Posts Tagged ‘Credits For Research’

Ideas For Democrats

October 17, 2012

So here we are. Romney has a plan, in five points. Obama says Romney’s plan is just one point: the rich should play with different rules. But what’s Obama’s plan? What is Obama’s point? Nothing. Except more of the same. And the same does not work.

The democrats have zero new ideas. After he was elected president, Obama spent two years on his knees, begging republicans to change tone. Apparently he was elected president to beg for love: Obama did not need republicans, in the first few months, as he enjoyed a supermajority. [See note.] Did he want to do nothing more than Bush, in the hope he would be rewarded, like Clinton (or Major, or Blair, or Sarkozy)? Giving six figure speeches to the powers that be.

I long pointed out that the economy is worse than in the 1930s, in some dimensions. Not too many celebrities point that out on the left: their power & wealth depend upon the present corrupt intellectual scheme.  I want to meditate this graph:

French & German Private Companies Research & Development.

A consequence is this graph:

German Industrial Production Is Higher Than Ever. Because Research and Development in German private companies is higher than ever.

Why to brandish France and Germany in the context of the election in the USA? The European Union is an excellent place to test policies. What we see above is that Germany did something right, and France the exact same thing, wrong. With dramatic consequences (jobs are disappearing by the thousands in France every day it seems). Something resembling what’s done in Germany is basically the only solution for the West. And that’s real progressivism.

Germany is doing great economically. Germany has an unemployment rate of 5.5% although she accepted no less than one million new Eurozone residents, who came to work, in the last year alone. A spectacular way to solve the… German problem… Now something more about a dying birthrate.

Many leaders, political, academic or intellectual, on the left are more corrupt than on the right, because their minds are twisted. They are not what they seem. They are the opposite of what they claim. Those pseudo leftists are plutocrats, or next to plutocrats, or serving plutocrats… while claiming to serve the People. At least the Koch brothers, when they do their machinations, are really trying to influence public opinion the way one expects them to.

Whereas plutocrats such as (chief of the democrats in Congress) Nancy Pelosi (personal worth perhaps as great as Romney, about 200 million dollars), or (Senior Senator) Dianne Feinstein (personal worth up to twice Romney) claim to care about the plebs… Which is fine. However their historical record is that they did nothing when they controlled Congress, except for extending Bush’s tax cuts, Bush’s wars, and an ObamaCare who looks (to me) more like BuffetCare than anything else (Buffet is a notorious investor in HMOs and the like). So they are not what they seem.

Many of the critiques Romney has been making, I have been making over the years, to wit:

1) the lowering of the median family income by more than $4,300 (roughly 10%, in constant dollars). This is actually (one of) the main argument I historically made to qualify the present slump as the “Greater Depression”. (There are other arguments, now reinforcing, such as the decrease of life expectancy.) 

2) that health care costs are out of control. Romney said they increased by more than $2,000 under Obama, and independent evaluators have forecast a proximal augmentation of the average family health insurance bill by as much as ObamaCare kicks in fully by 2014.

To put health care under control the only way is to make the basic plan public (as this takes the profit motive out of the cost of rendering care to the otherwise moribund). OK, Obama could push for that later.

3) the lack of jobs. Romney say he will get tougher with China, for currency manipulation (Obama already did this quite a bit), and Intellectual Property theft. IP theft is the big one. The West has been like a baby while the Chinese Communist Party and its plutocratic agents have been stealing IP right and left to the West.

The democrats have no plan, but Romney came up with one: take out all the deductions, beyond $25,000 total, do not tax capital gains below $200,000. And of course, reduce taxes all across the board, except, overall, for the top 5%.

How come the democrats do not have a plan? OK, tax the rich mandatorily 30%. That’s their would be plan. Good luck forcing Pelosi and Feinstein to pay 30% tax. The average Congress person and senator is a high multimilionaire, I do not see them taxing themselves. Moreover, taxes do not mean jobs, as Constantinople demonstrated for a millennium.

The same critique can be made to, say, the French Socialists. There the proposed tax is 75%. But entrepreneurs in France revolted, and used exactly the same argument as Romney: small companies create jobs, a lot of the pseudo millionaires actually re-invest massively in their companies, creating employment. A really progressive agenda has to take this into account. Bitten by critique that way, the French Socialists accepted that Romney/Silicon Valley argument, and operated a strategic retreat. And now they are sitting on their haunches, thinking harder and deeper… (Notice that the Socialists are in total control of France: Presidency, Senate, Parliament, most large cities and regions; what they have is an intellectual, not political problem.)

This argument, that multi-millionaire entrepreneurs create jobs, is correct, and close to the heart of Germany’s economic success. I would argue that small entrepreneurs should be taxed ZERO on the portion of the money they make that they reinvest in R&D.

