Flat Tax & VAT, Jack (Hudson)

[cjppjc]

Re: Flat Tax & VAT, Jack (Hudson)

That's the assumption behind egalitarianism, socialism and communism, which I absolutely reject. If everyone owns everything equally, no one owns anything at all.

Assuming you aren't invoking magic of some kind, who would acquire/earn those things? Why would they be motivated to do so? By what right would those who didn't earn them have any legitimate claim? "Limited supply"? "Fairness"? "Need"? The history of collectivism very clearly shows the disastrous outcome of such a scenario.

I don't think that is the assumption behind egalitarianism, socialism and communism. I was trying to point out that it's very possible that EVERYTHING is material of one kind or another. We except that fact for things we can see and measure. I myself don't believe we would be better off if everything was equally divided, especially thoses things that we don't know how to measure. Diluted they might provide little.

[Chris Coles]

Re: Flat Tax & VAT, Jack (Hudson)

This statement doesn't seem to fit with the rest of what you said.

Someone who has succeeded in true capitalist fashion -- that is, without force or fraud (either directly or by using government as their agent) -- has already provided huge benefits to others. After all, that's how moral, honest people make money: by providing something of benefit to others. So, even after providing those benefits, someone who is successful is then obligated to "selfless service" (meaning they should destroy themselves for the benefit of others)? If so, why?

As a modern example, look at the founders of Google. They have provided an immense benefit to millions of Internet users; thousands of people have become wealthy as a result of association with them; thousands more are able to earn a living using services provided by them. The founders made this all possible; they created wealth, and they became justly wealthy in return. Would you now suggest that they have a selfless responsibility to provide a "fair share" of that wealth to others? Sounds like theft to me.

OTOH, if you're talking about correcting situations where force or fraud was applied, then I agree some "adjustments" are warranted (it's those parts of the economy that are responsible for the current semi-feudalistic / neo-fascist environment). However, not for "selfless" reasons. Rather, in the name of justice.

You have misunderstood my point, perhaps it was not presented very well.

If any of us succeed, then it is almost always through the efforts of others, many will have been employees, AND their families, also in support of the employees, that make for that success. Several years ago, I placed this up here as a Christmas Thought. Perhaps this will clarify my thinking.

A Christmas Thought

When you next go to the opera, think about why you are there? When we enjoy another person singing or dancing, we gain enjoyment, not because of what we see, rather, from what we cannot achieve ourselves. Whatever our pleasure, it is in knowing that we are looking at something we cannot do for ourselves alone. Our modern civilisation has been constructed upon the fact that we earn our pleasures in life from a lot of other individuals combining their input to our lives to make the whole better. We are completely interdependent with each other for the success of our lives.

But, imagine, now, we have shackled the artist to the easel, they become our slave. In so doing, we lose sight of the fact that it is the very freedom of spirit of the artist to draw and paint exactly what they feel that creates great art. A shackled artist cannot do that. Nor can we become that artist, or singer. Every one of us excels at what we do when we are free so to do.

The investment of capital has today become a feudal world of control and order where everyone has to become shackled from first contact. New business creator’s lives are now ordered, confined by strict rules of engagement and rigid thinking. But, such rules suit a line manager. True leaders in any community are the free thinkers; individuals that can lift all our eyes from the daily toil and state the obvious. Such leadership should be visible at all levels of society, not just at the very top. Today, much of society is leaderless and shackled. As a result, we have a demotivated uncivilised general population. You only need to see the young people drinking themselves senseless with binge drinking here in the UK to see this as a reality.

The true aiming point of any civilisation is surely to unshackle the lives of as many as possible? We are not here to make a profit without also leaving everyone we touch in a better state. No community saves its money for the savings institution to improve itself at the expense of the saver.

We need to find a way forward that makes it possible for everyone to be able to live full lives unshackled from the utter stupidity that we cannot be permitted to be both free and successful.

