Student Loans is aid. Nothing “psychologo-economic” about it.
You are a bright 18 year old of modest means and you want to be a doctor. To do this you need to borrow 100k to buy the education. Banks would charge high rates for this type of risk loan. In this case the government offers cheap money (I have seen 10 year student loans with a lower interest rate than 10 year treasury bonds.) While you have to pay the loan back the interest rate is deeply subsidized.
Personally, I think we would get more bang for our buck if we did more grants then loans. In the case of loans the benefits flow to those who pay the most for education. i.e. A private college graduate gets more subsides than a state college graduate., which is kind of unfair because one would expect the private college graduate to earn more money. The people who need it the least get it the most. A (indirect, some generalizations made) subsidy for the rich in effect.
I think there is a subtle point you are missing. The Federal Government subsidizes a good – any good - for simplicity; let us say $100 per student. This subsidy will be split by the consumer (student) and the producer (school.) How will it be split? The article argues that the lion shares goes to the school.
First, while schools are non-profit, very few are staffed by Franciscan monks who have taken a vow of poverty. Schools are interested in upgrading their campus, doing basic research and increasing staff salaries.
Second, there is a mismatch between the students and the schools. Young kids have a hard time determining the value of the education they are buying. On the other hand, parents have to disclosure all of their information to the school. If a kid wants to attend a school and the parents can pay for it the school can use price discrimination and charge them full price.
I would like to build on Sarten-Xs question – what exactly is unethical about finance?
Are there people who are greedy and worship on the altar of Mammon? Yes - and you will find them in all industries. Is finance soulless, only interested in money? I would say no. It is interested in efficiency and it’s cold reductionist logic can be brutal.
But I would guess that the issue you have is not with the morality but with the ethos of people in finance.
I have worked at for profit (family and corporate owned and Not-For-Profit member owned (Credit Unions or Mutuals) financial institutions. The ethos in the two places are different. Then again, these were all Midwest conservative (in the “we are here for the long haul so focus on long term results, moderate risk aspects and not the quarterly high risk aspects)
First, we currently do tax wealth transfers. What happens? We have companies like GE who just leave thier profits abroad. Mind you, it's at a lower rate then 0.5%., but still.
Second, you don't want to encourage "faster" wealth transfers. That is just going to encourage hot money to flow in and flow out of countries lookings for short therm gains. You want long term stable transfers.
While Antartica has the lowest tax rate they have not signed any tax treates, so the local goverment could charge full taxes.
That being siad, I don't like corporate taxes for interantional companies. There are too many source (where is the corporation located) / residence (where is the corporation making money) issues, they are easy to game, etc.
I think the world would be a better place if more of the corporate taxes were shifted to a source only method. USA would get a cut of the corporate profits when I bought a Angry Birds games - not sure why Finland should have a cut. The profits would then float to corporate headquaters and paid out to the employees / shareholders - which I am assuming are Finish. Then Finland could charge a income / dividend tax and get it's cut. Much simplier.
You have somebody who send back remittances Make come back and bring additional skills. Creates demand and excitement for education, encouraging more people to enter the field.
IIRC, in the field of nursing, the tipping point is 20%. There have been studies trying to figure out if educating nurses for oversea work helps the local economy. If less then 20% of the nurses head overseas, then the county has more nurses then it would normally have.
As Gandhi (?) said – Better a brain drain then a brain in the drain.
I can empathize form where you are coming from, but you are ask subjective question where people give the wrong answers.
Even the simple one on permanent residence. I worked on a study on Scandinavian immigrants to the US in the late 19th century. Over ½ said they were going to return. Almost none did. The predictive power just was not there. I am going to rely on antidotal evidence but I still think it holds true. People come to the US with plans and after 5 years those plans almost always gets turned around.
Then you start asking the tougher subjective questions – Are these people going to take away “Native” American jobs away from us – or at least lower our pay. The answer is always going to be yes. That being said, we are a nation of immigrants – it is one of the ways we constantly reinvent ourselves to meet the new challenges of tomorrow. I can’t imagine an immigration bureaucrat being able to guess who will kick off the next great revolution.
