Guest Post by Simon Black
Howard Marks is one of the smartest, wealthiest investors in the world.
As founder of Oaktree Capital, Marks manages around $120 billion. And his track record ranks him among the greatest investors in history.
So it’s probably no surprise that Marks is deeply concerned about “the rising tide of anti-capitalism,” and dedicated one of his famous memos to this new political trend.
In the eyes of anti-capitalists, wealthy people, big businesses, and investment funds are all evil. Period.
Just look at how New York City pushed Amazon to walk away from its multi-billion dollar expansion there: these anti-capitalists aren’t rational. This is no longer a political agenda. They’re waging a holy war… it’s a bizarre jihad against prosperity.
As Howard Marks writes in his latest memo, the anti-capitalist fever is spreading quickly today because so many people are feeling left behind.
The stock market has been booming for most of the past decade—so people in the upper middle class, and the rich, have become wealthier as a result.
People in the working class, however, rarely invest in the stock market. Instead, they have seen stagnating wages that in many cases haven’t even kept up with inflation.
Nearly 30% of American jobs, primarily those in the working class, now require expensive, bureaucratic government licenses that take even more time and money away from people who are already struggling.
At the same time, economic growth is slowing.
And automation and globalization are eliminating working-class jobs. In a short time, entire working class professions will be vanquished.
All of this contributes to a ‘have/have not’ society that has become almost a caste system: if you’re born poor, you’re probably going to die poor. Opportunities for growth and advancement are dwindling.
If you’re working class and try desperately to save money, you won’t even be able to generate a positive return (after adjusting for inflation and taxes) by keeping money in a savings account.
And if you try to start a business to get ahead, you’ll once again be hit with endless bureaucracy, fees, and legal liability.
Unsurprisingly this has led to a lot of anger. People feel like they’re being screwed by the system. And right now it’s palpable.
Yet rather than focus on intelligent ways to fix enormous problems, the government will align itself with the Socialist jihad and start attacking prosperity.
Look at Social Security as an example (which Howard Marks also agrees will fail). There are realistically only two ways to fix this:
One- default on the promises that have been made to everyone, by cutting benefits, raising the retirement age, etc.
Two- Raise taxes.
Option 1 is political suicide. Option 2 is much easier, especially if you can ratchet up tax rates on the wealthy.
But there’s an even bigger insult with this Socialist Jihad: they not only want to shake down the upper and upper-middle classes with punitive tax rates of 70% to 80%, but they also want to constantly shame and demean you as well.
In ancient Rome, wealthy people were often heavily taxed and expected to pay for enormous public works.
But they were honored for it… heralded with gratitude for contributing so much to the Republic.
The socialists want your money AND your self-esteem; some days it seems like there’s no end to the rancid emotional diarrhea on social media over someone else’s personal wealth.
Every action has consequences. And it’s only reasonable to presume that every person has a limit. Push people too far and they’ll leave.
That’s what the jihadists fail to realize: it’s the 21st century. People (and capital) are mobile.
As we’ve noted before, the rich are already leaving higher-tax states for places like Texas and Florida where there’s no state income tax. That trend will only accelerate.
It’s also clear that more people will relocate to Puerto Rico, where they can entirely eliminate their US federal income tax.
Under tax incentive programs that I have written about before, in Puerto Rico it’s possible to pay just 4% on business income, and absolutely NOTHING on investment income.
Puerto Rico’s Secretary of Economic Development told us recently that applications for these incentives are up several fold over the past few years. So it seems that trend is growing as well.
John Paulson, another hedge fund billionaire, has already said that he’s planning on moving to Puerto Rico just as soon as his youngest child goes off to college in a few years.
But that’s fine with the socialists. They think it’s a victory when they chase people and businesses away.
They’re not interested in a win/win solution that benefits everyone. They only want a win/lose outcome… “winning” at your expense.
Two thousand years of historical evidence show this doesn’t work. As Marks writes in his memo:
“The hard-left thinks government can do things better than free markets and increase wellbeing. Which government agencies would you like to see managing our economic engine?
“Capitalism is an imperfect economic system, because differential performance in the pursuit of economic success – as well as luck – results in there being (a) some people who are less successful as well as some who are more and (b) a few who are glaringly successful.
“Obviously I’m someone who has profited from capitalism, so my views could be dismissed as hopelessly biased.
“However, I’m 100% convinced that the capitalist system has produced the most aggregate gains for our society, exceptional overall progress, and a better life for most. For me, the best assessment of capitalism is the one Winston Churchill applied to democracy:
No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time.
In the same way, I’m convinced that capitalism is the worst economic system . . . except for all the rest.”
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So do we really need American oligarchs, fucktard? People don’t want to tax the rich, they want to take back what the oligarchs have stolen from us. I’m down with that. I too, have benefited immensely from capitalism and wouldn’t want to see any other system in place. But that’s a whole lot different than an oligarchy. Wise up, you can keep writing the same drivel every piece, it just makes you look stupid. Amazon would be a perfect example. Amazon shouldn’t exist. We should bemoan the loss of $15 an hour jobs in New York City? Those people would have to be on welfare to survive even if they were working full-time. So Mr. Bezos can have another a hundred billion dollars? Please. The Socialist politicians have the worst possible solutions to almost everything. But that doesn’t take away from the fact that they are correctly identifying the problem.
The problem is term limits. Stop incentivizing this kind of political behavior and make it about service. If Senators and Reps knew they had 2 terms they would be far less likely to try and “buy” votes..of either the poor or the rich. Lobbyists would be wasting their time. Poof…gone. Career politicians are in it for themselves and so both sides take advantage of their blinding need to stay in power.