Civilisation surely demands everyone is left free to pursue their lives as they think fit? We must recognise that if investment is not civilised, and the recipient is not left free, we are living in a feudal rather than a civilised society.

Please, think about that.

Chris Coles.

Franklin D. Roosevelt said it much better than I ever could here:

http://www.youtube.com/watch?v=UwUL9tJmypI

[c1ue]

Re: Flat Tax & VAT, Jack (Hudson)

As a modern example, look at the founders of Google. They have provided an immense benefit to millions of Internet users; thousands of people have become wealthy as a result of association with them; thousands more are able to earn a living using services provided by them. The founders made this all possible; they created wealth, and they became justly wealthy in return. Would you now suggest that they have a selfless responsibility to provide a "fair share" of that wealth to others? Sounds like theft to me.

Actually I disagree with this statement.

Google created a search engine - but in fact they destroyed wealth.

The revenue stream Google enjoys today is an attenuated version of the revenue stream formerly enjoyed by the yellow pages across America and the world, as well as the encyclopedias, libraries, and classified ads.

Thus it is a misnomer to say Google created wealth or productivity per se - even disregarding the blatant abuse of civil liberties which Google undertakes.

Furthermore it assumes that someone else would not have created a search engine - clearly also a misnomer since search engines existed before Google and search engines continue to be created.

In contrast compare with the inventor of the light bulb and electrification: before, activity largely ended with nightfall due to the expense and danger of lighting via fire ; afterwards, everyone who bought lightbulbs and consumed electricity saw immediate gains from those formerly dark hours.

The point of PC is to create as in the light bulb.

The point of FIRE is to tax an ongoing activity.

[flintlock]

Re: Flat Tax & VAT, Jack (Hudson)

The old jobs may disappear, but they are replaced by new ones. The people who made horse buggies had their jobs disappear with the arrival of the automobile, but the economy grew anyway. Those who could adapt moved on and had their standard of living increase substantially.



Increasing automation is one of the primary drivers of higher real wages in the long-term. More automation allows a single employee to be more productive and to effectively use much more capital equipment. A man driving a tractor on a farm can demand much higher wages than someone picking crops by hand. Labor in America is expensive, and for the most part deservedly so, because workers have the use of more capital equipment than most of their overseas counterparts do.



Just because someone is unemployed doesn't necessarily mean they are unable to produce anything of value. What it more likely means is that the market rate for the skills they have has gone down, and either they are unable or unwilling to accept a lower wage, or perhaps they are sucking off of some government teat that further decreases their motivation, or in some cases employers are either slow to adapt to an environment where they could pay people less, or they feel political or social pressure not to do so (or they are prevented by law, such as with minimum wage or unions). Plenty of jobs are available at the right wage; just take a look at the millions of illegal immigrants. Why do they come to the US again? Oh, right: JOBS.

In the past I would have agreed with everything you said here Sharky, but we need to face the reality that we are bumping up against certain realities that never existed in the past. The world never had seven billion people before. Exponential economic growth has always been seen through short sighted eyes as something that could go on forever. That is because in the past human labor was almost always more productive than their cost. (ie, the value of people's labor generally exceeded the cost of sustaining themselves.) In the past, labor was at a premium. Especially in America, there was a labor shortage for most of it's history. That's why the people were so prosperous. It took massive amounts of human labor to build things. Hundreds of hours to make items that today can be pumped out by the thousands by some cheap machine. Just supplying the basics of life consumed most of people's efforts. Today we must continue to invent gadgets and other items to occupy our excess of free time. If not for those items, what economy would we even have left that is still growing? How much more efficient have cell phones made us in the last year vs 3 years ago? I say not as much as we'd like to believe. Look who they market these things to now. Kids. That's because the line between a tool and a toy has become very thin. We are scraping the bottom of the barrel in terms of efficiency in order to support a larger and larger base of inefficient, unnecessary humanity. As far as the US is concerned, any upwards push on wages will always be suppressed by either outsourcing or by immigration. So those still working in the US will find it harder and harder to pay for their keep. The world only needs so many engineers. So many doctors. So many programmers. Not to mention the fact that even if these jobs could grow in an unlimited manner, you could never train the majority of humanity to that level. No more than you could train a mule to water ski. It's just not realistic.

