Former head of Google China, Kai-fu Lee, insists—insists—that he is not happy that Google imploded its business in China. “Seeing the work that I put in, how could I be happy to see that?” he says. In fact, in a press release all about his incubator’s companies being built on top of Android he doesn’t use the G-word once. “Given the pull out, we’ll accept the situation and do our best,” he says humbly. Yeah, accept the situation like a fox.
As Lee begins to open up more about the types of companies being created at his incubator, Innovation Works, there’s a consistent theme—Android. Whether it’s address books, music programs, video games, maps, eCommerce marketplaces or e-readers, many of Lee’s companies are hoping to take advantage of the good things about Android—namely that it’s a free, robust operating system—but customize the core smartphone applications in a way that Google won’t or can’t.
It’s interesting that I had a conversation with Lee about this topic right about the time Google CEO Eric Schmidt was delivering a keynote touting that more than 200,000 Android-powered smartphones are activated daily, going beyond just the smartphone wielding “elite.” Lee would agree with everything his former boss said. It’s just that Google isn’t well positioned to make money off the apps and services in the world’s largest market. Oops.
Lee philosophically may have issues with the lack of openness in the Chinese Web, but it’s also giving him an advantage: The most popular applications for the Android phone like YouTube, Facebook, Twitter or Pandora aren’t available in China, and Google’s native apps may not be the top choice of manufacturers given the search engine’s stance on doing business in the country. So Innovation Works is collectively trying to build a new Web on top of the platform that’s customized for Chinese tastes.
For example, music services that show song lyrics as they play—an essential feature for China’s karaoke loving audience. Another example is a program that automatically enters different dialing prefixes that save money on calls to certain regions. Because 3G is so expensive in China, a video program called Wonderpod downloads videos onto your phone from your laptop at work, so you can watch them without having to stream them on the commute home. An eReader software company lets you read 60% of the book for free then asks for a payment to read the rest. Because of rampant piracy, there’s no chance of selling eBooks without giving anything away for free, but once people are hooked, if they enjoy it, they’ll pay for the rest of the book out of convenience, Lee argues. The incubator is making a few, broad platform plays with an Android-based operating system called Tapas, an analytics tool for developers called Umeng and Ascending Cloud, a publisher of social games.
At most, Lee’s mobile companies are getting a couple dollars per user for these apps so these ideas only become huge companies with massive scale. This can’t be just a game played for the top of the pyramid. And there’s no question in Lee’s mind that Android will be bigger in China than the iPhone, because the cost differential is much more pronounced. Because there aren’t many Android models in the US, hardware makers can price the phones close to the iPhone, but in manufacturing-heavy China prices will almost certainly be driven down much faster.
Lee says the Android devices coming out next year—including manufacturers his companies are working with—cost $200 to $300 per phone. He expects that to fall to around $100 the next year, and possible fall below $100 the year after that. The iPhone will never experience that kind of competitive pressure because only Apple makes it. (Although I could show you plenty of cheaper versions with the an Apple-like logo in the dodgy markets of Shenzhen…)
And there are no carrier subsidies in China, because 80% of phones are bought independently from airtime. So an iPhone will cost around $600. Already Android will enter the market at half the price. For a big swath of the Chinese population that will make a difference, especially if those prices can get under $100 per phone in just a few years with features more tailored for the market.
In a lot of ways, this is a strategy that would only work in China—it’s all about volume and counts on a market with hyper-aggressively competitive gadget manufacturing. But with billions of dollars in venture capital sloshing around China, the market to build the best mobile apps could be as cutthroat as the competition to win the hardware wars. Lee has recently inked some strategic partnerships with Foxconn, Chunghwa Telecom, MediaTek Inc and a raft of global investors to help his chances of being the one to profit from the opportunity.
He’s also moved Innovation Works from Google China’s building to a new location that features what any incubator needs—a hologram that greets you at the front door. I’m not kidding. He told his designer he needed it to look different than any other office and from the look of the pictures, he succeeded. His mobile bets are less certain. But if he wins he’ll have at least one guy to thank: Sergey Brin. A big juicy market opportunity is a lot better parting gift than a watch.
35 Responses to “Alan Greenspan Will Have His Revenge on the Social Security Trust Fund”
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Former head of Google China, Kai-fu Lee, insists—insists—that he is not happy that Google imploded its business in China. “Seeing the work that I put in, how could I be happy to see that?” he says. In fact, in a press release all about his incubator’s companies being built on top of Android he doesn’t use the G-word once. “Given the pull out, we’ll accept the situation and do our best,” he says humbly. Yeah, accept the situation like a fox.
As Lee begins to open up more about the types of companies being created at his incubator, Innovation Works, there’s a consistent theme—Android. Whether it’s address books, music programs, video games, maps, eCommerce marketplaces or e-readers, many of Lee’s companies are hoping to take advantage of the good things about Android—namely that it’s a free, robust operating system—but customize the core smartphone applications in a way that Google won’t or can’t.
It’s interesting that I had a conversation with Lee about this topic right about the time Google CEO Eric Schmidt was delivering a keynote touting that more than 200,000 Android-powered smartphones are activated daily, going beyond just the smartphone wielding “elite.” Lee would agree with everything his former boss said. It’s just that Google isn’t well positioned to make money off the apps and services in the world’s largest market. Oops.
Lee philosophically may have issues with the lack of openness in the Chinese Web, but it’s also giving him an advantage: The most popular applications for the Android phone like YouTube, Facebook, Twitter or Pandora aren’t available in China, and Google’s native apps may not be the top choice of manufacturers given the search engine’s stance on doing business in the country. So Innovation Works is collectively trying to build a new Web on top of the platform that’s customized for Chinese tastes.
