Stimulating Conversation

Brian Ward and Paul Happe reconvene for a special simulcast episode from a recent appearance on KYCR Business Radio 1440, filling in for the King Banaian Radio Show.

Topics addressed include:

* Trump economic interventionism with Carrier – a violation of classical liberal economic theory, but is that always a bad thing? A discussion on the trade-offs between subsidized jobs and consumer benefits. Also, a review of past Carrier behavior regarding executive compensation which dwarfs the $7 subsidy needed to save 1,000 jobs. What’s up with that?

* Exclusive audio, live from Trump Tower, of the Trump transition team plotting their economic strategy.

All member feedback welcome in the comment section, hope you enjoy.

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There are 5 comments.

  1. Bishop Wash Member

    Interesting discussion about stock options. I thought one reason CEOs were paid with stock options was to get around a change in the tax code under Bill Clinton limiting the amount of a CEO’s salary a company could deduct to $1 million.

    • #1
    • December 19, 2016, at 11:48 AM PDT
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  2. Paul Happe Contributor

    Bishop Wash:Interesting discussion about stock options. I thought one reason CEOs were paid with stock options was to get around a change in the tax code under Bill Clinton limiting the amount of a CEO’s salary a company could deduct to $1 million.

    That is true. However salaries generally are set in advance of job performance. So we are really comparing options with cash bonuses. Even in the abscense of Clinton’s law, bonuses would need to be tied to company performance. Stock price makes measure of such performance very easy and objective.

    • #2
    • December 19, 2016, at 1:08 PM PDT
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  3. milkchaser Member

    Oppose the free market and you oppose the best interests of the economy. Companies that cannot compete die. Companies that die provide very few (zero) jobs.

    • #3
    • December 21, 2016, at 7:25 AM PDT
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  4. milkchaser Member

    There is an article on Ricochet.com today by James Pethokoukis that explains the problem with the Carrier deal:

    But maybe what we really need is an economy that is “antifragile,” a neologism coined by Nassim Nicholas Taleb. Life is full of randomness and chaos and failure, so perhaps an economy that would actually “benefit from shocks and a wide array of trauma.” Indeed, a country that tries to prevent all failure is actually increasing its fragility and the odds for a major breakdown and massive insecurity. I couldn’t help thinking of Donald Trump and Carrier when I recently reread this from Ashwin Parameswaran:

    This fleeting and illusory stability that benefits the short-term interests of the currently employed workers in a firm leads to the ultimate loss of bargaining-power and reduced real wage growth in the long run for workers as a class. In the pursuit of stability, the labour class supports those very policies that are most harmful to it in the long run. …

    Just like a fire that burns down tall trees provides the opportunity for smaller trees to capture precious sunlight and thrive, new firms expand by taking advantage of the failure of large incumbents. But when the incumbent fails, there must be a sufficient diversity of small and new entrants who are in a position to take advantage. A long period of stabilisation does its greatest damage by stamping out this diversity and breeding a micro-stable, macro-fragile environment.

    • #4
    • December 21, 2016, at 8:20 AM PDT
    • Like
  5. Kim K. Member

    Kanye says “hey!”

    • #5
    • December 22, 2016, at 12:26 PM PDT
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