Nope, the problem for most in the future will be finding something to make themselves relevant to the world. It can stlll be done, but more and more will flunk the test as the bar is raised.

All of what you say is true to some degree, those displaced in one field may find more efficient employment in another. But more and more we are finding many bumping up against the idea of finding themselves superfluous. We simply don't need more people today. The natural exponential growth of the population insures that more and more will always be pursuing less and less available jobs. It makes the idea of colonizing space not so crazy.

Of course there are still meaningful jobs. But how many of these can actually support someone cradle to grave without requiring massive support from government programs? I'd venture to say 80-90% of the 1st world cannot economically sustain themselves at their present standard of living without aid at some point.

The world will go on, just not at the existing standards of living. We've had it so good in our lifetimes that we fail to understand that history has not always been a one of unlimited and constant growth. There is no law that says we will always have it better than our parents. Civilizations do rise and fall like the tides. From where I sit, a decline overall is inevitable.

[flintlock]

Re: Flat Tax & VAT, Jack (Hudson)

When you say "available prosperity," you make it sound like there is only a limited amount of prosperity to go around. But where does prosperity come from? In a capitalist society, even in a moderately mixed economy (provided it's not corrupt), one person does not become prosperous at the expense of another. All boats rise together.



How do you increase "prosperity" at every level of society? Historically, there is only one approach that has ever worked: capitalism; every alternative and every deviation has failed miserably (as will the current variant of corporatism / neo-fascism). The closer to true capitalism a society has been, the more prosperous they have become. This seems to be a basic law of human nature.

Exactly. Capitalism, with all its flaws, is the only reason we have made it this far and not collapsed earlier. It squeezes out the last ounce of productivity in an otherwise hopelessly unsustainable world.

[DSpencer]

Re: Flat Tax & VAT, Jack (Hudson)

Google created a search engine - but in fact they destroyed wealth.

The revenue stream Google enjoys today is an attenuated version of the revenue stream formerly enjoyed by the yellow pages across America and the world, as well as the encyclopedias, libraries, and classified ads.

No offense, but this line of thinking shows a lack of fundamental understanding of the POINT of economic growth.

If someone created a method to teleport, for free (with the exception of viewing an ad for a few seconds), to anywhere in the world....would you say that they had in fact destroyed wealth?

After all, they would almost immediately bankrupt the car manufacturers, passenger airlines, taxi services, highway workers, etc.

What you're missing is that consumers of Google now have a better, cheaper way of obtaining a service that they used to have to spend more time and money obtaining through encyclopedias, yellow pages etc. Google preserves their wealth in this manner. This raises their standard of living by allowing them to use it on other goods and services.

Yes, for a select group of people this creates problems and frictional unemployment. For society as a whole this is a net benefit.

The point of economic growth is to enhance people's lives by making them longer, easier and more enjoyable by providing improved products and services at decreasing costs.

[DSpencer]

Re: Flat Tax & VAT, Jack (Hudson)

OTOH, if you're talking about correcting situations where force or fraud was applied, then I agree some "adjustments" are warranted (it's those parts of the economy that are responsible for the current semi-feudalistic / neo-fascist environment). However, not for "selfless" reasons. Rather, in the name of justice.

Maybe this is where so much of the disagreement arises, possibly even on a sub-conscious level. Trying to read this thread and avoid the ad hominem attacks I've noticed there seems to be two sides with their own theme:

1. The rich, land-owning, dividend receiving, rentier class has used the government to rob the working people of the fruits of their labor. It's only fair that the working class now uses the government to take back the wealth that is rightfully theirs.