For example, music services that show song lyrics as they play—an essential feature for China’s karaoke loving audience. Another example is a program that automatically enters different dialing prefixes that save money on calls to certain regions. Because 3G is so expensive in China, a video program called Wonderpod downloads videos onto your phone from your laptop at work, so you can watch them without having to stream them on the commute home. An eReader software company lets you read 60% of the book for free then asks for a payment to read the rest. Because of rampant piracy, there’s no chance of selling eBooks without giving anything away for free, but once people are hooked, if they enjoy it, they’ll pay for the rest of the book out of convenience, Lee argues. The incubator is making a few, broad platform plays with an Android-based operating system called Tapas, an analytics tool for developers called Umeng and Ascending Cloud, a publisher of social games.
At most, Lee’s mobile companies are getting a couple dollars per user for these apps so these ideas only become huge companies with massive scale. This can’t be just a game played for the top of the pyramid. And there’s no question in Lee’s mind that Android will be bigger in China than the iPhone, because the cost differential is much more pronounced. Because there aren’t many Android models in the US, hardware makers can price the phones close to the iPhone, but in manufacturing-heavy China prices will almost certainly be driven down much faster.
Lee says the Android devices coming out next year—including manufacturers his companies are working with—cost $200 to $300 per phone. He expects that to fall to around $100 the next year, and possible fall below $100 the year after that. The iPhone will never experience that kind of competitive pressure because only Apple makes it. (Although I could show you plenty of cheaper versions with the an Apple-like logo in the dodgy markets of Shenzhen…)
And there are no carrier subsidies in China, because 80% of phones are bought independently from airtime. So an iPhone will cost around $600. Already Android will enter the market at half the price. For a big swath of the Chinese population that will make a difference, especially if those prices can get under $100 per phone in just a few years with features more tailored for the market.
In a lot of ways, this is a strategy that would only work in China—it’s all about volume and counts on a market with hyper-aggressively competitive gadget manufacturing. But with billions of dollars in venture capital sloshing around China, the market to build the best mobile apps could be as cutthroat as the competition to win the hardware wars. Lee has recently inked some strategic partnerships with Foxconn, Chunghwa Telecom, MediaTek Inc and a raft of global investors to help his chances of being the one to profit from the opportunity.
He’s also moved Innovation Works from Google China’s building to a new location that features what any incubator needs—a hologram that greets you at the front door. I’m not kidding. He told his designer he needed it to look different than any other office and from the look of the pictures, he succeeded. His mobile bets are less certain. But if he wins he’ll have at least one guy to thank: Sergey Brin. A big juicy market opportunity is a lot better parting gift than a watch.
35 Responses to “Alan Greenspan Will Have His Revenge on the Social Security Trust Fund”
Greg says:
September 16th, 2010 at 4:32 pm
As a general rule, Matt, the Right Wing likes a lot of things about Singapore.
But, implicit in a Right Winger’s calculations about Singapore is an ignorance of Singapore’s development into the present day. Namely, that you can’t just pick and choose what you like about Singapore and try to import those things into your own country.
Singapore is an authoritarian (and in the past ruthlessly authoritarian) place that’s friendly to business.
Singaporeans put up with the authoritarianism and the corporatism because of the lack of corruption, the incredibly honest, hard-working, and well-paid civil service, the fair but ruthless regulatory regime, and the generous pension, health care, educational, and hell, even housing systems.
You cannot have a pension system like Singapore’s in the US, because we lack most, if not all, of what makes Singapore work. That’s why I’m always amused by Right Wing love for the place, since it’s the most statist (and indeed socialist) country on the planet.
John I says:
September 16th, 2010 at 4:33 pm
Wow – Elvis Costello looks really old in that pic. He still rocks though..
cleek says:
September 16th, 2010 at 4:41 pm
“the current generation must pay twice: first for current beneficiaries, and second for their own benefit”
yeah, we already did that. it’s why there’s an SS surplus right now.
Anon says:
September 16th, 2010 at 5:02 pm
It’s amazing that nobody seems to remember Al Gore and his “lockbox.” Same SNL skit that made fun of George Bush with “strategery” also hit on Al Gore’s lockbox.
I’m telling you, if the Republicans succeed in increasing the retirement age, it will be one of history’s greatest fleecings of the working class by the wealthy.
That surplus wasn’t by chance. Greenspan gave us big tax hikes for working folks in the 80’s to finance social security, and then he supported the tax cuts for the rich that wiped out that financing. And after Clinton fixed it, Greenspan went and did it again in the 00’s. Oh, and as a side gig he enabled the most spectacular financial crisis our nation has seen since the 1930’s.
Greenspan makes Bernie Madoff look like a piker.
EorrFU says:
September 16th, 2010 at 5:06 pm
Wow, I didn’t know Layne Pryce from MadMen was an economist.
Crissa says:
September 16th, 2010 at 5:09 pm
It is amazing how few conservatives will own up to the results of their political decisions.
I had a guy tell me the other day that senators McCain and McConnell are ‘fringe’ – until I pointed out that they shared the features we were discussing with Reagan. Then he changed the subject.
They’re willing to vote for these guys, but once they do things, that’s out of the picture. It’s crazy.
Don Williams says:
September 16th, 2010 at 5:25 pm
Re Matthew’s comment “At this point, George W Bush and most Republicans began making the argument that “it’s your money” and the existence of surpluses showed the desirability of gigantic regressive tax cuts. ”
—————
What was hilarious was that after Bush CONNED the Rubes into electing him, Bush then STOLE $3 Trillion of the Rubes’ money out of their Social Security accounts and GAVE it to the richest motherfuckers in the country.In return he gave the Rubes a bunch of IOUS — US Treasury Bonds — which are WORTHLESS unless the Rubes cough up ANOTHER $3 Trillion in taxes to pay themselves –i.e, pay off the bonds so that Social Security checks can be issued.
