My question is: What evidence is there? What level is it happening at? Just because something can happen does not mean it is happening, nor does it tell us at what level it is happening.

There are industries that I can point to regulator capture. I can point to specific cases of lobbying by special interests - which is a different kettle of fish. But I can look at my city and see Comcast lobbying for special privileges. On the other hand I can look at one city over and see that they are really getting screwed because they have very weak oversight.

There will always be issues when there are natural monopolies. The question is if those issues are well managed with a minimal amount of economic distortions. When I look at my states electric utilities I see the issues being managed much better than that of the cable industry.

Is OK different? How? Why? I am not saying it can’t happen, I would like specific details on how OK public utility is being subverted.

Why do you say regulatory capture? With the exception of nuclear power, I don’t see a lot of regulatory capture in the electric market. Regulatory capture normally happens when the regulations are narrow and complex. Most of the current issues surrounding electric generation tend to be old, well settled issues, which results in open debate – or at least where I live.

Because their profits are (kind of) regulated.

Electric Utilities are heavily regulated. I am not sure about Oklahoma, but in many states the rate that utilities can charge is tied back to the cost of electric production, Since electric production tends to be capital intensive, that means their cost of capital, and that ties back to the health of the utilities earnings, both in terms of growth and stability (i.e. risk).

Feeding electricity back into the grid is not a free lunch for the utilities – there are costs involved. (and I am sure that electric utilities will whine loudly in an exaggerated fashion as they fight a rearguard action.)

To be fair, Joss was not happy with the final product either, feeling it greatly differed from his script.

I am confused about your positions on preferred stocks - what you are saying does not track with what preferred stocks are today. Preferred stock only has a limited participation in profits, and common stock almost always outperforms preferred - for good casual reasons.

On to your points. There are models of what you are suggesting, most are predate industrialization (Railroads were to first to majorly break away from this model during the 1850, other companies followed) or are in Islamic countries (they still have traditional equity, but need the preferred stock to fill in the balance sheet since they can’t take out loans). These have had a poor record with larger corporations. Most of the problems boil down to having a permanent base of capital and liquidity.

A model might be partnerships or private bank shares. However, the more owners one has the more conflicts one has. Issues show up when you have more than 50 owners. Things break down when there are more than 250. You can reference any modern partnership (law firms, accounting firms, etc.) or worker owned co-op to see the numerous flavors of issues. Every year people are cashing out – they need the money, die, whatever. The demand for cash is often high, leaving scant fund for growing the business.

REITs and Limited Partnerships are another model. They issue and redeem equity frequently. However, since they don’t have a permanent equity and limited retained earnings, their projects tend to be of shorter terms and limited focus.

However, many industries need a long term capital base. Think fab plants, ship building, mining. These take years to build - companies can’t have their capital yanked out of them in the middle of these projects. Banks are special. Take a look at the financial crisis and the bank run on its equity. Governments still restrict how much capital they can pay out. Need cash to pay for an emergency? You may not be able to do that for years. These would be a hard fit in your model.

Another model you might look at are hedge funds and private equity. Like your suggestion they have a initial pay in. However many have lockout periods of 5 to 10 years, discounts on early redemption running from 20 to 40%. The reason for this tends to be liquidity (cash is often not at hand) but valuation is hard. You suggest that a person should be able to cash at a percentage of what a company is worth? Well, what is a company worth? Evaluating private companies is notoriously subjective. Differences of 20% between different appraisers are common.

A Dutch auction would solve some of the above issues, but then you are stuck waiting for management to offer the cash out. Need the cash at some other point in time? Tough luck.
Which takes me back to my original point. Investors in startups get paid when they cash out at the IPO. Anything that reduces the value of the stock on the secondary market is going to lower the price that I cash out as, which lowers my returns, which makes me less likely to invest.

Well, technical the intrinsic value it is the future discounted cash flows to the shareholder. This matters for two reasons.

First, as an investor I don’t care what the company pays out, I care about what I get. If you slap a 50% tax on dividend income, I receive 50% less cash, the value of stock to me falls by 50% (if the only thing we care about is dividends). Taxes and other regulations matter.