2. The idea that the government can fix our problems by taking more of our money and giving it to people who don't work in exchange for their vote is insanity. It's not fair to pay income taxes, try to scrape together savings and invest them and then get taxed again even if the gains are only nominal and not real. Raising the capital gains tax will only discourage business investment and won't help anyone. The government won't redistribute the money to those it was taken from anyway. It will waste it or spend it on people who never contributed anything.


I think both points of view have some merit. I think lots of people debating these issues talk past each other because the issues and players involved are so generalized. When two people think of the "rich", "middle class" and "poor" they almost never visualize the same groups.

My question is whether there is a way to reconcile the positions. Can we penalize the responsible parties without lumping the honest, hard-working entrepreneurs in with the corrupt corporatocracy players? Can we ever have a true free market with some people starting with loads of ill-gotten wealth?

Do the people who hold position 1 really just want to right the wrongs or is this simply an excuse to implement collectivist goals?

My guess is that it's a moot point anyway. We'll never be in a position to come up with a reasonable solution. As things get worse people will simply support whatever helps their short term situation the most.

[jneal3]

Re: Flat Tax & VAT, Jack (Hudson)

This thread is a page-turner. One of the few I've read from start to finish. Punch/counterpunch and acknowledgements of points well-made (Mr. PC your reference to your evolution of thought in the 'contrails' thread is the embodiment of intellectual integrity. Good stuff.).

FWIW it seems to me that ultimately, without aggregate demand for goods from the renters, the rentiers are doomed as well. Henry Ford understood this, the $5 day being his one true brilliant original thought (no, he did not invent the automobile or the assembly line). The question to me is whether the present-day rentiers will see this in time and realize that a large percentage of their wealth is due to the fortune of living in the country they do and not exclusively due to their personal efforts. Henry Ford knew this also (at least relative to his times...).

[cjppjc]

Re: Flat Tax & VAT, Jack (Hudson)

Google created a search engine - but in fact they destroyed wealth.

The revenue stream Google enjoys today is an attenuated version of the revenue stream formerly enjoyed by the yellow pages across America and the world, as well as the encyclopedias, libraries, and classified ads.

A good point for my argument. What if everything is material of one kind or another? If it is, then surely there is a finite amount of the material.

[llanlad2]

Re: Flat Tax & VAT, Jack (Hudson)

FWIW it seems to me that ultimately, without aggregate demand for goods from the renters, the rentiers are doomed as well. Henry Ford understood this, the $5 day being his one true brilliant original thought (no, he did not invent the automobile or the assembly line). The question to me is whether the present-day rentiers will see this in time and realize that a large percentage of their wealth is due to the fortune of living in the country they do and not exclusively due to their personal efforts. Henry Ford knew this also (at least relative to his times...).

But Henry Ford was a wealth creator not a rentier. He didn't take unearned money out of the economy. He created thousands of jobs and ran a highly profitable company. Like you said he also knew that decent wages created demand.

The rentiers on the other hand take out wealth but there is still demand for their product as ultimately everyone needs shelter, medicine and utilities. The FIRE doesn't care if there's nothing left over to buy anything else.

DSpencer
2. The idea that the government can fix our problems by taking more of our money and giving it to people who don't work in exchange for their vote is insanity. It's not fair to pay income taxes, try to scrape together savings and invest them and then get taxed again even if the gains are only nominal and not real. Raising the capital gains tax will only discourage business investment and won't help anyone. The government won't redistribute the money to those it was taken from anyway. It will waste it or spend it on people who never contributed anything.

I think the above point identifies the main issue why some people are against Hudson, they think the issue facing us now is either a pro or anti government point of view.

Hudson's argument is actually a question of being pro or anti rentier.

The argument since the 1980s was that tax cuts to the financier and corporate class would stimulate the economy, create growth,wealth and jobs. Well what happened? The policy failed miserably.