People complained about George W’s brother, Neil Bush, buttfucking the US Taxpayers to the tune of $1 Billion back in 1990 with that Silverado Saving and Loan scam. But Neil is a minor grifter compared to George W.
Of course, George W could never have pulled it off if he hadn’t had a bunch of Democratic whores helping him with the con — assuring the Rubes that their Social Security benefits were in GREAT shape. Plus saying nothing as $3 Trillion slide out of a Trust Fund that is already short $40 Trillion.
LoserStar says:
September 16th, 2010 at 5:41 pm
Re: Greg
Run “find and replace” on your comment:
“Right” –> “Left”
“Singapore” –> “Western Europe” or “Scandinavia”
JonF says:
September 16th, 2010 at 6:05 pm
Don Williams,
Bush was not elected by the “rubes” or even by the people as a whole (in 2000). He was elected by the Supreme Court and by his brother’s shenanigans in Florida.
MGDub says:
September 16th, 2010 at 6:27 pm
Wait a minute. “US Social Security …. in practice outlays are financed by current tax revenue.” How so?
How are Social Security and Bush Tax cuts related to each other at all? The wealthy have their Social Security tax obligations capped at their first $106,00.00. Nothing over that amount is taxed by Social Security. Nada. The percentage of the Social Security tax for the first 106k went unchanged by the Bush tax cuts, correct? How can Bush tax cuts have any impact on this at all? And if they did to any degree, to what extent?
Wasn’t the surplus (1999 – 2000) more to do with revenue from the stock market boom and the fudging of Social Security revenues in with general tax revenues?
I don’t see how Bush tax cuts would have any impact on the future revenues of Social Security. Are there any research papers published on this? Where is the data? Can you explain this in more detail?
Adam says:
September 16th, 2010 at 6:31 pm
I think we should just cancel Medicare and social security for baby boomers as a way to make the system solvent. It was they who allowed the system to spiral out of control, and it was they who kept voting for more and more public largess for themselves while sabotaging their kids’ futures.
Pat L says:
September 16th, 2010 at 6:41 pm
@MGDub
I think Matt is taking the holistic view of SS here. From one perspective, yeah, SS has been running a surplus for 30 years or so, and is now starting to drain that surplus. Then that reserve is projected to run out sometime around 2032.
But SS’s savings are in the form of US Treasuries, so the money paying off SS is basically coming from the rest of the federal budget. So there’s no direct effect on SS, but it does effect the rest of the budget, which would be in much better shape without the Bush tax cuts.
Cranky Observer says:
September 16th, 2010 at 7:31 pm
It is not possible for the United States to “save for the future”. Singapore could, if it wished, pre-fund its retirement program and invest those funds in the United States. Where pray tell could the United States invest its pre-funds? In the Federation? The Gamma Quadrant? The United States is bigger than any other economy out there with the exception of the EU in total – but the EU in total has _more_ severe demographic issues than the US. There ain’t nowhere for the US to “pre-invest”, and if it did such “pre-investment” would be conceptually exactly equal to “waiting and taxing as needed” since the investment could only be in the entire US economy.
Cranky
15th try
Don Williams says:
September 16th, 2010 at 7:44 pm
Re Cranky at 13: “There ain’t nowhere for the US to “pre-invest”, and if it did such “pre-investment” would be conceptually exactly equal to “waiting and taxing as needed” since the investment could only be in the entire US economy.”
————
1) How about “pre-investing” by PAYING OFF the $3 Trillion in US federal debt held by foreigners? Or the several $Trillion more held by Superich in the USA.Do you think that is play money? Hundreds of Billions of our taxes have to go out every year just to pay the fucking INTEREST on the Public portion of the Federal Debt.
2) As in –Hundreds of Billions per year that can therefore NOT be used to care for the sick, educate the young, maintain the infrastructure, feed the poor or all the many other tasks which a COMPETENT government –as opposed to corrupt whores — is supposed to manage.
3) Or if you are really flush, how about spending some money on scientific research to develop NEW energy supplies?
It’s only been 30 fucking years since Jimmy Carter wore that fucking sweater in the WHite House and told us we needed to get off the Middle Eastern oil addiction.
4) George W Bush ran up $6 TRILLION in debt in 8 years. What in the hell did he INVEST in that will improve our lives in the future?
Don Williams says:
September 16th, 2010 at 7:53 pm
Re MGDub at 12: “I don’t see how Bush tax cuts would have any impact on the future revenues of Social Security. Are there any research papers published on this? Where is the data? Can you explain this in more detail?”
—————–
1) Bush PAID for his tax cuts by Stealing the money out of the Social Security Trust Fund. That was REAL money –which he gave to the Superrich.In return, he put IOUS — US Treasury Bonds — into our Accounts. Which he then called “assets”. Which is bullshit — they are just as much liabilities.
2) What kind of an “Asset” is a piece of paper that basically says you owe yourself $200,000? Because NO Social Security checks can be written to you unless you FIRST pay taxes to pay off the Bush IOUs in order to provide the money for the SS checks.
3) The research paper is which this was all documented is Bush’s own fucking Budget for fiscal year 2002–submitted in February 2001 — which clearly SHOWED that he was raiding Social Security to pay for the tax cuts.
4) If we had a REAL opposition party — instead of a pack of lying Democratic Whores who COLLABORATE with the Republicans — then Bush would have been exposed at once. Instead, a shitload of Democratic Senators voted to pass the tax cuts by a huge margin.