If somebody can earn 100k I would rather have them work in the US and have them shave 5k in salaries for a “Native”. They will pay taxes and add vigor. The other option is to let them stay where they are – and let them invent the next big idea outside of America.
Same field, but is in some aspects better. Actuaries get high marks in job satasification. Good pay (not as good as quants, but....), easier to get into, good life / work balance, no insane presure, etc. Plus, as an added bonus, you can tell the exact time when somebody will die - but you can only use this power once. On the downside, you make accountants look sexy.
I don't think that is true. In my neck of the woods only a single "art" theater chain will run NC-17 films. On the other hand, quite a few will run the unrated type.
Films with a NC-17 rating have restrictions on how they are advertised. Since you can't advertise, most theaters wont run the film.
And it's not about porn films. Those are low quality. I would like something with a bit of class. The MPAA is a bit odd. Have a ton of blood and guns, get a R. Have a bit of male frontal nudity, NC-17. It does slant the story telling process.
Prop 13, combined with the "3 strikes" (sponsored by the police union) prop and "education" prop (sponsored by the teacher's union), is not direct democracy gone right. Sorry if I can't rember the props off the top of my head.
Prop 13 limits taxes. The other 2 props which increase goverment spending. And then there is the prop which requires a super majority to raise taxes, while you only need a majority to raise spending. CA is getting to a point where the state legislator could not pass a budget if they wanted to.
I can ask easy questions and get easy answers. However, at some point you want to work off a clean sheet of paper and figure out the best balance between how much to tax and where to spend.
PCM2 has a point - but his question is non starter - so let me try to ask 2 questions.
First, how will you frame questions? Decsion Theroy, a branch of Psychology and used by Economist, has shown that we can manipulate results by how you frame questions. i.e. "Do you want to increase taxes for spending on roads" gets a lower result then "How much do you think we should spend on roads"
Second, how will you balance you a passionate minority vs. a passive majority? I will use building a new road as an example (a poor example because this is beyond the preveiw of congress - maybe somebody could come up with a better example?). Most people want to see the road built. A small minority want accommodations (move the road a couple of hundard feet to perserve a cherish historical or natural spot, better barriers for road noise, etc.). Special intrest groups are not automaticly evil after all.
As an aside, how much have you read on Public Choice? A subbranch of Economics on how different voting methods can generate different results.
I work with 8 highly trained, young (5 under 30, 3 under 40) CPAs.
We can't convert from Windows XP to Windows 7 in June because it is kind of busy time.
None of the applications are changing, all have been test, the computers are waiting - basically they would leave at their normal time and find brand new computers waiting form them. We are only talking about the learning curve. So we have to wait until July.
So I work in the financial services I would not use drop box - and not because it is a bad product.
First, people will have access to material insider information, SS#, etc. You have to have positive proof that this information is under your control and that it can not be leaked to 3rd parties. There is simple too much room for mischief with a rouge employee uploading data and selling it to the competitors.
Second, I have to keep all information between 3 to 7 years. Once again, there has to be positive controls that can be audited.
Now, I know of some cloud computing centers which have gone though all of the red tape / auditing, but they tend to offer specialized services.
I work in financial services and we are addicted to Microsoft Excel.
I get "relational data" in Excel spreadsheet form from outside vendors all of the time. I can't even get them to send me the data in a flat text file so Excel won't chop off the leading (and necessary) zeros.
It is what everybody knows.Not the way it should be, but that's life.
In the US, legally, this is not necessarily true. Companies have been nailed on anti-trust grounds without formal communication. If company A changes it's prices and companies B and C consistently follow suit, that is enough. Even though there is no formal communication, everybody knows what is happening - wink wink nudge nudge.
I would guess that the manufacturing of spinning disks for HHD drives and assembling chips for a SSD drive are different. I don't see any great tricks up the sleeves of current manufacturers when the shift occurs. Even if they successfully made the transitions, I would think most of the profits would flow to the chip manufacturers, not the drive manufacturers. I think they would be left high and dry.
Just to extend the argument, Game Theory suggests that there are 2 stables states when you get down to 2 or 3 big players. Either cozy (Biggest firm is the price leader, everybody follows suit. Nobody wants a war) or fierce - no quarter is given by either side.