Average Joe: Increased indebtedness, job insecurity, decreased real earnings, increased housing costs,
Bankers and CEOs: Untold wealth, despite the companies they run creating less wealth, paying lower dividends, failing, employing less people.

The above did not happen by accident. It happened because the rules were changed. Hudson wants them changing back is all. A by-product of that will be increased revenue to the government.

Nobody can pretend that government is efficient and not wasteful but surely the funneling of trillions to 200000 Wall-street bankers and CEOs who have never set up a company or created a job (except in China) in their lives in the dim hope this will lead to investment is a case of naivety or cutting your nose off to spite your face.

If the brightest minds in the country can get given free money where the hell is their incentive to invest or set up new businesses and become wealth creators??? The answer is they won't. The only 2 investments they need to make is one to the democrat party and another to the republican to maintain the status quo.

Tax in general is NOT the issue.The issue is who the tax rules favour. The corporatocary and bankers are winning the battle by framing the argument in this manner.

If Hudson ran his campaign in a much more negative anti-fiancier style and didn't frame it as pro-govt he would be able to convince more people in my point of view.

[oddlots]

Re: Flat Tax & VAT, Jack (Hudson)

I'm kind of disquieted by this line of argument clue. i think one of the most telling and disturbing moments in the GFC saga was the perception that the Fed was playing favorites (hold the guffaws, please): Bear Sterns was toast and the beneficiary would be... etc. What's really disturbing about that is not the exertion of political power but the fact that the accounting had become so arcane and convoluted that that the only "business realities" that were available were created out of whole cloth by the Fed itself. It really reminds me of Hayek's argument that in a fully socialised economy there is no way to price anything because the feed-back loops have been severed wholesale.

The joke of course is that this has been achieved in a free-market economy subject to the dollar standard over 55 odd years. That is the political gravel in the economic model, slowly destroying the machinery.

But to get to the point, I think part of the power of Hudson's argument is that there's a non-academic and non-subjective distinction between say analysing whether Google creates or destroy's wealth and whether a CDO does. I think you can make a good case that the latter is an artifact of a particular moment in the dollar-reserve's life which created a tsunami of money looking for a home. (And by God Wall Street would find a place for it especially since Greenspan was going to make the coals burn under their prospect's feet. I'm thinking of the rates in 2000-3ish.) I also think that Hudson makes a good case for a real distinction that can be found in the tax regime for a free lunch and an ultimately destructive foray into Potemkin prosperity that has been had at the greater economy's expense.

In this context I think the Google analogy just muddies the water.

[Jay]

Re: Flat Tax & VAT, Jack (Hudson)

I think it is important when discussing sustainability to acknowledge the difference between a rival good, a good that can be consumed by only one consumer like a specific barrel of oil, and nonrival goods, like intellectual property, that never get used up. While rival goods become scarce, nonrival goods are free for all forever. As the world shrinks with the growth of the internet and other technology, the total amount and access to all the nonrival goods in existence grows. That makes the world a wealthier place.

Access to nonrival goods may in fact be the soul reason for economic advancement beyond all the economic voodoo and politics spouted over the years. Things like the plow and the steam engine are what really make our lives better. The rest is show in comparison, at least in my mind. The ironic thing is that most true nonrival goods, that make everyone's lives better, need government protections because they otherwise have no market. They lose an effective revenue stream quickly because knowledge transfer is free for nonrival goods. Just look at the music industry. This is the great conundrum of the internet.

[Chris Coles]

Re: Flat Tax & VAT, Jack (Hudson)

But Henry Ford was a wealth creator not a rentier. He didn't take unearned money out of the economy. He created thousands of jobs and ran a highly profitable company. Like you said he also knew that decent wages created demand.

The rentiers on the other hand take out wealth but there is still demand for their product as ultimately everyone needs shelter, medicine and utilities. The FIRE doesn't care if there's nothing left over to buy anything else.



I think the above point identifies the main issue why some people are against Hudson, they think the issue facing us now is either a pro or anti government point of view.