Mike K says:
September 16th, 2010 at 7:57 pm
Don,
Ding-dong BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that
Cranky Observer says:
September 16th, 2010 at 8:05 pm
> 1) How about “pre-investing” by PAYING OFF the $3 Trillion
> in US federal debt held by foreigners? Or the several
> $Trillion more held by Superich in the USA.That’s a great idea Don, and I’m with you. The only thing is that the Social Security fund is currently $1.5 trillion in SURPLUS, which means that that $3 billion will have to come from increases in general taxes, not cuts in Social Security.
In any case that does not change my point: the US Government cannot “invest” in anything except the entire US economy, and making such an investment today is no different from not making that investment today and taxing as needed in the future. Same pot.
Cranky
Don Williams says:
September 16th, 2010 at 8:05 pm
I noted back in the Spring of 2001 that Bush was stealing from Social Security to pay for the tax cuts. Here, for example, is an excerpt from an article I wrote for Alexander Cockburn’s Counterpunch in December 2001:
————
“Mr. President: Your February 2001 budget indicates that you will pay for your income tax cut by borrowing heavily from the government Trusts (Social Security, Medicare,etc.) over the next ten years. By 2011, the Trust Funds will be holding $6 Trillion in IOUs, which your Economic Advisor Lawrence Lindsey has noted are “not real assets”. When the huge baby boomer generation begins retiring in 2011, the government will need to repay the IOUs in 2011-2031–i.e., the government will need to run a $300 Billion/year surplus for twenty years. How will they do that?If we cannot run a real surplus today, in the boomers peak earning years, then how will we do so when a large portion of the population retires? ”
http://www.counterpunch.org/dwilliams1.html
If I could figure that out in 2001 , then you know that the fucking Democrats who voted FOR the tax cut — Ben Nelson, Max Baucus, Mary Landrieu, etc. — knew that.
Don Williams says:
September 16th, 2010 at 8:14 pm
Re Mike K at 16: “Ding-dong BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that”
———
Maybe they would not have had to run those deficits if Bush had not drove the bus named “US Economy” off the cliff because all the Rich Men’s dicks in his mouth blocked his view of the road.But, hey, if middle class Republicans are stupid enough to elect an alcoholic, an incompetent, bankrupt businessman and a fool to the Presidency, then they deserve to have their 401K turned into toast. Which is what will happen when high taxes are levied on future IRA withdrawals in order to pay down the Bush debt.
The Superrich sure as shit ain’t going to pay — THEY will always be able to bribe enough Senators to protect them.
However, The rest of us dumbshits — Democrats as well as Republicans — are fucked.
cmholm says:
September 16th, 2010 at 8:16 pm
Mike K @ 16: Ding-dong BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that
I’d say that GWB set us up for the mother of all recessions, hammering tax receipts… yet the bills still need to get paid, and ya gotta spend money to make money to keep said recession from banging us even harder than it is.
You don’t cut your way out of a drop in business. You’re a real H. Hoover, champ.
rea says:
September 16th, 2010 at 8:19 pm
BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that
Your guys bankrupted the government, crashed the economy, and got us bogged down in two wars, and then you wonder why the Democrats haven’t fixed all the problems you created already? And all the while doing everything in your power to block the Democrats from doing anything constructive to address the mess. And it’s not as if your guys have managed to formulate any plans to address the situation that do not obviously lead, in a best-case scenario, to small groups of survivors herding goats in the ruins of western civilization.
Arun says:
September 16th, 2010 at 10:13 pm
Remember everyone making fun of Al Gore’s Social Security Fund lockbox?
bdbd says:
September 16th, 2010 at 10:20 pm
Prefunding would not have begun with the elimination of the national debt. By building up the Social Security Trust Fund since the Greenspan Commission reforms of the social security system in 1983, those paying into social security have been prefunding parts of their own retirements. Those funds were put into Treasury securities, just as a prudent person planning for future retirement might do.
#
Anthony says:
September 16th, 2010 at 10:34 pm
“an article I wrote for Alexander Cockburn’s Counterpunch”
Why would anyone ever think you’re anti-Semitic, Don?
Don Williams says:
September 16th, 2010 at 11:06 pm
Re Anthony at 24: “Why would anyone ever think you’re anti-Semitic, Don?”
—————
“Anti-Semitic” is such a vague, ELASTIC term, isn’t it? Covers everything from Hitler and the Holocaust to someone merely annoying stupid little Anthony on the Internet.I don’t recall mentioning any Jews in the above comment. But evidently, “anti-Semitic” is a slur that can not only be hurled at someone who questions the treason of the Israel Lobby — of people who have killed 4500 US soldiers, including Jewish American soldiers, with lies.
It evidently now can also be hurled by Hacks at anyone who criticizes the Democratic leadership.
Such a useful term — lets the guilty duck the FACTS.
For what it is worth, I sent my article re Bush’s $3 Trillion theft from Social Security to Counterpunch because both the Washington Post and the New York Times REFUSED to address the issue in spite of multiple letters I sent them. With citations to Bush’s own budget. I didn’t give a shit if they published my letters — I just wanted the American voters informed of what was occurring.
But then the two-faced Superwealthy owners of those papers
wanted Bush’s tax cuts just as badly as did Richard Mellon Scraife, the Coors Family and the most corrupt financiers of the Right. The difference being that the Washington Post and New York Times owners like to con the Rabble into believing that the Post and Times are Tribunes of the People –who tell the Truth, the Whole Truth, and Nothing but the Truth.I must have missed the swastikas on the Counterpunch home page Anthony. Maybe you can point them out to me and other readers.