Qualifying for a car loan does not mean an artist can qualify for a business loan.
Banks do loans, which means they have a small upside if you pay back a loan (interest) and a large downside if you default. One of the ways the offset the downside risk is by the use of collateral - the car. Can't pay the loan, they take the car and sell it at auction. Fast and quick. So they do a lot of low risk loans.
Business is riskier then a car loan. Having a solid business plan can offset that risk. And it's not because they bad business people (I know a lot, some are, most are not). It because you can put out a great product and 1/2 the time it fails. And a bank is not set up to quickly sell a 2nd rate album in the secondary market. On the other hand, when an artist succeeds, it big. Just the opposite of bank. Few big upsides, lots of big downsides.
It's one of the reasons why I mentioned Risk Capital. The risk profile of artists suggest that investors want to invested in the equity side instead of the debt side - which is where the music labels come in. Their business plan is to lose 9 times out of 10.
For most artist the only bank loan they can get is to max out their credit cards. This can work - See Spike Lee's She's Gotta Have It. But taking on personal credit card debit is different then a business loan.
NPR"s Planet Money had a interview with O.K. about a year ago. I am sure you can still find the podcast. IIRC O.K. go said it was closer to 250k to launch a new national band - at the low end. 4 months where you quit your day job and work on the music. Then a good gob in the studio time, with sound engineers, song writers (if needed), etc. Shoot a video or four. Then launch a 6 month college tour. And only about 10 percent makes it.
If you read the article most of the costs associated with a album are salary and stuff. It does not matter how cheap the equipment is, good sound engineers cost money.
So you might be able to cut out some of the costs by going slow, pushing the authentic folk side, etc.and cut the 250k down a little. But still, spending 25k on a start up with a high risk factor is more risk capital then the average person has.
O.K. Go has now started their own record label to see if they can launch bands for less using newer methods - but they admit they could not have launched without the help of the majors 10 years ago.
The old boss is dead. Can't quite figure out how to make the new one work.
And while we are researching that, can we also figure out why Kickstarter, which crowd funds projects, is named after a motorcycle starting system? I can't see the conection!
Thanks for pulling that data. I know that FB earning were going up fast – and I assumed that they were still accelerating.
But to build on what I was saying, the Dividend Discount Model is the stock and trade on analyst. But it is very sensitive on what you think the rate and length of super normal rate of grown will be. Small changes can lead to big differences in price.
Analysts guess that the S&P will grow steady at 9%, ergo P/E of 13 Analysts guess that Apple will grow at 15% for the next few years, ergo P/E of 18 Analyst at are failing about, guessing that FB will grow at 35% for the next few years, ergo P/E above 60
And while FB does have 900m users, which suggest slowly growth in the user base, I have heard a lot of annalist saying that FB can squeeze a lot more profit from each user. (oh joy)
As a disclaimer, I am not a cheerleader for FB. I tend to favor value stocks where the calculations are easier and the risk is lower. Just trying to lay out the arguments and pointing out what the assumptions are.
If it trades below $5 for a long time it will be kicked off the NASDAQ and onto the OTC (think pink sheets) market.
It would have to go out of bussines, which means lots and lots of losses.
Even then, that might not be sufficent. Last I checked (which was a few years ago) Enron was still trading at a fraction of a peeny. (People were hoping to get a slice of the lawsuits aginst various people, lawyers, accounts, etc.). It can take years for a defunct company to stop trading.
Most of the shares would have gone to institutional investors, not wealthy people. Most institutional investors are pension funds, mutual funds or hedge funds.
Most hedge funds are owned by pension funds. Most pension assets belong to average working people.
Sure, it normally 1 or 2 steps removed, but it does belong to the average joe. Take a look at CalPERS if you want an example.
Slashdot Mirror
Student Loans is aid. Nothing “psychologo-economic” about it.
You are a bright 18 year old of modest means and you want to be a doctor. To do this you need to borrow 100k to buy the education. Banks would charge high rates for this type of risk loan. In this case the government offers cheap money (I have seen 10 year student loans with a lower interest rate than 10 year treasury bonds.) While you have to pay the loan back the interest rate is deeply subsidized.