Hudson's argument is actually a question of being pro or anti rentier.

The argument since the 1980s was that tax cuts to the financier and corporate class would stimulate the economy, create growth,wealth and jobs. Well what happened? The policy failed miserably.

Average Joe: Increased indebtedness, job insecurity, decreased real earnings, increased housing costs,
Bankers and CEOs: Untold wealth, despite the companies they run creating less wealth, paying lower dividends, failing, employing less people.

The above did not happen by accident. It happened because the rules were changed. Hudson wants them changing back is all. A by-product of that will be increased revenue to the government.

Nobody can pretend that government is efficient and not wasteful but surely the funneling of trillions to 200000 Wall-street bankers and CEOs who have never set up a company or created a job (except in China) in their lives in the dim hope this will lead to investment is a case of naivety or cutting your nose off to spite your face.

If the brightest minds in the country can get given free money where the hell is their incentive to invest or set up new businesses and become wealth creators??? The answer is they won't. The only 2 investments they need to make is one to the democrat party and another to the republican to maintain the status quo.

Tax in general is NOT the issue.The issue is who the tax rules favour. The corporatocary and bankers are winning the battle by framing the argument in this manner.

If Hudson ran his campaign in a much more negative anti-fiancier style and didn't frame it as pro-govt he would be able to convince more people in my point of view.

Well said, and as I see you are relatively new to iTulip, may I say welcome to the debate, You make a very valid and interesting point. Thank you.

[bpr]

Re: Flat Tax & VAT, Jack (Hudson)

You are quite wrong. But, in so expressing your own feelings, you give the chance to point to the nub of the debate.

As I see it, we are watching what one often sees described as a herd effect. How sheep will all follow the others in a crowd. Someone has, at some point in the past, discovered a way of making money that was easier than before and the majority have followed; just like sheep in a field. What we have to do is first recognise the mistakes they have made and then educate them as to the better direction to follow. You cannot get another's attention without at first opening a dialogue with them. An example I can relate is when working at night with a machine operator that was, at first, as confrontational an individual as I have ever seen depicted.... let alone met in person. He would stand and use mouthful after mouthful of expletives; standing right beside you calling you all the names under the sun - very difficult to deal with. But after a couple of years where he could see that we were not going to cause him any harm, and then, when at last we got his attention, gave him responsibility and an opportunity to better himself, he changed beyond any recognition to become a very competent, and friendly, member of our Little team.

The only worthwhile route out of this debate is via debate; and we have to stand our ground and keep at it.

Thank you for this, and your persistent optimism: we're going to need it.

EDIT: "I" messages: I'm going to need it (again).

It's far too easy to fall into the lazy trap that I did during those posts.

I had just returned from a family outing in which the following exchange took place between myself and probably the smartest person (and the only dyed-in-the-wool Republican) in our family (a federal prosecutor):

Relative: I remember a time on my porch when you [bpr] made a negative comment about Beagan [some politician] and you were immediately shut down by RelativeX. You may have been right, but we all kept quiet out of deference ot RelativeX, as if to say, "It's not polite to talk about politics in family circles"; or "We need to respect the views of our elders." But, during these times, with the challenges we're facing, I think we need to open up debate, I think we need to challenge our elders.

Me: It's too f'n late. By shutting up on your porch in 2004, you vindicated her belief in bad economics, and thus we're screwed until all these old people die. Plus, you made me look like a bad sheep by not supporting me in front of the family.

(a paraphrase)

It's tiring, going over this crap. Trickle-down economics and cutting taxes was a failed strategy before the tech bubble inflated.

But, you're right: there are people that still need reason, and can be persuaded by it. And my relative was right: it's time to let down those old guards against challenging family elders on political matters.

On that night, however, listening to Michael Savage's politics of fear on the way home, I really felt we just needed to wait for the sheep to die off.