Don Williams says:
September 16th, 2010 at 11:39 pm
Something else puzzles me as well. There are lots of working class Jews and the last time I checked there is not a Jewish exemption from paying payroll taxes. So most Jewish Americans were fucked by Bush’s $3 Trillion theft from Social Security as badly as were middle class Gentiles.
Yet that rolls over Anthony like a cool summer breeze. Doesn’t bother him at all. Which suggests we ain’t exactly dealing with Elazar ben Ya’ir defending Masada here.
abb1 says:
September 17th, 2010 at 4:46 am
Hey Don, you’re published by Counterpunch, good for you. That reminds me, I should renew my subscription.
autoit 0.734705980867147
Anthony says:
September 17th, 2010 at 8:58 am
“both the Washington Post and the New York Times REFUSED to address the issue in spite of multiple letters I sent them.”
That’s hilarious. Do you type them on a manual typewriter and send them by mail?
Ape Man says:
September 17th, 2010 at 9:46 am
Cranky Observer has it right – the difference in this case between the US and Singapore is that Singapore has a managed currency (it’s convertible into an undisclosed basket of foreign currencies) and the US has a floating, nonconvertible currency.
You shouldn’t compare countries with floating nonconvertible currencies to countries with managed currencies. They’re totally different and are managed in completely different ways.
The US cannot have a sovereign wealth fund. It can’t invest in foreign currencies. It can’t prepay its retirement funds. This stuff is imaginary. It’s nonsense.
So maddening. We’re doomed by the ignorance of our preposterous elite.
rapier says:
September 17th, 2010 at 10:40 am
Greenspan was terrified by the balanced budget on two counts. First it meant a decrease in systematic credit at exactly the time another recession was starting. Everyone looks at this from the fiscal side but Greenspan well knows it makes no difference who borrows the money what is important is that somebody is borrowing more. Always more. He wanted deficits because he wanted the credit demand they produce.
Secondly the lack of growth in sovereign credit is a constraint on what was at that time normal central bank operations. A fresh supply of Treasury securities is the life’s blood of the Fed. I suppose this is a restatement of the first point but the point must be pounded home that sovereign debt is the foundation of money today. It’s increase the basis of increasing money supply.
MY is wrong that conservatives, the serious ones that is, don’t care about deficits. No, they love them. Now we are in a position that we can have large deficits even if not one penny the government spends goes to the proles. The military, the bailouts of lenders and soon perhaps debt service costs can provide enough spending to insure deficits and all their political and cultural goals will still have been achieved.
rapier says:
September 17th, 2010 at 10:48 am
In addition to 30. The drive to maintain and extend tax cuts is simply a tactic to insure deficits. Tax cuts have always been aimed at producing government borrowing. Greenspan knows this down to his bones. So do Peterson and Norquist, Paulson and Geithner too. They love tax cuts because the produce deficits. Government borrowing is the primary method of injecting liquidity into the banking and financial system. Oddly and counter intuitively. Which is the beauty of it.
Don Williams says:
September 17th, 2010 at 10:55 am
Re rapier at 31: “Government borrowing is the primary method of injecting liquidity into the banking and financial system. Oddly and counter intuitively. Which is the beauty of it.”
————
And WHO receives the bulk of those hundreds of $Billions of risk free Government interest payments is left as an exercise for the reader.
Don Williams says:
September 17th, 2010 at 11:11 am
PLUS the Superrich can’t stuff money under the mattress if the government doesn’t build a big enough mattress ($13 Trillion in US Treasury securities).
Of course, this means the rich no longer have to run businesses for a living. Which is why unemployment is so high and why the S&P 500 is around where it was 15 years ago.
Don Williams says:
September 17th, 2010 at 11:12 am
Clarification to 33: Why the rich no longer have to INVEST in US businesses for a living”
Don says:
September 17th, 2010 at 9:03 pm
@11 Adam, Bullshit. The baby boomers are only now starting to collect SS and Medicare Benefits after paying into the system for thw whole of their working lives. You want to look at who paid little into the system but have collected and are collecting the most, look at the greatest generation, the boomers parents.
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Greg says:
September 16th, 2010 at 4:32 pm
As a general rule, Matt, the Right Wing likes a lot of things about Singapore.
But, implicit in a Right Winger’s calculations about Singapore is an ignorance of Singapore’s development into the present day. Namely, that you can’t just pick and choose what you like about Singapore and try to import those things into your own country.
Singapore is an authoritarian (and in the past ruthlessly authoritarian) place that’s friendly to business.
Singaporeans put up with the authoritarianism and the corporatism because of the lack of corruption, the incredibly honest, hard-working, and well-paid civil service, the fair but ruthless regulatory regime, and the generous pension, health care, educational, and hell, even housing systems.
You cannot have a pension system like Singapore’s in the US, because we lack most, if not all, of what makes Singapore work. That’s why I’m always amused by Right Wing love for the place, since it’s the most statist (and indeed socialist) country on the planet.
John I says:
September 16th, 2010 at 4:33 pm
Wow – Elvis Costello looks really old in that pic. He still rocks though..
cleek says:
September 16th, 2010 at 4:41 pm
“the current generation must pay twice: first for current beneficiaries, and second for their own benefit”
yeah, we already did that. it’s why there’s an SS surplus right now.
Anon says:
September 16th, 2010 at 5:02 pm
It’s amazing that nobody seems to remember Al Gore and his “lockbox.” Same SNL skit that made fun of George Bush with “strategery” also hit on Al Gore’s lockbox.
