Contributor Post Created with Sketch. The ‘Billionaire Effect’ That Wealth Worriers Never Mention

 

The “billionaire effect” isn’t how the mere existence of the super-rich seems to cause great alarm in some people. Well, it isn’t just that, obviously. UBS defines the “billionaire effect” as how entrepreneur-led businesses “have tended to outperform others financially” due to “long-term vision, smart risk taking, business focus, and determination.”

UBS analysis of more than 2,000 global billionaires finds that over the past 15 years, billionaire-controlled companies returned almost twice the annualized average performance of the market and generated a 50 percent higher return on equity. Moreover, while the billionaire effect is seen globally, the effect was strongest in the United States.

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Contributor Post Created with Sketch. Europe’s Tech Entrepreneurs to America: ‘Don’t Be Like Europe’

 

Just because you dislike capitalism here, doesn’t mean you necessarily dislike capitalism everywhere. Have a problem with the American way of doing things? Well, there are other options. Elizabeth Warren, for instance, favors an “accountable capitalism” based on the German model of corporate governance and trade policy. Critics of Big Tech point to the more aggressive EU on issues such as competition and privacy. And, of course, Scandinavia remains the go-to example for politicians arguing for more expansive social welfare policy.

But Europe’s various flavors of capitalism have an unpleasant aftertaste in at least one major way. As a new McKinsey Global Institute analysis finds, “Europe is falling behind in growing sectors as well as in areas of innovation such as genomics, quantum computing, and artificial intelligence, where it is being outpaced by the United States and China.”

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Thanks for joining the Three Martini Lunch today. Once again, Rob Long of National Review and Ricochet is sitting in for Jim. Today, we celebrate the resignation of socialist Bolivian dictator Evo Morales and notice how very sad the mainstream media and far left politicians are that Morales is no longer in power. They also […]

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Contributor Post Created with Sketch. The Power of Economic Freedom, in Pictures and Words

 

What happens when societies reject economic freedom? Perhaps the most vivid illustration of that outcome is the famous photo of the two Koreas at night. This natural experiment shows the democratic capitalist South as a bright hub of progress and prosperity, the totalitarian communist North a dark nightmare of poverty and wasted human potential. A less dramatic, though still illustrative, photo is the above viral Twitter pic of San Francisco from the air, giving needed context to that city’s housing crisis and its restrictions on building high-density dwellings.

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Jim is on vacation but there’s still plenty of fireworks on Thursday’s Three Martini Lunch. Greg is joined by Chad Benson, host of “The Chad Benson Show.” Today, they get a kick out Bill Gates wondering just how much of his money Elizabeth Warren wants and concluding a conversation with Warren might not be worth […]

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Contributor Post Created with Sketch. America’s Chronic Productivity Problem Returns, at Least for Now

 

The American economy hasn’t generated decent productivity growth since 2005 (not counting the Financial Crisis-skewed years of 2009 and 2010). Indeed, if you’re going to talk about how American capitalism is “broken” or dysfunctional, you should really lead with productivity rather than the “problem” of having too many super-entrepreneur billionaires. If living standards are going to rise anywhere near as fast in the future as in the past, greater innovation-driven productivity growth will be indispensable.

So it was really encouraging to see sharply faster productivity growth in the first half of 2019, 3.5 percent annualized in Q1 and 2.5 percent in Q2. Also encouraging: multifactor productivity — the part of productivity growth accounted for by technological progress rather than better-trained workers or more buildings and software — rose by 1.0 percent in 2018, the strongest gain since the current expansion began in 2010.

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Contributor Post Created with Sketch. The Cost of ‘Medicare for All’ Isn’t Just Taxpayers’ Dollars — It’s Also Jobs and Income

 

“Medicare for All” plans, such as those proposed by Bernie Sanders and Elizabeth Warren, qualify as “big structural change,” to use Warren’s phrase. The elimination of private health insurance in favor of “free” government health coverage is certainly change that’s big and structural. Same goes for all the tax increases and the payment of much lower rates to physicians and hospitals.

But those are the known big structural changes, or BSCs — at least the ones mentioned in candidate plans. But what about other BSCs that may be less obvious? Would, say, overriding drug patents affect the type of early-stage development done by biotech firms and funded by venture capital? Undercutting that innovation mechanism would qualify as a BSC.

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Contributor Post Created with Sketch. Warren’s Health Plan, SNL, and Partial Equilibrium Reasoning

 

That Saturday Night Live cold-open about Elizabeth Warren pitching her “Medicare for All” plan to skeptical Iowa voters may seem like an in-kind donation to the Warren campaign. Kate McKinnon’s impression of the Massachusetts senator is both spot-on and compelling.

But there was one way in which the sketch was unfair to Warren. At one point, “Warren” is asked why she claims her plan will cost $20.5 trillion over a decade even though many economists put the cost at 50 percent higher or more. “Warren” then dismisses all these estimates as “pretend,” then adding, “You ready to get red-pilled? Money doesn’t exist!”