[c1ue]

Re: Flat Tax & VAT, Jack (Hudson)

No offense, but this line of thinking shows a lack of fundamental understanding of the POINT of economic growth.

If someone created a method to teleport, for free (with the exception of viewing an ad for a few seconds), to anywhere in the world....would you say that they had in fact destroyed wealth?

After all, they would almost immediately bankrupt the car manufacturers, passenger airlines, taxi services, highway workers, etc.

What you're missing is that consumers of Google now have a better, cheaper way of obtaining a service that they used to have to spend more time and money obtaining through encyclopedias, yellow pages etc. Google preserves their wealth in this manner. This raises their standard of living by allowing them to use it on other goods and services.

D,

I think you miss both my points.

1) I've never said Google didn't create value. Note value does not equate to wealth. Google absolutely encompassed a massive wealth destruction - and I fully agree that part of this was the normal Schumpeterian 'creative destruction'. But equally so part was not - see the next point.

2) The value Google created - arguably would have been created by someone else. This is what I meant by search engines existing before Google and search engines being created all the time even now.

This matters then because the 'creative destruction' Google encompasses was not even due to uniqueness/invention, but rather other business practices.

Much as Microsoft creates value with its OS's, equally so it stunts growth through its ongoing monopolistic behavior and existence. Is the Microsoft ongoing monopoly deserving of the OS's it creates? Note in this specific example, Microsoft didn't even invent DOS or even Windows.

Contrast Google's business practices with say, a non-profit like Craigslist.

Does Google create more value? The exact same capabilities Google offers, is offered in a specific smaller realm by a free service.

Do you think Craigslist sells user information to the US Government for $25/user (as does Yahoo, Microsoft, Google, and others)?

To speak to your example: a way to teleport without a cost is of course a gigantic value creation.

But if said way to teleport was accompanied by a Microsoft business model - i.e. a company which priced its service and had a legal monopoly such that the savings was 1 cent less than the next cheapest alternative - do you now consider this wealth creation?

The only reason Google doesn't charge per search is that they don't yet have a monopoly position (and may never), and more importantly they make more money from advertising. This is a mere law away from changing - for example were I Google and competitors started eating into my ad margins, I would push to have Google enshrined as an Internet utility "in the interests of providing the greatest value for the world". Then the barrier to charging for searches (utility cost of providing service) would no longer be an issue.

More importantly, the 'free' ad you see isn't actually free. Advertising costs ultimately flow directly to the consumer - and unlike the traditional TV/radio advertising model, Google literally does charge for every single user. The traditional advertising payments use an indirect formula which in reality charges far less.

This is from my direct experience as both a business consumer of Google and traditional TV/radio/print advertising. The reason Google can do this is because there is a demonstrable direct link between a click ad or paid search and an impression, whereas the traditional media can only provide models.

In this context I think the Google analogy just muddies the water.

I don't think so.

For one thing, while I despise banksters, on the other hand I do not consider the job of financier per se to be utterly parasitic and irredeemable.

A venture capitalist in the best model - as EJ seems to be - seeks to provide value beyond just money. Said VC helps a budding company grow through advice, contacts, and experience as well as via financial transfer.

On the other hand, there are lots of other types of venture capitalists: the ones just making use of their pool, the ones just drafting into hot new sectors, the ones who seek to take over the successful companies they invest in so as to take full control of the revenue stream, etc etc. I've had plenty of experience with those.

The point is simple: value creation isn't wealth creation.

It isn't that we should not create the automobile and thus preserve buggy whip manufacturers.

It is that simply creating new value does not confer the right to monopolize the resultant wealth creation, nor is creating new value an excuse for any type of uncompetitive nor illegal behavior.

Securitization does not have to be fraudulent.

Home loans do not have to be fraudulent.

Appraisals do not have to be fraudulent.

Foreclosures do not have to be fraudulent.

The purpose of regulation - and closely related to it, the removal of perverse incentive systems - is exactly to combat the 'dark side' tendencies.