Personally, I think we would get more bang for our buck if we did more grants then loans. In the case of loans the benefits flow to those who pay the most for education. i.e. A private college graduate gets more subsides than a state college graduate., which is kind of unfair because one would expect the private college graduate to earn more money. The people who need it the least get it the most. A (indirect, some generalizations made) subsidy for the rich in effect.
I think there is a subtle point you are missing. The Federal Government subsidizes a good – any good - for simplicity; let us say $100 per student. This subsidy will be split by the consumer (student) and the producer (school.) How will it be split? The article argues that the lion shares goes to the school.
First, while schools are non-profit, very few are staffed by Franciscan monks who have taken a vow of poverty. Schools are interested in upgrading their campus, doing basic research and increasing staff salaries.
Second, there is a mismatch between the students and the schools. Young kids have a hard time determining the value of the education they are buying. On the other hand, parents have to disclosure all of their information to the school. If a kid wants to attend a school and the parents can pay for it the school can use price discrimination and charge them full price.
I would like to build on Sarten-Xs question – what exactly is unethical about finance?
Are there people who are greedy and worship on the altar of Mammon? Yes - and you will find them in all industries. Is finance soulless, only interested in money? I would say no. It is interested in efficiency and it’s cold reductionist logic can be brutal.
But I would guess that the issue you have is not with the morality but with the ethos of people in finance.
I have worked at for profit (family and corporate owned and Not-For-Profit member owned (Credit Unions or Mutuals) financial institutions. The ethos in the two places are different. Then again, these were all Midwest conservative (in the “we are here for the long haul so focus on long term results, moderate risk aspects and not the quarterly high risk aspects)
Let me point out two things.
First, we currently do tax wealth transfers. What happens? We have companies like GE who just leave thier profits abroad. Mind you, it's at a lower rate then 0.5%., but still.
Second, you don't want to encourage "faster" wealth transfers. That is just going to encourage hot money to flow in and flow out of countries lookings for short therm gains. You want long term stable transfers.
While Antartica has the lowest tax rate they have not signed any tax treates, so the local goverment could charge full taxes.
That being siad, I don't like corporate taxes for interantional companies. There are too many source (where is the corporation located) / residence (where is the corporation making money) issues, they are easy to game, etc.
I think the world would be a better place if more of the corporate taxes were shifted to a source only method. USA would get a cut of the corporate profits when I bought a Angry Birds games - not sure why Finland should have a cut. The profits would then float to corporate headquaters and paid out to the employees / shareholders - which I am assuming are Finish. Then Finland could charge a income / dividend tax and get it's cut. Much simplier.
On the flip side
You have somebody who send back remittances
Make come back and bring additional skills.
Creates demand and excitement for education, encouraging more people to enter the field.
IIRC, in the field of nursing, the tipping point is 20%. There have been studies trying to figure out if educating nurses for oversea work helps the local economy. If less then 20% of the nurses head overseas, then the county has more nurses then it would normally have.
As Gandhi (?) said – Better a brain drain then a brain in the drain.
I can empathize form where you are coming from, but you are ask subjective question where people give the wrong answers.
Even the simple one on permanent residence. I worked on a study on Scandinavian immigrants to the US in the late 19th century. Over ½ said they were going to return. Almost none did. The predictive power just was not there. I am going to rely on antidotal evidence but I still think it holds true. People come to the US with plans and after 5 years those plans almost always gets turned around.
Then you start asking the tougher subjective questions – Are these people going to take away “Native” American jobs away from us – or at least lower our pay. The answer is always going to be yes. That being said, we are a nation of immigrants – it is one of the ways we constantly reinvent ourselves to meet the new challenges of tomorrow. I can’t imagine an immigration bureaucrat being able to guess who will kick off the next great revolution.
If somebody can earn 100k I would rather have them work in the US and have them shave 5k in salaries for a “Native”. They will pay taxes and add vigor. The other option is to let them stay where they are – and let them invent the next big idea outside of America.
Same field, but is in some aspects better. Actuaries get high marks in job satasification. Good pay (not as good as quants, but....), easier to get into, good life / work balance, no insane presure, etc. Plus, as an added bonus, you can tell the exact time when somebody will die - but you can only use this power once. On the downside, you make accountants look sexy.