I’m telling you, if the Republicans succeed in increasing the retirement age, it will be one of history’s greatest fleecings of the working class by the wealthy.
That surplus wasn’t by chance. Greenspan gave us big tax hikes for working folks in the 80’s to finance social security, and then he supported the tax cuts for the rich that wiped out that financing. And after Clinton fixed it, Greenspan went and did it again in the 00’s. Oh, and as a side gig he enabled the most spectacular financial crisis our nation has seen since the 1930’s.
Greenspan makes Bernie Madoff look like a piker.
EorrFU says:
September 16th, 2010 at 5:06 pm
Wow, I didn’t know Layne Pryce from MadMen was an economist.
Crissa says:
September 16th, 2010 at 5:09 pm
It is amazing how few conservatives will own up to the results of their political decisions.
I had a guy tell me the other day that senators McCain and McConnell are ‘fringe’ – until I pointed out that they shared the features we were discussing with Reagan. Then he changed the subject.
They’re willing to vote for these guys, but once they do things, that’s out of the picture. It’s crazy.
Don Williams says:
September 16th, 2010 at 5:25 pm
Re Matthew’s comment “At this point, George W Bush and most Republicans began making the argument that “it’s your money” and the existence of surpluses showed the desirability of gigantic regressive tax cuts. ”
—————
What was hilarious was that after Bush CONNED the Rubes into electing him, Bush then STOLE $3 Trillion of the Rubes’ money out of their Social Security accounts and GAVE it to the richest motherfuckers in the country.
In return he gave the Rubes a bunch of IOUS — US Treasury Bonds — which are WORTHLESS unless the Rubes cough up ANOTHER $3 Trillion in taxes to pay themselves –i.e, pay off the bonds so that Social Security checks can be issued.
People complained about George W’s brother, Neil Bush, buttfucking the US Taxpayers to the tune of $1 Billion back in 1990 with that Silverado Saving and Loan scam. But Neil is a minor grifter compared to George W.
Of course, George W could never have pulled it off if he hadn’t had a bunch of Democratic whores helping him with the con — assuring the Rubes that their Social Security benefits were in GREAT shape. Plus saying nothing as $3 Trillion slide out of a Trust Fund that is already short $40 Trillion.
LoserStar says:
September 16th, 2010 at 5:41 pm
Re: Greg
Run “find and replace” on your comment:
“Right” –> “Left”
“Singapore” –> “Western Europe” or “Scandinavia”
JonF says:
September 16th, 2010 at 6:05 pm
Don Williams,
Bush was not elected by the “rubes” or even by the people as a whole (in 2000). He was elected by the Supreme Court and by his brother’s shenanigans in Florida.
MGDub says:
September 16th, 2010 at 6:27 pm
Wait a minute. “US Social Security …. in practice outlays are financed by current tax revenue.” How so?
How are Social Security and Bush Tax cuts related to each other at all? The wealthy have their Social Security tax obligations capped at their first $106,00.00. Nothing over that amount is taxed by Social Security. Nada. The percentage of the Social Security tax for the first 106k went unchanged by the Bush tax cuts, correct? How can Bush tax cuts have any impact on this at all? And if they did to any degree, to what extent?
Wasn’t the surplus (1999 – 2000) more to do with revenue from the stock market boom and the fudging of Social Security revenues in with general tax revenues?
I don’t see how Bush tax cuts would have any impact on the future revenues of Social Security. Are there any research papers published on this? Where is the data? Can you explain this in more detail?
Adam says:
September 16th, 2010 at 6:31 pm
I think we should just cancel Medicare and social security for baby boomers as a way to make the system solvent. It was they who allowed the system to spiral out of control, and it was they who kept voting for more and more public largess for themselves while sabotaging their kids’ futures.
Pat L says:
September 16th, 2010 at 6:41 pm
@MGDub
I think Matt is taking the holistic view of SS here. From one perspective, yeah, SS has been running a surplus for 30 years or so, and is now starting to drain that surplus. Then that reserve is projected to run out sometime around 2032.
But SS’s savings are in the form of US Treasuries, so the money paying off SS is basically coming from the rest of the federal budget. So there’s no direct effect on SS, but it does effect the rest of the budget, which would be in much better shape without the Bush tax cuts.
Cranky Observer says:
September 16th, 2010 at 7:31 pm
It is not possible for the United States to “save for the future”. Singapore could, if it wished, pre-fund its retirement program and invest those funds in the United States. Where pray tell could the United States invest its pre-funds? In the Federation? The Gamma Quadrant? The United States is bigger than any other economy out there with the exception of the EU in total – but the EU in total has _more_ severe demographic issues than the US. There ain’t nowhere for the US to “pre-invest”, and if it did such “pre-investment” would be conceptually exactly equal to “waiting and taxing as needed” since the investment could only be in the entire US economy.
Cranky
15th try
Don Williams says:
September 16th, 2010 at 7:44 pm
Re Cranky at 13: “There ain’t nowhere for the US to “pre-invest”, and if it did such “pre-investment” would be conceptually exactly equal to “waiting and taxing as needed” since the investment could only be in the entire US economy.”
————
1) How about “pre-investing” by PAYING OFF the $3 Trillion in US federal debt held by foreigners? Or the several $Trillion more held by Superich in the USA.
Do you think that is play money? Hundreds of Billions of our taxes have to go out every year just to pay the fucking INTEREST on the Public portion of the Federal Debt.
2) As in –Hundreds of Billions per year that can therefore NOT be used to care for the sick, educate the young, maintain the infrastructure, feed the poor or all the many other tasks which a COMPETENT government –as opposed to corrupt whores — is supposed to manage.
3) Or if you are really flush, how about spending some money on scientific research to develop NEW energy supplies?