German entrepreneur-owners in the Mittlestand (Middle Stand) re-invest massively in their companies. OK, they are tough with their employees, but is it better to have a sadistic boss rather than having no income whatsoever? OK, it depends how sadistic, it’s all about 50 Shades Of Grey (Feldgrau in this case…).

Thus it would be good for USA democrats and French Socialists to have a system similar to that Angela Merkel presides over. The Mittelstand invests massively in research and development.

In 2011, Germany obtained three times more patents than France (which has 83% of the population of Germany). Here are the numbers from 2008:

Rank Country No. of Patents Granted
1  Japan 239,338
2  United States 146,871
3  South Korea 79,652
4  Germany 53,752
5  China 48,814
6  France 25,535
7  Russia 22,870
8  Italy 12,789
9  United Kingdom 12,162
10  Switzerland 11,291
11  Netherlands 11,103
12  Canada 8,188
13  Sweden 7,453
14  Finland 4,675
15  Australia 4,386
16  Spain 3,636
17  Belgium 2,948
18  Israel 2,665
19  Denmark 2,347
20  Austria 2,306

The classification is very different for patents in force, and for applications. Comparing all, it seems some countries, presently in economic difficulty are seeing their patent position decay quickly. Digging a bit deeper, one can see that research and development led by private companies has exploded in Germany, while it has decayed in France.

The bottom line is this: people in the developing world earn at most 5% of what they would earn, with the same job, in the developed countries. Reciprocally this means that most employees, in developed countries, are paid twenty, and often thirty times too much, or at least would be if the communications were free.

The way out is for developed countries to develop jobs that cannot be replaced at a distance. Except for low lives’ jobs, such as pushing carts around and shining shoes in airport, this means jobs depending upon knowledge most countries cannot endow their citizens with. Firms with a persistent R&D strategy outperform those with an irregular or no R&D investment.

European Countries With Higher R&D Do Much Better

So, to provide with employment, developed societies should be oriented towards research, to develop further. The target should not be 3%, but 10% of GDP. A good way to do this would be to make all research and development go tax free. $6.6 billion of research tax credit has been claimed recently in the USA, a very small fraction of the total R&D, so there is a lot of room to spur research using taxation!

It goes without saying that forcing the banks away from derivatives, and back into the real economy would help. One can easily argue that three quarter of world finance is actually a criminal organization. How? Simple: the world used to work with 8% of corporate profits in finance. Now it’s 40%. Those 32%, one third of world profits, can only be explained as parasitism of some sort.

So let the left talk about these things. That would be more constructive than the specious arguments Obama used in the debate to mark points with the silly ones [See note]. If Obama is elected without an effective plan, the situation is pretty sure to disintegrate further, and when things get too desperate, the fascist instinct always gets in gear.

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Patrice Ayme

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Note on Obama’s specious arguments: the 47%. And the Benghazi fiasco. Obama said he used the word “terror” the next day. But I thoroughly documented that the White House administration prepared declarations at the time accused those who “denigrated Islam”, not a deliberate Salafist attack by a commando (which is what really happened). Instead a video describing the Qur’an according to itself (!), and a French magazine with two silly drawings (one representing a Jew and a Muslim, and the other that I reproduced). I would actually suggest that Clinton sacrifice herself, and resign. Time to man up. After all, there was a massive Salafist base next door (since then destroyed by inhabitants of Benghazi in retaliation for the attack on the Consulate of the USA).

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Note on supermajority: I sent a comment on the Krugman New York Times editorial (another freaky attack accusing Romney to have lied about what he did in next year). I pointed out Obama did nothing when he could have done everything. exceptionally, the NYT published it, jointly with a reply that I was deluded because Obama had a super majority of 60 in the Senate for only 14 weeks (as the rest of the time, the reply argued, poor Ted Kennedy was idiotically “housebound“, meaning Teddy, a specialist of swimming against the current, preferred to help the republicans by eating pancakes at home, rather than facing his destiny, and resigning).

That was doubly idiotic: first of all, the democrats controlled Congress for four years, during which, they did preciously nothing. Secondly, even if it’s all the fault of poor rich Teddy boy eating pancakes at home, 14 weeks is a long time. In less than 14 weeks, the French Socialist government has passed an enormous amount of legislation, including a European financial rescue mechanism, an FDIC for Europe (that required sorting things out with 26 other Congresses!), a 75% tax on income, a financial transaction tax, and the French Socialists passed countless other laws.

Face it guys: Obama hid behind Oblahblah, also known as George W. Bush III… And plutocrat Pelosi, his prophet.

So the New York Times published my comment which mentioned just in passing “supermajority”, joined with a reply already “approved” by 108 people (!) In other words, a lot of money is deployed to cheaply twist reality. How could have these people read by stuff, reply to it, and have 108 people read the reply, and approve it? All in one nanosecond?