I don't think that is true. In my neck of the woods only a single "art" theater chain will run NC-17 films. On the other hand, quite a few will run the unrated type.
Films with a NC-17 rating have restrictions on how they are advertised. Since you can't advertise, most theaters wont run the film.
And it's not about porn films. Those are low quality. I would like something with a bit of class. The MPAA is a bit odd. Have a ton of blood and guns, get a R. Have a bit of male frontal nudity, NC-17. It does slant the story telling process.
For a good film, see "This Film is Not yet Rated" http://en.wikipedia.org/wiki/This_Film_Is_Not_Yet_Rated
Prop 13, combined with the "3 strikes" (sponsored by the police union) prop and "education" prop (sponsored by the teacher's union), is not direct democracy gone right. Sorry if I can't rember the props off the top of my head.
Prop 13 limits taxes. The other 2 props which increase goverment spending. And then there is the prop which requires a super majority to raise taxes, while you only need a majority to raise spending. CA is getting to a point where the state legislator could not pass a budget if they wanted to.
I can ask easy questions and get easy answers. However, at some point you want to work off a clean sheet of paper and figure out the best balance between how much to tax and where to spend.
PCM2 has a point - but his question is non starter - so let me try to ask 2 questions.
First, how will you frame questions? Decsion Theroy, a branch of Psychology and used by Economist, has shown that we can manipulate results by how you frame questions. i.e. "Do you want to increase taxes for spending on roads" gets a lower result then "How much do you think we should spend on roads"
Second, how will you balance you a passionate minority vs. a passive majority? I will use building a new road as an example (a poor example because this is beyond the preveiw of congress - maybe somebody could come up with a better example?). Most people want to see the road built. A small minority want accommodations (move the road a couple of hundard feet to perserve a cherish historical or natural spot, better barriers for road noise, etc.). Special intrest groups are not automaticly evil after all.
As an aside, how much have you read on Public Choice? A subbranch of Economics on how different voting methods can generate different results.
I work with 8 highly trained, young (5 under 30, 3 under 40) CPAs.
We can't convert from Windows XP to Windows 7 in June because it is kind of busy time.
None of the applications are changing, all have been test, the computers are waiting - basically they would leave at their normal time and find brand new computers waiting form them. We are only talking about the learning curve. So we have to wait until July.
Sigh. different strokes for different folks.
So I work in the financial services I would not use drop box - and not because it is a bad product.
First, people will have access to material insider information, SS#, etc. You have to have positive proof that this information is under your control and that it can not be leaked to 3rd parties. There is simple too much room for mischief with a rouge employee uploading data and selling it to the competitors.
Second, I have to keep all information between 3 to 7 years. Once again, there has to be positive controls that can be audited.
Now, I know of some cloud computing centers which have gone though all of the red tape / auditing, but they tend to offer specialized services.
I work in financial services and we are addicted to Microsoft Excel.
I get "relational data" in Excel spreadsheet form from outside vendors all of the time. I can't even get them to send me the data in a flat text file so Excel won't chop off the leading (and necessary) zeros.
It is what everybody knows.Not the way it should be, but that's life.
In the US, legally, this is not necessarily true. Companies have been nailed on anti-trust grounds without formal communication. If company A changes it's prices and companies B and C consistently follow suit, that is enough. Even though there is no formal communication, everybody knows what is happening - wink wink nudge nudge.
I doubt that.
I would guess that the manufacturing of spinning disks for HHD drives and assembling chips for a SSD drive are different. I don't see any great tricks up the sleeves of current manufacturers when the shift occurs. Even if they successfully made the transitions, I would think most of the profits would flow to the chip manufacturers, not the drive manufacturers. I think they would be left high and dry.
Does anybody know better?
Just to extend the argument, Game Theory suggests that there are 2 stables states when you get down to 2 or 3 big players. Either cozy (Biggest firm is the price leader, everybody follows suit. Nobody wants a war) or fierce - no quarter is given by either side.
Qualifying for a car loan does not mean an artist can qualify for a business loan.
