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View Diary: Harvard innovation guru: Pursuit of profit is killing the U.S. economy (199 comments)

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  •  Knowledge is geographically diversified (2+ / 0-)
    Recommended by:
    cotterperson, linkage

    Good ideas can come from anywhere and always have, but used to be attracted to magnets in the US. Now, not so much.

    I'd like to recommend a book that helps to explain this. It's a bit dated published about 10 years ago) but I think you would find it illuminating, and in any case, it's an absorbing and entertaining read.

    "We Were Burning : Japanese Entrepreneurs and the Forging of the Electronic Age" by Bob Johnstone

    It's one case where the Amazon reviews don't do it justice in terms of the author's message, but that's probably because the reviews are more dated than the author's insights which might have been a few years ahead of it's time.

    I think you would find it genuinely of interest.

    What about my Daughter's future?

    by koNko on Fri Dec 09, 2011 at 06:24:26 AM PST

    •  Brain drain happens in 2 ways (11+ / 0-)

      As our economy weakens, this country stops being a magnet for the best and brightest -- and even some of our best minds will begin gravitating overseas. There is, however, an even more insidious brain drain into non-productive spheres of our economy.

      Our economy is badly skewed in enriching those who are able to take advantage of markets -- arbitragers that make huge profits just by moving paper and electronic transfers. So, the smartest often move into the trading economy instead of into real production. That has a huge negative impact on our innovation potential.

      And, of course, the capital markets are themselves badly skewed by the emphasis on short-term profits over long-term investments. All of this makes for a brand of anti-capitalist capitalism that is devouring itself, as Marx predicted.

      Is there a solution? I have a simple idea that could work. Besides a tax on financial transactions which could limit all the damaging program trading that occurs just to enrich those with super-fast computers, we need to re-rig the incentives in the capital gains tax. Republicans argued that lowering the gains rate would incentivize investment in growth. The problem is that most capital gains do not come from real investment in companies -- the gains are produced in secondary capital markets. Lowering the capital gains rate proved to be very damaging in the long-term.

      A new system would favor long-term capital investments and direct purchases of stock issues by companies trying to raise capital. Those who flip their investments quickly, or have short-term gains and gains from stock purchased on the open secondary market should not get favorable gain rates. These profits should be treated no better than ordinary income. With a transaction tax, such arbitraging would actually be slightly disfavored by the tax code as compared with ordinary income.

      This would go a long way to restoring the correct incentives into our economy.

      Coming Soon -- to an Internet connection near you:

      by FischFry on Fri Dec 09, 2011 at 07:22:58 AM PST

      [ Parent ]

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