Think about how much time these people waste on campaigning versus actually governing. If they knew they had to focus on actually doing their damn jobs instead of kow-towing to groups for votes, much of these problems would go away.
But this is never going to happen voluntarily.
I always thought one eight-year term so politicians don’t waste time campaigning. Term limits are needed badly.
Excellent post Star.
“There are realistically only two ways to fix this:
One- default on the promises that have been made to everyone, by cutting benefits, raising the retirement age, etc.
Two- Raise taxes.”
Fuck yourself you lying bastard. I have a couple more:
1 End ALL corporate welfare
2 Cut the ‘defense’ budget by 80%
Oh, wait. that’s not ‘realistic’? Yeah, because the system is hopelessly corrupt. These kids aren’t socialists in the true definition of the word. They want a cut of the loot. Who the fuck can blame them?
Get rid of all the nonconstitutional agencies.
Bingo Starfucker!!
The article doesn’t mention the very thing thats pushing non-socialist, i.e. capitalist toward socialism, it’s crony capitalism and gangster capitalism. Which really equates to socialism for the rich and everyone else is held to strict rules of capitalism. If capitalism were in it’s pure organic form , I guarantee you this socialist movement wouldn’t exist in America today. The article doesn’t go deeper, it just gives a black or white choice between capitalism and socialism without pointing out the causes at all. So many errors in this article also.
Simon Black contradicts himself by complaining about fears of socialism in America while admitting that America is already 70% communist. And TBP thinks this guy is some kind of expert?
FLASHBACK!
https://www.sovereignman.com/trends/no-america-isnt-communist-its-only-70-communist-15088/
The Tax Cuts and Jobs Act was sold as a reason, that if you gave 40% tax cuts for big business corporations then those previously offshored jobs would be voluntarily brought back and no more jobs would be offshored. All voluntarily of course. All bullshit of course.
Lockheed Martin Unveils “Made In India” F-21 Fighter Jet
https://www.zerohedge.com/news/2019-02-21/lockheed-martin-unveils-made-india-f-21-fighter-jet
So with thousands of what should be good paying middle class jobs in America, tell me again what is driving more and more towards socialism? Is it socialism alone by itself which TBP says, or is it crony capitalism? Notice the title of the law is the Tax Cuts and Jobs Act. It should have been labeled the Tax Cuts For The Rich Act. Very deceptive POTUS and Judas Goat we have. Read the comments at Zero hedge. They agree with me on this.
Until everyone that matters is willing to distinguish, in public, the difference between FREE MARKET CAPITALISM and the CRONY CAPITALISM that controls 100% of our economy (the Federal Reserve Note is 1/2 of EVERY financial transaction), we are going to get nowhere in any real discussion. And until everyone on both sides of the aisle is willing to face the truth that CRONY CAPITALISM requires a powerful central government to exist, and that the ONLY way to abolish this type of capitalism is to massively slash away at the power of government at all levels in our society, nothing will ever change. Both major political parties and the vast majority of Americans, are more than happy with a powerful central government, and powerful state and local governments, so long as THEY are getting what THEY want from the violence that is inflicted upon society at large to achieve it. Pretending that the massive “wealth” in this country that is now in the hands of a limited few, got there simply through free market activities and without the actions, violence, coercion and force of the government (at all levels), is beyond delusional.
Stalin talking about his fellow communists:
“Death is the solution to all problems. No man – no problem.”
Gee, I wonder what he did about it …
Molyneux’s Maxim:
If people are by nature good, you don’t need a government.
If people are naturally bad, you can’t have a government.
So get your butts over to the nearest voting machine. 🙁
With a name like Marks ,I don’t think he is really worrying to much.
Henry Ford CREATED a market which had not existed when he paid his employees $5.00 per day. The average wage of the day was around $1.25 per day. His premise was not entirely altruistic as assembly line work was monotonous; a way had to be found to retain employees as well. Of course, the wall street types and the banksters howled that Ford’s wage rates would destroy capitalism (as they knew it-those at the top reap all of the benefits while the “proles” are forced to live on a bare subsistence wage, due to the machinations of those at the top). Guess what?? The OPPOSITE happened. Henry Ford knew one of the basic tenets of a truly free, capitalistic society, that a well-paid work force would be able to participate and contribute to a strong economy, unlike what is taught in business schools today that wages must be kept to a bare minimum and that the stockholder is king. Our “free trade” politicians have assisted the greedy wall street types and banksters in depressing wages on the promise of cheap foreign labor and products. A good example of this is the negative criticism that Costco receives for paying its employees well above market wages. These same wall street types praise Wal-Mart for paying its employees barely subsistence wages while assisting them in filling out their “public assistance” (welfare) forms. Any sane person KNOWS that in order for capitalism to work, employees need to make an adequate wage. Unfortunately, this premise does not exist in today’s business climate.
Henry Ford openly criticized those of the “tribe” for manipulating wall street and banksters to their own advantage, and was roundly (and unjustly) criticized for pointing out the TRUTH. Catholic priest, Father Coughlin did the same thing and was punished by the Catholic church, despite his popularity and exposing the TRUTH of the American economy and the outsider internationalists that ran it . . . and STILL run it.
Our “race to the bottom” will not be without consequences. A great realignment is necessary (and is coming) . .
I read an article on this very thing the other day and saved it. Thanks for posting.
The Oligarchic Rule, Financial Parasites, and Fordism