Category Archives: Money and risk

The “double taxation” myth

  

The debate over the Tax Cuts and Jobs Act of 2017 resurrected a lot of conflicted thinking about what a corporation is and is not. It has become a common talking point that corporate profits are “double taxed,” first at the corporate level and then as part of the owner’s income. This particular code revision has expanded this theme in… Read more »

Privatization is not capitalism

  

The slow-roll collapse of the ill-advised Iowa Medicaid privatization, which was put in place by former Governor Terry Branstad, continues under his successor, Kim Reynolds, to harm the lives of real Iowa citizens with disabilities and chronic medical conditions. Because of that fiasco, I thought it would be useful to dispel some widely-held myths about government privatization efforts in general…. Read more »

Bank deregulation: Wash, rinse, repeat

  

With “bipartisan” bank deregulation rushing its way through Congress again (Why do bad bills progress so quickly?) I thought it time for a little history lesson. As if the 2008 housing debacle wasn’t enough to keep Congress understanding that the banks are rarely to be trusted, let’s go back a couple bank crises before that one, the forgotten one from… Read more »

Government budgets are moral documents

  

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” – U. S. Constitution, Article I Section 8 With the release of President Trump’s first proposed budget, I thought… Read more »

Uber wages and the Amway model

  

A recent controversial study from the Massachusetts Institute of Technology [1] has asserted that Uber and Lyft drivers’ median wage is really just $3.37 per hour. I don’t want to wade here into the final number calculated by MIT, but I thought it might be useful to demonstrate that the techniques used by Uber and Lyft to keep the “real… Read more »

Taxpayer-financed business failure insurance

  

Two recent posts looked at private equity (PE) as an aberrant form of business model dependent first on very artificial tax preferences and second on the ability to empty the cash from “cash cow” businesses. In this final part of my critique of PE, I will look at the liberal use of bankruptcy protection as a “feature, not a bug”… Read more »

How to milk a cash cow

  

An earlier post explored the “tax welfare” characteristics in much private equity (PE) investment in the U.S. This post explores the second key characteristic of PE, which is the preying on “cash cow” companies. One of the greater misstatements common in the business press is that private equity firms like Bain Capital target “troubled companies” for takeover and rescue. A… Read more »

Fingers, toes, and Bernie Madoff

  

The record-breaking Bernie Madoff Ponzi scheme, which collapsed in 2008, is in news again. The trustee trying to recover assets has clawed back $76.5 million from a Bermuda/Austrian investment fund that had profited from the scheme. [1] Most people don’t know that this fraud could have been taken down eight years earlier. An analyst named Harry Markopolos had tried to… Read more »

Private equity and tax welfare

  

With Mitt Romney back in politics, running for senator from Utah, as well as the recent death of his business mentor, Bill Bain, [1] I thought I should revisit the legacy of the “private equity” (PE) model of corporate governance. Romney’s Bain & Co. spin-off, Bain Capital, was one of the first, and has long been one of the most… Read more »

Ambulances, drugs and the fixed-cost dilemma

  

Vox.com’s Sarah Kliff has been mounting an excellent campaign to make hospital emergency room charges more transparent. One example making the rounds is several accounts of short ambulance rides being billed in the vicinity of $2000. I have yet to see a good discussion of this rate level presented as the very basic math problem that is the “Fixed-cost Dilemma.”… Read more »