It’s only been 30 fucking years since Jimmy Carter wore that fucking sweater in the WHite House and told us we needed to get off the Middle Eastern oil addiction.
4) George W Bush ran up $6 TRILLION in debt in 8 years. What in the hell did he INVEST in that will improve our lives in the future?
Don Williams says:
September 16th, 2010 at 7:53 pm
Re MGDub at 12: “I don’t see how Bush tax cuts would have any impact on the future revenues of Social Security. Are there any research papers published on this? Where is the data? Can you explain this in more detail?”
—————–
1) Bush PAID for his tax cuts by Stealing the money out of the Social Security Trust Fund. That was REAL money –which he gave to the Superrich.
In return, he put IOUS — US Treasury Bonds — into our Accounts. Which he then called “assets”. Which is bullshit — they are just as much liabilities.
2) What kind of an “Asset” is a piece of paper that basically says you owe yourself $200,000? Because NO Social Security checks can be written to you unless you FIRST pay taxes to pay off the Bush IOUs in order to provide the money for the SS checks.
3) The research paper is which this was all documented is Bush’s own fucking Budget for fiscal year 2002–submitted in February 2001 — which clearly SHOWED that he was raiding Social Security to pay for the tax cuts.
4) If we had a REAL opposition party — instead of a pack of lying Democratic Whores who COLLABORATE with the Republicans — then Bush would have been exposed at once. Instead, a shitload of Democratic Senators voted to pass the tax cuts by a huge margin.
Mike K says:
September 16th, 2010 at 7:57 pm
Don,
Ding-dong BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that
Cranky Observer says:
September 16th, 2010 at 8:05 pm
> 1) How about “pre-investing” by PAYING OFF the $3 Trillion
> in US federal debt held by foreigners? Or the several
> $Trillion more held by Superich in the USA.
That’s a great idea Don, and I’m with you. The only thing is that the Social Security fund is currently $1.5 trillion in SURPLUS, which means that that $3 billion will have to come from increases in general taxes, not cuts in Social Security.
In any case that does not change my point: the US Government cannot “invest” in anything except the entire US economy, and making such an investment today is no different from not making that investment today and taxing as needed in the future. Same pot.
Cranky
Don Williams says:
September 16th, 2010 at 8:05 pm
I noted back in the Spring of 2001 that Bush was stealing from Social Security to pay for the tax cuts. Here, for example, is an excerpt from an article I wrote for Alexander Cockburn’s Counterpunch in December 2001:
————
“Mr. President: Your February 2001 budget indicates that you will pay for your income tax cut by borrowing heavily from the government Trusts (Social Security, Medicare,etc.) over the next ten years. By 2011, the Trust Funds will be holding $6 Trillion in IOUs, which your Economic Advisor Lawrence Lindsey has noted are “not real assets”. When the huge baby boomer generation begins retiring in 2011, the government will need to repay the IOUs in 2011-2031–i.e., the government will need to run a $300 Billion/year surplus for twenty years. How will they do that?
If we cannot run a real surplus today, in the boomers peak earning years, then how will we do so when a large portion of the population retires? ”
http://www.counterpunch.org/dwilliams1.html
If I could figure that out in 2001 , then you know that the fucking Democrats who voted FOR the tax cut — Ben Nelson, Max Baucus, Mary Landrieu, etc. — knew that.
Don Williams says:
September 16th, 2010 at 8:14 pm
Re Mike K at 16: “Ding-dong BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that”
———
Maybe they would not have had to run those deficits if Bush had not drove the bus named “US Economy” off the cliff because all the Rich Men’s dicks in his mouth blocked his view of the road.
But, hey, if middle class Republicans are stupid enough to elect an alcoholic, an incompetent, bankrupt businessman and a fool to the Presidency, then they deserve to have their 401K turned into toast. Which is what will happen when high taxes are levied on future IRA withdrawals in order to pay down the Bush debt.
The Superrich sure as shit ain’t going to pay — THEY will always be able to bribe enough Senators to protect them.
However, The rest of us dumbshits — Democrats as well as Republicans — are fucked.
cmholm says:
September 16th, 2010 at 8:16 pm
Mike K @ 16: Ding-dong BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that
I’d say that GWB set us up for the mother of all recessions, hammering tax receipts… yet the bills still need to get paid, and ya gotta spend money to make money to keep said recession from banging us even harder than it is.
You don’t cut your way out of a drop in business. You’re a real H. Hoover, champ.
rea says:
September 16th, 2010 at 8:19 pm
BHO and the Congress under Reid/Pelosi will run up TWICE GWB’s $6 trillion in debt, what you say about that
Your guys bankrupted the government, crashed the economy, and got us bogged down in two wars, and then you wonder why the Democrats haven’t fixed all the problems you created already? And all the while doing everything in your power to block the Democrats from doing anything constructive to address the mess. And it’s not as if your guys have managed to formulate any plans to address the situation that do not obviously lead, in a best-case scenario, to small groups of survivors herding goats in the ruins of western civilization.
Arun says:
September 16th, 2010 at 10:13 pm
Remember everyone making fun of Al Gore’s Social Security Fund lockbox?
bdbd says:
September 16th, 2010 at 10:20 pm
Prefunding would not have begun with the elimination of the national debt. By building up the Social Security Trust Fund since the Greenspan Commission reforms of the social security system in 1983, those paying into social security have been prefunding parts of their own retirements. Those funds were put into Treasury securities, just as a prudent person planning for future retirement might do.
#
Anthony says:
September 16th, 2010 at 10:34 pm
“an article I wrote for Alexander Cockburn’s Counterpunch”
Why would anyone ever think you’re anti-Semitic, Don?