Banks do loans, which means they have a small upside if you pay back a loan (interest) and a large downside if you default. One of the ways the offset the downside risk is by the use of collateral - the car. Can't pay the loan, they take the car and sell it at auction. Fast and quick. So they do a lot of low risk loans.
Business is riskier then a car loan. Having a solid business plan can offset that risk. And it's not because they bad business people (I know a lot, some are, most are not). It because you can put out a great product and 1/2 the time it fails. And a bank is not set up to quickly sell a 2nd rate album in the secondary market. On the other hand, when an artist succeeds, it big. Just the opposite of bank. Few big upsides, lots of big downsides.
It's one of the reasons why I mentioned Risk Capital. The risk profile of artists suggest that investors want to invested in the equity side instead of the debt side - which is where the music labels come in. Their business plan is to lose 9 times out of 10.
For most artist the only bank loan they can get is to max out their credit cards. This can work - See Spike Lee's She's Gotta Have It. But taking on personal credit card debit is different then a business loan.
I will point points about risk and equity.
NPR"s Planet Money had a interview with O.K. about a year ago. I am sure you can still find the podcast. IIRC O.K. go said it was closer to 250k to launch a new national band - at the low end. 4 months where you quit your day job and work on the music. Then a good gob in the studio time, with sound engineers, song writers (if needed), etc. Shoot a video or four. Then launch a 6 month college tour. And only about 10 percent makes it.
If you read the article most of the costs associated with a album are salary and stuff. It does not matter how cheap the equipment is, good sound engineers cost money.
So you might be able to cut out some of the costs by going slow, pushing the authentic folk side, etc.and cut the 250k down a little. But still, spending 25k on a start up with a high risk factor is more risk capital then the average person has.
O.K. Go has now started their own record label to see if they can launch bands for less using newer methods - but they admit they could not have launched without the help of the majors 10 years ago.
The old boss is dead. Can't quite figure out how to make the new one work.
And while we are researching that, can we also figure out why Kickstarter, which crowd funds projects, is named after a motorcycle starting system? I can't see the conection!
10% growth is considered average. Not sure I would go as far as to say sloppy writting.
Well, let's do the math.
Return = ((1 + Growth)^Time)-1. Assuming time is 10 years (as it says in the summary)
10.8% = 179% growth in profits
24% = 760% growth in profits.
Now, the S&P 500 is projected to grow around 9 to 10% - consider that.
Thanks for pulling that data. I know that FB earning were going up fast – and I assumed that they were still accelerating.
But to build on what I was saying, the Dividend Discount Model is the stock and trade on analyst. But it is very sensitive on what you think the rate and length of super normal rate of grown will be. Small changes can lead to big differences in price.
Analysts guess that the S&P will grow steady at 9%, ergo P/E of 13
Analysts guess that Apple will grow at 15% for the next few years, ergo P/E of 18
Analyst at are failing about, guessing that FB will grow at 35% for the next few years, ergo P/E above 60
And while FB does have 900m users, which suggest slowly growth in the user base, I have heard a lot of annalist saying that FB can squeeze a lot more profit from each user. (oh joy)
As a disclaimer, I am not a cheerleader for FB. I tend to favor value stocks where the calculations are easier and the risk is lower. Just trying to lay out the arguments and pointing out what the assumptions are.
Stock was sold. Instagram stock was sold for $300 million in cash and 23m shares of FB stock.
Your right that the 23m prorably was a swap, and thus not a taxable event. But the $300m in cash is a different story.
No.
If it trades below $5 for a long time it will be kicked off the NASDAQ and onto the OTC (think pink sheets) market.
It would have to go out of bussines, which means lots and lots of losses.
Even then, that might not be sufficent. Last I checked (which was a few years ago) Enron was still trading at a fraction of a peeny. (People were hoping to get a slice of the lawsuits aginst various people, lawyers, accounts, etc.). It can take years for a defunct company to stop trading.
I would think a lot. Follow this logic
Most of the shares would have gone to institutional investors, not wealthy people.
Most institutional investors are pension funds, mutual funds or hedge funds.
Most hedge funds are owned by pension funds.
Most pension assets belong to average working people.
Sure, it normally 1 or 2 steps removed, but it does belong to the average joe. Take a look at CalPERS if you want an example.