methinks wants to quibble about what is meant by elderly/older. Meanwhile the substance of my critique (the harsh results of Williams greed, the contrived criticism of public programs) is thereby ignored. Substance would be nice, but they aren't good at that here.

 
At 5/17/2012 2:19 PM, Blogger Methinks said...

Morganovich,

You already have such a system, but there's more than 3 companies to choose from. That's exactly what CPAs do.

God forbid there should ever be a government created oligopoly protected by regulation like the one you describe.

My CPA performs exactly those services. A government protected oligopoly of filers isn't going to be interested in reducing your taxes if they're paid by the government per filing. And the government is going to understand it's not getting the full shake-down if you're paying the filer.

So, I don't know how you avoid an IRS in this scenario. The job of the IRS is to ensure that all tribute is extracted from you. Without an IRS, how is the government going to ensure that you've paid what it demands from you at all?

 
At 5/17/2012 2:21 PM, Blogger Methinks said...

Jon,

Just as soon as you write something that isn't drivel, you'll get a meaningful response. So far, I've gotten more meaningful and truthful commentary from inanimate objects than from one of your comments.

 
At 5/17/2012 2:40 PM, Blogger Jon said...

Thanks again for all that substance, Methinks. I'm learning so much.

 
At 5/17/2012 3:06 PM, Blogger Methinks said...

You're far too much of a twit to learn anything valuable.

 
At 5/17/2012 4:43 PM, Blogger OBloodyHell said...

>>> In Florida, I make an appointment and everything runs very smoothly.

I have to sort of confirm this... FL's DMV isn't perfect, but it's lightyears ahead of the classic DMV picture.

 
At 5/17/2012 4:50 PM, Blogger OBloodyHell said...

>>>> After all, the costs and headaches of the DMV don't come about because of the unpleasant nature of the employees or of the surroundings, but rather the hit on your wallet

LOL, }}}} W O W {{{{ -- what magical DMV office did you go to?

Noting my comment above about how FL's DMV ain't that bad, the historical picture of the DMV, the one that forms in everyone's head, IS EXACTLY one where the problem is "because of the unpleasant nature of the employees or of the surroundings."

The DMV's "Standard" of operation is very long lines, nowhere to sit when you finally "get a number", and rude, surly employees with "Whachu WANT!?!?" attitudes.

I've noticed my own local Tag agency is pretty good, too, but those are county-run, not state-run, but have a similar historical impression.

 
At 5/17/2012 4:51 PM, Blogger Ron H. said...

morganovich: "pay them per filing and just makes sure they follow clearly set rules on procedure and accounting."

I was right with you up to that point, but if you envisioned allowing competition with existing government agencies, they would be at an immediate disadvantage if clear, set rules on procedures and accounting are required.

IRS - clear, set rules? You're kidding, right?

 
At 5/17/2012 5:03 PM, Blogger Ron H. said...

Paul: "I dunno, do you really want the profit motive introduced into tax collection? I have to think about that one."

Yes. They get my business by collecting the least. Their income comes from customer fees, not amounts collected.

 
At 5/17/2012 5:33 PM, Blogger Ron H. said...

Jon: "Meanwhile the substance of my critique (the harsh results of Williams greed, the contrived criticism of public programs) is thereby ignored. Substance would be nice, but they aren't good at that here."

That was a critique? Who knew?

If you want substantive responses, Jon, you need to offer substantive comments instead of the usual bullshit you've offered so far.

 
At 5/17/2012 5:34 PM, Blogger OBloodyHell said...

>>> You can't see it right now Benji, but a tear is streaming down the side of my cheek after reading of your plight.

Speak for yourself. I whipped out my Stradivarius and began playing the slowest, saddest, most weepy tune I could play.

Then I danced a jig because, for five minutes, he wasn't whining about military expenditures.

...But only for five minutes.

...And I think that was because he fainted when they stuck in the needle.

 
At 5/17/2012 5:36 PM, Blogger Ron H. said...

"weren't they being rated as 'investment grade" by the companies who were being paid by the companies trying to sell those "investments"?"

Do you think investments backed by US taxpayers should be rated as risky?

 
At 5/18/2012 8:23 AM, Blogger Jon said...

That was a critique? Who knew?

Nyuk Nyuk Nyuk. You are so funny.

Just saw a headline about how Ford, GM, and BMW benefit from Brazilian slave labor. See how good greed is? I can see why Williams likes it.

http://www.guardian.co.uk/environment/2012/may/17/ford-gm-bmw-logging-brazil

 
At 5/18/2012 6:31 PM, Blogger Ron H. said...

"I can see why Williams likes it."

Geez. You might expect Walter Williams to be more sensitive to an issue like slavery than some people, but you think he's not?

 
At 5/18/2012 6:48 PM, Blogger Jon said...

People have done much worse. For instance what do you make of Vietnamese that supported the US as we engaged in saturation bombing of Vietnam? They supported the mass murder of their own relatives. They still die from birth defects and unexploded munitions over there. Williams is maybe a jerk and insensitive, but some are even worse.

 
At 5/18/2012 7:06 PM, Blogger Ron H. said...

"People have done much worse. For instance what do you make of Vietnamese that supported the US as we engaged in saturation bombing of Vietnam? They supported the mass murder of their own relatives. They still die from birth defects and unexploded munitions over there. Williams is maybe a jerk and insensitive, but some are even worse."

How awful!

How does that relate to greed and profits, or shall we just discuss evil people? I don't recall there being any economic interest in Vietnam.

I'm reminded of that mass murder Che Guevara Did you know that some people, ignorant of who he really was actually wear his picture on their shirts? Pathetic.

I prefer my Hitler T-shirt. At least that guy combed his hair once in a while. I also ovccasionally wear a Saloth Sar T-shirt, but few people recognize him, so reactions are rare, but usually intense.

 
At 5/19/2012 7:26 AM, Blogger Jon said...

My point is it's not unusual for people to be oblivious to the suffering of their own kind. Or to be oblivious to the fact that people right now are subjected to the same kind of treatment Williams ancestors were subjected to, all to improve the profits of Ford, GM, and BMW. Greed is alive and well and producing horrors. Williams likes his computer though, so who cares about all that.

 

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