I got some interesting questions via email and I thought I would share them, along with my answers.
- Does he feel that the economic crisis make him more or less confident in Rand’s objectivist philosophy? Why?
If you want to know where I think we have a problem, Im happy to share. Our government doesn’t know the difference between an investor and a speculator or trader. If we did, we would understand that we should tax the trader/speculator more heavily than the investor.
The government should raises taxes significantly on profits from short term capital gains on the sale of public stocks, indexes, commodities, futures held for 24 hours or less and extend the length of time required to qualify for Long Term capital gains and reduce the tax rate on Long Term gains. This will discourage flash trading, ETFs that move markets purely on cash inflows rather than fundamentals and also reduce the amount of speculation on commodities. It will also reward companies that act in the financial interests of long term holders and their employers. I think the impact on the economy would be far fewer layoffs as CEOs find themselves with more shareholders who think long term rather than short term. Believe it or not, there are shareholders who are fine with companies not beating their numbers if the company is making progress towards a clearly defined goal. I don’t care if the P/E of the stocks I own is 14 or 20. I want the companies investing in being a great company rather than trying to make traders of their stock happy. Most CEOs give great lipservice to this approach, but they are so focused on marking to market their own personal stock portfolios, they emphasize stock performance over doing the right thing for the company. Taxation can change the focus on public companies and stock trading. That would be a great thing for the economy.
- Does he think that massive pay packages are warranted at financial institutions accepting government bailout money?
2 types of pay. Salary and performance bonuses based on outside criteria (stock performance), and commission. if a guy is busting his ass and is great at his job. More power to him if he makes 100mm dollars. If he made his bank 300mm, he helped solve the problem, he didnt contribute to it. If an executive gives him/herself a ridiculous compensation package , thats a different story. Given is far different than earned. I dont have a problem with earned. I do have a problem with given.