Second, it accounts for cash other than dividends, such as when the company is sold – either in part (you sell your stock) or in whole (the company is bought out our merged). At some point I am going to need to sell it – to fund my retirement, when I die, etc. Bedsides, Berkshire Hathaway is worth something even though the CEO has said that they will not pay a dividend in the foreseeable future. Modeling that type of future discounted dividends is hard.

I am not sure what bluefoxlucid’s exact proposal is, but it sounds like gimping the secondary market. If you gimp the secondary market, I am going to get a lower price when the company is sold, which means lower returns for m, and the lower the returns are the less I will invest.

I think you missed my question. Why would I want to give cash (something of value) to a startup and receive stock, something that you imply is trashy and has low to no value? How do get my profits out of the company?
In the strong case (I am not sure if you are going that far) where there is no secondary market there is no way to get my investment back – I would never see a cent back of my initial investment. Weaken the case to where we only heavily discriminate against the secondary market we get some investment return but the return is still dented. The crappier the secondary market is the crappier my initial investment into a startup, the crappier the investment the less is invested

I will say that something of value is being traded on the NYSE – ownership of companies. And while that is a more abstract concept than trading oil futures over at the commodity exchange, it is just as economically important.

I need to ask because dealing with those rules are my day job – how do Canadians avoid constructive sales?

For those who don’t know, in constructive sales one can “economically” sell a security (i.e. stock), extract the money from said sale, but delay the “actual” sell – and the associated taxes – indefinitely.

I am going to avoid all of the distortions and loopholes this proposal would make and assume it would work. Why would I invest in startup under your proposal? Investors care about my total return. Most of my return is going to happen when I sell the stock. The higher capital gains on the traded stock, the lower the return will be, so the stock price will be lower, so my returns will be lower as I sell my founding shares. Result? Less investment in start-ups.

There is a huge body of evidence that supports this – the higher the capital gains the lower the investment in the economy. Carving out expectations for favored business (national champions, family farms, internet startups) has had a miserable history.

I am saying it ain't so.

If you look back at 2012 they made a huge profit but lost money in the 4th quarter. Same for 2013. I am saying it is a slow time of the year. It is the opposite of a Christmas Tree Farm – 3 really bad quarters with no sales and large profits, but huge sales and profits in the 4th.

There are other ways to avoid taxes but this is not one of them.

errrr - the press release says they lost money for the 4th quarter, which I am going to guess is their slow time of the year. IIRC their profit last year was 820m and they have made 680m so far this year. Not billions but nothing to sneeze at either.

What studies are you referring too? Everything I have seen has suggested lower taxes on capital leads to move investments.

I will admit that doing studies like these are hard. You have to factor the difference between high vs. low taxation states, how taxes are raised (income vs. consumption vs. investments)that the country has to be publicly committed for the long term (i.e. 10+ years), and how capital is taxed (capital gains, wealth tax, dividend income, etc.)

Yes. Neil has done some good stuff already.

Alan Moore has had a horrible experience with Hollywood. Some of that is Hollywood, some of that is Moore being an anarchist who does not play well with corporations or other people. He has a hard time sharing.

About a year ago the idea for American Gods was to make this a HBO series. The first season would be about 10 episodes and cover the book. Not sure what the plans were for the next 6 seasons but Neil said he had something up his sleeve.

The HBO project has been officially killed but I would not be surprised if something similar cropped up for the American Gods TV shows.

For Sandman, I have no idea. There have been some horrible scripts floating out there since the early 90s but I don’t think that is what is going forward.

o.k. then - what would have been the right answer?

Direct supervision is not an answer. Indirect supervision either by multiple layers of bureaucracy (what you were talking about) or by the board were both ruled out by the board.

It is the rare case where conflicts of interest can be completely eliminated. I would argue that either of these methods would have been robust enough to minimize conflict. There are tons of cases where you have married couples working together, parent and child, etc. and organizations have come up with polices to handle and minimize the issue.

I personally feel that shipping her over to the State Department was overkill, but obviously that is not your opinion. What does that leave us with? Fire her because her boyfriend got a job? That seems unfair to her. Maybe soften the blow with a fat severance package? But that would be open to abuse. Any better ideas?