Don Williams says:
September 16th, 2010 at 11:06 pm
Re Anthony at 24: “Why would anyone ever think you’re anti-Semitic, Don?”
—————
“Anti-Semitic” is such a vague, ELASTIC term, isn’t it? Covers everything from Hitler and the Holocaust to someone merely annoying stupid little Anthony on the Internet.
I don’t recall mentioning any Jews in the above comment. But evidently, “anti-Semitic” is a slur that can not only be hurled at someone who questions the treason of the Israel Lobby — of people who have killed 4500 US soldiers, including Jewish American soldiers, with lies.
It evidently now can also be hurled by Hacks at anyone who criticizes the Democratic leadership.
Such a useful term — lets the guilty duck the FACTS.
For what it is worth, I sent my article re Bush’s $3 Trillion theft from Social Security to Counterpunch because both the Washington Post and the New York Times REFUSED to address the issue in spite of multiple letters I sent them. With citations to Bush’s own budget. I didn’t give a shit if they published my letters — I just wanted the American voters informed of what was occurring.
But then the two-faced Superwealthy owners of those papers
wanted Bush’s tax cuts just as badly as did Richard Mellon Scraife, the Coors Family and the most corrupt financiers of the Right. The difference being that the Washington Post and New York Times owners like to con the Rabble into believing that the Post and Times are Tribunes of the People –who tell the Truth, the Whole Truth, and Nothing but the Truth.
I must have missed the swastikas on the Counterpunch home page Anthony. Maybe you can point them out to me and other readers.
Don Williams says:
September 16th, 2010 at 11:39 pm
Something else puzzles me as well. There are lots of working class Jews and the last time I checked there is not a Jewish exemption from paying payroll taxes. So most Jewish Americans were fucked by Bush’s $3 Trillion theft from Social Security as badly as were middle class Gentiles.
Yet that rolls over Anthony like a cool summer breeze. Doesn’t bother him at all. Which suggests we ain’t exactly dealing with Elazar ben Ya’ir defending Masada here.
abb1 says:
September 17th, 2010 at 4:46 am
Hey Don, you’re published by Counterpunch, good for you. That reminds me, I should renew my subscription.
autoit 0.734705980867147
Anthony says:
September 17th, 2010 at 8:58 am
“both the Washington Post and the New York Times REFUSED to address the issue in spite of multiple letters I sent them.”
That’s hilarious. Do you type them on a manual typewriter and send them by mail?
Ape Man says:
September 17th, 2010 at 9:46 am
Cranky Observer has it right – the difference in this case between the US and Singapore is that Singapore has a managed currency (it’s convertible into an undisclosed basket of foreign currencies) and the US has a floating, nonconvertible currency.
You shouldn’t compare countries with floating nonconvertible currencies to countries with managed currencies. They’re totally different and are managed in completely different ways.
The US cannot have a sovereign wealth fund. It can’t invest in foreign currencies. It can’t prepay its retirement funds. This stuff is imaginary. It’s nonsense.
So maddening. We’re doomed by the ignorance of our preposterous elite.
rapier says:
September 17th, 2010 at 10:40 am
Greenspan was terrified by the balanced budget on two counts. First it meant a decrease in systematic credit at exactly the time another recession was starting. Everyone looks at this from the fiscal side but Greenspan well knows it makes no difference who borrows the money what is important is that somebody is borrowing more. Always more. He wanted deficits because he wanted the credit demand they produce.
Secondly the lack of growth in sovereign credit is a constraint on what was at that time normal central bank operations. A fresh supply of Treasury securities is the life’s blood of the Fed. I suppose this is a restatement of the first point but the point must be pounded home that sovereign debt is the foundation of money today. It’s increase the basis of increasing money supply.
MY is wrong that conservatives, the serious ones that is, don’t care about deficits. No, they love them. Now we are in a position that we can have large deficits even if not one penny the government spends goes to the proles. The military, the bailouts of lenders and soon perhaps debt service costs can provide enough spending to insure deficits and all their political and cultural goals will still have been achieved.
rapier says:
September 17th, 2010 at 10:48 am
In addition to 30. The drive to maintain and extend tax cuts is simply a tactic to insure deficits. Tax cuts have always been aimed at producing government borrowing. Greenspan knows this down to his bones. So do Peterson and Norquist, Paulson and Geithner too. They love tax cuts because the produce deficits. Government borrowing is the primary method of injecting liquidity into the banking and financial system. Oddly and counter intuitively. Which is the beauty of it.
Don Williams says:
September 17th, 2010 at 10:55 am
Re rapier at 31: “Government borrowing is the primary method of injecting liquidity into the banking and financial system. Oddly and counter intuitively. Which is the beauty of it.”
————
And WHO receives the bulk of those hundreds of $Billions of risk free Government interest payments is left as an exercise for the reader.
Don Williams says:
September 17th, 2010 at 11:11 am
PLUS the Superrich can’t stuff money under the mattress if the government doesn’t build a big enough mattress ($13 Trillion in US Treasury securities).
Of course, this means the rich no longer have to run businesses for a living. Which is why unemployment is so high and why the S&P 500 is around where it was 15 years ago.
Don Williams says:
September 17th, 2010 at 11:12 am
Clarification to 33: Why the rich no longer have to INVEST in US businesses for a living”
Don says:
September 17th, 2010 at 9:03 pm
@11 Adam, Bullshit. The baby boomers are only now starting to collect SS and Medicare Benefits after paying into the system for thw whole of their working lives. You want to look at who paid little into the system but have collected and are collecting the most, look at the greatest generation, the boomers parents.