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After a surprisingly brief venting about how bad their football teams are, Jim and Greg serve up three good martinis. They welcome New York Times polling showing Warren as the weakest major Democratic candidate against President Trump and an NYT editorial blasting Warren for falsely claiming that only billionaires would see higher taxes in her […]

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Back to the normal format today, but plenty of good Friday fodder awaits. Today, Jim and Greg are happy to see better-than-expected numbers in the October jobs report. They shred Elizabeth Warren’s ludicrous plan to pay for government-run health care, explaining why it’s a fiscal pipe dream and a health policy nightmare for everyone. And […]

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November is National Entrepreneurship Month. Here’s Humphrey Bogart to explain why it’s about more than the money: More

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Contributor Post Created with Sketch. It’s Too Late in Campaign Season for Facebook to Ban Political Ads, but Not Fact-Check Them

 

Facebook has instituted fact-checking before, like with its partner BOOM in India.
There are some famous natural experiments out there, such as the Dutch Hunger Winter study or the Oregon Health Insurance study. Or how about that nighttime satellite photo of North and South Korea showing the benefits of democratic capitalism vs. totalitarian communism. That may be the most famous and instructive natural experiment of all.

Silicon Valley may be giving us another enlightening comparison. Twitter is banning all political advertising, while Facebook will continue to run such ads — even those containing false or misleading claims. We should get a first read on the results on either the evening of Nov. 3 or the morning of Nov. 4, 2020.

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Contributor Post Created with Sketch. Millennials Wanting to Live in a Socialist Country Is Like Wanting to Go to School at Hogwarts

 

Maximum concern would be warranted if 70 percent of millennials said they were likely to vote for candidates who supported Chavismo or Maoism or Marxist-Leninism. But more than two-thirds of that generation saying they are “somewhat likely” or “extremely likely” to vote for a generic “socialist?” Not so much.

And certainly I wouldn’t read the results of a new YouGov/Victims of Communism Memorial Foundation survey as Axios does: “Young people’s political views often change as they grow older, but their support for socialist ideas and leaders is a sign that the old rules of politics are changing fast.”

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Recommended by Ricochet Members Created with Sketch. Quote of the Day: Price Controls

 

“Four things have almost invariably followed the imposition of controls to keep prices below the level they would reach under supply and demand in a free market: (1) increased use of the product or service whose price is controlled, (2) Reduced supply of the same product or service, (3) quality deterioration, (4) black markets.” – Thomas Sowell

Did anyone notice California’s governor imposing statewide rent control on September 10? It was done to make housing more affordable and more available. It was sold as a means of fixing the homeless crisis. Of course, the cities that already had rent control are the cities with the greatest housing shortages and highest rents, but why let reality intrude on a great theory.

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Good polls, confusing polls and politicizing math are the focus of our martinis on Wednesday. Jim and Greg are glad to see Republican U.S. Senate challenger John James already in a virtual dead heat with Democratic Sen. Gary Peters in Michigan. They also shake their heads as a new Kaiser Family Foundation survey shows a […]

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Has anyone done any research into the implications for financial investments if either Warren or Sanders is elected President? Obviously, it will make a big difference whether or not the Republicans are able to hold the Senate. I am planning to retire in the next few years and I’m extremely concerned about having either of […]

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Contributor Post Created with Sketch. Two Pyrrhic Union Victories

 

The Chicago Teachers Union strike and the nationwide strike at General Motors are two troublesome signs of our nation’s increasing political instability. The losses suffered by all parties to these disputes will not be recouped going forward, no matter what the outcome. The difficulty here does not stem from the strategies adopted on either side of the bargaining table; it is that the current structure of management-labor relations requires the bargaining table at all. That “table” is symbolic of the monopoly power, protected by statute, that unions can exert on management in both the private and public sectors. Sadly, the resulting losses are borne not only by the immediate participants of these struggles, but also by students, parents, suppliers, coworkers, taxpayers, citizens, and so on. Their dislocations, though, are blithely dismissed by the unions as “incidental” damage.

The precise issues in most labor strikes vary in their particulars, but they all share several features in common. In the CPS strike, the teachers insist that they are out on strike not just for themselves, but for their students and coworkers. As Randi Weingarten, president of the American Federation of Teachers, has stated, “It’s about making the sacrifice to help create welcoming and safe environments for our kids and not taking ‘no’ for an answer.” But her protestations aside, the demands always look the same: salaries must be higher, class sizes must be reduced, and more nurses, social workers, and other staff must be hired. Questions of excessive job security and low public-school performance are never mentioned.

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Contributor Post Created with Sketch. San Francisco Unleashes Destructive Creation on Silicon Valley

 

Hans Vestberg, CEO of Verizon Communications, speaks about the deployment of 5G wireless technology during the TechCrunch Disrupt forum in San Francisco.
Politicians kvetch a lot about Big Tech, but government officials everywhere would love their country, state, or city to have its own Silicon Valley. Alas, there’s no magic formula, no blueprint for top-down constructing a fertile ecosystem of technological innovation and entrepreneurship. As economist Enrico Moretti has noted, “If you look at the history of America’s great innovation hubs, we haven’t found one that was directly, explicitly engineered by an explicit policy on the part of the government.”

That’s just not how it seems to work in America. It’s more of an organic, idiosyncratic, indirect thing. As University of Washington historian Margaret O’Mara, author of “The Code: Silicon Valley and the Remaking of America,” told me in a recent podcast, the story of Silicon Valley isn’t “a story of big government coming in with giant research labs and command-and-control” although Washington certainly played a critical role.

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It’s all good martinis for us today! Join Jim and Greg as they find endless entertainment in Hillary accusing Tulsi Gabbard of being a Russian asset and Gabbard going nuclear in response. They’re also glad to see President Trump listening to those begging him to take one controversy off the table and scrapping the 2020 […]

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Although results have been varied, I am still keen on the idea, this late in my traveling life, of quick trips. Yeah, it was not fun to be spending my 60th birthday trying to find the right line to get out of Mexico City’s airport; and I still have no plans whatsoever for the autumn […]

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